Mortgage Rate News

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Today, the government released its non-farm payrolls unemployment report. The news, as expected, remains somewhat grim: The unemployment rate in June reached 9.5%. This is slightly better than the anticipated 9.6% unemployment rate.

The fact that things aren’t quite as bad as analysts expect offers cold comfort. Sure, the rate of rising unemployment is slowing, but employment is still declining. And things aren’t likely to improve soon. The Street reports on companies that have announced pending job cuts:

Yesterday, Gannet(GCI Quote), which publishes USA Today, said it plans to cut 1,400 jobs or 3% of its work force.

Last week, Kimberly-Clark(KMB Quote) said it would lay off 1,600 workers, while Monsanto(MON Quote) said it would cut 900 jobs .

General Motors(GMGMQ Quote) also adjusted its domestic, white-collar, job cuts forecast up to 4,000.

Clearly, the coming weeks will see an increase in unemployment as more people lose their jobs and line up to collect government benefits. All of this unemployment is also going to have an effect on the housing market.

Prime foreclosures likely to continue to increase

When people do not have jobs, they find it difficult to make mortgage payments. Unemployment benefits can’t completely replace an income, and the last few years have left many people bereft of emergency savings funds. This means that foreclosures are likely to rise as conditions continue to worsen (albeit at a slower pace) on the employment front. With expectations that the unemployment rate will actually hit 10% before economic recovery begins, more foreclosures seem inevitable. The President’s foreclosure prevention plan, while admirable and likely to be helpful in some cases, can’t help those who don’t have an income to aid them in qualifying for loan modification or refinance.

In the end, it is a wise idea to prepare yourself for unemployment now. And realize that you will have to make changes to your finances and your life for this possibility. It may not happen, but if you cut expenses now and work on building your emergency fund, you will be prepared in the even that you are laid off. And if your job survives this recession? Well, making better personal finance decisions will always get you ahead — no matter what the economy is doing.

Image via Wikipedia

We all know by now that even the rich and famous can end up poor and infamous. Indeed, being famous cannot completely guard someone against making poor money decisions. After all, people are people, and some never learn the importance of financial discipline. Many of the richest people fall on hard times by failing to follow the basics of personal finance:

1. Make more than you spend.
2. Avoid getting into more debt than you can handle.
3. Set aside money for a rainy day.

Unfortunately Michael Jackson fell into the category of rich people who do not manage their money very well. He lived a luxurious lifestyle — one that overran his income. It seemed as though someone so rich could never spend more than he earned, but it still happened. He also got into legal trouble, adding further to his expenses. Most people heard about Michael Jackson’s financial troubles nearly two years ago, when the first inkling that his ranch Neverland was going into foreclosure. (The ranch was saved from auction in March 2008 when a wealthy real estate mogul, Thomas Barrack, bought the ranch.) At any rate, it is clear that there are other financial issues to be worked out by Jackson’s estate.

Putting together an estate plan

This sad tale serves as a reminder that it is important to put together an estate plan. Michael Jackson, though a great entertainer and a worldwide icon, did this rather poorly. Tisa Silver, at Bizzia, points out that there are four essential points that good estate planning must cover:

1. Accumulation of wealth.
2. Preservation of that wealth and minimization of costs.
3. Use of your assets if you should become incapacitated.
4. Distribution of the assets after death.

In the end, it is important that you prepare your finances in life and in death. It makes things easier for you and your family in the long run, and protests those you care about.

Image via Wikipedia

After a couple of weeks of heading higher, mortgage rates have dropped a bit. On the assumption that the economy would soon be picking up (leaders have been excited about “economic green shoots”), speculation about inflation has been seen. This speculation has been leading to higher mortgage rates. However, last week saw inflation reports leaning toward low inflation, and that has given mortgage rates pause in their climb.

For the most part, though, the direction of mortgage rates is largely uncertain. Financial markets and others will be looking at economic data, including Treasury auctions, due out this week. (In fact, two T-Bill auctions are happening right now.) The outcomes of economic announcements and auctions are likely to influence where mortgage rates go from here. Lenderama offers some helpful hints on where to look for direction on mortgage interest rates:

Currently, there are no scheduled speeches, though that is likely to change as the week progresses.  The two main events are clearly the FOMC decision and the PCE on Friday (included in the Personal Income and Outlays report).  However, as we have seen in recent history, some other reports such as GDP and Consumer Sentiment have had increased effects on the markets, and the Treasury Auctions will surely have some impact as well.  Remember that when the FOMC makes its announcement, don’t focus on their decision regarding the Fed Funds Rate, instead you should dissect what they are saying within the released Policy Statement.

Chances are that mortgage rates will go higher in the near future, but it will take some time for them to reach the levels that they were at prior to the subprime lending crash and the financial crisis. For quite some time, mortgage rates are likely to remain relatively low, providing good incentive for those who are looking to buy a home right now, while prices are low and mortgage terms are favorable.