Arlington, VA, United States (AHN) – Mortgage rates fell to new lows again for the week ended May 10, with the 30-year averaging 3.83 percent.

Freddie Mac said in a statement Thursday, “Following April’s weaker than expected employment report and the French and Greek election results raising concerns over the stability of the eurozone, long-term Treasury bond yields declined, allowing fixed mortgage rates to ease to new all-time lows this week.”

The rate for the 30-year averaged 3.84 percent in the prior week and 4.63 percent in the same period a year ago.

Rates on the 15-year fixed mortgage averaged 3.05 percent in the latest week, down from 3.07 percent last week and 3.82 percent a year ago.

According to Freddie Mac, average interest rates on five-year Treasury indexed hybrid adjustable mortgages averaged 2.81 percent, down from 2.85 percent last week and 3.41 percent from a year ago.

Rates for 30-year conforming mortgages also fell to a record low in the Mortgage Bankers Association weekly survey released Wednesday.

The MBA also reported that mortgage applications increased 1.7 percent in the current period, a hopeful sign for the ailing housing market.

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Arlington, VA, United States (AHN) – Mortgage rates in the U.S. have fallen to a record low-again.

The average rate for 30-year fixed loan slipped to 3.84 percent for the week ending May 3, down from 3.88 percent in theor week. It is the lowest ever for the 30-year since mortgage giant Freddie Mac started tracking rates in 1971.

The average rate for the 15-year dipped to 3.07 percent from 3.12 percent.

Lower interest rates will provide some cushion and support for the struggling housing market, but unfortunately, the U.S. economic recovery appears to be stalling, and that does not provide the confidence consumers want to take on the obligation of purchasing a home.

The Census Bureau reported earlier this week that homeownership in the U.S. dropped to the lowest level in 15 years, sliding to 65.4 percent in the first quarter of 2012, down from 66 percent in the previous quarter.

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Arlington, VA, United States (AHN) – Mortgage rates in the U.S. have fallen to a record low-again.

The average rate for 30-year fixed loan slipped to 3.84 percent for the week ending May 3, down from 3.88 percent in theor week. It is the lowest ever for the 30-year since mortgage giant Freddie Mac started tracking rates in 1971.

The average rate for the 15-year dipped to 3.07 percent from 3.12 percent.

Lower interest rates will provide some cushion and support for the struggling housing market, but unfortunately, the U.S. economic recovery appears to be stalling, and that does not provide the confidence consumers want to take on the obligation of purchasing a home.

The Census Bureau reported earlier this week that homeownership in the U.S. dropped to the lowest level in 15 years, sliding to 65.4 percent in the first quarter of 2012, down from 66 percent in the previous quarter.

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Washington, D.C., United States (AHN) – The Federal Reserve, as widely expected, left interest rates unchanged at a meeting of its policy meeting Wednesday, and it reiterated the central bank’s stance of keeping rates at “exceptionally low levels if needed” through late 2014.

The Fed also maintained it will continue bond market moves to switch to longer maturity mortgage backed securities and government agency debt from bonds that come due sooner.

That will continue to pump money into the struggling economy, a current policy that has helped steady the ailing housing and mortgage markets since the fall of 2011.

The Fed meeting comes on the heels of mixed signals in recent weeks which show improvement in some key areas and disappointing readings in others.

Unemployment claims have ticked up, job growth has waned and durable goods orders remain week.

The Fed was expected to leave rates at near zero levels, but many investors were hoping for a stimulating fresh round of bond purchases which failed to materialize.

Markets, enjoying a strong rally before the announcement mid-day Wednesday, held onto early gains.

Just after 1 p.m. on Wall Street, the Dow was up 77 points, the S&P 500 was higher by 16 points and the NASDAQ climbed 62 points, helped by stellar earnings from Apple.

 

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Washington, DC, United States (ProPublica) – by Cora Currier

Wells Fargo and U.S. Bank have let foreclosed homes in black and Latino neighborhoods lapse into disrepair, while bank-owned homes in mainly white neighborhoods are better cared-for, according to housing advocates.

The National Fair Housing Alliance, a non-profit group, brought a formal complaint to the Department of Housing and Urban Development last week alleging that Wells Fargo violated the Fair Housing Act by failing to keep up homes in minority neighborhoods. Today, the group announced they are also filing a second complaint, against U.S. Bank.

Earlier this month, the group released a survey, which was funded in part by HUD, of more than 1,000 unoccupied, foreclosed homes across the country owned by unspecified banks. When a house is foreclosed upon, the bank that takes it over is responsible for maintaining it. The report cites evidence — photos and interviews with neighbors — showing houses becoming dilapidated under banks’ watch.

The complaint against Wells Fargo claims that among more than 200 homes surveyed, those in black and Latino neighborhoods were much more likely to have yards filled with trash, broken doors, damaged windows, and other signs of neglect. Fewer homes in those neighborhoods had “for sale” signs visible. For example, 68 out of-9 homes in black and Latino neighborhoods had damaged roofs, compared to only nine out of 69 properties in white neighborhoods.

The study looked at homes owned by Wells Fargo in Washington D.C., Baltimore, Philadelphia, Dallas, Miami, Atlanta, Oakland, Calif., and Dayton, Ohio.

A spokeswoman for Wells Fargo said in an emailed statement that the bank “conducts all lending-related activities in a fair and consistent manner without regard to race: this includes maintenance and marketing standards for all foreclosed properties for which we are responsible.” She also said that the bank has a dedicated department that maintains and markets foreclosed properties from loans that are within its portfolio. Since the complaint did not identify specific properties, she said, Wells Fargo has not been able to investigate its claims.

U.S. Bank did not immediately respond to our request for comment, and a spokesman for HUD declined to comment on the complaint.

The report also pointed out that there were simply fewer bank-owned foreclosed properties in white neighborhoods than in minority neighborhoods, an indication, it says, of the fact that African-American and Latino communities were disproportionately affected by the subprime mortgage crisis.

Numerous studies have shown that lenders targeted minorities for the riskiest loans, and often charged them more than similarly qualified white borrowers. A report from the Center for Responsible Lending found that black and Latino homeowners were twice as likely to lose their homes to foreclosure than white homeowners. (The center was started with support from the Sandler Foundation, which is also the major funder of ProPublica.) In the biggest settlement to come out of the government post-bubble investigation of discriminatory lending practices, lender Countrywide (now owned by Bank of America) agreed to pay $335 million to settle a Department of Justice suit.

Nationally, banks or investors own roughly half a million foreclosed homes, and the Federal Reserve estimates this will increase to 1 million this year. Some banks and investors are looking to unload the properties en masse. Fannie Mae and Freddie Mac, who own about half the properties, are piloting a program for bulk sales of their foreclosed properties that requires they be offered as rentals. Other lenders are turning into landlords themselves.

– Provided by ProPublica.org

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Washington, D.C., United States (AHN) – Mortgage rates remained virtually unchanged in the week ended April 5, another mixed signal about the pace of the economic recovery in the United States.

According to the latest report out Thursday by mortgage giant Freddie Mac, the 30-year fixed-rate average remained just below 4 percent after falling below that significant threshold two weeks ago for the first time in months. The average this past week was 3.98 percent, a hair lower than the 3.99 percent posted in the prior week. It remains well below the 4.87 percent registered this same time a year ago.

The 15-year average also slipped slightly, falling from 3.23 percent last week to 3.21 percent, and down from 4.10 a year ago.

The 5-year hybrid adjustable rate mortgage dropped from 2.90 percent to 2.86 percent. The 1-year ARM held steady at 2.7 percent.

News this past week on the housing market has been less than encouraging.

Sales of foreclosed homes are expected to rise 25 percent to 1.2 million this year, according to recently released data from Moody’s Analytics. In addition, nearly one third of real estate agents surveyed in a recent National Association of Realtors report they faced more closing cancelations in March from what they saw in February.

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Riyadh, Saudi Arabia (The Media Line) – When Reem Muhammad sought a personal loan to pay off some lingering debts, a Saudi bank offered 100,000 riyals ($26,667). The price tag? Repayment of the loan, plus 33,000 riyals.

“I took the loan and repaid it, but I never knew what the 33,000 was for since it wasn’t interest,” Muhammad, 38, told The Media Line. “But it sure felt like interest.”

Muhammad is one of thousands of Saudis taking advantage of Saudi Arabia’s healthy economy and banks’ increasing willingness to offer personal loans and credit cards. Her loan also illustrates the continuing debate in the Saudi banking industry whether some aspects of the loan system contravene shariah, or Islamic law, that guides how Muslims conduct financial transactions.

Personal loans in Saudi Arabia jumped nearly 20-fold to a staggering 219 billion riyals in 2011, up from an estimated 11 billion riyals in 1998. Loans included 27.7 billion riyals in property loans due in part to the passage of the 2011 mortgage law. Credit card debt in 2012 is estimated about nine billion riyals.

Asher Noor, chief financial officer for the Riyadh-based AlTouq Group, a global investment firm, told The Media Line the increase in loans reflects Saudi Arabia’s strong economy.

“I find the increase in line with the growth of the Saudi economy, an emergence of an affluent middle class and creation of more high net worth individuals now than at any time in the past,” says Noor, who emphasizes he was offering a personal opinion. “The surge in personal loans is not just due to proliferation of credit cards in the Saudi economy, although plastic money has clearly made it easy to stack up debts. Real estate loans have also been a big reason for personal loan surge.”

Until about 2000, banks were reluctant to issue personal loans to individuals, preferring to limit their lending to large companies. Consumer credit card use was also relatively rare.

However, the demand for easier access to money has increased as the Saudi middle class has grown more affluent. Banks devised methods to offer credit cards compliant with shariah. Islamic law does not permit usury, charging or paying interest and conducting business contrary to Islamic values, such as operating a casino and selling pork or alcohol.

Saudis pay a fixed monthly fee on credit cards. Banks may require customers to have a savings account with a specific amount of money on deposit. Charges for late payments may be about 3 percent of the outstanding balance. Another way the card issuer earns a profit is to pre-purchase an item a customer plans to buy and then instantly resell it to him at a higher price.

Noor acknowledged there is “cause for concern” over the rapid increase in consumer loan and credit card debt, but the Saudi Arabian Monetary Agency (SAMA) has not allowed it to get out of control. “I think SAMA has not been asleep at the wheel and has kept the commercial banks in check with regulations like limiting loan to deposit ratios.”

SAMA in 2006 established regulations that total loans may not exceed 33 percent of the total salary of employees and 25 percent of the income of retirees. Nabil Al-Mubarak, executive-director of SIMAH, told the Arab News that SIMAH’s policy labels card debtors as defaulters under two conditions: if they have not paid for six consecutive months and if the amount due is SR 500 and more.

Noor said the criteria to issue credit cards is heavily regulated in Saudi Arabia, noting that customers are rarely pre-approved and must prove their eligibility for credit cards. “There are SAMA regulations dictating the credit card and personal loan limits and the central database [Saudi Credit Bureau] SIMAH is monitoring defaults,” he said.

Noor said that given the large expatriate population, whose work and residence permits are linked, banks are very careful in credit card issuances and usually require having a bank account with them, salary transfer and employer letter before a card is issued.

“Since expatriates here are unable to leave the kingdom with credit card debts disproportionate to their earnings or end of service, the banks here have not struggled with staggering default rates as elsewhere,” Noor said.

Yet the explosion in obtaining credit cards and personal loans, and how banks charge fees, has led to consternation among some Islamic scholars whether the high fees are tantamount to paying interest.

Ahmed Alkady, a trainer at the Jeddah-based Islamic Development Bank, told The Media Line that he sees no difference between paying penalty fees and charging interest on credit cards.

“I don’t use or even recommend credit cards,” Alkady said, “It is a hidden type of interest as banks make you pay what they call a fine or a penalty for failing to pay them back on time. The same thing is applied in non-Islamic banks but they call it interest. I see no difference between the two unless you make sure you don’t use it for drawing cash. Or when you buy goods make sure you pay it back before the end of the time limit.”

Alkady also considers Muhammad’s 100,000-riyal loan as contrary to Islamic values with some Saudi banks skirting shariah-compliant regulations.

Islamic banks use an asset-based loan system, such as providing an automobile loan, in which the bank purchases the car, maintains ownership and then rents it to the customer. The customer makes monthly payments that add up to more than what the bank paid for the vehicle. Ownership is then transferred to the customer once all payments are made.

Alkady described Muhammad’s loan as tawreeq, or securitization, meaning the asset is made into a financial tool like a share in a company. The transaction originates with an item, such as equipment or even property bought by the bank and then sold to the customer to be paid for on an installment basis. This allows the bank to raise the price of the item as a way of earning a profit while at the same time providing immediate liquidity for the borrower.

However, the Organization of Islamic Cooperation’s International Council of Fiqh Academy, a group of Islamic scholars, ruled in 2009 that tawreeq is “legal trickery” with roots in interest-based lending.

Alkady said the Islamic Development Bank followed with a similar ruling in April 2011. “The bank’s scholars have issued a decree in which they consider tawreeq un-Islamic simply because the bank is selling goods that it does not actually own,” he said.

Yet most Islamic banks worldwide embrace tawreeq, with many Islamic scholars in Muslim countries endorsing the practice.

Sami Al-Nwaisir, chairman of Al-Sami Holding Group, wrote in the Arab News recently that loans “favor the banks and their regulations” and “the unfair contracts by banks designed for their benefit alone, which victimize and suppress the individual through the systematic brutality of the one-sided agreement.”

Noor faults the banks for not educating borrowers. “Islamic banking is asset-based and borrowers need to understand that to better appreciate it,” he said. “Bankers, however, remain the culprit by complicating documentation and structures, and thus making it difficult for the layman to make a rational choice.”

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Nairobi, Kenya (IRIN) – Slum dwellers from across Africa have urged their governments to stop forced evictions and work towards providing them with adequate shelter and basic services.

“Better housing is not a favor our governments should extend to us, but a right that we deserve to be given like everybody else,” said Alhassan Ibn Abdallah, a resident of Old Fadama, the largest informal settlement in Ghana’s capital Accra.

Abdallah was speaking at a meeting organized by Amnesty International (AI) in Nairobi, on the sidelines of a ministerial conference on housing and urban development.

“We urge our governments to stop the practice of forced evictions, whether carried out by government itself or by private developers. You cannot have development by creating more homeless people,” he said.

In Old Fadama, AI estimates that 55,000-79,000 people live without security of tenure and under constant threat of forced eviction, while in Nigeria, at least 20,000 people may be rendered homeless should the government implement its plan to demolish waterfront settlements in Port Harcourt.

Activists from Chad, Kenya, Ghana, Nigeria, Egypt and Zimbabwe have been, since 20 of March, taking part in a week of action dubbed “People Live Here”, aimed at highlighting the plight of residents of informal settlements or slums and the need to provide essential services like health, water, education and security to them.

George Amaka from Nigeria said forced evictions normally disrupt the social networks and economic activities of those living in slums, saying the lack of security of tenure creates anxiety among many slum residents.

“We have to look for new schools for our children; we have to start creating new businesses, normally with no capital with which to do it. Every social safety net that slum people rely on to survive is disrupted. We are not criminals but people working hard to earn a living and provide for our families,” Amaka told IRIN.

Corruption

Another activist from Kenya, Minicah Otieno, who coordinated the Rapid Response Team which mobilizes slum dwellers in Nairobi to stand up against forced evictions, told IRIN that slum upgrading programs in Africa, normally meant to provide affordable housing to the poor, are affected by corruption.

“In Kenya, we have slum upgrading programs that are meant to provide affordable and dignified housing to slum dwellers, but because of corruption, people do not benefit and instead, government officials allocate these houses to themselves and their cronies”, she said.

“It is because of corruption that land grabbers evict people from their settlements and the government assists them to do it,” she added.

Justus Nyang’aya, AI director in Kenya, said while evictions are at times necessary, they need to be carried out within the confines of both local laws and international statues on evictions, to which, he says, many African countries are voluntary signatories.

“People must be consulted, provided with alternative settlement before eviction and must be told exactly what the land they live on will be used for,” he added.

Speaking to IRIN on the sidelines of the conference, Kenya’s minister for housing, Soita Shitanda, admitted more work needs to be done: “We have to look afresh on our urban planning and accommodate this growing population, because poor planning also impedes provision of services.”

ko/am/cb

– Provided by Integrated Regional Information Networks.

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Jerusalem, Israel David Rosenberg / The Med – Israel’s middle class – the people who keep the country’s high tech industry humming, pay most of the taxes, serve in the army and volunteer for school committees – is shrinking even as the economy is thriving and unemployment is at its lowest in decades. And that has economists and policy makers worried.

The combined share of the middle and upper-middle class in Israel’s household population declined to 50.4 percent in 2010/2011, down from 55.7 percent in 1997, the Bank of Israel said in a study released this week. The bank defined the middle class as anyone with income between 75 percent and 125 percent of the national median and upper middle class as 125 percent to 200 percent. That works out to between $1,925 and $5,140 a month after taxes.

While the wealthiest as a percentage of the population grew slightly, the biggest change was the growth of the lowest wage earners. Those earning 75 percent or less of median income grew nearly five percentage point to 30.2 percent of the population.

“There is clearly social significance to this trend. It says more and more people – basically all wage earners and self employed – have seen their incomes stagnate while the economy is booming. This is one explanation for the outburst of protests last summer,” Joseph Zeira, a professor of economics at The Hebrew University, told The Media Line.

Sparked by the high price of cottage cheese, Israeli erected tent cities and staged mass rallies across the country last summer demanding action to help a middle class squeezed by rising prices and fewer opportunities. The protests shook the government and prompted it to implement in January a package of reforms, including free early-childhood education.

While the protests faded by last autumn, many – not the least the protest organizers themselves – say Prime Minister Binyamin Netanyahu did too little to address the problem. Many observers expect the movement to come back to life in the spring.

“There are a lot of people who remain very active and are planning summer activities. They are really determined to do it and this time it will be more planned than last time around, a lot more effective,” Roni Kaufman, a lecturer in the social work department of Ben-Gurion University, told The Media Line. “The activists haven’t disappeared.”

Israel is not alone in seeing its middle class come under pressure. In the U.S., for instance, the percentage of households whose income falls within 50 percent of the median dropped to 42.4 percent of the total last year from 44 percent in 2000 and just over 50 percent in 1970. Economists blame a host of factors, including a globalized economy that has eliminated many well-paying jobs in the industrialized West as well as tax polices that favor the wealthy.

The Israeli economy has shared many of these global trends, but the declining weight of its middle class comes as the economy by almost every other measure has been thriving for the last decade. Economic growth barely stalled during the 2008-2009 global recession and Israel’s jobless rate fell to 5.4 percent in the fourth quarter of last year, the lowest in 30 years.

But the Bank of Israel found that the prices for products and services used by the middle class, which include everything from housing costs to automobile upkeep and education, have started faster than incomes. Incomes were rising faster for the decade until 2007, but the trend has reversed in recent years, the bank found.

Meanwhile, government spending on services that benefit the middle class such as health and education remain low by Western standards.

On the balance, the Bank of Israel believes the country’s middle class is unhappy. “They are the ones most likely to say that the burden – social, economic and security – are carried by them, but that they feel that their standard of living and the quality of services they get from the state are deteriorating,” the bank said.

A poll conducted last June by the Israel Democracy Institute (IDI) and Tel Aviv University found that three-quarters of those surveyed said their economic conditions had worsened in recent years or remained the same. Only 3 percent said it had “greatly improved,” according to the poll.

Zeira attributed the middle class squeeze to multiple factors, among them the increased use of workers under temporary contracts, who tend to be hired at lower wages and with fewer social benefits than those directly on the payrolls of government and corporate employers. The large number of foreign workers in Israel, he said, has driven down wages even for the middle class.

This means that even as gross domestic product per capita and productivity have risen in Israel, middle-income earners have not seen those gains in their paychecks.

Kaufman dismissed the impact of globalization as a factor in the decline of the middle class and puts the blame on Netanyahu’s free-market economic policies

“In last decade, the labor market has changed. There is no unemployment. People are working, but not full time and at lower wages,” Kaufman said, urging the government to create new, full-time jobs by reviving the social services that have been cut back over the last decade,” Kaufman said. “A welfare state gives a lot of work to middle class professionals. They’re the big beneficiaries from it even if it serves the poor.”

The Bank of Israel figures indicate how important full-time work is to the middle class. Among middle class families, more than 40 percent had two full-time wage earners, which enabled them to accumulate enough household income, up from just over 30 percent in 1997.

Zeira, who acted as an adviser on economic policy to last summer’s protest movement, said the most effective way to reverse the trend would be for the government to increase social spending. His committee recommended last summer that the budget should be increased by 2.5 percentage point of GDP, which would work out to about 20 billion shekels ($5.3 billion) annually.

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New York, NY, United States (AHN) – U.S. mortgage rates for 30-year loans declined in the latest week to 3.88 percent.

The average rate for a 30-year fixed loan dipped in the week ending March 8 from 3.9 percent, mortgage giant Freddie Mac reported Thursday.

The rate stood at 3.87 percent last month, the lowest in Freddie Mac records dating back to 1971.

The average rate on a 15-year loan slipped to 3.13 percent from 3.17 percent.

Low borrowing costs and an improving job market has helped the ailing housing market. Industry analysts anticipate home sales and home building to continue to edge higher, and they expect home prices to finally stop falling later this year.

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