The further we get into this weak recovery, the more it looks like a weak recovery is what we’ll be enduring for a while. As resource-slack-absorbing growth remains in the distance, investors seem to be taking a less-concerned attitude about rising inflation, at least for the time being. The recent falloff in oil prices is especially helpful in that regard.

Along with a leveling of gains in equity prices over the past couple of weeks, at least some money has come back into bonds, taking the top off of a spike in mortgage rates which saw the conforming 30-year fixed-rate mortgage run from 4.32% on October 22, 2010 to as high as 5.09% on February 18 of this year. This week’s average of 4.74% for that most common instrument is almost exactly halfway between those two bookends.

But even if inflation isn’t a great concern, prices certainly should be, and may be at the heart of the recent decline in rates.

It should be noted that popular measures of inflation only gauge the rate of change of prices, not the actual price levels themselves. It’s also worth noting that everyone of us has a personal inflation index, since your choices and purchases dictate whether you are affected by the rising price of an item or items. After all, if you don’t smoke, you don’t care that the price of cigarettes has increased by 100% over the last few of years… but if you did, those increases might affect your spending patterns. You might cut down spending in other areas, try to use coupons or change to a less-expensive brand, for example. On the other hand, though, if you’re not purchasing a computer, you don’t care that you can get a much faster, more powerful computer for the same price you paid for your older, slower one, which counts as a price that is declining.

There are some more or less universal price increases which affect everybody. Although there are others, food, energy and clothing costs are at the top of the list. These day-to-day items do matter, since increases in them absorb a considerable portion of the consumer pocketbook on the most regular basis, and are largely unavoidable. People need to eat, heat their homes and transport themselves from place to place and cover themselves to some degree. With incomes only increasing meagerly, these increases eat up more and more of a share of available income, and should the become too costly, other spending patterns can become affected.

Prices may rise to a level where they are consuming income at a most painful clip… then level off. Measures of inflation may show the increases, month after month, and of course investors become concerned and interest rates may rise. However, when prices level off, the rate or change falls to just a small increase or even to no increase at all, inflation concerns wane to some degree. In this way, even though the rate of change has returned to more favorable levels, actual prices paid by consumers are still at levels which create changes in their spending patterns.

Mortgage rates are a good reflector of both the current and potential economic climates. As prospects rose last year and it looked as though we’d be running a closer to full steam by now, both underlying and mortgage interest rates marched higher. As the reality dawned that we’re in for a slow slog of a recovery, and that a full or more robust recovery isn’t coming real soon, interest rates have stepped back down, and with the “unofficial” start of Summer starting to loom in the windshield — Memorial Day just a couple of weeks away at this point — we could be in for a slow Summer, and one which won’t even have the Fed’s QE2 program to distort it.

Not that we expected them to, but mortgage rates went down this week. Now that we’re a near-equilibrium — halfway between valley and peak — do they really have the legs to keep falling? Absent an additional sign of considerable economic slowing, probably not, and they may find a home at these levels for a little while.

The world’s troubles sent investors scrambling for a place to hide this week, with stock markets having a few rough days. Among the most favorite places to stash cash are highly-liquid US Treasuries, and investor demand for them has driven the yield on the benchmark 10-year Treasury down by more than a quarter-percentage point over the last week or so.

The massive earthquake in Japan, followed by an indescribably destructive Tsunami which in turn triggered perhaps an unprecedented nuclear crisis may have far-reaching political and economic effects. In the middle east, political unrest is creating near civil war in Libya, and rising oil prices threaten to slow an already tepid domestic recovery.

All these troubles and others are to the benefit of US mortgage shoppers, who would be well-advised to take advantage of rates which are approaching 2011 lows.

The Federal Reserve Open Market Committee met this week, and no change to policy came and none was expected. In the statement which accompanied the close of the meeting, the Fed did note at least some concern about price pressures or at least acknowledged them. “The recent increases in the prices of energy and other commodities are currently putting upward pressure on inflation” noted the Fed. The did say that they expect these effects to be “transitory” but the trends in inflation all seem to be pointing upward at the moment, even if the actual levels are still fairly low.

Prices of imported goods rose by a stout 1.4% in February; excluding rising petroleum prices left a 0.6% gain. The increase isn’t particularly troublesome by itself, except that it was the fifth straight month of better than 1% increase in the cost of goods coming onto our shores. At the same time, we are exporting some cost increases to the rest of the world, too, as goods destined for exports rose by 1.2% during the month. A world still awash in monetary liquidity — with more added this week by the Bank of Japan — does seem to set the stage for price increases.

That was reflected in the Producer Price Index for February. The 1.6% increase was better than double forecasts, driven higher by food and energy increases again. Excluding them, the core rate of inflation rose by just 0.2%, but increases of 5.8% in the headline figure and 1.9% in the core measure are both on an upward path at the moment.

Much the same could be said about costs at the consumer level. The Consumer Price Index rose by 0.5% in February, a little more than was expected, with the core rate coming at a milder 0.2% rise for the month. Over the past year, consumer prices have increased now by 2.2%, and just half that much when food and energy are excluded from the mix. Although still low, the trend over the past year has moved from declining to flat to increasing, with more pronounced increases coming in the most recent period.

Inflation matters to mortgage shoppers because it pushes interest rates higher. Holding a long-term fixed-rate investment — like a bond or a mortgage loan — exposes an investor to the potential for loss, since the value of the investment is eroded over time by inflation. If you invested your money expecting a real (after inflation) return of perhaps 2%, and if you expect inflation to run at a 2% rate, your actual return would be zero. You would ask for a higher yield at the outset… and that higher yield would be someone else’s mortgage rate (or possibly even yours). Managing actual inflation and inflation expectations are among the Fed’s charges, and timely policy changes can make certain neither get out of hand. At some point, probably not all that far into the future, the Fed will need to make changes, and will probably be pushed there by mounting inflation expectations and concerns from investors.

It almost goes without saying that increases in mortgage rates are unwelcome in a housing market struggling to find traction. The National Association of Home Builders index of member sentiment did manage to rise a tick to 17 during March, but the move was insignificant, hardly above the trend of the past four months. Sales levels and traffic were unchanged from February, with only rising hope about the next six months driving the indicator upward. How even that much enthusiasm was created is a puzzle, when considered in the context of a Housing Starts report for February which sported a 22.5% decline. Single-family starts slumped by almost 12% for the month, and multi-family initiation caved as well. Permits for future activity — the drive of the HMI above — declined by more than eight percent.

A spate of warmer weather (at least compared to January) during February for much of the country led to a decline in Industrial Production, which eased by 0.1% for the period. Although not enough to overcome the 4.5% decline in utility production, mining output sported an increase for the month, as did manufacturing production, and the recovery should continue to power forward, probably led by factories as it has been for much of the recovery so far. To that end, localized manufacturing reports from The New York and Philadelphia Federal Reserve Banks both showed gains for the month, with the Philly Fed’s indicator rising to levels last seen in the 1980s. Both reports noted firm to rising input costs but gains in employment opportunities in one area were met by diminished offers in the other. If production and orders keep moving ahead, more jobs will surely follow at some point.

While that is still hoped to be the case, at the moment we’ll have to content ourselves with a slight decline in jobless claims. During the week ending March 12, “only” 385,000 new applications for benefits were filed at state windows. The gentle and general downward trend in new benefits claims continues to point to a gradually improving labor market, but it is a very slow improvement given now six to seven quarters of rising economic output.

As with the global troubles above, that’s also to the benefit of mortgage seekers. Although rates have moved off of last year’s levels, they were generated by a nascent, unsteady recovery which might have slipped into deflation. Six months or so later, and concerns of inflation are more the order of the day, and while challenged by troubles, the durability of the recovery no longer seems so much in doubt.

At some point, and probably at a faster-than-expected pace, interest rates will begin to move higher. Time may not cure all the woes which affect both us here and especially those abroad, but it does allow for time to become accustomed to them, to learn how to work both in and around them, and ultimately to focus on the longer term’s prospects. Next week’s got a fairly light calendar of economic data again, but we’ll get a look at new and existing home sales, a final review of 4Q10 GDP, an indicator of consumer moods and an economic reference point. Stock markets found some opportunities to rally on Friday, by just a little, but only a resolution of the nuclear trouble in Japan might cause much of a move in interest rates. Here’s hoping that comes as quickly as possible, even if it will mean slightly higher mortgage rates. Absent that, rates should be pretty flat next week.

Rob Kanyur Senior Loan Officer NMLS 204420 BK 0018295 Wallick & Volk Mortgage Bankers 7033 E. Greenway Parkway, Suite 290 Scottsdale, AZ 85254 602) 361-1587 – Phone (888) 676-7807- FaxRob@wvmb.com www.RobKanyur.com

Insurance Mistakes to Avoid: Don’t Risk Being Underinsured

Too many Americans mistakenly believe that the coverage limits of their home owners insurance policy are linked to the market value of their home, according to the Insurance Information Institute.

In the I.I.I.’s 2011 Insurance Pulse Survey, conducted by the Opinion Research Corporation, nearly half (48%) of survey respondents came to that incorrect conclusion.

“The real estate value of a home, that is the price you can buy or sell it for, has absolutely nothing to with the amount of insurance needed to financially protect the home owner in the event of a fire or other disaster,” said Jeanne M. Salvatore, senior vice president and consumer spokesperson for the I.I.I. “Reducing insurance coverage because the market value of a home has decreased can result in being dangerously underinsured.”

One out of three respondents to the Pulse Survey reported that they purchased less home owners or auto insurance as a way to save money. A better strategy would be to take a higher deductible, which can substantially reduce insurance costs. Home and car owners can then put the savings into a purchasing the right amount and type of insurance for their specific needs, pointed out Salvatore.

Another way to save money is to comparison shop, something that seven out of 10 Pulse Survey respondents said they did to save on both their home and auto insurance needs.

Read more: http://www.houselogic.com/news/articles/insurance-mistakes-avoid-dont-risk-being-underinsured

Mortgage Interest Rates for Fixed Rate Mortgages*

Rates as of Friday, March 18th, 2011

*Rates are subject to change due to market fluctuations and borrower’s eligibility.

*INTEREST RATES ARE BASED ON PURCHASE MONEY, PRIMARY RESIDENCE, 30-DAY LOCK, CURRENT INVESTOR GUIDELINES. AT LEAST 1.250% POINTS MAY APPLY, RATES BASED ON LOAN AMOUNT >$200K,<417K, MIN FICO 760, SUFFICIENTLY DOC’D INCOME & ASSETS REQUIRED. PREPAY PENALTY MAY APPLY. INFORMATION DEEMED RELIABLE BUT NOT GUARANTEED. RECIPIENT TO VERIFY ALL INFORMATION. ROB KANYUR AT WALLICK AND VOLK MORTGAGE BANKERS. LICENSED ORIGINATOR 204420 (602) 361-1587 BK 0018295

Mortgage interest rates held fairly steady this week, but the focus on the economy shifted away as news of a massive earthquake and tsunami captured the headlines. How great or lasting any economic impact will be remains to be seen, but there was word of a “repatriation” of cash to Japan from selling some holdings of Treasuries on Friday, but the overall effect was on interest rates was mild.

After a substantial rise which began in October 2010 and crested in December, rates have remained fairly flat overall, pulled in different directions by an economy which is growing at a meager pace. A clue that financial markets are healing comes in the form of narrowing differences between benchmarks such as the ten-year US Treasury (a virtually risk-free investment) and more risky products like residential mortgages. To be fair, Treasuries yields remain low as the Fed continues its QE2 program to support the economy, but the yield markup over Treasuries (called “spread”) for things like first mortgages has returned to near normal.

The recent pace of the economy isn’t exactly a one-step forward, two-steps back sort of affair, but there does not appear to be forming the kind of momentum which will produce a hot spike in the economy. More likely, the slow-growth pattern we’ve seen in the recovery seems likely to persist, and new challenges to the period just ahead, in the form of oil-related drag, waning enthusiasm and the end of Fed-engineered stimulus seem more than sufficient to temper any flare of growth or inflation which could form, at least for a while yet.

Mortgage rates have been generally been in a plateau since January, and we’ve wandered in about a quarter-percentage point range since then. There isn’t much likelihood of a breakout next week, when we’ll get a look at price pressures from imports and exports as well as producer and consumer price indexes, a look at housing markets in the form of builder sentiment and housing starts, industrial output and a couple of regional manufacturing outlooks, plus a forward looking indicator. A few basis points in either direction seems most likely.

Rob Kanyur Senior Loan Officer NMLS 204420 BK 0018295 Wallick & Volk Mortgage Bankers 7033 E. Greenway Parkway, Suite 290 Scottsdale, AZ 85254602) 361-1587 – Phone (888) 676-7807 – Fax Rob@wvmb.com www.RobKanyur.com

Closing on Your Home: Are You Walking in Blind?

By the time you arrive at the table to close on your home purchase, you’re tired. It’s been a long haul to get to this point, and the last thing you want is any kind of surprise.

Particularly if you’re a first-time home buyer, knowing ahead of time what to expect at closing can help ease any anxieties you may have, and ensure that you get your keys with no unforeseen hiccups.

The good news is, if you have worked with a trustworthy real estate agent and have chosen a reliable mortgage lender, you should anticipate a smooth settlement. All the professionals you’ve been working with are helping you get through the final steps of the transaction.

“Buyers should not expect any surprises at the settlement as long as they have carefully reviewed their Good Faith Estimate (GFE(, shopped for their title services and compared written estimates of closing costs,” says Todd Ewing, president of Federal Title and Escrow Co. in Washington, D.C.

Read more: http://www.foxbusiness.com/personal-finance/2011/03/09/closing-home-walking-blind/#ixzz1GMA7M9zs

Mortgage Interest Rates for Fixed Rate Mortgages*

Rates as of Friday, March 18th, 2011

*Rates are subject to change due to market fluctuations and borrower’s eligibility.

*INTEREST RATES ARE BASED ON PURCHASE MONEY, PRIMARY RESIDENCE, 30-DAY LOCK, CURRENT INVESTOR GUIDELINES. AT LEAST 1.250% POINTS MAY APPLY, RATES BASED ON LOAN AMOUNT >$200K,<417K, MIN FICO 760, SUFFICIENTLY DOC’D INCOME & ASSETS REQUIRED. PREPAY PENALTY MAY APPLY. INFORMATION DEEMED RELIABLE BUT NOT GUARANTEED. RECIPIENT TO VERIFY ALL INFORMATION. ROB KANYUR AT WALLICK AND VOLK MORTGAGE BANKERS. LICENSED ORIGINATOR 204420 (602) 361-1587 BK 0018295

I was just out reading a post on ActiveRain from Gary Lirette of Sandpoint Real Estate asking If a Flood of Shadow Inventory is on the Horizon?

I admit this one peaks my interest, as we have been hearing for quite some time that there is a new wave of foreclosures about to hit the market.

At the end of December 2010, I was in a meeting where someone from Fidelity National was sharing and stated they had been in meetings with the big 4 banks who said that in 2011 they would begin dumping this inventory on the market. And why 2011…it’s a “non-election” year.

So here we are in March 2011 with all the same issues surrounding foreclosures that we have been experiencing for years and still no “flood of inventory.”

Well, last week I was on a call with a loan officer from Bank of America in our area and we were discussing our Phoenix/Scottsdale real estate market overall and what the impact of rising interest rates would be versus declining home values. I shared that I felt it would basically be a “wash” because even though the rates will have an impact, values will decline enough that they will offset each other.

His comment was that he disagreed and said he really wouldn’t even purchase right now because of what is getting ready to be released on to the market. He went on to share that the bank had just completed their “forensics analysis” and after first quarter 2011, they would begin bringing all this inventory to market.

I then made mention of what I had heard at the end of the year from Fidelity and he confirmed that was correct.

It peaked my interest further, so I asked just how much inventory are they planning to release that he thinks it would have that big of an impact on home prices.

With that question, he suddenly had a memory lapse and his response was “I don’t know for sure”, but I just know it’s going to make a difference, which left me confident that he did know the number.

But like Gary said in his article mentioned above, ”I’ll believe it when I see it”, as we have been hearing about all of this for a very long time…but my ears and eyes are definitely more open starting in April 2011.