ates on 30-year fixed-rate mortgages bounced back from last week’s record lows, averaging 4.81 percent with an average of 0.7 point, Freddie Mac said in releasing the results of its weekly Primary Mortgage Market Survey.

Last week, the 30-year fixed-rate hit a record low of 4.71 percent in records dating back to 1971. The rate remains well below the 5.47 percent reported a year ago, thanks in large part to ongoing Federal Reserve purchases of $1.25 trillion in mortgage-backed securities issued by Fannie Mae, Freddie Mac and Ginnie Mae.

The Mortgage Bankers Association in October (the Fed program was projected to end in March at that time) had projected that 30-year fixed-rate mortgages will hit 5.4 percent next year, 6 percent in 2011, and 6.3 percent in 2012 (see story).

Mortgage rates were up this week after an upbeat employment report pushed long-term bond yields up slightly, with fixed mortgage rates following, said Frank Nothaft, Freddie Mac vice president and chief economist.

The economy shed only 11,000 jobs in November, far fewer than forecast, and the unemployment rate unexpectedly fell to 10 percent, Nothaft noted.

The 15-year fixed-rate mortgage averaged 4.32 percent with an average of 0.6 point this week, up from 4.27 percent last week but down from 5.2 percent a year ago. Last week’s rate for 15-year fixed mortgages was a low in records dating back to 1991.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.26 percent this week, with an average 0.5 point, up from 4.19 percent last week but down from 5.82 percent a year ago. The 5-year Treasury-indexed ARM reached a record low of 4.18 percent in the last week of November.

The 1-year Treasury-indexed ARM averaged 4.24 percent this week with an average 0.7 point, down slightly from 4.25 percent last week and 5.09 percent a year ago.

Rates surveyed by Freddie Mac are for prime borrowers taking out loans with 20 percent downpayments. Borrowers taking out loans too large or risky for purchase or guarantee by Freddie Mac can expect to pay more.

By Robert Freedman, Senior Editor, REALTOR® Magazine

But not in the way you might think.

A new financial regulator is in the works but it’s one of those developments that’s easily lost in the news while other federal initiatives command the headlines.

The Consumer Financial Protection Agency (CFPA), which passed the House Financial Services Committee just a few weeks ago, would represent a sweeping change in the way financial services companies are regulated. Right now, our alphabet soup of federal banking regulators—OCC, FDIC, NCUA, and so on—have two missions: 1) to oversee the safety and soundness of financial services companies, and 2) to protect consumers.

The logic behind CFPA is to split off the consumer-protection side of the regulators’ portfolio so they can focus on bank safety and soundness. The new agency would focus on consumer protection.

What’s key for real estate professionals is that CFPA will focus only on financial servcices companies. That seems obvious, but it wasn’t always this way. As the language was originally drafted, any number of professional services that handle money in some way would have fallen under the definition of financial services. Thus, real estate professionals, who handle earnest-money deposits among other things, could have been subject to regulation under CFPA.

The fact that the House Financial Services Commtttee makes clear in its bill that real estate brokers and sales associates aren’t regulated under CFPA is an advocacy victory for REALTORS®, who, through NAR, let lawmakers know that the original draft would lead to unforseen consequences if it wasn’t changed. It was.

You should be aware that CFPA could still touch the real estate transaction in several ways, though. Assuming the bill passes in something close to its current form, the Real Estate Settlement Preocedures Act (RESPA), which today is overseen by HUD, would be placed under CFPA.

Aspects of the Home Mortgage Disclosure Act (HMDA), which real estate professionals know mostly for its role in providing data on mortgage lending, would also fall to CFPA. But CRA—the Community Reinvestment Act—would not. CRA is the law requiring banks to make loans in all the areas from which they collect deposits. In other words, they can’t collect deposits in a low-income area but not make loans there.

Continue Reading…

By Anthony Mirhaydar

While the primary trend for stocks continues to arch skyward, we are beginning to see equity traders react to some new developments over in the world of fixed-income, commodities, and currencies. This has made for choppy trading over the last few days.

Much of the catalyst for the recent gains in equities has been the depreciation of the U.S. dollar. Traders are using the greenback as a funding currency in carry trades with riskier, higher yielding assets because of super-low U.S. interest rates. They borrow dollars cheaply, sell them short, and use the proceeds to buy commodities and bonds in countries like Brazil and Australia.

They can do this with confidence because of the apparent support for dollar devaluation among officials in Washington — who are hoping to boost employment by reviving the competitiveness of our exports — along with prolonged support for low rates at the Federal Reserve.

With so much leverage at work in the carry trade, investors are very sensitive to unfavorable position movements. So whenever the U.S. dollar rises, stocks fall, bonds fall, gold falls, and the yen sinks, it causes carry traders to cringe in agony. Any indication that cross-asset correlation trends are changing, be it statements by policymakers or rumors in the newspapers, will cause unease.

This is important because you must recognize that at this point in the cycle, it’s not corporate earnings reports or economic data causing the most volatility lately: It’s changes in currency relationships as traders react to government or central bank officials’ comments.

There were a few developments over the past week that furrowed the brows of hedgies in the carry trade.

The first were those comments from Bernanke that the Fed won’t print money forever. During a speech last Thursday night, Bernanke discussed how the bank plans to exit its accommodative policy stance. There was lots of talk about reducing the amount of reserves held by money center banks along with interest rate increases to discourage lending.

This is a big change in tone from just a few months ago, when all the Fed could talk about was how much debt it wanted to buy. But I still think he is only saying this to keep the decline of the dollar from being a completely one-way trade. Before becoming Fed chairman Bernanke made a career out of studying and explaining why the Fed should not curb easy-money policies amid a deflation threat until the danger has clearly passed. That moment has been defined by him and others as a point at which rock-solid employment growth has been established. Figure late 2010 at the earliest.

We also had reports that central banks in Thailand, Malaysia, Hong Kong, Singapore, and Taiwan were actively buying the dollar to check its fall against their currencies. The idea is that their exporters can’t handle such a dramatic drop in profitability and competitiveness. Since the Asian financial crisis of the late 1990s, export-oriented countries on the Pacific Rim have enjoyed a period of prosperity enabled by their devalued currencies, a strong dollar, and the accumulation of foreign exchange reserves. These people aren’t going to give all that up easily.

All of this, along with building political pressure from the Republican Party to halt the dollar’s slide, has helped stabilize the dollar over the last month. Yet if stocks are to push higher from here, as I believe they are, then it may be on the back of continued declines in the dollar. U.S. officials will talk about how they prefer a strong dollar, but won’t do anything about it.

Disclosure: The author does not own or control a position in any of the funds or companies mentioned.

Anthony Mirhaydari is a researcher for the Strategic Advantage investment newsletter. He can be contacted at anthony.mirhaydari@live.com. Feel free to comment below.

http://blogs.moneycentral.msn.com/topstocks/archive/2009/10/13/stock-bulls-await-the-dollar-s-collapse.aspx