See-saw. Yo-yo. Bouncing ball. All are good terms to describe the nature of the current mortgage market, with rates moving up and down, ever so slightly, week-in and week-out.
In the latest Freddie Mac survey of loan costs, the average for the standard fixed-rate, 30-year mortgage was 6.32 percent, a dip from 6.34 percent the week before. Last year at this time, the rate was 6.01 percent.
Which is to say (with apologies to Elvis) that over a 12-month period, there hasn't been a whole lot of shakin' goin' on.
It was the second week in a row that long-term rates drifted lower. At the same time, though, shorter-term rates rose in anticipation of further rate hikes by the Federal Reserve Board.
Here's a look at how other benchmark rates ended the month:
- The 15-year, fixed-rate loan averaged 5.97 percent, down just one peg from 5.98 percent. A year ago, the average was 6.01 percent.
- The five-year hybrid adjustable rate mortgage (fixed for five years, then adjusts annually thereafter) average 5.96 percent, up from 5.93 percent. The five-year ARM was 5.35 percent a year earlier.
- One-year ARM was 5.41 percent, up from 5.37 percent. A year ago: 4.24 percent.
Energy Tax Credits
Under the Energy Policy Act of 2005, home owners who make certain energy-conscious improvements during the 2006 and 2007 tax years can claim a credit on their tax returns. To qualify, the law states, the component must meet or exceed the criteria established by the 2000 International Energy Conservation Code, including supplements, and must be installed in the taxpayer's principal residence.
Now, IRS says taxpayers can rely on manufacturers claim's that their products will qualify for the credit as proof the items meet the law's requirements.
There are different levels of credit, depending on the type of improvement made. But the maximum amount of credit for all energy-related improvements combined and undertaken by an individual home owner cannot exceed $500 during the two-year period of the tax credit. Improvements eligible for the credit include the following:
- Added insulation to walls, ceilings or other part of the building envelope.
- Replacement windows.
- High-efficiency gas, oil and propane furnaces and boilers.
- High-efficiency central air conditioning units, including air-source and ground-source heat pumps.
- High-efficiency fans for heating and cooling systems.
- High-efficiency water heaters, including heat pump water heaters.
A good website for information concerning federal tax credits for energy-related home improvements is EnergyStar.com .
Flood Insurance
Last year's devastating hurricanes showed home owners the importance of flood insurance. And now Congress has acted by increasing the borrowing authority of the National Flood Insurance Program from $18.5 billion to $20.775 billion. Without this additional borrowing authority, the program would run out of money next week and be unable to pay any future claims.
But lawmakers also are considering legislation that would, among other things, force owners of vacation homes, second homes and nonresidential properties to pay actuarial rates for coverage. Right now, the cost of insurance on these properties is subsidized, at least in part. If you don't think this is fair, write your legislators in Washington. And of course, if you think this is the way it should be, write in support of the change.
The legislation that has been cleared by the House Committee on Financial Services also would increase NFIP's borrowing authority to $25 billion, increase the coverage limits for residential flood insurance policies from $250,000 on the structure and $100,000 for its contents to $335,000 and $135,000, respectively, and require lenders to tell all borrowers, not just those whose houses are in a flood plain, that flood insurance is available, and that premiums can be escrowed just like those on standard homeowners policies.
Most home owners buy flood insurance only because it is required in areas considered most vulnerable to flooding, according to a recent study by the Rand Corp. Just 20 percent of those living in the most flood-prone areas purchase coverage when they are not required to do so, the study says.
"Substantial flood damage from Hurricane Katrina was suffered by homes located in flood zones whose owners were not required to purchase flood insurance," said Lloyd Dixon, lead author of the report.
Only about 1 percent of Americans living outside flood zones buy federal flood insurance, according to the study, even though they sometimes become flood victims as well.
Fifty to 60 percent of the 3.6 million single-family homes in the most flood-prone areas are required by law to buy federal flood insurance. But the owners of the remaining homes in the most flood-prone areas and the roughly 76 million single-family homes in the nation outside these areas are not required to buy flood insurance.
Identity Theft
Mrs. W., an 80-year-old California woman, became a victim of identity theft when she hired two young men to clean her apartment. But working with the Identity Theft Assistance Center, she was able to detect and close one fraudulent account, and identify 16 additional incidents of possible fraudulent activity.
ITAC is a free victim assistance service for customers of member companies. ITAC walks the identity theft victim through his or her credit report to find suspicious activity, notifies the affected creditors, provides documentation to the victim and places fraud alerts with the credit bureaus. ITAC also shares information with law enforcement and the Federal Trade Commission.
The group is a cooperative initiative sponsored by the financial services industry, and is operated by the Identity Theft Assistance Corporation, a not-for-profit membership corporation.
"We joined ITAC because we want to give our customers the help they need during such a vulnerable time," said Brian McGinley of Wachovia Bank. "Every consumer who uses ITAC talks to a knowledgeable trained agent who walks them through their credit report and helps them through this difficult and overwhelming experience."
Over 60 percent of consumers who use the ITAC service find other suspicious activity on their credit report. ITAC notifies its members of the suspicious activity identified by the consumer. And member companies report that over half the alerts turn out to involve fraud.
"Reports from ITAC have enabled us to prevent fraud," said Wells Fargo's Diana Starcher. Recently, a notice from ITAC allowed Wells Fargo to close down several fraudulent checking and savings accounts established online using a New York City resident's social security number, but a Florida address and phony driver's license. ITAC member companies report that over 50 percent of the alerts they receive from ITAC turn out to involve fraud.
