Archives for March 2009

The recent positive news on new and existing home sales in February points to a housing market that might have seen the worst days behind it. Freddie Mac released more positive news in the form of record low interest rates.

In its survery 30-year fixed-rate mortgage averaged 4.85 percent with an average 0.7 point for the week ending March 26, 2009, down from last week when it averaged 4.98 percent.

Last year at the same time, a 30-year fixed rate mortgage averaged 5.85 percent. This is the lowest mortgage rate in the 38 year history of the survey.

A 15-year fixed rate mortgage averaged 4.58 percent this week, with an average 0.7 point, down from last week when it averaged 4.61 percent. Last year at the same time a 15-year FRM averaged 5.34 percent. This is also the lowest mortgage rate on a 15-year mortgage ever recorded in the survey.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.96 percent this week, with an average 0.7 point, down from last week when it averaged 4.98 percent. A year ago, the 5-year ARM averaged 5.67 percent. Another record low mortgage rate in the history of the survey.

One-year Treasury-indexed ARMs averaged 4.85 percent this week with an average 0.6 point, down from last week when it averaged 4.91 percent. At this time last year, the 1-year ARM averaged 5.24 percent.

Home prices are also coming back down to their historical trend line, making housing more affordable especially for first time home buyers. Further fueling lower mortgage rates is the recent decision by the Federal Reserve to purchase Treasury securities.  This caused bond rates to drop which caused mortgage rates to go down more.

The last piece of the puzzle to a housing recovery is a lower inventory of homes available for sale. Once this equation returns to a more historical level, housing prices should start to rise.

Post was featured on: http://www.searchlightcrusade.net/2009/03/consumer_focused_carnival_of_r_25.html

First Republic Bank is offering a promotional 5 month certificate of deposit that currently has an annual percentage rate (APR) of 2.23% and an annual percentage yield (APY) of 2.25%. The minimum deposit is $5,000. This rate is current as of March 18th, 2009.

First Republic Bank is a private bank and wealth management company and a division of Merrill Lynch Bank & Trust Co (FDIC Cert: 34571). In addition to offering deposit accounts, the bank also offers lending services, business banking services, brokerage services and trust services. 

The bank has locations in San Francisco, Los Angeles, Santa Barbara, Newport Beach, San Diego, Las Vegas, Portland, Seattle, Boston and New York City.

GMAC Bank is offering a high interest online savings account that currently has an annual percentage yield (APY) of 2.50% which is well above the national average for a savings account.

The savings account annual percentage yield is accurate as of 3/20/2009.

Besides offering a competitive savings account rate, there is no minimum balance requirement and the minimum open deposit is only $1.00.

There are no monthly fees on the account and you can transfer money to external bank accounts free of charge.

In December 2009 GMAC received $5,000,000,000 in funds from the U.S. Department of Treasury’s Troubled Asset Relief Program (TARP).

E*Trade Financial is offering a promotional securities IRA account. You can earn up to $500 when you deposit over $250,000 in funds or securities into a new or existing Rollover IRA, Traditional IRA or Roth IRA. The money you deposit must be “new money or securities”, meaning money or securities not currently deposited with E-Trade Financial.

Deposits between $100,000 and $249,999 receive $250; deposits between $50,000 and $99,999 receive $100; deposits between $25,000 and $49,999 receive $50.

New funds or securities must be deposited or transferred within 45 days of new account opening or enrollment in this promo offer.

You probably thought all certificates of deposit were safe, until you read about Antigua-based Stanford International Bank, the bank Allen Stanford controlled. To make matters worse for depositors,  the bank was outside the U.S. so deposits were not insured by the Federal Deposit Insurance Corporation (FDIC).

The bank was offering CD rates that were well above the normal going rate, sometimes three to four times the normal CD rate. The SEC decided to look into and go after the bank for this very reason. I’m sure the Madoff ponzi scheme going on for so long had something to do with the SEC acting on Stanford’s bank.

Reputable banks in other countries do offer rates higher then current CD rates, though there are risks involved and your deposit won’t be insured by the FDIC. You also might have the added risk of the U.S. dollar increasing in value which may reduce your return when you convert your foreign currency back into dollars when the certificate of deposit matures.

Another type of certificate of deposit that differs from a regular CD is a brokered CD. With a brokered CD your deposit is FDIC is insured but if you need to make an early withdrawal, you risk losing interest and some of your deposit as well because the CD is sold in the secondary market.

As with all investments, be sure to know what you’re getting into before you invest. Remember the old adage, “if it’s too good to be true…”

The Federal Open Market Committee decided to leave the Fed Funds rate at historic lows of 0% to .25% because the ecomony continues to contract.

“Job losses, declining equity and housing wealth, and tight credit conditions have weighed on consumer sentiment and spending. Weaker sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories and fixed investment.  U.S. exports have  slumped as a number of major trading partners have also fallen into recession”

At the same time the Feds are hopeful about the future.

“Although the near-term economic outlook is weak, the Committee anticipates that policy actions to stabilize financial markets and institutions, together with fiscal and monetary stimulus, will contribute to a gradual resumption of sustainable economic growth”

The Feds also announced they are expanding their program of purchasing mortgage-backed securities by $750 billion, bring the total purchases of these securities to $1.25 trillion.

The Feds have also started a new program, they plan to purchase up to $300 billion of longer-term Treasury securities over the next six months to drive down interest rates on mortgages.

Bank of America is offering a promotional checking account.

B of A will give you $50 for opening a checking account. The offer is only available at Bank of America’s branches. Mention promo offer code XDUGASINT.

To receive the promo bonus you have to maintain a minimum balance of $125 in the account and do a “qualified” monthly direct deposit for the first 60 days after opening the checking account.  The interest rate on the account is 0.05% APY as of 3/1/2009.

The bonus will be credited to your account within 90 days provided the stated requirements have been met.

The offer end on April 6, 2009.

The Commerce Department reported Tuesday that construction of new homes and apartments jumped 22.2 percent in February compared to January, pushing total activity to a seasonally adjusted annual rate of 583,000 units.  The consensus forecast was for 450,000.

A glimmer of light at the end of the tunnel? Maybe so, but not as bright as you might think. Apparently what skewed the index higher is an 82.3 percent surge in multifamily sector, which is known for its volatility. 

Analysts see it as a temporary rebound and not as a recovery since housing prices are still declining.

Ameritrade is offering one of the best CD rates for a 3 month certificate of deposit. The current CD rate is 2.97% with an annual percentage yield of 3.00%.

You’ll  have to hurry to take advantage of this offer since the promotional CD rate is available until March 25th, 2009. You have to open a new account and deposit $25,000 or more in new assets - money not currently deposited with Ameritrade. The maximum amount you can open a CD account with is $250,000.

This offer is for a brokered certificate of deposit, which works differently than a CD offered directly from a bank. Should you choose to sell your CD prior to maturity, you should know that brokered CDs sold prior to maturity may result in loss of principal due to fluctuation of interest rates, lack of liquidity, or transaction costs.

In keeping with the general trend of interest rates on online savings accounts accounts going down, ETrade’s Savings account rate decreases.

E*Trade Financial just announced the rate it pays on their “Complete Savings Account” will decrease from 1.95% to 1.70% APY. The new savings account rate will be effective close of business on March 13th, 2009.

E-Trade isn’t the only financial institution lowering the rates it pays on online savings accounts. HSBC has lowered the rate it pays on an online savings account to 1.85% APY. GMAC bank also lowered the rate it pays on an OSA to 2.65% APY.

Interest rates on deposit accounts have been coming down at the same time the U.S. personal savings rate is going up. The rate just reached 5 percent and economists are predicting the rate will reach double digits.

The Federal Reserve Board has come up with another program to plan to restore stability to our financial system by jump starting the credit markets and the economy.

The program was actually first announced back in November 2008 with $200 million of funding and was expanded recently with $1 trillion in funding.

The Term Asset Backed Securities Loan Facility (TALF) program is designed to make it easier for banks to sell loans they have made to investors. The market for these loans stopped functioning. As a result banks had to hold onto these loans, further deteriorating their financial stability and severely crimping new lending by banks.

Through the TALF program, the government will lend investors up to 95 percent of the face value of these securities. The terms the government is offering to potential investors is so generous they can expect returns of up to 15 to 20 percent! Not a bad return, especially when rates earned on deposits are so low.

In this example the returns are much higher than 15 to 20 percent. Imagine if a hedge fund bought $10 million in these distressed securities for 20 cents on the dollar, only having to put in $500,000. The government chips in $9.5 million. Now these securities will never return to par (100 cents) but let’s assume when the economy recovers they are able to sell these securities for 40 cents on the dollar. Their return would be 100 percent on the value of the securities. They repay the government the original $9.5 million plus interest, say $1 million in interest, they would have earned $9 million dollars on their original cash investment of $500,000.

Considering that the government is providing the funding, this kind of return on an investment will make of plenty people angry. Isn’t this the kind of financial trickery that got us into trouble? Maybe so, but at this point the government is so desperate to restore stability to the financial markets it’s willing to risk the wrath of the American public.

Citibank is now offering a CD rate of 2.47%, with a yield of 2.50% for a 12 month CD. The minimum opening deposit is $500. The rate is available on balances of $500 and above.

The CD rate is current as of 3/11/2009 and is only available for certificate of deposits opened through citibank.com. One cool feature Citibank has is you can set up alerts that notify you via cell phone or e-mail as your CD nears maturity.  

The early withdrawal penalty for a 12 month certificate of deposit is 1 month of simple interest.

The 2.50% annual percentage yield (APY) is for personal certificate of deposits. Different rates and terms may apply to a CD held in an Individual Retirement Account (IRA). You can contact Citibank at 1-800-695-5911 for more information on CDs held in an IRA.

Compass Bank is offering a promotional checking account deal, the bank will give you $100 in cash for opening a checking account. Compass Bank is headquartered in Birmingham, Alabama.

The bank has 577 branches in Alabama, Arizona, Colorado, Florida, New Mexico and Texas. Compass is among the top 25 largest banks in the U.S. based on deposit market share and ranks among the largest banks in Texas (4th) and Alabama (3rd).  

To qualify for the $100 cash payment you will need to do the following.

• Checking Accounts have to be opened between 03/02/2009 and 03/21/2009
• Open a “Build to Order Free Checking Account”
• Deposit a minimum of $100
• Establish a recurring payroll direct deposit
• Enroll in online statements
• Stop receiving paper statements by 04/30/2009

The $100 cash bonus deposit will occur within 120 days of  opening the checking account in the account that receives the recurring payroll direct deposit.

Community Bank of Nevada is offering some very competitive CD rates. These rates are some of the best CD rates available today. CD rates on both a 6 month and a 9 month certificate of deposit are currently 3.00% with an annual percentage yield of 3.03%. The 12 month CD rate at Community Bank is currently 3.25% with an APY of 3.29%.

Here are all the CD Rates Community Bank of Nevada is offering as of 3/10/09.

Community Bank of Nevada has been around since 1995 and has 13 branch locations in Nevada.

GMAC Bank is offering a promotional 12 month certificate of deposit rate of 2.91% with an annual percentage yield of  2.95%. This CD rate is well above the national average for a 12 month CD.  The minimum opening deposit is $500. 

Interest is compounded daily which gives you a better return than a CD that has interest compounded monthly, quarterly or annually. You can use Monitor Bank Rates’ CD Calculator to figure out what the return would be when interest is compounded daily.

There is an early withdrawal penalty of 90 days of interest.

Monitor Bank Rates, a leading site for finding the best bank rates, announces the release of several new consumer financial marketplaces that give consumers the ability to compare car loan rates, mortgage rates and insurance quotes from several financial institutions and insurance providers.

To obtain car loan rates or mortgage rates, consumers enter their zip code and they will be matched with banks and financial institutions offering loans in their area. Once they have selected a bank or institution they enter basic personal information and will be provided quotes.

Consumers can be matched with providers for home equity loans, new home purchase loans, refinance loans, mobile home loans and car loans.

To receive insurance quotes consumers are also matched with insurance providers in their area by entering their zip code. Once they have selected the type of insurance they need, consumers enter their zip code and are provided a list of insurance providers in their area.

Currently the insurance marketplace includes auto insurance, health insurance, home insurance, life insurance, motorcycle insurance and small business insurance.

In addition to auto loan rates, mortgage rates and insurance quotes, consumers can also find the best banking rates including CD rates, online savings account rates, checking account rates, and credit card rates.

The Federal Deposit Insurance Corporation could run out of funds this year if more banks fail.

The head of the FDIC, Sheila Bair, has sent a letter to bank executives saying the fees banks pay into the fund will be increased and a special fee will also be assessed to shore up the fund.

In the letter, Sheila Bair wrote “Without these assessments, the deposit insurance fund could become insolvent this year. Without substantial amounts of additional assessment revenue in the near future, current projections indicate that the fund balance will approach zero or even become negative.”

I personally wouldn’t worry about the deposit insurance fund becoming insolvent. Even if the fund failed, the Federal Government would come of the rescue and bailout the fund. Can you imagine the uproar if the Government didn’t bailout the deposit insurance fund?

Charles Schwab Bank is offering a cash back Visa credit card that gives you 2% cash back on purchases. There is no limit to the cash back you can earn.

Unlike most cash back credit cards that give you a lump sum annually, the 2% cash back you earn on this credit card is deposited into your Charles Schwab brokerage account every month.

Charles Schwab Bank Invest First Visa credit card benefits:

• No cash back limit
• No minimum monthly purchase amount
• No annual fee
• No foreign exchange transaction fees
• APR on purchases is 13.99%

You can apply online or by phone by using code FACYR4

Charles Schwab

Investar Bank of Baton Rouge Louisiana is currently offering one of the best savings account rates for a business savings account and a personal savings account. 

Investar Bank’s ”Star Savings Account” currently yields 2.75% for balances over $25,000. Balances between $2,500 and $25,000 earn an APY of 2.50% and balances under $2,500 earn a APY of 2.00%.

The minimum opening deposit for a savings account is $200. The yields listed above have been stable even though other banks have been lowering their savings account rates the past month. Investar Bank’s Star Savings Account rates in effect since February 2nd, 2009.

Nexity Bank of Birmingham Alabama is offering one of the best cd rates for a 6 month CD, the current annual percentage rate (APR) is 2.51%, well above the national average for a 6 month CD. The minimum deposit to open a certificate of deposit is $1,000.

Nexity Bank, a subsidiary of Nexity Financial, was incorporated in Deleware on March 12, 1999 and has had a presence on the Internet since 2000.  The bank has offices in Atlanta, Georgia, Columbia, South Carolina, Dallas/Fort Worth, Texas, Myrtle Beach, South Carolina and Winston-Salem, North Carolina.

The Bank also offers competitive CD rates for IRA CDs, Roth IRA CDs and non-personal CDs.

Certificate of Deposit accounts can be open online or by mail.

Credit unions have historically provided their members with higher rates on certificate of deposits and savings accounts. Credit unions also offer lower rates on loans and mortgages.  

To take advantage of these better rates you have to join a credit union. The union is owned and run by its members and its purpose is to provide better rates for its members.

Here is a small sample of 1 year credit union CD rates as of March 2nd, 2009.

• Melrose Credit Union- 1 year CD rate currently is 3.35%
• Alliant Credit Union- 1 year CD rate currently is 2.96%
• Delta Community Credit Union- 1 year CD rate currently is 2.96%

The average rate for a 1 year certificate of deposit from a bank is just above 2.00%. So you definitely can get a better interest rate by joining a credit union.