Archive for November 2014

Home loan approvals surge for Bank of Queensland

Home loan approvals at Bank of Queensland jumped 20 per cent between September and October driven by brokers and an ad campaign, said acting chief executive Jon Sutton.

By last week, he said 20 per cent of new loans were coming from brokers, up from 3 per cent a year ago and 14 per cent in August. BoQ began using brokers for the first time this year.

The Retail Bank is improving performance off the back of some highly focused activity from our spring lending campaign, although it still faces headwinds such as the line of credit product run-off, he told shareholders at the banks annual meeting in Brisbane on Thursday.

The increased activity generated from the lending campaign is likely to drive higher settlements and lending growth in coming months. All distribution channels are building momentum and the continued strong performance of the broker network remains a highlight.

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Juncker’s investment plan: how to radically transform it

Today the European Commission’s president Jean-Claude Juncker announced a EUR315bn investment plan for Europe that will leverage funding from the European Investment Bank (EIB) through a new financial entity: the European Fund for Strategic Investments.

Oh, but wait. It’s not actually a EUR315bn investment plan. On closer scrutiny the EU is only planning to relocate existing money into a new fund (EUR21bn from existing budgets and the European Investment Bank, part of it being money that was already going to Horizon 2020 investments in innovation). The EU then hopes to achieve a leverage ratio of 15 to turn this EUR21bn into an investment of EUR315bn.

This is never going to happen. For the same reason another instrument, the European Stability Mechanism (ESM), never achieved much leverage from member states – the same states are also being asked to continue a mad austerity programme. On top of this, would EUR315bn be enough? In the US, after the financial crisis, the government invested 4% of GDP ($787bn in the American Recovery and Reinvestment Act of 2009, which also directed investments to green areas via agencies like ARPA-E). Compared with this, even if Juncker manages to raise EUR315bn that is still not enough. This is a massive missed opportunity because, with a serious investment commitment, the EU could today be on the road to recovery.

One positive aspect of the plan is the involvement of the European Investment Bank. While attention is usually on the European Central Bank (ECB), and its inability so far to act like a real central bank (by being lender of last resort, and allowing bond purchases), the attention now on the EIB means, hopefully, that we also understand that even when quantitative easing (QE) begins in Europe, it will not be enough. Funds must be “directed” towards the real economy – so the new money created doesn’t just end up in the coffers of banks. So let’s leave aside for a moment the actual leveraging. Why is it good to start worrying about the EIB and not just the ECB?

At a moment when growth in European economies is faltering, national budgets are constrained by austerity measures, private investors are lacking Keynesian “animal spirits” – and, at the same time, solutions to pressing problems such as ageing, youth unemployment and climate change require a massive amount of new investments. Europe needs the EIB to become part of the select group of State Investment Banks (SIBs) that increasingly promote strategic investments that are targeted to specific areas, with the aim of promoting smart (innovation-led), sustainable and inclusive growth.

As we explain in detail in a recent paper (pdf), the enhanced activity of SIBs is a counterforce to the retreat of the private financial sector from funding the real economy. The “short-termism” of the financial system has been accompanied by the increasing “financialisation” of business enterprises, the financial departments of which increasingly became main profit centres, to the detriment of core operational activities. The 2007 financial crisis made these decade-long processes evident, by revealing the fragility of speculative financial markets and of financialised business enterprises.

Recent years have therefore seen SIBs increasing their role in areas where private finance fears to tread. This is most evident in the emerging “green” economy: worldwide investments aimed at the global challenges of limiting carbon emissions. According to data compiled by the Climate Policy Initiative (Figure 1) in 2012, the share of development finance institutions (that is, SIBs) in the “climate finance landscape” was 34% (the highest share of any single type of actor), compared to 29% for project developers (including state-owned utilities), 19% for corporate actors, 9% for households, 6% for all types of private financial institutions and 3% for executive governments (investments from governmental budgets).

Data from Bloomberg New Energy Finance shows that Germany’s KfW, China Development Bank, and Brazil’s BNDES are the most active state investment banks engaged in this kind of “mission-oriented” finance for green energy (Figure 1), as indeed we heard at a recent Mission-Oriented Finance for Innovation conference that we organised in London this year. Other areas where SIBs promote mission-oriented investments include the health and pharmaceutical sectors, climate and environmental protection (beyond green energy), regional integration and inclusion of peripheral communities in the financial system.

Figure 1: State Investment Banks are the single most important source of funding for climate change mitigation and adaptation projects.
Illustration: Mariana Mazzucato and Caetano Penna, based on data from Climate Policy Initiative
Figure 2: State Investment Banks’ mission-oriented finance for green energy projects.
Photograph: Mariana Mazzucato and Caetano Penna, based on data from Bloomberg New Energy Finance (BNEF)

The EIB has the potential to become one of the most important mission-oriented SIBs. Indeed, we believe that SIBs are very appropriate as funding sources for projects that tackle these new challenges (or missions). Because these are banking institutions, they are able to access the economic feasibility of projects, which is crucial if new technologies and innovative projects are to substitute for the old ones. Moreover, SIBs have traditionally supplied long-term finance (for capital-intensive projects, for example), and patient long-term committed finance is crucial for making new mission-oriented projects economically feasible. Banking institutions are also well-positioned to coordinate stakeholders, as part of the banking process is to establish relationships and build up a network with an array of actors (from government officials to corporate actors to consumers).

The fact that SIBs have a vast portfolio of funding tools (equity, loans, grants, etc) enables them to match the most appropriate finance to the project, whether it is incremental or radical (for example, equity or risk contracts for the radical innovation, loans to incremental innovation projects, grants to visionary Ramp;D). Finally, SIBs have traditionally executed their roles in coordination with governmental policies, and new missions could potentially build on this important node in the governmental network.

Juncker has taken a step in the right direction by talking about investment and growth, not just structural reforms. He has also taken the right step in putting the EIB at the centre. Investment is what the Eurozone desperately needs, not the austerity we have heard so much about since the financial crisis. But if he wants this strategy to work, he needs to put his money where his mouth is. Increase direct investment, and provide the EIB with a strategy that goes beyond fixing “market failures” to maximise the transformative impact of public investments to shape and create markets.

Mariana Mazzucato is RM Phillips Professor in the Economics of Innovation at SPRU, University of Sussex, and author of The Entrepreneurial State: Debunking Public vs Private Sector Myths. You can follow her on Twitter @MazzucatoM

Caetano Penna is a research fellow at SPRU, University of Sussex. You can follow him on Twitter @Digitano

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Home Equity Loans and HELOCs are Available Again

Home equity loans and lines of credit are making a comeback. Homeowners are tapping their equity with these loans as property values go up and mortgage rates rise.

Cash-out refis decline

Not long ago, homeowners who had some equity often used cash-out refinances to pay for home remodeling, to consolidate debt or pay for a childs school tuition. But that was when mortgage rates were lower. As mortgage interest rates increase, making refinancing less attractive, many are now considering getting a HELOC or a home equity loan.

Home equity loan

A second mortgage for a fixed amount, at a fixed interest rate, to be repaid over a set period.

Home equity line of credit (HELOC)

A second mortgage with a revolving balance, like a credit card, with an interest rate that varies with the prime rate. Pronounced HE-lock.

Home equity lending activity increased last year for the first time since 2006, by 26%, according to a recent report by Black Knight Financial Services. But the volume is still about 90% lower than in 2006.

We have seen an increase in our applications for equity loans and a significant increase year over year for lines of credit, says Cyndee Kendall, regional sales manager at Bank of the Wests northern California division.

Having enough equity for a loan

Lenders are returning to the equity lending business and even loosening their standards a bit, especially after they lost a big chunk of their refinance business when mortgage rates rose.

Market value – All mortgage debt = Equity

For example: The Smiths bought a house four years ago. Today, its worth $200,000 and they owe $120,000 on the mortgage. Their equity is:

$200,000 market value – $120,000 mortgage debt = $80,000 equity

One of the main requirements to qualify for a home equity loan these days is, of course, having equity in the home. During the wild days of lending, you could cash out up to 110% of the value of your home. You wont find that today. But lenders generally allow homeowners to borrow 80% to 90% of the value of their homes. A few let homeowners tap into all of their equity.

Credit scoring

As for credit scores, the requirements vary greatly by lender and type of loan.

Our minimum credit score is 620 (for a home equity loan), but the market is all over the place, says Gary Harman, vice president of home equity for Discover Financial Services. If you wanted a HELOC, you would need a better score.

Mike Kinane, retail lending senior product manager for TD Bank, says homeowners generally need a minimum credit score of 660 to 680 for equity loans. But that depends on other factors, such as how much equity they have and their income compared with their monthly debt obligations.

Debt-to-income ratio

Generally, it helps if your debt-to-income ratio, or DTI, is in the low 40s, Kinane says. But the lenders decision is based on a combination of factors, in which equity plays a major role.

Debt-to-income ratio

Percentage of monthly income that is spent on debt payments, including mortgages, student loans, auto loans, minimum credit card payments and child support.

Debt payments / income

For example: Jessie and Pat together earn $10,000 a month. Their total debt payments are $3,800 a month. Their debt-to-income ratio is 38%.

$3,800 / $10,000 = 0.38

Theres rarely the perfect applicant with the perfect credit, Kinane adds. If we have an individual that has plenty of equity and slightly higher debt-to-income ratio, we are more likely to make an exception to make that work because the equity is there, so we do use equity to offset other characteristics that might not be as pristine.

Foreclosures and short sales

A previous foreclosure or short sale could hurt the chances of getting an equity loan even if your score is good, Harman says.

You need to have a good score, responsible prior credit use and good performance in prior mortgages, he explains. People who went through foreclosure would have a problem even if their scores have rebounded.

Rates vary greatly from lender to lender

Just like the minimum qualification requirements, the rates on home equity loans and lines of credit vary a lot, depending on the lender. Thats because unlike mortgages, which are normally sold on the secondary market after the loan is issued, home equity loans and HELOCs normally stay on the lenders portfolios, Kendall says.

That means the lenders generally dont have to follow pricing guidelines or strategies determined by investors when it comes to home equity lending. They can come up with their own terms for their loan, as long as they meet lending regulations.

Its very bank-specific, Kendall says.

And thats why its so important to shop around for the best rate.

Equity loan vs. equity line of credit

As you try to choose between a home equity loan and a line of credit, dont base your decision solely on rates.

Home equity loans have higher rates than equity lines of credit, but the rate is fixed, while HELOCs have a variable rate.

The line of credit rate is typically based on the US prime rate, and that moves, Kinane says. Its been historically low for a number of years now, but at some point it will go up.

The time will likely come when the Fed raises rates, which may happen as soon as mid-2015.

Try Bankrates calculator to decide whether to get a home equity loan or home equity line of credit.

Difference in rates

If its important to you to have a fixed rate and you know exactly how much you need to borrow and when you plan to use the money, a home equity loan may be the way to go.

But say you will be doing some home remodeling projects, for example, and dont know how much it will cost but want to have the money ready to go. A home equity line is probably the best option.

Pros and cons of HELOCs

Once approved, a HELOC works sort of like a credit card — except it is backed by your home and the rate isnt nearly as high as a credit cards. With the line of credit, you dont have to draw money until you are ready. And you can pay back and reuse the line.

Its this ongoing easy access to the money that concerns Harman.

One reason I am not so enthusiastic about HELOCs is people have a tendency to use the money when they dont really need it, he says, offering borrowers some advice on equity lending in general. If youre using the money for home improvements, to pay down debt or have kids going to college, fine, but dont take out additional money unless you have a real need for it.

Copyright 2014, Bankrate Inc.

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7 surprising perks of VA loans

The VA loan has spectacularly good terms nothing else comes close, says Joe Parsons, senior loan officer at PFS Funding, a Dublin, California, mortgage broker.

Yet only a small minority less than 12% of the 16.4 million service members and veterans with a mortgage take advantage of VA loans, according to the National Mortgage News.

Is it time for you to consider a VA loan? Here are the key advantages, or perks, they provide.

1. Expert advice on price and repairs

The VA makes sure buyers dont overpay for a home and that its move-in ready, without any costly, unexpected problems.

It does that by requiring all properties to be evaluated by a specially trained VA-certified appraiser who will:

  • Determine the homes fair market value.
  • Make sure it meets the VAs Minimum Property Requirements, a list of health, safety and structural requirements that is unique to VA loans.

Bare wires in the kitchen? An addition that was built without the proper permits? These must be fixed or brought up to local building codes before the sale can be completed.

The appraisal process typically takes 10 days or less and can provide buyers with peace of mind.

In 2013, Sandy Magura and her husband, a medically retired army veteran, purchased a home in Stafford, Virginia. Regarding the VAs experts, she says, Not only were they extremely thorough, but they were also adamant about the seller getting the things done before we closed.

2. Lower interest rates, fewer fees

Lets count the ways youll save by financing with a VA loan.

  • No down payment on purchases up to $417,000 in most areas.
  • No mortgage insurance even with no down payment.
  • Strict restrictions on the type and amount of closing costs.
  • Competitive interest rates, even if you have relatively poor credit and high debt.

How competitive? In most cases, youll pay the same interest rate as borrowers with a 760 credit score and a 20% down payment. Some lenders Navy Federal Credit Union and USAA, for example offer lower interest rates to VA borrowers than they do to prime, conventional fixed-rate borrowers.

The only financial drawback to a VA loan is whats called the funding fee, which can range from 1.5% to 3.3% of the amount youre borrowing.

The fee can be added to the loan so you wont have to pay for it up front. If you have a service-connected disability, the funding fee is waived.

3. Its assumable!

Back in the day, virtually all home loans were assumable. Someone who bought your house could accept responsibility for your mortgage and start making payments.

There was no need to go through the expense and uncertainty of another loan.

Today, virtually no mortgages are assumable, except for VA loans, which can be passed on to new owners in one of two ways.

If the person buying your home has served in the military and can qualify for a VA loan, he or she can assume your mortgage. Youre free to take out another VA loan.

If the person buying your home does not qualify for a VA loan, you can still allow it be assumed. You wont qualify for another VA loan until the new owner pays it off.

This is a tool that can be used to be creative in selling a home, says Yael Ishakis, vice president and loan officer at First Meridian Mortgage in Brooklyn, New York.

4. This isnt a one-time deal

A veteran can use VA eligibility more than one time and, in some cases, can have two VA loans on two homes simultaneously, explains Louise Thaxton, military specialist and branch manager at Fairway Independent Mortgage in Leesville, Louisiana.

Lets say you take out a VA loan and pay it off. You can take out another VA loan to buy another home. Theres is no limit on the number of sequential mortgages you can have.

Or you might be living in a VA-financed home and need to relocate for work or family reasons.

You might be able to get a second VA loan to buy a place to live in your new hometown without selling and paying off the government-backed mortgage on your first home.

Qualifying for two VA loans depends on how much entitlement thats the total amount the government is willing to guarantee you have left on your benefit. But its something thats routinely done.

5. Helps available if you run into trouble

With most mortgages, youre on your own if you run into financial trouble and cant make the payments.

Lost your job? Fallen ill and cant work? Going through a divorce?

Thats too bad.

But the Department of Veteran Affairs provides its borrowers access to all sorts of emergency assistance and advice. Thats why default rates on VA loans are so low.

If youve recently faced problems such as a job loss or sudden illness, VA Regional Loan Centers offer financial counseling specifically designed to keep your home out of foreclosure.

The counselor assigned to your case might negotiate a revised repayment plan with your lender or guide you through a sale if its simply not possible for you to continue as the owner.

In extreme cases, the VA might even opt for whats called a deed in lieu of foreclosure, in which the government assumes ownership of the home and releases you from any future financial liability.

6. You can refinance with a VA loan, too

Perhaps you took out a VA loan several years ago when interest rates were higher. There are three ways to refinance into a new and cheaper mortgage.

The Interest Rate Reduction Refinance Loan is for borrowers with a history of on-time payments. The application process doesnt require a home inspection, appraisal, credit check or income verification.

The programs purpose is to reduce monthly payments, so youre not allowed to take cash out of your home or consolidate other loans.

If you want to do that, you must request a cash-out loan, which requires a full-blown application process, including a home appraisal.

VA loans are one of the few types of mortgages that can be refinanced when the borrower is behind on payments. A loan officer must analyze each case, determine why the homeowner got in trouble and ensure the problem has been resolved. For instance, a borrower might have been laid off but recently returned to work.

7. Theres extra money for improvements

Adding an Energy Efficient Mortgage to a purchase or refinancing provides up to $6,000 for qualified improvements.

This work can include new windows and doors, programmable thermostats, additional insulation, heat pumps and solar heating and cooling systems.

The idea is to make the home more comfortable and reduce future utility bills. These loans are most often used when buying or refinancing an older home that needs some serious renovations.

The first step is to have an expert assess the home and generate a score using the Home Energy Rating System index. The HERS report will include specific recommendations for improvements and their projected monthly savings. That way you know youre getting the biggest bang for your buck.

The money is usually placed in an escrow account, so that its available to do the work after closing. Its repaid by rolling the balance into the primary VA loan.

This article originally appeared on

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Stock Update (NYSE:BAC): MOVES-Former Bank of America healthcare banker …

[Reuters] A former Bank of America banker who advises clients in the healthcare sector has joined Credit Suisse, according to an internal memo. Sumit Khedekar, who previously worked at the Swiss bank for ten years earlier in his career, will rejoin in January 2015. A Credit Suisse spokesman on Monday confirmed the contents of the memo. The Credit Suisse healthcare group has worked on notable transactions this year including Merck amp; Co Incs acquisition of biotech company Idenix and Zimmer Holdings Incs pending acquisition of medical device company Biomet.
Read more on this.

Bank of America Corporation (BAC), with a current value of $182.66B, began trading this morning at $17.36.

Today’s price range has been between $17.30 and $17.40 per share with its 52-week range being $14.20 to $18.03.

Bank of America (BAC) shares are currently priced at 36.94x this years forecasted earnings, which makes them relatively expensive compared to the industrys 17.26x earnings multiple for the same period.

The company pays shareholders $0.20 per share annually in dividends, yielding 1.20%.

In a review of the consensus earnings estimate this quarter, 23 sell-side analysts are looking at $0.33 per share, which would be $0.04 better than the year-ago quarter and a $0.01 sequential decrease. The full-year EPS estimate is $0.47 which would be a $0.43 worse than last years full-year earnings.

The quarterly earnings estimate is predicated on a consensus revenue forecast of $21.49 Billion. If reported, that would be a 0.00% decrease over the year-ago quarter.

In terms of ratings, FBR Capital upgraded BAC from Mkt Perform to Outperform (Oct 16, 2014). Previously, UBS upgraded BAC from Neutral to Buy.

Investors should keep in mind is that the average price target is $18.15, which is 4.55% above where the stock opened this morning.

Summary (NYSE:BAC): Bank of America Corporation, through its subsidiaries, provides various banking and financial products and services for individual consumers, small and middle market businesses, institutional investors, corporations, and governments in the United States and internationally. The company’s Consumer amp; Business Banking segment offers traditional and money market savings accounts, CDs and IRAs, checking accounts, and investment accounts and products, as well as credit and debit cards; and lending related products and services, working capital management, and treasury solutions. This segment provides its products and services through operating 5,100 banking centers, 16,300 ATMs, call centers, and online and mobile banking platforms. Its Consumer Real Estate Services segment offers consumer real estate products comprising fixed and adjustable-rate first-lien mortgage loans for home purchase and refinancing needs, home equity lines of credit, and home equity loans. The company’s Global Wealth amp; Investment Management segment provides investment and brokerage, estate and financial planning, fiduciary portfolio management, cash and liability management, and specialty asset management services; and retirement and benefit plan, philanthropic management, and asset management services. Its Global Banking segment provides various commercial loans, leases, commitment facilities, trade finance, real estate and asset-based loans, and consumer loans; treasury management, foreign exchange, and short-term investing options; and debt and equity underwriting and distribution, and merger-related and other advisory services. The company’s Global Markets segment offers sales and trading services for securities and derivative products in primary and secondary markets; market-making, financing, securities clearing, settlement, and custody services to institutional investor clients; and risk management products. The company was founded in 1874 and is based in Charlotte, North Carolina.

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Changes for Langport and Somerton savings service

THE Langport and Levels Area Savings and Thrift (LLAST), which operates as part of Opportunities in Langport and Somerton, is making some changes to its services.

It is increasing its personal budgeting and family financial management activities, but is no longer providing cash collection facilities for local credit unions, although it will still help people set up accounts or apply for low-cost loans.

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Chamber News & Views for October

The end of September was the end of the third quarter: time for another Professional Development Seminar!

The September seminar with the attention-getting title of Avoiding Financial Disaster, Ron Kramer of Kramer Accountancy gave a thoroughly sobering account of the many things that small businesses generally fail to do that can create very big problems down the road. Fortunately, he provided everyone with a Financial Health Checklist for getting on track for financial good health.

Simple things like make a budget! are so basic to really know how you spend your money. Kramer discussed some of the ins and outs of savings, wills, trusts, incorporating a business and dealing with taxes. A lover of technology solutions, he provided a couple of handy websites for managing your money: for help in personal budgeting; and to help in saving for specific things. Small businesses in Topanga could use more of this great advice from Kramer. Lets ask him to start an advice column!


Closer at hand, on October 26, we urge everyone to come to the First Annual Topanga Folk Fest benefiting Anam Cara. We promise it will be painless and full of joy!

This landmark event will be held on Sunday, from 11 am 6 pm; tickets are on sale at Many talented musicians have come forward to share their music. Featured and local artists create a dazzling lineup: Colin Hay, Cecilia Noel, Miner, Julia Fordham, Linda Perhacs, Freebo, Wild Reeds, Peter Alsop, Hani Naser Band, Philip Boone, Dan Navarro, Gwendolyn, Judith Owen, Paul Kenny, Jon Gilutin.

Please come, bring your family and invite your friends; be inspired to contribute and support the completion of Gabriels House at Anam Cara, whose grand opening is planned for this coming spring. Lets fulfil Gabe Gelbarts dream for a compassionate care home that provides a unique, natural setting for a fully supported experience at the end of ones life.

Chamber Vice President, Mitch Metzner, writes that Anam Cara is not the same without Gabe, who passed away unexpectedly this past June. But those who are diligently working on the hospice home continue to move forward, inspired by his memory, his love of this community and his last projectto create the Topanga Folk Fest, a community heritage event and fundraiser for Anam Cara.

The team at Anam Cara continues to walk the talk and opens the doors for monthly events such as Volunteer Garden Day (first Sundays) for the native California landscape projects, Hospice Volunteer and Community Potluck socials and end-of-life educational evenings (third Thursdays), and quarterly events such as the Hospice Volunteer and Professional Training (the next one will be held November 1416). For more information, contact; or call (310) 455-0419. Tax deductible donations can be made online at checks made payable to Anam Care can be mailed to 1178 N. Topanga Canyon Blvd., Topanga, CA 90290. For more information and to get involved, please visit; (310) 455-0419.


The Topanga Guide,sporting the first ever list of 27 Things to Do on Scenic Route 27 (See the list in a separate article in this section), has gone to print. Please contact us if you would like to distribute copies in your neck of our woods.

October 29, Evening Mixerfeatures well known and loved local realtor, Tanya Starcevich. Check the Chamber calendar for details.

Heads Up for the Holidays!Despite the still-hot days, October is when the Chamber starts working on holiday plans. The Holiday Party will be held this year at the Topanga Community Club on December 6. Mark your calendars and well have details out soon, along with tickets for sale!

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Bethpage Federal Credit Union opens first campus branch at LIU Post

LIU Post in Brookville on April 14, 2013. (Credit: Ian J. Stark)

Bethpage Federal Credit Union has opened its first branch on a college campus at LIU Post in Brookville.

The branch employs two full-time employees and two part-timers who are LIU Post students getting hands-on training in how a bank operates and in basic personal budgeting and money management.

The students also will have opportunities to become summer interns at Bethpages headquarters…

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Freddie Mac: Homeowner demand for home equity loans doubles

Homeowners are taping into their home equity at double the pace due to continual home price increases, pulling more borrowers out from underwater, Freddie Macs third-quarter refinance report said.

However, despite the surge in demand, the dollar volume remains very low at an estimated $8 billion.

The peak in cash-out refinance volume was $84 billion during the second quarter of 2006 ($97 billion in 2013 dollars).

According to Zillows latest home value index of $176,500, the rate of annual home-value appreciation peaked at 8.1% in April and has fallen in every month since. US home values were up 6.5% year-over-year at the end of the third quarter.

While the share of borrowers that cashed-out some equity has increased considerably over the past year, the refinance volume has also fallen sharply, resulting in a relatively small amount of equity cashed-out, to the tune of roughly $8 billion which is less than one-tenth of what we saw at the peak in mid-2006, said Frank Nothaft, Freddie Mac vice president and chief economist.

The good news, to put it into numbers, those that lowered their payment by refinancing into a cheaper mortgage rate will save more than $1.5 billion in interest payments over the next 12 months of their new loan.

On average, thats an interest rate reduction of about 1.3 percentage points — a savings of about 24% On a $200,000 loan, that translates into mortgage interest savings on average of about $2,700 during the next 12 months, Nothaft said.

Additional quick facts from Freddie Mac:

  • The report found that of borrowers who refinanced during the third quarter of 2014, 36% shortened their loan term, a 4% decline from the previous quarter. From 1990 through 2013, on average 28% of borrowers shortened their term.
  • About 72% of those who refinanced their first-lien home mortgage maintained approximately the same loan amount or lowered their principal balance by paying in additional money at the closing table, unchanged from the previous quarter. Twenty-eight percent cashed-out some equity, the highest share in five years; the peak on cash-out share was 89% during the second and third quarters of 2006.
  • The median age of the original loan outstanding before refinance was 7 years during the third quarter. The median age was 7 years or older in each of the last four quarters, the most since the analysis began in 1985.
  • In the second quarter, an estimated $8.0 billion in net home equity was cashed out during a refinance of conventional prime-credit home mortgages, up from the revised $5.6 billion last quarter. Adjusted for inflation, annual cash-out volumes during 2010 through 2013 have been the smallest since 1997.
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Your Family’s Business | Finance Tips for Military Families

Stacy Bush, Valdosta Today Business Contributor:

One survey found that 77% of military personnel have some financial worries, mostly regarding their lack of savings to cover retirement or other needs.  While the financial situation of military personnel and their families mirror the general population in many respects, heavy indebtedness and mismanagement of credit cards may be especially acute issues for service members.  Of course, military families face unique challenges, such as deployment to conflict zones, overseas assignments and the constancy of change, making personal finance even more critical for those in the Armed Forces.

Money Tips to Consider  

  • The Thrift Savings Plan is one way to save for retirement and a Roth TSP is now available.
  • The Savings Deposit Program allows eligible personnel serving in designated combat zones to invest up to $10,000 and receive a guaranteed return of 10%.
  • Saving in a Roth IRA may be a good idea if you receive tax-free combat-zone pay. This allows you to deposit tax-free income and take tax-free qualified withdrawals in retirement.
  • The Post-9/11 GI Bill covers the full cost of in-state tuition, up to 36 months.
  • Service member’s Group Life Insurance protects your family with low-cost life insurance.
  • Set Goals–Like any mission, success begins with articulating goals you want to pursue.
  • Establish a Budget–A budget provides the financial discipline that may help you control spending impulses that can lead to greater debt levels.
  • Pay Yourself First–Determine how much money you need to set aside to reach your savings goal, deduct this amount from your paycheck, and attempt to live within the limits of what remains.
  • Establish an Emergency Fund–Uncertainty marks the life of military families, so be sure you have an emergency fund that allows you to be as prepared as possible for these changes.
  • Control Your Debt–Indebtedness is one of the enemies of financial independence.

As you think through your financial goals, remember, taking action today is your first and most important step.


Stacy Bush has practiced independent financial advising in the Valdosta area for 14 years. Growing up on a farm in Donalsonville, Georgia, he is keen to the financial needs of South Georgia and North Florida families. Stacy and his wife, Carla, live in Valdosta with their four children. You can submit questions about this article to

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