About Mothers

Female activists of the 19th Century tried for decades to have Mother's Day declared in the U.S. Originally conceived as a holiday of peace. It wasn't until 1914, six years before women "suffragettes" got the vote that Congress dedicated the second Sunday in May as Mother's Day. Since then, the holiday has become simply a day to recognize and appreciate the often unsung heroes of the hearth and home -- moms.
Stay-at-home Moms
There were approximately 5.6 million stay-at-home moms in 2004. Salary.com recently made headlines by figuring the value of the stay-at-home mom. The company says that using today's skills in the marketplace, Mom is worth a salary of about $134,471 annually. That must account for over-time.
Working Moms
What if Mom is bringing home a paycheck? According to Cigna Healthcare's Tips For Working Women, "In 1948, only 11 percent of married women with children under the age of 6 worked outside the home. Today, more than 60 percent of married women with young children work outside the home, and 39 percent work in full-time jobs." Over half of working moms, 51 percent, gave birth to their first child and returned to work within four months. Working moms pay an average of $92 weekly for child care for at least one of their children.
Many moms are single. According to the 2000 Census there are 6.5 million single working mothers in America. The number of single moms living with children under 18 years old is about 10 million, up from 3 million in 1970.
The U.S. Census says that there are 80.5 million mothers of all ages in the United States. Fifty-five percent of women aged 15 to 44 are mothers in the U.S. From age 40 to 44, 81 percent of U.S. women are mothers, down from 1976 when 90 percent of women aged 40 to 44 were mothers. On average, women are 25.2 years old when they give birth for the first time -- a record high, says the Census.
Every year, about four million women across the country have babies. Forty percent of births are the mother's first, while 32 percent are second-borns, 17 percent, third-borns and 11 percent are fourth-borns or more.
Most U.S. women have 2.0 children in their lifetimes, while the average number in Utah is 2.6. Birth rates drop in Maine, Massachusetts and Vermont where the average is 1.7 births. In 2004, about 1.2 million births were nonmarital.
Most mothers are remembered with flowers and cards. According to Hallmark research, more than 152 million Mother's Day cards were given last year in the U.S.
Happy Mother's Day!

Healthly Economic News

The Capital Region continues to enjoy one of the best economies in the state and nation. The housing market has settled from its feverish pace but all other sectors continue to experience record growth. The University of the Pacific, located in Stockton, released their economic forecast for the state consisting of sustained good news.

According to the forecast which can be found in more detail at http://forecast.pacific.edu the California economy will continue to see robust growth from 2006 to 2008. The Sacramento area is expected to lead the state in employment and personal income gains.

High growth employment sectors continue to be: Professional and business services, transportation, warehousing and utility, education and health services.

Gross State Product will grow at a 6.4 percent rate in 2006 slowing to an average of 5.3 percent between 2007 and 2008. Personal income expected to be 6 percent this year will taper off to 5.6 percent during the next two years.

Their forecast on interest rates is that they will increase to 7.25 by 2008 and that housing starts peaked in 2005 and will continue to decrease over the next few years.

More good economic news came from Brent Cardwell, a senior investment manager and vice president of Wells Fargo Private Client Services who said in a recent interview for Comstock’s “The Sacramento region has had the fastest-growing population in the state over the last five years and is projected to remain the leader through the end of the decade. The majority of the growth has been domestic and can be attributed to the influx from the Bay Area and Southern California.”

Now keep all that good news in perspective when watching the evening news broadcast!

Larger loans with higher rates

Huge numbers of loans are being refinanced with larger mortgages. In the first quarter of 2006, Freddie Mac says that 88 percent of its loans that were refinanced were replaced with loans that were at least 5 percent larger. This is the highest rate of equity withdrawal in the past 15 years.
There is a mystery here: In a mortgage environment with rising rates why would borrowers want to refinance?
Since the summer of 2003 mortgage rates have climbed from roughly 5.2 percent to 6.6 percent. If you borrowed $300,000 at 5.2 percent your monthly cost for principal and interest would be $1,647 over 30 years. At 6.6 percent, the monthly cost would be $1,916.
For recent fixed-rate borrowers refinancing to just get a higher monthly cost makes no sense. There has to be something else at work here -- and there is. It is those without fixed-rates who are refinancing in big numbers.
The Federal Reserve says that "roughly 85 percent of first mortgages were fixed-rate in 2001, slightly more than 10 percent were adjustable-rate, and the rest were balloon." But now the numbers are different. Figures from the Mortgage Bankers Association show that in the first six months of 2005 -- the latest available figures -- only 40 percent of all loans by dollar volume were fixed-rate products.
In other words, 60 percent of all recent loans by dollar volume are adjustable or interest-only. More upsetting -- and more financially dangerous -- large numbers of these loans are high-risk, little down, high-balance products that feature or allow low monthly payments for the first several years of the loan term, payments that will surely increase after three, five or seven years.
This means if you were sucked into a loan with low up-front payments you knew there would come a time when monthly costs would rise even if mortgage rates remained steady.
Many borrowers, seeing what looms ahead, are refinancing. If they refinance with a fixed-rate loan they likely see higher-but-tolerable monthly payments today but they get the benefit of steady and known future payments. If they refinance with still-another high-risk toxic loan, they postpone, delay and defer that ultimate day of reckoning.

Piggybank Homes

American consumers are now using their homes as piggybanks -- literally. A new report from mortgage giant Freddie Mac reveals that nearly nine out of every ten homeowners who refinanced during the first three months of this year "cashed out" -- that is, they pulled out extra money rather than seeking a lower interest rate.
The 88 percent cashout ratio is the highest Freddie Mac has seen since 1990, and close to the highest ever recorded. The reason for the extraordinarily high proportion of cashouts, according to Freddie's chief economist, Frank Nothaft, is that short-term interest rates on home equity lines are far higher than 30-year fixed rate mortgages. Consumers who need spendable cash find it cheaper to simply refinance their principal mortgage, rather than tack on a floating rate equity credit line.
Cashouts work like this: Say you have a $300,000 mortgage at 6 percent and your house is worth $500,000. You need $50,000 for a major home improvement or business investment project. Since you have plenty of home equity -- $200,000 -- you can tap it and convert $50,000 into cash quickly.
You have the choice of either taking out a floating-rate home equity credit line (at a percent or two over the indexed current bank prime rate of 7.75 percent) or refinancing into a new $350,000 fixed rate principal mortgage at 6.5 percent. With Federal Reserve chairman Ben Bernanke hinting at another quarter-point increase in short-term rates soon -- taking the prime to 8 percent -- your choice is virtually a no-brainer.
That, in fact, is what tens of thousands of refinancers have been concluding, according to Nothaft. "Almost no one is refinancing to reduce their interest rate in today's environment," he said. "The first quarter of 2006 is the first time in (five years) in which the new mortgage rate was higher than the old one for more than half of refinancing borrowers."
As recently as mid-2003, just 33 percent of all refis were cashouts; 67 percent were pure rate-reduction transactions with no extra money extracted. Since 2004, however, as the Fed began nudging up short-term interest rates higher, steadily growing numbers of homeowners took the cashout route,which Freddie Mac defines as a post-refi balance at least five percent higher than the original balance.
Freddie Mac deputy chief economist Amy Crews Cutts predicts even more refis and cashouts later this year. "Many borrowers will be looking to refinance this year when their adjustable rate mortgages hit the first rate reset (interest-only and payment option adjustables primarily) or as a low-cost way to fund a major project such as home improvements or to consolidate debt. The average rate on a 30-year fixed rate mortgage is at 6.5 percent, still well below the 35-year average rate of 9.4 percent" making cashout refis a relatively cheap and convenient source of money for most people.