Category: Debt Management

Americans’ opinions regarding the economy are steadily becoming more favorable as they begin to be less pessimistic about their local economies, likely leading to a decreased need for some to consolidate debt and save their finances.

The latest RBC Consumer Outlook Index released on Thursday showed an increase of 8.1 points as it hit 72.7 in May, led primarily by an increasing confidence in an economic recovery as well as an improved job market.

Overall, 31 percent of consumers felt that the economy would likely improve in the next year, more than the 26 percent who feel it will become worse but less than the 43 percent who expect it to stay the same.

"This month’s RBC Consumer Outlook Index shows that consumers’ negative attitudes are moving towards neutral, but not yet into positives – they are not yet ready to say that things have gotten better, especially when it comes to the national economy," said Marc Harris, co-head of global research at RBC Capital Markets. "Few Americans are ready to say they are enjoying good times."

Despite the improved sentiments, 49 percent of consumers still described their personal financial situation as bad compared to three months ago, up from 45 percent who said so in April.

Likely spurred by some indicators of an economic rebound, newly released restaurant sales data for the end of 2010’s first quarter show significant improvements that may indicate consumers are not as reliant on debt consolidation tactics as they once were.

The latest Restaurant PerformanceIndex released by the National Restaurant Association last week saw a notable increase of 1.4 percent to hit 100.5 in March compared to the previous month’s figures.

The monthly increase in the index above 100 for the first time in 29 months and to its highest level since September 2007.

"The RPI’s solid performance in March was driven by improvements among both the current-situation and forward-looking indicators," said Hudson Riehle, senior vice president of the Research and Knowledge Group for the association. "Restaurant operators reported net gains in both same-store sales and customer traffic in March, the first time in 31 months that both indicators stood in positive territory."

Additionally, the NRA’s Current Situation Index, which measures current trends in same-store sales, traffic, labor and capital expenditures, hit 99.0 during March, a 2.4 percent increase from February’s figures. While same-store sales and traffic indicators increased during the month, labor and capital expenditure indicators continued to lag and decline.

New government figures released at the start of May have found that the end of 2010’s first quarter saw widespread gains in most figures relating to consumer income, signaling that Americans may not be as strapped for cash and in need of debt consolidation as they have been in recent months.

According to newly released data from the U.S. Bureau of Economic Analysis, personal income increased by $36 billion in March representing a 0.3 percent increase over the previous month’s figures.

Along with an increase in the amount of money finding its way into the bank accounts of consumers across the country, so too did the amount of extra cash that Americans had to spend. The BEA’s March figure for disposable personal income also saw an increase of $32.3 billion, a 0.3 percent increase from the previous month’s figures.

The BEA also found that private wage and salary disbursements for the month also saw an increase of $11.8 billion for the month, nearly double the $6.8 billion increase in the figure seen in February.

Goods-producing industries’ payrolls were also able to nearly offset a $3.3 billion decrease recorded in February as they increased by $2.2 billion in March.

Average interest rates for all mortgage types remained somewhat stable and showed minimal declines in the second part of April, continuing low rates that could be utilized to consolidate debt for homeowners looking to refinance.

According to the latest weekly national survey released by Bankrate.com on Thursday, the average rate for 30-year fixed-rate mortgages decreased slightly by 0.01 percentage points to hit 5.21 percent for the week ending April 21. While a decline, the rate change was minimal compared to the 0.14 percentage point decline seen one week prior.

Similarly, the average rate for 15-year FRMs declined by 0.01 percentage points as well, falling to 4.54 percent for the week. The mortgage type had also seen a more sizable decline of 0.13 percentage points one week earlier as well.

The average rate for 5/1-year adjustable-rate mortgages saw the largest decrease of the week as it fell by 0.05 percentage points to hit 4.37 percent. The week prior, the rate had seen a drop of 0.07 percentage points.

With the slight rate decreases, a $200,000 loan taken out in November 2008 that was refinanced under the current conditions would reduce mortgage payments by $142 every month as it fell to $1,099.46.

As homeowners struggling with their finances look to consolidate debt any way possible, including through mortgage refinancing, they should be aware that mortgage fraud cases rose yet again in 2009.

According to the latest report released Monday by LexisNexis’ Mortgage Asset Research Institute, incidents of mortgage fraud and misrepresentations by industry professionals increased by 7 percent from 2008 to 2009 in the U.S.

The increase was less than the 26 percent increase in mortgage fraud seen the year prior, with experts adding that the year-by-year percentage difference may not be as wide as the data indicates.

"While this is a noticeable increase, we believe that mortgage fraud is significantly understated, even during times of massive origination volumes," said Jennifer Butts, LexisNexis Mortgage Asset Research Institute manager of data processing.

"Lenders are facing hurdles with compliance, loss mitigation and staving off additional financial losses due to poor loan performance," added Denise James, LexisNexis Risk Solutions director of real estate solutions.

After holding the unfortunate title of the state with the highest rate of mortgage fraud for two of the last three years, Florida again overtook Rhode Island in 2009 as its residents suffered through three times the expected amount of fraud cases.

Americans across the country who are becoming increasingly desperate for any type of income as they look to consolidate debt may be faced with a decision to either make more money in a more grueling job, or settle for less cash in position that is less stressful.

According to a recent survey conducted by CareerCast.com, some of the most stressful jobs in 2010 were found to be firefighter, corporate executive, surgeon, police officer, and commercial pilot.

However, while incredibly stressful, the survey also pointed out that many of the listed positions were also found to be the most sought-after positions on the market because of their high wages or job security.

"While fear of losing your job may keep you awake at night, the nation’s most stressful job – firefighter – has one of the lowest unemployment rates," explains Tony Lee, publisher for CareerCast.com. "On the other hand, many low-stress jobs offer little room for advancement, and often don’t appeal to ambitious, educated job seekers."

Among the least stressful jobs documented during the year – which are easier on a daily basis but may not bring in as much of a salary – were musical instrument repairer, medical records technician, actuary, and librarian.

Americans are continuing to utilize debt consolidation and find ways to get by other than relying on government jobless insurance services, as figures regarding the number of initial claims declined yet again in mid-April.

According to the latest Unemployment Insurance Weekly Claims report released by the U.S. Department of Labor on Thursday, Initial unemployment claims for the week ending April 17 were reported to be 456,000, 24,000 fewer than the previous week’s revised figure.

Looking at newly released data from the week ending April 10, the insured unemployment rate declined slightly as it fell 0.1 percentage points to 3.6 percent.

Similarly, the number of those using unemployment insurance during the week also decreased by 40,000 as it hit 4.646 million. The 4-week moving average of total claims also hit 4,643,750, a decrease of 5,500 from the previous total.

Despite the national decreases, only two states – Kentucky and Indiana – reported decreases in initial claims of more than 1,000 during the week. On the other hand, 16 states reported increases in claims of more than 1,000, with New York leading the way with an increase of 23,876 due to transportation and service industry layoffs.

Despite marginal progress in the housing market so far this year, homeowners are still struggling to stay above water on their mortgage payments as they consolidate debt and begin the foreclosure process in increasing numbersthis quarter.

According to Bank Foreclosures Sale, new data released Monday showed that foreclosures across the country increased by 7 percent in first quarter of 2010 compared to the previous quarter. While the number of default notices fell by 1 percent during the quarter, bank repossessions shot up by 36 percent during the same time period.

"A repossession is usually the final stage of a foreclosure," remarked Simon Campbell, a business analyst with Bank Foreclosures Sale. "The properties are repossessed, and then sold off from there. So, now the banks and lenders have a huge supply of REO homes to deal with."

However, while the figure was somewhat dire for those in the housing market, Campbell added that the rise in foreclosures would be "great news for buyers" who would receive discounted prices because of the high inventory

"I wouldn’t be surprised if we see average sale prices really drop in the coming months," he added.

Consumers looking to buy a new car while consolidating debt and in need of financial help may be disappointed by a new bill being considered that could deal a blow to auto financing.

According to the National Automobile Dealers Association, a financial regulation bill that is scheduled to be considered by the U.S. Senate would create a Bureau of Consumer Financial Protection that would have control over dealer-assisted financing and commissions.

The effects of the bureau would lead to a new set of regulations on auto dealers that could complicate the financial help they can offer for consumers who need assistance in order to purchase a new car.

"Adding another layer of regulation will reduce availability of credit and increase costs to consumers," said Ed Tonkin, chairman of NADA. "Wall Street caused the financial meltdown, not local auto dealers on Main Street."

Sam Brownback, a Republican Senator from Kansas, is attempting to adjust the bureau by sponsoring an amendment that would exempt the auto industry from its authority. The so-called Brownback Amendment is scheduled to be considered by the Senate as well.

Following a week in which Bankrate.com’s data found all mortgage rates seeing significant increases, rates managed to return more manageable rates for homeowners who want to refinance their home in order to consolidate debt.

According to the latest weekly national survey released Thursday, the average interest rate for 30-year fixed-rate mortgages fell by 0.14 percentage points to hit 5.21 percent for the week ending April 14. The decline more than made up for the 0.12 percentage point spike seen in the rate one week earlier.

Similarly, the average rate for 15-year FRMs declined as well, shedding 0.13 percentage points to hit 4.56 percent for the week. One week earlier, the FRM had increased by 0.16 percentage points en route to 4.69 percent.

The average interest rate for 5/1 adjustable-rate mortgages fell for the week as well, dropping 0.07 percentage points as it hit 4.48 percent. The week prior, the average rate had shifted up by 0.04 percentage points to hit 4.55. percent.

In total, the average mortgage rate for all types during the week fell to 5.35 percent, meaning a monthly payment following a refinancing would fall to $1,116.83 from the $1,241.86 payment that would have been given to homeowners who took out a mortgage when the average rate stood at 6.33 percent in November 2008.