MORTGAGE UPDATE:
Lending update courtesy of MS&C Mortgage,
an affiliate of Wells Fargo

Market in Review: The Wells Fargo View
"Buyer's" Market For First Home Purchases

The current glut of housing inventory may soon experience relief as opportunities for first-time homebuyers begin to shift. Historically, first-time buyers have spurred housing activity, creating a domino effect that begins with new homeowners and extends to those eager to upgrade their homes.

According to the National Association of REALTORS® (NAR) the July resale of existing homes was 5 million, the highest level in five months. Eager to unload their current inventory of homes, some builders are offering incentives such as finishing basements or providing upgrades. And, people trying to sell their current homes also are providing inventive ways to make a sale – such as updating or replacing appliances, carpet, and making exterior improvements.

Since foreclosure and short sale properties now account for roughly one-third of recent transactions, according to the National Bureau of Economic Research, there are good deals in many communities across the country. Home prices have significantly declined from a year ago – most notably in eight markets: AZ, CA, FL, IL, IN, MI, NV and OH. According to NAR, the median existing family home price nationally was $206,500 at the end of the second quarter, or 7.6% below what it was in the second quarter of 2007.

New legislative relief also has ignited the first-time homebuyer market. Between now and the middle of 2009, about 2.5 million first-time homebuyers are expected to take advantage of the $7,500 tax credit recently passed through the Housing and Economic Recovery Act of 2008. Homes purchased on or after April 9, 2008 and before July 1, 2009 may be eligible.

Finally, interest rates remain relatively low, below 7%, peaking in July and then gradually decreasing (see chart on this page). In comparison, for example, in August of 2000 the average 30-year fixed-interest rate was 8.16%, according to HSN Associates Financial Publishers Fixed Rate Mortgage Indicator. In 1990, the average 30-year fixed rate was 10.17%. At the time of publication, mortgage rates were improving significantly with Fannie Mae and Freddie Mac being placed into conservatorship.

The Wells Fargo View: It may very well be a great time for qualified first-time homebuyers to finance a home. Rates remain relatively low, inventory levels are high, and sellers are seeking unique ways to provide incentives to buyers. Wells Fargo offers pre-approvals and extensive products to help customers and clients realize their goals of homeownership. With programs such as our money-backed Wells Fargo Closing GuaranteeSM, customers trust us with their financing needs.

Wells Fargo & Company is a diversified financial services company with $575 billion in assets, providing banking, insurance, investments, mortgage and consumer finance to more than 23 million customers from almost 6,000 stores and the internet (wellsfargo.com) across North America and elsewhere internationally. Wells Fargo Bank, N.A. is the only bank in the U.S., and one of two banks worldwide, to have the highest possible credit rating from both Moody's Investors Service, "AAA," and Standard & Poor's Ratings Services, "AAA." Information is accurate as of date of printing and subject to change without notice. Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A. © 2008 Wells Fargo Bank, N.A. All rights reserved.