Loans

New York, NY, United States (AHN) – More American homeowners are reducing the terms of their mortgages because of low interest rates and a desire to reduce debts. According to Freddie Mac, 34 percent of refinancers changed to 20- or 15-year loans. It is the highest level in switches in seven years.

Similarly, online mortgage broker Lending Tree reported requests for 15-year mortgages are up 30 percent compared to 12 months ago.

The shift to shorter-term loans came despite the average rate for 30-year, fixed-rate mortgage at 4.32 percent last week, which is almost a record low.

Changing to shorter-term loan is a better alternative than investing money in the volatile stock market, savings accounts or Treasury securities, while cutting terms of mortgages save the homeowner hundreds or thousands of dollars in interest cost, industry experts said.

To qualify for refinancing, borrowers must have a credit score of 720 or higher at least 20 percent in home equity, but only about 46 percent of homeowners with a mortgage have equity of 20 percent of less in their homes.

Washington is expected to retain playing a major role in the U.S. mortgage market. According to reports, U.S. President Barack Obama asked advisers to develop a proposal that would extend federal loan subsidy for most homebuyers.

Previously, senior economic and housing advisers of the president favored preserving Fannie Mae and Freddie Mac, but under different names and with new constraints.

A White House spokesman said that all three main options in the white paper on reforming the country’s housing finance system are still under active consideration and advisers are still making deeper analysis of how each option could potentially be implemented.

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London, England, United Kingdom (AHN) – The Bank of England will likely keep its record-low interest rate of 0.5 percent because of the weak British economy. The central bank is expected to retain for the 29th straight month the benchmark lending rate when its Monetary Police Committee meets on Thursday.

Because of consumers cutting down on spending and austerity measures initiated by the coalition government, the Office for Budget Responsibility has downgraded three times its growth forecast for the country, now at only 1.7 percent.

Observers said that an increase in the key lending rate would take at least another year, which would be good for borrowers with fixed mortgage rates but bad for savers.

However, there are speculations that the MPC may approve a second round of quantitative easing to help stimulate the British economy.

Shadow Treasury Minister David Hanson said that the OBR’s forecast reduction should make Chancellor George Osborne realize that the tax increases and spending cuts were responsible for the slowdown of Britain’s recovery.

Hanson said the OBR’s 1.7 percent forecast appears to be unrealistic because that would require that Britain register growth rates of 1 percent in the second and third quarters of this year.

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Manzini, Swaziland (IRIN) – Erratic pension payments, a rising cost of living and changing social circumstances are leaving Swaziland’s elderly with no choice but to fend for themselves and adjust to living alone. This is unprecedented in a country where an extended family system traditionally provided a social safety-net and companionship.

“I thank my God that I am still alive at 72, but I never thought I could be so lonely. In the old days there was never ‘alone’, but many elderly are living by themselves today, like me. What happened?” asked Amos Ngwenya, a farmer in the central Manzini region.

“You were in a Swazi family and so you were taken care of, from cradle to grave. It was a simple life and government didn’t have to assist anyone. Now, if I don’t get my old age pension I might go hungry if I do not use my imagination,” Lucy Simelane, 65, told IRIN.

Swaziland’s desperate financial situation caused suspension of the US$21 pension pay-out in the second quarter of 2011, in favor of a grant to cover the school fees of orphans and vulnerable children (OVC). About 5 percent of Swaziland’s approximately one million people are 60 years old or older and eligible for a government pension. Roughly two-thirds of Swazis live below the poverty line.

Sub-Saharan Africa’s last absolute monarch, King Mswati III, has turned to South Africa in the hope of securing a $1.47 billion loan to save the country from collapse after being rebuffed by the International Monetary Fund (IMF) and the World Bank, according to media reports. The country does not have sufficient funds to pay its public servants in June.

Coping strategies

Simelane, the youngest of her late husband’s three wives, cares for her ailing HIV-positive 25-year-old son, who has tuberculosis. “Life is hard taking care of [my son] by myself, and I worry about getting enough for us to eat,” she said.

Most days she scours the nearby hillsides with neighbors, searching for seeds, berries and wild spinach to supplement the staple food, maize-meal – coping strategies that in the past were adopted only in times of drought or economic distress.

“The older of our people are adopting ‘coping mechanisms’ like never before. It’s not just the economic downturn that makes this necessary, it is because Swazi elderly are alone now as never before,” Mkhuluza Zwane, the head of Umtfunti Wemaswazi, an advocacy group for the elderly, told IRIN.

But such coping methods are temporary solutions, Zwane said, as they rely on seasons. Simelane, like others in the neighborhood, is using water from a communal borehole to grow vegetables.

“Swazis growing vegetables is a new thing. We have water to do this now. I can even sell extra vegetables and make some money. Winter is good for growing because we never get frost, and with the sunshine the cabbage still grows. But the soil is not good and the cabbage is not big,” she said.

Amos Ngwenya, an octogenarian and a widower, is fit enough to cultivate his fields, but allows his neighbors to till the land in exchange for some sacks of maize at the end of the season.

Once employed by government as a local agriculture advisor, he has a small pension that meets most of his needs and he resides rent-free on communal Swazi Nation Land, where 70 percent of Swazis live under the jurisdiction of traditional chiefs.

“I feel sorry for old people who only have that pension to live on because it is so little, but even a little bit helps. You must remember I grew up when there were no pensions for anyone, and somehow we coped. We must remember those old days and borrow those lessons to survive as old people today,” he said.

The multi-generational family farm that was a fixture when he was born – when few Swazis traveled more than 80 kilometers or so from their birthplace – has been replaced by the effects of urbanization, with children and relatives scattered over long distances.

Although Swaziland has the world’s highest HIV prevalence rates – 26.1 percent of people aged 15-49 are living with the virus, which has reduced average life expectancy to 39 years – more than 70 percent of the population are not infected and will probably live into their seventies.

Self-worth

“It’s ironic that in Swaziland of all places – because we are a very gregarious people and a family-oriented society – you find more older people living in isolation. This is not only dispiriting for them but is unhealthy and dangerous. The elderly are prey to criminals and they face discrimination,” said Angelina Dube, a social worker in the Manzini area.

Simelane laments that she is not part of her grandchildren’s lives. “They live far away. Some of my grandchildren live in town, where my daughter works, and a stranger looks after them during the day,” she said.

“The absence of the responsibility of taking care of grandchildren is a terrible loss for many elderly women. They have no substitute activity, and their sense of self-worth is threatened by the absence of what Swazi grannies always used to do,” Dube said.

“It is disturbing how many young people make fun of the elderly nowadays. It didn’t used to be that way. Swazi society was based on respect of the elders, and we worshiped our ancestors.”

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– Provided by Integrated Regional Information Networks.

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Dhaka, Bangladesh (AHN) – Bangladesh, the world’s poorest Muslim majority country, unveiled a $22 billion deficit budget high on defense expenditures and low in farm spending. The government projects revenue income at $16.01 billion in the coming fiscal year, up from nearly $13 billion. The budget was placed in Parliament on Thursday amidst a boycott by the main opposition Bangladesh Nationalists Party.

The overall agriculture budget decreased more than 12 percent while defense spending increased almost 29 percent, the largest rise among major sectors. Instead of investing in human development and infrastructure, money will go towards increasing Bangladesh’s military firepower and salaries of defense personnel.

Finance Minister Abul Maal Abdul Muhith has called for higher allocation in the energy and farming sectors to perk up economic growth. In a move to end a serious of power outage, the power production saw an increase of almost 20 percent as the finance minister outlined a plan to increase power generation by almost three times adding 7,800 megawatts to the national grid by 2013.

The minister set a 7.0 percent growth target for the gross domestic product (GDP) starting on July 1.

The budget holds down the rising inflation, principally blamed on price spirals and depreciation of the local currency, he explained.

Economic think-tank Unnayan Onneshan, in a quick assessment on Thursday said the government might face extraordinary challenge to reach the growth target as quoted in the budget document of fiscal 20111-12 due to lack of supporting base in the overall economy of Bangladesh.

The fiscal space squeeze and IMF condition for accessing one billion dollar loan to Bangladesh might also pave the way for increasing different type of inequality; such as geographical inequality, income inequality and social inequality in the country, the think-tank said.

Finance Minister almost echoed with the think-tank and said that the next fiscal year would be challenging for the economy. “Recovery from the recession and political instability pose a great risk for the economy and we’re going to form a taskforce to deal with it,” he told journalist on Friday.

He does not hesitate to blame that the economy has fallen into trouble after recovery from recession due to commodity crisis and in Bangladesh political stability rubs salt to the injuries.

The anti-tobacco lobby expressed mixed reaction, when the government increased tax to 42.5 percent to discourage smoking. The activists were expecting strict economic restrictions of the tobacco growers.

Bank stocks went up Wednesday and Thursday riding largely on report that corporate tax will go down to 40 percent for commercial banks.

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London, England, United Kingdom (AHN) – Britain’s Labour Party called on Chancellor George Osborne to curb the coalition spending cuts because of the economic slowdown the austerity measures caused.

The party cited the major dip in manufacturing and mortgage approvals as proofs of the threat of a double-dip recession. Britain’s purchasing managers’ index went down to 52.1 in May from 54.4 in April. The May figure is the weakest month in about two years, which indicates modest expansion only by the manufacturing sector.

For April, the Bank of England reported that mortgage approvals went down to a four-month low, amid a dip in business lending. Mortgage approvals decreased to 45,166 while consumer credit went up by only $750 million (GBP 500 million).

With these weak figures, the British Chambers of Commerce cut its growth forecast for the U.K. The chamber downgraded on Wednesday its outlook for 2011 to a 1.3 percent growth from 1.4 percent, and 2.2 percent from 2.3 percent for 2012.

In the same week, the Organization for Economic Cooperation and Development cut its 2011 growth forecast for Britain to 1.4 percent from 1.5 percent. The two forecasts are much lower than the 1.7 percent projection by Britain’s Office for Budget Responsibility.

While BCC lowered its growth forecast, the chamber increased its forecast for the country’s inflation rate to 4.5 percent this year from 4.2 percent in March. The BCC predicts unemployment will go up by about 150,000 for the next 15 months.

The BCC explained its revised outlook to inflation and the coalition government’s austerity program.

However, not all the declines were because of the coalition government’s spending cuts. Some of its are because of an extra bank holiday in April and the impact of the Japanese industrial shutdown after the March 11 earthquake.

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New York, NY, United States (AHN) – Ford Motor Company is planning to expand its global sales to 8 million vehicles a year from its current level of 5.3 million units. The driver of this growth, which Ford aims to achieve by middle of this decade, would be Asia.

Ford Chief Executive Alan Mulally said the company plans to offer smaller vehicle models by five to 15 models in China and three to eight models in India. Through an aggressive sales strategy, Ford will attempt to catch up with the sales and brand recognition of competitors General Motors, Toyota and Volkswagen.

Auto industry experts said that Ford has a lot of work to do to be considered a major player in Asia.

Mulally told investors on Tuesday in New York that by 2020, Ford targets that 33 percent of its sales would come from the Asia-Pacific region and Africa. By that year, Ford aims that small cars would comprise 55 percent of its global sales. The two regions accounted for only 15 percent of Ford’s sales in 2010.

However, Mulally said that Ford will not leave behind the U.S. market as the auto industry seeks to recover the 30 percent sales it lost during the recession and global financial crisis.

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GM executives have discussed buying shares from the Treasury Dept. to reduce the government’s 33 percent stake in the automaker

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Polonnaruwa, Sri Lanka (IRIN) – Women could prove key to the success of Sri Lanka’s rural water and sanitation projects, experts and villagers say.

As a five-year project to reduce time spent collecting water and to ensure safe drinking water jointly launched by the Asian Development Bank (ADB) and Sri Lankan government comes to a close, its leaders are reflecting on the lasting benefits of their decision to incorporate women in an unprecedented way.

“Usually women are in the backseat, but in this [project] we were right in front,” Indrani Silva, who heads the women’s association at Lanka Pokuna village in the north-central Polonnaruwa District, one of five rural areas involved in this US$263 million undertaking, told IRIN.

Projects took place in eastern Batticaloa and Trincomalee, north-central Anuradhapura and Polonnaruwa and southern Hambantota districts.

Upon completion at the end of 2011, an estimated 900,000 people will have benefited, and those involved say it is largely because the project’s policies took into account the importance of gaining the trust and involvement of local women.

“[Women] understand the value of safe water. On top of that, they bear the traditional responsibility of collecting water, cleaning and cooking. You need them to be involved for any such project to have a chance,” Mookiah Thiruchelvam, ADB’s senior project officer overseeing the project, explained.

At the level of initial discussions with potential beneficiaries, 50 percent of participants and at least 25 percent of the government officials from the Water Supply and Drainage Board were women. This is not usual, Silva said.

“Usually these types of big projects will have no major involvement from the community, except for taking part in meetings. Even then the lead role is taken by men. Now this is our project; without the village women, this will not succeed,” she said.

Attanayke Mundiyanse Senevirathana, chief sociologist working on improving access to water in the Polonnaruwa District, says the men were primarily farmers and did not have the time to play a big role, let alone collect water.

“It is the women who used to spend hours and walk miles to collect the water,” Senevirathana said.

In Talpotha, a village in Polonnaruwa, the women’s association is central to managing water distribution from a new pumping station and water-tank.

A member of the association does a monthly round of the 172 new connections, tabulating usage and collecting payment. But during the dry season their role becomes even more important.

“We go around requesting users to limit usage,” said Sheila Herath, the chairwoman of the association. “All of them are our members and we can easily convince them.”

Economic benefits

ADB’s Thiruchelvam feels the next step is to use the time saved on collecting water to increase the income of the beneficiaries.

“The women have regained three hours every day that were spent on collecting water,” he said.

Among some rural villages, women’s associations have also proven to be effective in promoting new income generation.

A loan from a local women’s association has helped Liyaduruge Siriyawathie, 45, to earn an additional Rs10,000 ($100) every month. She uses the time freed from walking kilometers to collect water to draw portraits and other designs that are sold. “For over two decades I did not have time to draw,” she said.

Thiruchelvam said future water projects should take advantage of women’s roles and, importantly, the freed hours that used to be spent on collecting water. “We don’t calculate the productivity [gained]. It is time we started doing that.”

Meanwhile, experts believe similar water and sanitation initiatives involving women could prove instrumental in the conflict-affected north, where access to piped water after two decades of war remains problematic.

On average, only three out of 10 people have access to piped water in all the districts that fall within the Vanni, an area encompassing the two districts of Kilinochchi and Mullaithivu and parts of Mannar and Vavuniya districts in the north, according to the National Water Supply Board.

The ADB and the Sri Lankan government are implementing a comparable project, with a high focus on women, in the Vanni and Jaffna valued at $164 million, Thiruchelvam says.

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– Provided by Integrated Regional Information Networks.

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Beijing, China (AHN) – Tight new controls on rare earth minerals were announced by China’s State Council on Thursday, which issued a national guideline for the industry.

World-wide high demand for rare earth minerals, which are essential in high tech manufacturing of electronics, has caused rapid development of mining for the minerals, which has exposed numerous problems.

Electronics that contain rare earths include everything from consumer electronics to hybrid car batteries and even weapons guidance systems.

Controls include export quotas for rare earth minerals. The new controls mark the first time rare earths have been designated a national strategic reserve in China.

Rare earth minerals are comprised of 17 chemical elements in the periodic table.

The commerce ministry began an immediate export quota on all iron alloys that contain more than 10 percent of rare earths.

In addition, China announced it would begin building a strategic reserve stockpile of rare earths.

The move was not unexpected.

But it is bound to increase anxiety over the availability of supplies to industries that depend on rare earths as well as anxiety over prices. China holds one-third of the world’s reserves of rare earths and provides more than 90 percent of global production.

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Sacramento, CA, United States (AHN) – The impasse over extending taxes continues in California despite a revised budget plan from Gov. Jerry Brown that relies on an unanticipated rise in revenue. Republicans have insisted on an alternative plan that would cut compensation for state workers by 10 percent.

The updated budget takes into account a current-year tax revenue increase of $2.8 billion and a budget year earnings boost of $3.5 billion, for a total adjusted revenue of $6.6 billion.

The windfall, combined with steps already implemented by Brown since taking office, has reduced the state’s deficit from $26.6 billion to $9.6 billion, which consists of a current shortfall of $4.8 billion and another $4.8 billion in the fiscal year starting this July.

Brown’s previous budget plan reduced spending by $12.5 billion and relied on revenue of $12 billion from extending taxes. His new budget cuts spending by $11.2 billion because of an increase in funds for public schools by $3 billion.

Additional cost-cutting measures such as the elimination of 43 boards and commissions, as well as more than 5,000 state jobs, compensates for a revenue package that has failed to attract support from Republicans.

Brown, who assumed office in January having served two terms as governor three decades ago, has dropped his plan to raise the personal income tax. Under his revised plan, Californians will pay $2 billion less in income taxes compared to his initial proposal. However, he is still seeking to extend the sales tax and vehicle license fee for five years through a ballot.

The tax package represents 42 percent of the revised plan, while spending cuts account for 48 percent. Cuts include previously announced measures such as the closure of 70 parks to save $11 million in the first year, a hiring freeze and the halving of the number of state cars and cell phones.

The ballot for the tax extensions must first be approved by two Republicans from the Assembly and two Republicans from the state Senate.

Republicans rejected the governor’s revised plan and accused him of “fund[ing] bigger government.”

“Assembly Republicans showed that we can protect funding for the classroom and law enforcement without raising taxes,” Assembly Minority Leader Connie Conway said in a statement. ” We call upon the governor to stop trying to raise people’s taxes and start working across party lines on a no-tax increase budget compromise.”

State GOP Chair Tom Del Beccaro added, “The bottom line is that Brown’s demand to increase spending while we have a deficit means that he still doesn’t understand that we can no longer spend beyond our means.”

The statemate with Republicans occurred in March when the governor suspended negotiations over what he said were “an ever changing list of collateral demands” in return for support for a special election, such as giving a $1 billion tax break to out-of-state corporations so the companies would bring jobs to California.

The alternative GOP budget plan relies on the higher April revenue to prevent cuts to education and law enforcement. It does not raise taxes and calls on state workers to “do their part” with a 10 percent reduction in pay, benefits and other employee costs, which Republicans say would provide the government with $1.1 billion in savings.

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