REAL ESTATE

NEARLY A QUARTER OF HOMEBUYERS CHOOSE INTEREST-ONLY LOANS

Home buyers chose “interest-only” loans, which initially require payment of only financing costs, for almost a quarter of all mortgages in the first half of 2005.

The share of interest-only loans grew to 23% of all home mortgages from 17% a year earlier, according to a report issued today by the Mortgage Bankers Association. More than nine of 10 interest-only loans carried adjustable rates, meaning borrowers probably will see their monthly bills rise after the end of an initial fixed period of one to 10 years, the Washington-based trade group said.

American home prices gained 13% in the second quarter of 2005, the biggest jump in 26 years. Home buyers are turning to interest-only loans to lower their monthly mortgage bills, allowing them to pay more for properties. When the loan adjusts to a higher payment, it increases their risk for default, the chief economist of the bankers’ group, Doug Duncan, said.

– Bloomberg News

ECONOMY

CONSUMER CONFIDENCE FALLS TO A TWO-YEAR LOW

Consumer confidence unexpectedly fell to a two-year low in October as higher energy prices left Americans with less to spend, raising concern about the holiday shopping season.

The Conference Board’s consumer confidence index fell to 85 from 87.5 in September, the New York-based research group said yesterday. Another report showed sales of previously owned homes in America held in September at the second highest level ever. High gasoline prices and home heating bills that may rise by about $400 this winter threaten to hurt retail sales and delay a recovery in confidence, economists said. The supply of homes for sale was the highest since monthly record keeping began in 1999, suggesting the housing market that has helped support consumer spending may be about to lose some steam.

“The consumer has finally been shaken,” an economist at Bank of Tokyo-Mitsubishi in New York, Ellen Beeson, said. “If folks are unsure what the future is looking like over the next few months, they tend to hunker down and sit on cash, and that’s not a good start to the holiday shopping season.”

The National Association of Realtors said yesterday that existing homes sold at a 7.28 million annual rate in September, unchanged from August and second only to a 7.35 million pace in June. The median price rose 13.4% from the year-earlier month to $212,000.The supply of unsold homes rose to 2.85 million.

“Housing may be topping at the same time as consumer confidence is hurting from energy prices,” the U.S. research director at4Cast.comin New York, Alan Ruskin, said.

– Bloomberg News

FOOD

MCDONALD’S TO OFFER NUTRITION INFORMATION ON PACKAGING

McDonald’s will place nutrition information on most of its packaging to attract health-conscious consumers. The company will use icons and bar charts on boxes, wrappers, and other packaging to make it easier for consumers to see the fat and caloric content of burgers, fries, and salads, the director of global nutrition at McDonald’s, Cathy Kapica, said. The information, which is already listed on tray liners and in brochures in the chain’s restaurants, will not be on beverage cups.

“It is about our customers and their expectation to get nutritional information in their hands,” the company’s chief executive, Jim Skinner, told a press conference in Chicago yesterday.

Mr. Skinner, who took charge 11 months ago, started selling fruit-and-walnut salads and $3.89 premium-chicken sandwiches to attract mothers and other consumers who shun McDonald’s burgers and fries. Nutritional concerns have damped sales in Britain, where the chain last month opened restaurants to public tours and boosted advertising to try to improve its image among diners.

– Bloomberg News