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Mortgage Rates Continue Falling to Record Lows

The Wall Street Journal January 9,2009 by Amy Haok published in Realtor Magazine
For the fourth consecutive week, mortgage rates have fallen to all-time lows. The 30-year mortgage rates averaged 5.01 percent this week, which is a drop from last week's 5.1 percent. Last year at this time, rates averaged 5.87 percent.

"Interest rates for 30-year fixed-rate mortgages fell for the 10th week ... due in part to the Federal Reserve's recent purchases of mortgage-backed securities issued by Freddie Mac, Fannie Mae and Ginnie Mae," says Freddie Mac Chief Economist Frank Nothaft.

Other rates also dropped for the week:

• 15-year fixed rates: dropped to 4.62 percent from 4.83 percent last week. Last year at this time 15-year mortgage rates averaged 5.43 percent.
• 5-year hybrid adjustable-rate mortgages averaged 5.49 percent, a drop from 5.57 percent last week.

The only slight increase in rates this week was in 1-year ARMs, which were 4.95 percent, up from 4.85 percent last week. Overall, 1-year ARMs were still down for the year from last year's 5.37 percent.

Freddie Mac began tracking rates in 1971.

Last Week in Review - October 27, 2008

"JUST ANOTHER MANIC MONDAY..." The Bangles. And last week wasn't just another manic Monday, as the markets were wild the entire week. During the past two months in the stock market, there have been 19 trading days with a 3% move. It had previously taken 6 years to see 19 days with a 3% move. Bonds and home loan rates began the week with a strong rally on news that the world's largest Bond Fund, PIMCO, raised its stake in Mortgage-Backed Securities to its highest in over seven years. Also helping Bonds and home loan rates break above important technical levels were poor earning reports by companies like DuPont, Texas Instruments, Merck, Wachovia, and Boeing. However, the gains were short lived as both Stocks and Bonds worsened on Friday after heavy selling took place in Asia and Europe. The waves of panic selling started in Japan due to weak earnings reported by Sony and Samsung, then spilled over into the UK as Britain's economy shrank for the first time since 1992, signaling a recession. And while a strong sell-off in Stocks would typically cause money to flow into Bonds, helping Bonds and home loan rates improve, there is currently a bit of a departure from the normal "see-saw" trading you may typically see between Stocks and Bonds. This is occurring because securities must be liquidated to raise capital. In an effort to offset margin calls, all securities are being cashed in. Additionally, fear from individual investors, where people throw in the towel and want to get out of the market, is creating massive redemptions from fund managers. Despite the continued volatility and massive action of the last week, Bonds and home loan rates ended the week very close to where they began. FORGETTING TO CHANGE YOUR CLOCKS CAN CAUSE A MANIC MONDAY WHEN DAYLIGHT SAVING TIME COMES AROUND! CHECK OUT THIS WEEK'S MORTGAGE MARKET VIEW FOR SOME FASCINATING FACTS ON THIS YEAR'S DAYLIGHT SAVING TIME.

Forecast for the Week

 

This week, several scheduled items could cause some more manic movements in the markets...and the biggest of all could be the Fed Policy Statement and Rate Decision that will come on Wednesday, following the wrap of the Fed's regularly scheduled Federal Open Market Committee meetings. Remember: The Fed joined with other central banks from around the world and cut their benchmark Fed Funds Rate earlier this month to help restore confidence to the financial markets. The Fed is widely expected to cut its benchmark rate again this week, and some people are wondering if the Fed could go where it has never gone before and bring the rate below 1%. Other important reports to note this week include Wednesday's Durable Goods Orders, which is a measure of how many "durable" or non-disposable goods have been purchased during the previous month, and Thursday's Gross Domestic Product (GDP) Report, which is the broadest measure of economic activity. Also, on Friday we will get the details on the Fed's favorite gauge of inflation, the Core PCE (Personal Consumption Expenditure) data, from the Personal Income report. Each of these reports will be telling, given the growing talk of recession. Before all of this, there will also be housing news in store with Monday' New Home Sales Report. Last week, we learned that Existing Home Sales jumped to a thirteen-month high as foreclosures continue to drive down home prices, and it will be important to see if a similar trend is occurring with New Home Sales. If the economic news this week is dismal, Bonds and home loan rates may be the beneficiary and find some improvement...but the words and actions of the Fed are likely to be the primary driver for interest rate action this week. As always, I will be watching closely and would welcome your calls with any questions you may have on your own situation, and how the changes of the week may impact you. Chart: Fannie Mae 6.0% Mortgage Bond (Friday Oct 24, 2008)

 

 

Daily Real Estate News  |  June 20, 2008

Housing Relief Bill Threatened by Veto

A bipartisan coalition ignored a White House threat to veto a foreclosure rescue bill and voted 70-11 against an attempt to send the measure back to the Senate Banking Committee, which would have essentially killed the bill.

The bill was sidetracked by the news that Senate Banking Committee Chair Christopher J. Dodd (D-Conn.) and Senate Budget Committee Chair Kent Conrad (D-N.D.) got discounted home loans through a VIP program at Countrywide, the country’s largest mortgage lender.

The fact that the bill survived the effort to derail it makes it likely that there will be enough votes to override the veto President Bush is threatening, analysts say.

The bill would provide $300 billion in new, cheaper mortgages for distressed home owners who otherwise couldn’t qualify for fixed-rate loans. The bill also would tighten regulation of Fannie Mae and Freddie Mac, modernize the FHA, provide $4 billion to purchase foreclosed properties, and offer an $8,000 tax break to some first-time home buyers.

The administration opposes the inclusion of $4 billion to help states buy and rehabilitate foreclosed properties, and a plan to have Fannie and Freddie pay for the rescue.

Supporters hope to push the bill through the Senate before Congress breaks for a weeklong July 4 vacation.

 

 

Daily Real Estate News  |  May 30, 2008

30-Year Rates Climb Past 6%

Freddie Mac reports a jump in the 30-year fixed mortgage rate to 6.08 percent during the week ended May 29 from 5.98 percent the prior week, marking a two-month high triggered by investor concern over inflation.

The 15-year mortgage rate climbed to 5.66 percent from 5.55 percent over the same period, while the five-year adjustable rate rose slightly to 5.62 percent from 5.61 percent.

However, the one-year ARM slipped to 5.22 percent from 5.24 percent.

In the event of worsening inflationary pressures, Federal Reserve Bank of Dallas President Richard Fisher says, "I would expect a change of course in monetary policy to occur sooner rather than later, even in the face of an anemic [economy]."

Source: San Francisco Chronicle (05/30/08)

30-Year Mortgages Edge Down Slightly

Freddie Mac Chief Economist Frank Nothaft says the housing slump, along with rising mortgage delinquencies and foreclosures, has taken a toll on homeownership rates and prevented significant movement in mortgage rates during the week ended May 8.

The 30-year fixed rate slipped to 6.05 percent from 6.06 percent a week ago, while the 15-year fixed rate bumped up to 5.60 percent from 5.59 percent. Over the same period, the five-year adjustable mortgage rate fell to 5.67 percent from 5.73 percent; and the one-year ARM held steady at 5.29 percent.

Nothaft cites a report from the U.S. Census Bureau that indicates a decline in the national homeownership rate to 67.8 percent in the 2008 first quarter from 69 percent in the 2006 third quarter.

FHA Raises Mortgage Limits in High-Cost California Counties

By SARA MURRAY
March 5, 2008 6:38 p.m.The Federal Housing Administration raised the mortgage limits to a maximum of $729,750 for 14 high-cost counties in California, as the government began providing aid to homeowners required by the recently enacted economic-stimulus package.The upper mortgage limits also will apply to loans purchased or guaranteed by government-sponsored mortgage companies Fannie Mae and Freddie Mac, FHA officials said.Details for the rest of the country are due to be announced this week. California counties such as Los Angeles and Orange will be eligible for the maximum limit, which was raised from $362,790. Lower- priced regions, such as Trinity and Lassen counties, will qualify for a loan cap of $271,050, up from $200,160.FHA officials predicted the increases in California would aid about 33,000 individuals. The new loan limits will be in effect through the end of this year. The goal is to invigorate the market for larger mortgages, which should help push down interest rates.The FHA said there would be an appeal process through which the new loan limits could be raised higher for counties that aren't now eligible for the $729,750 maximum, but none of the limits will be lowered, said Bill Glavin, special assistant for public affairs in the FHA's Commissioner's Office. That appeals process could be announced, along with new loan limits for the rest of the country, as early as Thursday."From what we understand there are not going to be a lot of areas in the country except for California that are going to be at the maximum," Mr. Glavin said.

Those who have applied for an FHA loan but haven't yet closed on it will be able to take advantage of the new limits. The new ceilings also will apply to people seeking to refinance into an FHA loan

February 21, 2008 - Sandy Edelstein _ First Capital Corporation

Here is the latest information we have on the status of the new conforming loan limits:

As you know, the President signed the Economic Stimulus Bill into law on Wednesday February 13.  Although details of the affected agencies' requirements, eligible products, pricing and availability are still not finalized, we are working to identify the impact of the new law and the changes that will occur and get that information out to you as it becomes available.

HUD has 30 days from the date the bill was signed into law to establish and publish the median area home prices, MSA's (Metropolitan Statistical Areas) and the new loan limits for each area.  So we should have this information by around the middle of March.

However, we have been advised that the new conforming loan limits will not go into effect until July 1, 2008 and will be good only until December 31, 2008--unless of course, the law is extended.

So for now, the conforming loan limits remain at $417,000 for a single unit property (higher limits apply for 2, 3 and 4 unit properties).

At the moment, the bond and stock markets continue to be very volatile.  As you will see from the attached rate sheet, mortgage rates have continued to edge up a bit, though the bond market is having it's first good day in several weeks today, so with any luck, this is the beginning of a trend!

 

Update on rates end of December 2008

.  I have attached some bullet points that explain some important changes / opportunities that now exist in our ever-changing landscape….

 

 

·         FHA’s minimum down payment is being increased from 3% to 3.5% as of Jan 1, 2009. The only way to honor the 3% down payment option for your client, is to get their loan approved before the end of the year. So, if you don’t already have an approved offer and a loan submitted, then you should be notifying your clients about the change.

 

·         FHA’s new Loan Limit for Riverside County is $355,350, not $500,000. This is also in effect on January 1, 2009, and under the same scenario as above.

 

·         Conventional Loan limits have also been reduced back to $417,000, not $500,000 anymore. Any loan amount above 417K, is going to be considered a jumbo mortgage.

 

·         Reverse Mortgages are going to be a great mortgage tool moving forward to help seniors over the age of 62 purchase a new home, with no income or credit qualification required. Yes, you heard that here first.

 

·         Rates have been great all week. Now is a great time to look into doing a  refinance to lock into a low fixed rate.

 

·         USDA & VA Loan’s – both offer your clients 100% financing as long as they qualify for the program.

 

·         203(k) FHA remodel home loan – This program will allow your clients to include in the loan the cost of improvements the home will need to make it complete. This program requires only 3.5% down, and works on owner occupied properties only. Max loan $355,350.

 

·         Fannie/Freddie’s Homestyle Loans – this program works very similar to the above program, which allows you to include the cost of the home improvements in the loan, except that it works for all occupancy types. Primary, Second Homes, and Inv. Properties. Loan amount goes to $417,000, and down payments vary based on occupancy.

Posted December 5, 2008

There is a lot of Mortgage news today.  Particularly the news that the ” The Treasury Department is strongly considering a plan to intervene directly in the mortgage industry to dramatically force down rates and stimulate the housing market.”  As usual there is a lot of excitement and speculation and very few details available.  I have attached a couple of articles  from today that explain the ideas that are being examined.

 

Unfortunately, there is a lot of marketing and Grandstanding going on out there, and not a lot of educating.  Yes Mortgage rates are low from a historical perspective, however,  there are a lot of guidelines that must be met in order to qualify for the best terms.   In fact, rates have actually gone up on many conforming loans due to new “Risk Based Pricing Adjustments”… Though you probably won’t see any headlines with that information..  And now more than ever, the property is being scrutinized as well.

 

Anyone can throw out a super low rate quote without learning about a clients qualifications.  A professional talks specifically about the clients goals and options.

 

Update from FHA Market Place and M&H partners - October 28,2008

FHA Program	Rate	APR
30 Year Fixed	6.500%	6.799%
15 Year Fixed	6.000%	6.487%
5/1 ARM	5.750%	4.591%
3/1 ARM	5.250%	4.213%

Alternative to Down Payment Assistance

The Secretary of HUD has recently endorsed HR 6694 to allow Down Payment Assistance to remain available for borrowers with credit scores greater than 620.   The new reform bill has passed the House Committee and will more than likely be included in the next stimulus package to be voted on by Congress.    It is highly anticipated that Down Payment Assistance will be available again by January of 2009, if not sooner.   In the meantime, the First Time Homebuyer tax credit is a great alternative while down payment assistance programs temporarily remain on hold.

First Time Homebuyer Tax Credit:  $7,500.00

For aspiring home owners who find their goal stubbornly elusive, newly enacted legislation providing a tax credit of as much as $7,500 for first-time home buyers might just be the opportunity of a lifetime.

But like so many of the good things in life, time is of the essence for buyers who want to take advantage of this outstanding opportunity. Only homes purchased on or after April 9, 2008 and before July 1, 2009 are eligible.

• The tax credit is available for first-time home buyers only.
• The maximum credit amount is $7,500.
• The credit is available for homes purchased on or after April 9, 2008 and before July 1, 2009.
• Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.
• The tax credit works like an interest-free loan and must be repaid over a 15-year period.

FHA allows for gift funds from a family member as an acceptable source for the 3.0% down payment requirement.  Also, up to a 6.0% seller contribution is allowed to cover Non-Recurring Closing Costs and Prepaid expenses.

FHA Homebuyer Approval

The weekly Mortgage Market Guide - January 3, 2008

Senate Passes FHA Loan Limit Increase!

Big Win for California REALTORS®! 

On Friday, December 14, 2007, the U.S. Senate voted 93 to 1 to pass S. 2338, the FHA Modernization Act, which will reform the Federal Housing Administration (FHA).  A conference committee will now meet to resolve differences between this bill and the one passed by the House of Representatives earlier this year.

This is a huge victory for REALTORS® who have lobbied Congress aggressively all year to pass FHA reform and provide troubled homeowners with safe and affordable refinancing options.  Senator Diane Feinstein supported the measure and though Senator Barbara Boxer was not present to vote on the bill, she did issue a statement supporting it.

While the issue of FHA reform enjoys broad bipartisan support, including the administration, there are still a number of details to be worked out between the Senate FHA reform bill and the House passed version.  Additionally, legislation to reform Government Sponsored Entities (GSEs) Fannie Mae and Freddie Mac has not yet been introduced in the Senate.

C.A.R. will keep you informed on any future developments concerning these two very important issues. Thank you to every REALTOR® who participated in C.A.R.'s and NAR's Calls-for-Action on this bill and the issue of GSE by contacting Senators Feinstein and Boxer.