Mortgage Rates Take a Breather

Stop the Presses!!!!

   You have to read Jim Belote's latest Mortgage Matters(below).  

After a quick run up over the past months, interest rates leveled off last week and actually decreased a bit this week!!!!

Though not out of the woods yet, Jim matches up with my opinion that increases in mortgage applications(he sees) and buyers interest in homes(I see) along with good growth in 2013 in new home inventory means the Real Estate Market continue to improve.

No time to wait thought as one can't predict if rates will hold for very long!

Keeping you updated on the market! For the week of  July 22, 2013 MARKET RECAP Fed Chairman Settles Mortgage Markets After sprinting a full percentage higher over the past two months, the 30-year fixed-rate mortgage has finally taken a breather. Last week, the bellwether loan was staid, holding near the prior week's rate. This week, the rate actually fell a few basis points. Lending markets have finally settled down, and for this we can thank Federal Reserve Chairman Ben Bernanke, who assured credit-market participants the Fed is unlikely to taper QE3 in the near future. This means the Fed will continue to purchase long-term U.S. Treasuries and mortgage-backed securities. In short, mortgage rates have likely plateaued for the near future, which gives frantic buyers some breathing room. The interesting lesson in the mortgage-rate surge is that it failed to materially impact the purchase market. Indeed, the four-week purchase-application trend held steady. What's more, the latest data from the Mortgage Bankers Association show purchase applications actually rose 1% last week. Purchase applications are obviously related to home sales and building activity. On the latter, there's concern rising rates could translate into falling activity because of falling consumer demand. The latest data on housing starts, released Wednesday, raised a few eyebrows, and a few concerns. Housing starts were down significantly, dropping 9.9% to 836,000 units on an annualized basis in June. After the news was released, we ran across a number of comments forecasting the end of the housing recovery. Upon closer inspection, though, it appears housing's imminent demise was highly exaggerated. We say that because the drop in starts was lead by the smaller and more volatile multifamily component, which declined 26.2% in June after rising 28.2% in May. In contrast, the larger and more stable single-family component slipped a modest 0.8% for the month after rising 0.5% in May. It's informative to consider the longer-term starts trend; by this measure, the residential construction industry looks quite healthy. Over the first   half of 2013, multifamily starts are up nearly 34% from the same year-ago period, while single family starts are up 20%. These are meaningful increases in activity and tell us we've come a long way in a short time. Moreover, there is plenty of room left to run. Starts remain low when viewed from a historical perspective. From 1959 through 2000, roughly 1.5 million housing units were started annually. (And keep in, the population was meaningful smaller back then.) So, yes, we've come a long way on residential construction, but we still have long way to go. This suggests that housing will remain healthy and will remain a key economic driver for at least the next couple years. And even if mortgages continue to climb, we think that's unlikely to change. Economic Indicator Release Date and Time Consensus Estimate Analysis Existing Home Sales (June) Mon., July 22, 10:00 am, ET 5.25 Million (Annualized) Important. More supply coming to market will lead to higher sales volume in coming months. FHFA House Price Index (May) Tues., July 23, 9:00 am, ET 0.5% (Increase) Moderately Important. Home prices will continue to post gains across most local markets. Mortgage Applications Wed., July 24, 7:00 am, ET None Important. Purchase activity should show noticeable improvement thanks to stabilizing rates. Durable Goods Orders (June) Thurs., July 25, 8:30 am, ET 1.0% (Increase) Moderately Important. Rising orders are reflective of rising consumer confidence. Don't Look Back, Look Ahead Anchoring can be a difficult psychological trait to overcome. By that, we mean the inclination to believe that the past will either return or be will maintained in the future. Anchoring occurs frequently in the investment world. Investors buy a stock, see it's share price cut in halve, and yet despite poor prospects, they'll continue to hold, believing that it's inevitable their purchase price will again prevail. We see the same phenomenon in the mortgage market. Many potential borrowers believe it's inevitable that mortgage rates will again hit multi-decade lows of a few months ago. Tomorrow will somehow present yesterday's opportunities. This isn't to say yesterday's prices can't return, but yesterday isn't today: the outlook and the variables influencing today's market are decidedly different. Today, we are looking at stronger economic growth and stronger residential construction across most of the United States. Neither variable bodes well for lower lending rates. The point we want to emphasis is to keep focused on the future, and the variables – Federal Reserve tapering, job growth, rising consumer spending, higher housing demand and construction – that will prevail in the future. With the future in mind, it's becoming increasingly difficult to make a case for a lower-rate lending environment.

Financial Report 1

Two Posts to Read!

Jim Beloit with Union Mortgage andJeff Hurd with Prime Lending provide upbeat reports with two different emphasis.

Jim's Report(below) stresses:

Housing Market:   1.  Tight Home inventories
                                        Resale   AND  New Homes
                              2.  Sales slow due to low inventories
                              3.  Rising Home prices


Jeff's Report stresses:  

Mortgage Market:   1. Stocks and Bonds both up
                                 2. Unemployment down
                                3. Fed Meeting Positive on this news
                                 4. Interest rates are near record lows
                                     (i.e. came down again)

Though emphasizing different factors of the home buying and selling process, both gents relay data that only points to an improving economy and a housing market that is just waiting for some inventory to arrive.   Sellers aren't getting the message:  Buyers are searching for you!

	Keeping you updated on the market! For the week of  April 29, 2013 MARKET RECAP Fewer Homes, A Little More Pricing Power Home sales at the national level continue to spin their wheels. On the existing-home front, sales dropped 0.6% to an annual rate of 4.92 million units in March. When we look back to October 2012, we see that sales have, for the most part, plateaued. Of course, when we speak of plateauing existing-home sales, we invariably speak of plateauing inventory. Supply, in fact, remains low at 4.7 months at the current sales pace. Only 30,000 units were added in March, which is 70,000 shy of the historical average March increase of 100,000 units. The silver lining in this frustrating sales cloud is that low supply coupled with rising demand equals rising prices. Year over year, the median price is up a very stout 11.8%, which is on par with the boom days of 2005. (So we shouldn't expect the current price trend to hold indefinitely). New-home sales also appear to be going nowhere fast. That said, they are at least lurching forward. New-home sales rose 1.5% to an annual rate of 417,000 units in March. Unfortunately, the increase was still 2,000 units short of what most economists had expected. Supply is also tight in the new-home market. The number of new homes for sale rose by 3,000 units for March, but that wasn't enough to materially increase inventory, which remains at a low 4.4-months supply at the going sales pace. Curiously, the median price of a new home at the national level fell 6.8% to $247,000. We are not particularly concerned, though; weaker pricing likely reflects a change in compensation – higher sales of lower priced homes – rather than a material change in overall demand. So constrained inventory is an obvious issue, but so is tight credit, particularly for higher-amount non-conforming loans. Rates remain very low, and have been very low for the past year, but we've yet to see a material pick up in purchase-application activity. Uncertainty and risk – two subjects we've addressed repeatedly in the past six months – are by far the key constraints. Sequestration, regulation, taxes, Obamacare is to name a few of the most obvious uncertainty contributors. When the perception of uncertainty is reduced, the economy grows, jobs become more plentiful, and lenders and regulators become less risk averse. Unfortunately, uncertainty remains elevated, and as long as it remains elevated the economy will continue to sputter and hiccup along.   Economic  Indicator Release  Date and Time Consensus  Estimate Analysis Pending Home Sales Index (March) Mon., April 29, 10:00 am, ET 0.5%  (Increase) Important. Supply issues are still holding sales growth in check. Mortgage Applications Wed., May 1, 7:00 am, ET None Important. The recent rise in the purchase trend points to a healthier allocation of owner-occupied sales. Construction Spending (March) Wed., May 1, 10:00 am, ET 0.7% (Increase) Important. Rising residential real estate construction continues to lift overall spending. Employment Situation  (March) Fri., May 3, 8:30 am, ET Unemployment Rate: 7.6% Payrolls: 160,000 (Increase) Very Important. Another disappointing job report (like February's) could slow the housing recovery.   Positive Conversations We can extend the conversation of uncertainty to mortgage-bond investors, particularly those in the private market. Public officials and private pundits alike have commented on the need for private money – which is virtually nonexistent – to return to the mortgage market. Private money matters, because it means a more diverse, more inclusive mortgage-lending market. A recent New York Times article points out that there have been few private mortgage-bond deals in recent years. The reason is the banks that sell mortgage-backed bonds are waiting for regulators to finish drawing up rules aimed at strengthening the market. The hold-up centers on loan down payments. Private lenders want more leeway on down payments, so private bonds can be issued on mortgages with lower down payment requirements. Regulators have balked at the request in the past, but today it appears they are more willing to compromise. Regulators are being pressured by lenders and consumer advocates. Both sides have cautioned against stringent down-payment requirements, arguing that restrictions would limit lending. The regulators are listening, and that’s good news, because if they listen and act on what they hear, we could see lending extended to potential borrowers who are champing at the bit to get in the market and buy a home.     If you wish to unsubscribe, click on the following link and send the email with 'unsubscribe' as the subject: Click Here EQUAL HOUSING LENDER This Newsletter is for informational purposes only. The information contained herein may not be applicable to every situation or jurisdiction and we urge you to consult your professional advisor prior to acting on information contained herein. The content, accuracy and opinions expressed herein are not verified or endorsed by the sponsor hereof.

 

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Mortgage Myths

A must share from  Tara-Nicholle Nelson | Broker in San Francisco, CA

When insight is provided that helps buyers, sellers and homeowners, it is priceless!!

In a mortgage market that changes as quickly as this one, today’s fact is tomorrow’s fiction.  For buyers, misinformation can be the difference between qualifying for a home loan or not. Sellers and owners, knowledge is foreclosure-preventing, smart decision-making power! Without further ado, let’s correct some common mortgage misconceptions.

1.       Myth: Buyers with bad credit can’t qualify for home loans. Obviously, mortgage guidelines have tightened up, big time, since the housing bubble burst, and they seem likely to tighten even further over the long-term. But just this moment, they have relaxed a bit.  In the last couple of weeks, two of the nation’s largest lenders of FHA loans announced that they’ve dropped the minimum FICO score guideline from 620 (which allows for some credit imperfections) to 580, which is actually a fairly low score.

At a FICO score of 620, buyers can qualify for FHA loans at many lenders with only 3.5 percent down. With a score of 580, the lenders are looking for more like 5 to 10 percent down – they want to see you put more of your own skin in the game, and the higher down payment lowers the risk that you’ll default.  However, if your credit has taken a recessionary hit, like that of so many Americans, this might create a glimmer of hope that you’ll be able to take advantage of low prices and interest rates without needing years of credit repair.

2.     Myth: The Mortgage Interest Deduction isn’t long for this world.  Homeowners saved over $85 billion in 2008 by deducting their mortgage interest on their income tax returns. A few months ago, the National Commission on Fiscal Responsibility and Reform caused a massive wave of fear to ripple throughout the world of real estate consumers and professionals when they recommended Mortgage Interest Deduction (MID) reform, which would dramatically reduce the size of the deduction.

Fact is, the Commission made a sweeping set of deficit-busting recommendations to Congress, a few of which are likely to be adopted.  Fortunately for buyers and sellers, MID reform is not one of them.  Very powerful industry groups and economists have been working with Congress to plead the case that MID reform any time in the near future would only handicap the housing recovery.  Congress-folk aren’t interested in stopping the stabilization of the real estate market.  As such, the MID is nearly universally thought of as safe – even by those who disagree that it should be.

3.       Myth:  It’s just a matter of time before loan guidelines loosen up.  The US Treasury Department recently recommended the elimination of mortgage industry giants Fannie Mae and Freddie Mac. I won’t get into the eye-glazing details of it here, but the long and the short is that (a) this is highly likely to happen, and (b) it will make mortgage loans much harder and costlier to get, for both buyers and homeowners.   It’s possible that loans are as easy to get as they’re going to get.  So don’t expect that if you hold out, zero-down mortgages will come back into vogue anytime soon. Fortunately, Fannie and Freddie aren't likely to disappear for another 5-7 years, so you have a little time to pull your down payment and credit together. If you want to get into the market, the time to get yourself ready is now!

4.       Myth: If you don’t have equity, you can’t refi. Much ado is being made about how stuck so many people are in their bad loans, because they don’t have the equity to refinance their way out of them.  If you’re severely upside down (meaning you own much, much more than your home is worth), stuck may be the situation. But there are actually a couple of ways homeowners can refi their underwater home loans.  If your loan is held by Fannie or Freddie (which you can find out, here), they will actually refinance it up to 125% of its current value, assuming you otherwise qualify for the loan.  That means, if your home is worth $100,000, you could refinance a loan up to $125,000, despite the fact that your home can’t secure the full amount of the loan.

If your loan is not owned by Fannie or Freddie, you might be a candidate for the FHA “Short Refi” program. While most mortgage workout plans are only available to people who are behind on their loans, the Short Refi program is only available to homeowners who are current on their mortgages and need to refinance up to 115 percent of their homes’ value.  So, if you owe $250,000 on your home, you can refinance via an FHA Short Refi even if your home’s value is as low as $217,000. If you think you’re a good candidate for a short refi, contact your mortgage broker, stat – there are some in Congress who think that this program is so underutilized (only 245 applications have been submitted since it rolled out in September – no typo!) that its funding should be diverted to other needy programs.

5.       Myth:  If you’ve lost your job and can’t make your mortgage payment, you might as well mail your keys in.  Until recently, this was essentially true – virtually every loan modification and refinancing opportunity required that your economic hardship be over before you could qualify. And documenting income has always been high on the requirements checklist. But there are some new funds available in the states with the hardest hit housing and job markets, which have been designated specifically for out-of-work homeowners.

The US Treasury Department’s Hardest Hit Fund allocated $7.6 billion to the states listed below – all of which are now using some portion of these funds to offer up to $3,000 per month for up to 36 months in mortgage payment assistance to help unemployed homeowners avoid foreclosure.  Contact the state agency listed below if you need this sort of help:

Alabama: http://www.hardesthitalabama.com/

Arizona: https://www.savemyhomeaz.gov/

California: https://www.keepyourhomecalifornia.org/

Florida: https://www.flhardesthithelp.org/

Georgia: http://www.dca.state.ga.us/housing/homeownership/programs/hardesthitfund.asp

Illinois:http://www.ihda.org/

Indiana: http://www.877gethope.org/

Kentucky: http://www.kyhousing.org/

Michigan: http://www.michigan.gov/mshda/buyers/save_the_dream/helping+hardest+hit+homeowners+-+contact+your+mortgage+servicer+for+assistance

Mississippi: http://www.mshomecorp.com/firstpage.htm

Nevada: http://www.nahac.org/

New Jersey: http://www.state.nj.us/dca/hmfa/home/foreclosure/homekeepers.html

North Carolina: http://www.ncforeclosureprevention.gov/

Ohio: http://www.savethedream.ohio.gov/

Oregon: http://www.oregonhomeownerhelp.org/

Rhode Island: http://www.hhfri.org/

South Carolina: http://www.scmortgagehelp.com/

Tennessee: http://www.thda.org/

Washington D.C.: http://www.dchfa.org/

Inflation Pressure Rise as do Mortgage Rates

So the March goes on!!!

As you will note in the summary notes, the inflation pressures that everybody wondered about with the Fed's pumping dollars into the economy has begun to show itself. In the Virginian Pilot this a.m., cotton prices doubling was discussed due to increased demand and the need to increase clothing costs and other products with cotton content.   Thus, we may be seeing the beginning of a trend that will cause us all to watch the broad economic indicators to determine if inflation begins to raise its "ugly" head.

As you may well know, a bit of inflation is normal and is much preferred over deflation(lower pricing due to terrible economic conditions).  Yet, high inflation would lead to higher mortgage rates and more expensive house payments.  As noted below, rates are forecasted to go up to 5.5% by the end of the year by some.

Thus, it continues to be the absolute best time to buy a home....competitive home pricing and low interest rates.

Read below!!!       

                             Then get the move on, if it s time for you to get a home!!!

Keeping you updated on the market! For the week of  February 21, 2011 MARKET RECAP We knew it was only a matter of time, and now it appears the time, if not here, is close at hand. We are speaking of inflation, which is more real and tactual these days. Producer prices, which have been climbing over the past seven months, continued their march north. In January, the producer price index spiked 0.8 percent over December. However, the core number, which excludes energy and food prices, was even more disconcerting, posting a 0.5 percent gain – the most since October 2008. Rising prices on the producer side are eventually felt on the consumer side, so it was no surprise that consumer prices also rose in January, with the consumer price index posting a 0.4 percent increase. Consumer prices still appear subdued, posting a 1.6 percent increase for the past 12 months, but the data include big-ticket and infrequently purchased items, such as automobiles and airline tickets. Most of us are aware that day-to-day purchase prices are increasing at a higher rate. This latest data on price inflation points to upward pressure on mortgage rates; even though rates held steady this past week. Is there a reasonable estimate to how high rates will go? PMI Mortgage Insurance sees the 30-year fixed-rate mortgage hitting 5.5 percent by the end of this year and then increasing to 6.5 percent by the end of 2012. (For the record, PMI also predicted the 30-year loan would average 5.5 percent at the end of 2010.) We think 5.5 to 5.75 percent is a reasonable range, with a few caveats, of course, starting with the Federal Reserve. Fed Chairman Ben Bernanke has said that the Fed will keep buying Treasury securities through June to support the economy, but a couple Fed officials have argued that keeping the easy-money policy intact for too long could crimp the Fed's ability to bring inflation under control. The truth is that timing these things is obvious in theory, but very difficult in practice. However, even if we are wrong on price inflation and about the Fed's ability to optimally manage the money supply, other factors could keep mortgage rates moving higher. Pressure is building to wind down Fannie Mae and Freddie Mac, which have guaranteed more than nine out of every 10 mortgages since the financial meltdown. The White House has proposed increasing Fannie and Freddie's prices, phasing in a 10-percent down-payment requirement, and winding down their investment portfolio. These initiatives would put private capital and government capital on a more equal footing. We are in favor of more private investment, because it means more diversity in product offerings and more latitude in pricing and qualifying mortgage loans. Of course, the downside will be higher price loans, but that won't be so bad as long as the economy and the job market continue to improve. A 5-percent 30-year fixed-rate loan is nice, but a broader market of qualified applicants in a 5.5-percent loan market would be even nicer. Economic Indicator Release Date and Time Consensus Estimate Analysis Case-Shiller Home Price Index (December) Tues., Feb. 22, 9:00 am, et 0.8% (Decrease) Important. The worst in home-price declines is likely over. Mortgage Applications Wed., Feb. 23, 7:00 am, et None Important. Refinances continue to fall as the market shifts to purchase activity. Existing Home Sales (January) Wed., Feb. 23, 10:00 am, et 5.2 Million (Annualized) Important. Bad weather will likely cause sales to post at the low end of estimates. New Home Sales (January) Thurs., Feb. 24, 10:00 am, et 310,000 (Annualized) Important. Better pricing and reduced inventory are stabilizing the market. Gross Domestic Product (4th Quarter 2010) Fri., Feb. 25, 8:30 am, et 3.2% (Annualized Growth) Moderately Important. This preliminary report is expected to confirm strong growth in exports and retail sales. Bubble Trouble? We don't think so, but Robert Shiller of the Case-Shiller home price index does. Mr. Shiller recently cautioned that housing prices are likely to “stay in the doldrums for years,” but he added an alternative scenario where a growing speculative component could cause prices to overshoot on the upside. It is an unlikely scenario; rarely do consecutive bubbles form in the same market. Stocks that burst with the bursting of the tech bubble in 2001 are an obvious example. In addition, the common value matrices – such as median-income to median-home prices and rent to home-price appreciation are where they were around 2002. To be sure, they are still a little high by historical measures, but they are much more reasonable compared to 2006 – the apex of the housing bubble. The bigger concern is that the number of buyers who could buy won't. The New York Times recently interviewed Dan Cunningham, a 41-year-old renter. Here's what Mr. Cunningham told the Times reporter: “We would love to have a house; I have more than enough for a down payment. I’m pre-approved for a loan. But I have to have confidence it’s not going to lose another 20 percent.” The Times also reported that Cunningham plans to wait until he sees prices rising before making any offers. And that's the mindset we need to overcome. People like Dan Cunningham more often than not wait too long and find themselves chasing a less favorable, more expensive market. That's an important insight, and it's one the Dan Cunninghams of the world need to know.

Finance and Real Estate Market Update

From a Mortgage Pro....Great Reading on What is What in the Mortgage Market!!!

Just click on the link:


http://newsletter.rismedia.com/tracking/view/3704/62023/1163193/10306
 
 
Now You Know!!!