Another record low for mortgage rates
By Les Christie @CNNMoney May 10, 2012: 10:47 AM ET
NEW YORK (CNNMoney) — Mortgage interest rates hit new lows this week as both the 30-year and the 15-year fixed-rates fell, according to a weekly survey by Freddie Mac. It was the second consecutive week that rates broke records.
The 30-year, the most popular mortgage product, fell by 0.01 percentage points to 3.83%. Last year at this time, it stood at 4.63%. The new lows can save borrowers $46 a month for every $100,000 borrowed. Over a 30-year term that comes to more than $16,000.
The 15-year fixed dropped by 0.02 percentage points to 3.03%, lowering borrowing costs to $692 a month for every $100,000 borrowed, a $38 savings compared with a year earlier. Borrowers would pay out only $24,565 in interest over the life of the loan.
Rates are tracking the downward trend in Treasury yields, according to Frank Nothaft, Freddie’s chief economist, which have fallen in response to election results in Europe and a weaker than expected U.S. employment report.
“The economy added just 115,000 jobs, below the market consensus forecast and less than in March,” he said. “And although the unemployment rate declined, it reflected fewer people actively seeking jobs.”
Mortgage payments at lowest leevel in decades
Mortgage rates will likely not fall much further, according to Bob Walters, the chief economist for Quicken Loans. The low rates have sparked refinancings, which have accounted for upwards of 70% of all mortgage applications lately.
That flood of refinancings strain the capacities of mortgage lenders, especially since many have exited the industry over the past few years. When the remaining banks have trouble handling all the applications, they raise rates to discourage any more.
6 ways to get a great mortgage deal
That means that when Treasury yields rise again, mortgage rates will follow at a slower rate, said Walters. Fewer homeowners will seek to refinance their loans and the banks will be better able to handle the lower number of applications.
“The spread between yields and rates will reduce when capacity comes into line,” he said.
Vince Reece
Senior Loan Officer
Office: 303-840-0966
Cell: 303-818-0699
vince@coloradomortgageguy.com
19519 E Parker Square Dr
Parker, CO 80134
www.denvercoloradomortgage.com
Housing Poised for Spring Recovery:
Five years after the U.S. housing bust sent sales and prices plunging, the spring home-buying season is pointing to a long-awaited recovery.
Reduced prices, record-low mortgage rates, higher rents and an improving job market appear to be emboldening many would-be buyers.
Open houses are drawing crowds. A wave of foreclosures is leading investors to grab bargain-priced homes.
And many people seem to have concluded that prices won’t drop much further. In some areas, prices have begun to tick up.
“The biggest challenge that we’ve had over the past four years is fear — fear that the economy is collapsing, that property values are collapsing, that the world is coming to an end,” says Mark Prather, a broker at ERA Buy America Real Estate in La Palma, Calif. “The fear factor is all but gone.”
The spring buying season got an early lift-off from an uncommonly warm January and February — a winter that was the best for sales of previously occupied homes in five years. Permits to build houses and apartments rose in February to their highest level since 2008.
“People feel much more confident,” said Steve Brown, co-owner of real estate company Irongate Inc. of Dayton, Ohio, who says sales jumped more than 16 percent for the first two months of 2012 over the same period last year. “There’s no question there’s a good feeling in the marketplace.”
Some analysts detected a slight uptick in prices for February and March. CoreLogic, a real estate data firm, says prices for homes not at risk of foreclosure — about two thirds of the market — rose 0.7 percent in February. It was the first increase in four years. Price gains occurred both in some hard-hit areas, such as Phoenix, and some still-thriving areas like New York and Washington.
Also fueling interest are signs that home values are finally stabilizing. One factor that had slowed purchases after the housing boom ended in late 2006 was fear that a home would lose value soon after its purchase.
What Happened to Rates Last Week?
Mortgage backed securities (MBS) gained just +3 basis points from last Friday to the prior Friday which caused mortgage rates to move sideways.
The highest rates of the week were on Wednesday and the lowest rates of the week were on Tuesday. The difference between our best and worst pricing for the week was a whopping 109 basis points which shows a lot of volatility.
Mortgage rates dipped Tuesday afternoon in reaction to global concern over Spain and Italy’s debt woes. Mortgage rates then reversed course and increased both Wednesday and Thursday in reaction to the release of the Fed’s Beige Book (named for the color of its cover). The Beige Book contains the economic data that the Fed will use to base their next policy move. In this report, the economic conditions in most districts were improving which led investors to believe that there would be a reduced chance for the Fed to have another round of quantitative easing.
Mortgage rates then reversed course again, and improved on Friday in reaction to a weak stock market and milder than expected University of Michigan Consumer Sentiment reading.
What to Watch Out For This Week:
The following are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages.
I will be watching these reports closely for you and let you know if there are any big surprises:
It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets. Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.
Quote of the week:
The biggest challenge that we’ve had over the past four years is fear — fear that the economy is collapsing, that property values are collapsing, that the world is coming to an end – the Fear Factor is all but gone now. – Mark Prather, a broker at ERA Buy America Real Estate in La Palma, Calif.
Vince Reece
Senior Loan Officer
Office: 303-840-0966
Cell: 303-818-0699
vince@coloradomortgageguy.com
19519 E Parker Square Dr
Parker, CO 80134
www.denvercoloradomortgage.com
The $26 billion crapshoot
The foreclosure settlement looks like a hit-or-miss game that leaves millions of homeowners out in the cold.
Homeowners hoping the $26 billion foreclosure abuse settlement would mean big savings on their mortgages were mostly disappointed. Even though a million borrowers will have their principals slashed by as much as $100,000 or more, most are not eligible for a workout simply because the bank that issued their mortgages, didn’t hold their mortgages.
During the housing boom years of the early 2000s through 2007, about 20% of loans went into the bank’s own portfolios. The rest were sold off, either to Fannie Mae or Freddie Mac or to investors.
Only loans held by the banks and some of their investors will be modified. The rest of the borrowers will be left out in the cold.
“It’s not as long a shot as winning the lottery but there’s a lot of chance involved,” said Guy Cecala of Inside Mortgage Finance.
The Department of Housing and Urban Development, which helped negotiate the settlement, recognizes that it left out many homeowners.
“From the outset we have been very clear that the settlement is not intended to solve or resolve all the issues related to the housing crisis,” HUD spokesman Derrick Plummer said earlier this month. “It’s just one step in a host of efforts the Obama Administration is taking to help the housing market recover.
Vince Reece
Senior Loan Officer
Office: 303-840-0966
Cell: 303-818-0699
vince@coloradomortgageguy.com
19519 E Parker Square Dr
Parker, CO 80134
www.coloradomortgageguy.com
Mortgage applications picked up last week: MBA
January 11, 2012 7:05 AM ET
NEW YORK (Reuters) – Applications for U.S. home mortgages rose in the first week of the year as demand for both purchases and refinancing perked up, an industry group said on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose 4.5 percent in the week ended Jan 6.
The MBA’s seasonally adjusted index of refinancing applications gained 3.3 percent, while the gauge of loan requests for home purchases climbed 8.1 percent.
The refinance share of total mortgage activity eased to 80.8 percent of applications from 81.9 percent the previous week.
The improvement in demand came even as interest rates rose. Fixed 30-year mortgage rates averaged 4.11 percent in the week, up 4 basis points from 4.07 percent.
The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.
(Reporting By Leah Schnurr; Editing by Leslie Adler)
Vince Reece
Senior Loan Officer
Office: 303-840-0966
Cell: 303-818-0699
vince@coloradomortgageguy.com
19519 E Parker Square Dr
Parker, CO 80134
www.coloradomortgageguy.com
Denver Colorado Mortgage launches new website at www.denvercoloradomortgage.com
Vince Reece
Senior Loan Officer
Office: 303-840-0966
Cell: 303-818-0699
vince@coloradomortgageguy.com
19519 E Parker Square Dr
Parker, CO 80134
www.coloradomortgageguy.com
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