Mortgage Rates Close to ‘Bottoming,’ Koskinen Says (Update2)
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By Kim Chipman and Romaine Bostick
March 27 (Bloomberg) -- Mortgage rates are “probably as good as it’s going to get” and the housing market is likely to rebound sooner than some forecasts, Freddie Mac interim Chief Executive Officer John A. Koskinen said.
“Mortgage rates, if they go down at all further, it’s going to be incremental,” Koskinen told reporters today in Washington after he met with President Barack Obama. “Interest rates are probably close to bottoming out, and therefore we are telling people” to buy a house now.
The U.S. 30-year fixed mortgage rate as tracked by Freddie Mac fell to 4.85 percent, the lowest on record, on a government plan to increase purchases of mortgage bonds. The U.S. housing market, the worst since the Great Depression, may improve sooner than some economists’ forecasts as people who had put off home purchases take advantage of a “buyer’s market.”
“This is more attractive than they’ve ever been and about as attractive as they’re ever going to be,” Koskinen said of mortgage rates. ‘We are going to begin to see a lot of home purchases by people on the sidelines who are suddenly discovering ‘hey I can afford a house.’”
Read the entire Mortgage rate article here:http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a_7KVrbmxVnQ
Monday, March 30, 2009
Friday, March 27, 2009
Mortgage Rates at 52 year Low!
Mortgage rates at 52-year low
The average 30-year fixed mortgage rate dips to 5.19%, according to a report from Bankrate.com, the lowest rate since 1956.
By Catherine Clifford, CNNMoney.com staff writer
Last Updated: March 26, 2009: 2:38 PM ET
NEW YORK (CNNMoney.com) -- Home mortgage rates dropped to a 52-year low this week, according to a report released Thursday, in the wake of the government's announcement that it will buy more than $1 trillion in debt.
The average 30-year fixed mortgage rate fell to 5.19% this week, down from 5.29% in the week prior, according to Bankrate.com's weekly national survey.
The previous low was 5.28%, hit this January and in June 2003; the last time rates dipped lower than 5.19% was in 1956, according to Bankrate.com.
To put the plunge in mortgage rates into perspective, 30-year fixed home mortgage rates averaged 6.77% in late October. At that time, a $200,000 home loan would have meant a monthly payment of $1,299.86. Now, with the mortgage rates down at 5.19%, the monthly payment for the same loan would be $1,096.99. That works out to a savings of more than $200 per month.
Meanwhile, the average 15-year fixed mortgage rate fell to 4.80% from 4.86% in the the prior week. The 15-year fixed mortgage rate carried an average of 0.49 points.
The government announced last week that it would be buying more than $1 trillion in debt in order to increase liquidity and improve credit conditions. With the key lending rate already at a range of 0% to 0.25%, the Federal Open Market Committee - the policymaking committee of the Fed that sets interest rates - turned to less traditional means to encourage lending.
The Federal Reserve said that it would buy an additional $750 billion in mortgage-backed securities and $300 billion of long-term Treasurys. The so called "quantitative easing" policy essentially increases the money supply and is designed to push interest rates down, making borrowing cheaper.
Not much further to drop: Analysts say that while mortgage rates could edge a smidgen lower, they won't make any more dramatic plunges.
"At this point, what we are going to see is mortgage rates fluctuate at these levels," said Brian Bethune, chief financial analyst at IHS Global Insight. "I don't see them dropping significantly from where they are now."
Mortgage rates move in relation to the yield on the 10-year government bond. While there is not a direct correlation, they do move in the same direction. Bethune said that there are two factors that will prevent Treasury yields, and by extension mortgage rates, from dropping much further.
"One is the huge Treasury borrowing requirements," he said. As the government looks to fund its massive stimulus spending programs, it has had to issue a record amount of debt. The increased supply keeps a lid on the price of bonds and stabilizes yields.
"In addition, as we get closer to perceptions of a trough in the economy, the yields will tend to see upward pressure," said Bethune. Uncle Sam's debt is considered one of the safest places for investors to keep their cash. During times of market uncertainty, demand surges, the prices increase, and yields fall. But as market sentiment begins to believe the economy could be headed for recovery, demand for Treasurys will lessen, lifting yields.
Surge in refinance: The dramatic drop in mortgage rates has motivated home owners to refinance in great numbers, but the drop in mortgage rates has not spurred as large an increase in new home purchases, said Mike Larson, real estate analyst at Weiss Research.
"We are still not seeing a huge impact on home buying," he said. "All else being equal, it will help the market," said Larson. "But it is not the huge impact you are seeing on the refinance side."
Bankrate.com compiles national averages every Wednesday by surveying the top 10 banks and thrifts in the top 10 housing markets. For historical data, Bankrate.com cites the National Bureau of Economic Research.
First Published: March 26, 2009: 12:25 PM ET
Find this article at:
http://money.cnn.com/2009/03/26/real_estate/mortgage_rates/index.htm?section=money_latest
* Please note that if you have a Massachusetts mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
The average 30-year fixed mortgage rate dips to 5.19%, according to a report from Bankrate.com, the lowest rate since 1956.
By Catherine Clifford, CNNMoney.com staff writer
Last Updated: March 26, 2009: 2:38 PM ET
NEW YORK (CNNMoney.com) -- Home mortgage rates dropped to a 52-year low this week, according to a report released Thursday, in the wake of the government's announcement that it will buy more than $1 trillion in debt.
The average 30-year fixed mortgage rate fell to 5.19% this week, down from 5.29% in the week prior, according to Bankrate.com's weekly national survey.
The previous low was 5.28%, hit this January and in June 2003; the last time rates dipped lower than 5.19% was in 1956, according to Bankrate.com.
To put the plunge in mortgage rates into perspective, 30-year fixed home mortgage rates averaged 6.77% in late October. At that time, a $200,000 home loan would have meant a monthly payment of $1,299.86. Now, with the mortgage rates down at 5.19%, the monthly payment for the same loan would be $1,096.99. That works out to a savings of more than $200 per month.
Meanwhile, the average 15-year fixed mortgage rate fell to 4.80% from 4.86% in the the prior week. The 15-year fixed mortgage rate carried an average of 0.49 points.
The government announced last week that it would be buying more than $1 trillion in debt in order to increase liquidity and improve credit conditions. With the key lending rate already at a range of 0% to 0.25%, the Federal Open Market Committee - the policymaking committee of the Fed that sets interest rates - turned to less traditional means to encourage lending.
The Federal Reserve said that it would buy an additional $750 billion in mortgage-backed securities and $300 billion of long-term Treasurys. The so called "quantitative easing" policy essentially increases the money supply and is designed to push interest rates down, making borrowing cheaper.
Not much further to drop: Analysts say that while mortgage rates could edge a smidgen lower, they won't make any more dramatic plunges.
"At this point, what we are going to see is mortgage rates fluctuate at these levels," said Brian Bethune, chief financial analyst at IHS Global Insight. "I don't see them dropping significantly from where they are now."
Mortgage rates move in relation to the yield on the 10-year government bond. While there is not a direct correlation, they do move in the same direction. Bethune said that there are two factors that will prevent Treasury yields, and by extension mortgage rates, from dropping much further.
"One is the huge Treasury borrowing requirements," he said. As the government looks to fund its massive stimulus spending programs, it has had to issue a record amount of debt. The increased supply keeps a lid on the price of bonds and stabilizes yields.
"In addition, as we get closer to perceptions of a trough in the economy, the yields will tend to see upward pressure," said Bethune. Uncle Sam's debt is considered one of the safest places for investors to keep their cash. During times of market uncertainty, demand surges, the prices increase, and yields fall. But as market sentiment begins to believe the economy could be headed for recovery, demand for Treasurys will lessen, lifting yields.
Surge in refinance: The dramatic drop in mortgage rates has motivated home owners to refinance in great numbers, but the drop in mortgage rates has not spurred as large an increase in new home purchases, said Mike Larson, real estate analyst at Weiss Research.
"We are still not seeing a huge impact on home buying," he said. "All else being equal, it will help the market," said Larson. "But it is not the huge impact you are seeing on the refinance side."
Bankrate.com compiles national averages every Wednesday by surveying the top 10 banks and thrifts in the top 10 housing markets. For historical data, Bankrate.com cites the National Bureau of Economic Research.
First Published: March 26, 2009: 12:25 PM ET
Find this article at:
http://money.cnn.com/2009/03/26/real_estate/mortgage_rates/index.htm?section=money_latest
* Please note that if you have a Massachusetts mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
Wednesday, March 25, 2009
Mortgage Rate Alerts
Mortgage Rate Alerts
Lock in a Low Mortgage Rate
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Lock in a Low Mortgage Rate
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You set your rate and we notify you as soon as it becomes available.
Don't miss your rate again
Tuesday, March 17, 2009
Housing Starts Unexpectedly Rebound
The U.S. housing sector showed unexpected strength in February, with housing starts and building permits both rising against expectations for continued declines.
U.S. housing starts rose to an annualized pace of 583k, representing a month-over-month increase of 22.2%, according to the U.S. Department of Commerce on Tuesday morning.
The consensus was looking for starts to decline to 450k. The previous month's reading was revised up to 477k from a previously reported 466k.
Single-family homes - the most important component in the report, accounting for four-fifths of housing starts - rose 1.1% to 357k, compared to the previous month's 353k. The rise comes following decline in the component in 20 of the past 21 months.
Multiple-family homes rose to 226k, compared to the previous month's 124k level.
Meanwhile, building permits rose to 547k in February, up from 531k in January. The consensus was looking for a decline to 500k building permits.
Single-family permits rose 11% in the month to 373k in February from January's 336k. Multiple-family unit permits fell to 174k, up from 195k units in January.
By Stephen Huebl and edited by Megan Ainscow
©CEP News Ltd. 2009
U.S. housing starts rose to an annualized pace of 583k, representing a month-over-month increase of 22.2%, according to the U.S. Department of Commerce on Tuesday morning.
The consensus was looking for starts to decline to 450k. The previous month's reading was revised up to 477k from a previously reported 466k.
Single-family homes - the most important component in the report, accounting for four-fifths of housing starts - rose 1.1% to 357k, compared to the previous month's 353k. The rise comes following decline in the component in 20 of the past 21 months.
Multiple-family homes rose to 226k, compared to the previous month's 124k level.
Meanwhile, building permits rose to 547k in February, up from 531k in January. The consensus was looking for a decline to 500k building permits.
Single-family permits rose 11% in the month to 373k in February from January's 336k. Multiple-family unit permits fell to 174k, up from 195k units in January.
By Stephen Huebl and edited by Megan Ainscow
©CEP News Ltd. 2009
Thursday, March 12, 2009
Mortgage Article from Bloomberg
Lock in Mortgage Rate Before It’s Too Late: Jane Bryant Quinn
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Commentary by Jane Bryant Quinn
March 11 (Bloomberg) -- So who is actually getting some?
I mean those beautiful fixed-rate mortgages advertised at 5.5 percent or less. Maybe, in a virtual world, an avatar can drop into a virtual bank and close a loan at that rate, but here in real life, achieving it is close to a miracle.
You might get 5.5 percent if you put 20 percent down, borrow $417,000 or less, boast a high credit score (730 to 750, out of 850 total, as determined by your credit history), carry low debt relative to your reliable income (confirmed by two years’ worth of tax returns and probably not counting bonuses), buy in an area where home prices are relatively stable (wherever that is) and use a community bank, not a national bank.
If you slip even a little bit on any of the criteria above, you will be charged a higher interest rate and higher fees, as well. Mortgages are far more expensive than they appear, especially for people borrowing large amounts or trying to refinance.
To start with, none of the easy, bubble mortgages are around anymore. No “stated income” loans where you don’t have to document your earnings. No option adjustable-rate mortgages, where you could choose to pay less than the interest due. Virtually no piggyback loans, where the lender supplies a first and second mortgage in the same package, up to 100 percent of the purchase price. You might still get an interest-only loan, but it’s not cheap.
Fannie, Freddie
The principal actors in the market today are the nationalized housing-finance companies, Fannie Mae and Freddie Mac, which purchase mortgage loans. In third place stands the Federal Housing Administration, which insures loans originated by private lenders. All together, the government sector accounts for 87 percent of the mortgages currently being made, says Guy Cecala, chief executive officer and publisher of Inside Mortgage Finance Publications in Bethesda, Maryland. Purely private financing is expensive and scarce.
The government backs only loans of a certain size, known as conforming loans. The lowest available interest rate is generally on a traditional Fannie or Freddie mortgage for as much as $417,000, with a higher limit in Alaska, Hawaii, Guam and the U.S. Virgin Islands. Next step up would be a jumbo conforming loan of as much as $729,750, available in the most expensive counties in the U.S. and costing anywhere from a quarter point to a full percentage point more.
And that’s just for starters. Fannie and Freddie add a quarter-point “adverse market delivery charge” because of declining home prices. They have also initiated “risk-based pricing,” which raises fees on people with less than a perfect borrowing profile. You will pay more if your credit score falls below about 720, you are buying a condominium or you are putting less than 15 percent down.
Prohibitive Fees
“You might qualify for a mortgage, technically, but the interest rate and fees may make it prohibitive to take,” Cecala says. Loans larger than the Fannie/Freddie limits, booked by private lenders, might cost 2 percentage points over the conforming rate. On refinancing, the fees can eat up any monthly savings you expected.
Another cost is private mortgage insurance, which you need if you put less than 20 percent down. Premiums are up, in most parts of the country, and the lenders are restricting coverage in various ways. For example, PMI Group in Walnut Creek, California, won’t insure cash-out refinances, second homes or investment properties. In Florida, it won’t touch attached housing such as condominiums. MGIC Investment Corp. in Milwaukee, Wisconsin, stopped insuring second-home loans this week.
Higher Down Payments
Mortgage insurance is scarce for buyers who want to put only 5 percent down. In declining housing markets, meaning practically all of them, the insurers might want 10 percent or 15 percent down. Genworth Financial Inc., based in Richmond, Virginia, demands credit scores of 720 and up in the most bruising markets -- Arizona, California, Florida and Nevada.
Cash-poor borrowers are turning to the FHA, which accepts down payments as low as 3.5 percent. Not surprisingly, the FHA accounted for 31 percent of the market at the end of 2008 compared with 2 percent in 2006.
Still, these loans aren’t cheap. You pay an upfront mortgage insurance premium of 1.75 percent, which can be tacked on to the loan, plus a monthly premium tied to the size of your down payment. Interest-rate quotes vary tremendously, says mortgage expert Jack Guttentag, founder of the Web site mtgprofessor.com and professor of finance emeritus at the Wharton School of the University of Pennsylvania. Some lenders mark up their FHA loans much more than others. It’s hard to know if you’re getting a good price.
Lock Interest Rate
Only loans for veterans, insured by the U.S. Veterans Affairs Department, and U.S. Agriculture Department loans in rural areas require no down payment and no mortgage insurance.
It’s taking longer to close a loan. Lenders, burned by their own sloppy practices, have gone back to checking what you say on the application and that takes time. For example, they are routinely checking your income claims against your tax return, says Jim Pair, president-elect of the National Association of Mortgage Brokers.
Once you strike a deal on a mortgage, protect yourself by locking up the interest rate for the length of time it will probably take for the loan to close. Rates can change as much as a quarter-point in a single day. Don’t accept a verbal lock, Guttentag warns. Get it in writing, with rate, points and fees disclosed. A broker might say you are locked, in hope of nipping a higher fee if rates decline. If he or she is wrong, you are the one who pays.
(Jane Bryant Quinn, a leading personal finance writer and author of “Smart and Simple Financial Strategies for Busy People,” is a Bloomberg News columnist. She is a director of Bloomberg LP, parent of Bloomberg News. The opinions expressed are her own.)
To contact the writer of this column: Jane Bryant Quinn in New York at jbquinn@bloomberg.net
Last Updated: March 11, 2009 00:01 EDT
* Please note that if you have a mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
Share | Email | Print | A A A
Commentary by Jane Bryant Quinn
March 11 (Bloomberg) -- So who is actually getting some?
I mean those beautiful fixed-rate mortgages advertised at 5.5 percent or less. Maybe, in a virtual world, an avatar can drop into a virtual bank and close a loan at that rate, but here in real life, achieving it is close to a miracle.
You might get 5.5 percent if you put 20 percent down, borrow $417,000 or less, boast a high credit score (730 to 750, out of 850 total, as determined by your credit history), carry low debt relative to your reliable income (confirmed by two years’ worth of tax returns and probably not counting bonuses), buy in an area where home prices are relatively stable (wherever that is) and use a community bank, not a national bank.
If you slip even a little bit on any of the criteria above, you will be charged a higher interest rate and higher fees, as well. Mortgages are far more expensive than they appear, especially for people borrowing large amounts or trying to refinance.
To start with, none of the easy, bubble mortgages are around anymore. No “stated income” loans where you don’t have to document your earnings. No option adjustable-rate mortgages, where you could choose to pay less than the interest due. Virtually no piggyback loans, where the lender supplies a first and second mortgage in the same package, up to 100 percent of the purchase price. You might still get an interest-only loan, but it’s not cheap.
Fannie, Freddie
The principal actors in the market today are the nationalized housing-finance companies, Fannie Mae and Freddie Mac, which purchase mortgage loans. In third place stands the Federal Housing Administration, which insures loans originated by private lenders. All together, the government sector accounts for 87 percent of the mortgages currently being made, says Guy Cecala, chief executive officer and publisher of Inside Mortgage Finance Publications in Bethesda, Maryland. Purely private financing is expensive and scarce.
The government backs only loans of a certain size, known as conforming loans. The lowest available interest rate is generally on a traditional Fannie or Freddie mortgage for as much as $417,000, with a higher limit in Alaska, Hawaii, Guam and the U.S. Virgin Islands. Next step up would be a jumbo conforming loan of as much as $729,750, available in the most expensive counties in the U.S. and costing anywhere from a quarter point to a full percentage point more.
And that’s just for starters. Fannie and Freddie add a quarter-point “adverse market delivery charge” because of declining home prices. They have also initiated “risk-based pricing,” which raises fees on people with less than a perfect borrowing profile. You will pay more if your credit score falls below about 720, you are buying a condominium or you are putting less than 15 percent down.
Prohibitive Fees
“You might qualify for a mortgage, technically, but the interest rate and fees may make it prohibitive to take,” Cecala says. Loans larger than the Fannie/Freddie limits, booked by private lenders, might cost 2 percentage points over the conforming rate. On refinancing, the fees can eat up any monthly savings you expected.
Another cost is private mortgage insurance, which you need if you put less than 20 percent down. Premiums are up, in most parts of the country, and the lenders are restricting coverage in various ways. For example, PMI Group in Walnut Creek, California, won’t insure cash-out refinances, second homes or investment properties. In Florida, it won’t touch attached housing such as condominiums. MGIC Investment Corp. in Milwaukee, Wisconsin, stopped insuring second-home loans this week.
Higher Down Payments
Mortgage insurance is scarce for buyers who want to put only 5 percent down. In declining housing markets, meaning practically all of them, the insurers might want 10 percent or 15 percent down. Genworth Financial Inc., based in Richmond, Virginia, demands credit scores of 720 and up in the most bruising markets -- Arizona, California, Florida and Nevada.
Cash-poor borrowers are turning to the FHA, which accepts down payments as low as 3.5 percent. Not surprisingly, the FHA accounted for 31 percent of the market at the end of 2008 compared with 2 percent in 2006.
Still, these loans aren’t cheap. You pay an upfront mortgage insurance premium of 1.75 percent, which can be tacked on to the loan, plus a monthly premium tied to the size of your down payment. Interest-rate quotes vary tremendously, says mortgage expert Jack Guttentag, founder of the Web site mtgprofessor.com and professor of finance emeritus at the Wharton School of the University of Pennsylvania. Some lenders mark up their FHA loans much more than others. It’s hard to know if you’re getting a good price.
Lock Interest Rate
Only loans for veterans, insured by the U.S. Veterans Affairs Department, and U.S. Agriculture Department loans in rural areas require no down payment and no mortgage insurance.
It’s taking longer to close a loan. Lenders, burned by their own sloppy practices, have gone back to checking what you say on the application and that takes time. For example, they are routinely checking your income claims against your tax return, says Jim Pair, president-elect of the National Association of Mortgage Brokers.
Once you strike a deal on a mortgage, protect yourself by locking up the interest rate for the length of time it will probably take for the loan to close. Rates can change as much as a quarter-point in a single day. Don’t accept a verbal lock, Guttentag warns. Get it in writing, with rate, points and fees disclosed. A broker might say you are locked, in hope of nipping a higher fee if rates decline. If he or she is wrong, you are the one who pays.
(Jane Bryant Quinn, a leading personal finance writer and author of “Smart and Simple Financial Strategies for Busy People,” is a Bloomberg News columnist. She is a director of Bloomberg LP, parent of Bloomberg News. The opinions expressed are her own.)
To contact the writer of this column: Jane Bryant Quinn in New York at jbquinn@bloomberg.net
Last Updated: March 11, 2009 00:01 EDT
* Please note that if you have a mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
Friday, March 6, 2009
Mortgage Market Commentary
Mortgage Market Commentary
Mortgage backed securities prices (MBS) fell, then rebounded (rates rose) and stocks advanced after release of the Employment report showed the economy lost 651k jobs in February, December and January figures were revised lower and the Unemployment Rate jumped to 8.1%; highest in 25 years. FNMA 4.5% coupon 101.19bps, 1bps. Traders return focus to the continuous battle between weak economic data that should push rates lower and lingering supply concerns pulling rates higher. The economy may need additional federal measures to help stop the worst recession since WWII. The flight to quality and risk reduction trade is overwhelmed by the announcement of further Treasury borrowings.
Mortgage backed securities prices (MBS) fell, then rebounded (rates rose) and stocks advanced after release of the Employment report showed the economy lost 651k jobs in February, December and January figures were revised lower and the Unemployment Rate jumped to 8.1%; highest in 25 years. FNMA 4.5% coupon 101.19bps, 1bps. Traders return focus to the continuous battle between weak economic data that should push rates lower and lingering supply concerns pulling rates higher. The economy may need additional federal measures to help stop the worst recession since WWII. The flight to quality and risk reduction trade is overwhelmed by the announcement of further Treasury borrowings.
Thursday, March 5, 2009
Mortgage Market Commentary
Mortgage Market Commentary
Mortgage backed securities (MBS) prices are higher (rates lower) on weakness in the stock market and speculation central banks may increase asset purchases after the Bank of England said it would buy long term bonds after cutting rates 50bps. Stronger demand for MBS leads to lower rates. FNMA 4.5% coupon 100.83bps, +20bps. U.S. jobless claims decreased to 639k from a 26 year high the prior week. U.S. worker productivity in the 4th quarter fell for the first time in a year as output dropped even faster than companies cut jobs and hours. Unit labor costs climbed 5.7%, indicating companies will keep cutting jobs to contain escalating losses. The faltering labor market has caused consumer sentiment to plummet and crippled spending. The Treasury will announce the amount of 3yr, 10yr & 30yr notes it will sell next week later today and the Fed details its most recent MBS purchases too; SUPPLY & DEMAND!
Mortgage backed securities (MBS) prices are higher (rates lower) on weakness in the stock market and speculation central banks may increase asset purchases after the Bank of England said it would buy long term bonds after cutting rates 50bps. Stronger demand for MBS leads to lower rates. FNMA 4.5% coupon 100.83bps, +20bps. U.S. jobless claims decreased to 639k from a 26 year high the prior week. U.S. worker productivity in the 4th quarter fell for the first time in a year as output dropped even faster than companies cut jobs and hours. Unit labor costs climbed 5.7%, indicating companies will keep cutting jobs to contain escalating losses. The faltering labor market has caused consumer sentiment to plummet and crippled spending. The Treasury will announce the amount of 3yr, 10yr & 30yr notes it will sell next week later today and the Fed details its most recent MBS purchases too; SUPPLY & DEMAND!
Wednesday, March 4, 2009
Special Report
Special Report
Updated Housing Plan
03/04/2009
Today the Treasury Department released the details and guidelines of the Obama Administration’s Housing Plan which is being called “Making Home Affordable”
The following links will provide you with direct access to read the Treasury Department’s release:
Click here for the summary
Click here for the Housing Fact Sheet
Click here for Modification Guidelines
Updated Housing Plan
03/04/2009
Today the Treasury Department released the details and guidelines of the Obama Administration’s Housing Plan which is being called “Making Home Affordable”
The following links will provide you with direct access to read the Treasury Department’s release:
Click here for the summary
Click here for the Housing Fact Sheet
Click here for Modification Guidelines
Mortgage Market Commentary
Mortgage Market Commentary
Mortgage backed securities prices are lower (rates higher) this morning as stocks rose around the world and traders increased concern supply is overwhelming demand leading to higher rates. FNMA 4.5% coupon 100.55bps, down 20bps and the low of the session. U.S. service sector shrank further in February as job losses sapped consumer confidence and spending. The service sector represents about 80% of U.S. economic activity. The Mortgage Bankers Association weekly purchase index fell 6% & refinancing index decreased 15% coinciding with 30yr mortgage rates rising above 5%. The Fed's Beige Book will be released at 11am pt.
Mortgage backed securities prices are lower (rates higher) this morning as stocks rose around the world and traders increased concern supply is overwhelming demand leading to higher rates. FNMA 4.5% coupon 100.55bps, down 20bps and the low of the session. U.S. service sector shrank further in February as job losses sapped consumer confidence and spending. The service sector represents about 80% of U.S. economic activity. The Mortgage Bankers Association weekly purchase index fell 6% & refinancing index decreased 15% coinciding with 30yr mortgage rates rising above 5%. The Fed's Beige Book will be released at 11am pt.
Tuesday, March 3, 2009
Potential of the Federal Tax Credit
Potential of the Federal Tax Credit
Prospective home buyers and real estate professionals are optimistic about the positive potential of the federal tax credit of up to $8,000 for first-time home buyers. The credit is 10 percent of the home's purchase price, up to $8,000. It applies to all new and existing homes purchase before December 1.
First-time buyers are defined as those who have not owned a home within the past three years. To qualify, individuals cannot earn more than $75,000 per year - couples may earn up to $150,000. The credit does not need to be repaid if the home is owned and occupied by the tax payer for at least three years.
Prospective home buyers and real estate professionals are optimistic about the positive potential of the federal tax credit of up to $8,000 for first-time home buyers. The credit is 10 percent of the home's purchase price, up to $8,000. It applies to all new and existing homes purchase before December 1.
First-time buyers are defined as those who have not owned a home within the past three years. To qualify, individuals cannot earn more than $75,000 per year - couples may earn up to $150,000. The credit does not need to be repaid if the home is owned and occupied by the tax payer for at least three years.
Mortgage Market Update 2
Yesterday, mortgage backed securities managed to have a small rally and close higher by about .375 in discount. When I say we closed higher by .375 in discount I mean that if a rate was costing .375 in points that rate would cost nothing today. The main driving force for the improvement was a big rally in treasuries which drove the yield from over 3.03 to as low as 2.88 on the 10 yr Treasury note. Unfortunately, overnight we have given back most of the gains but we are still higher than where we opened yesterday. We can give treasuries the credit for the improvement yesterday and we can blame them this morning for the loss. Currently, the 10 year Treasury note is moving back higher and is at a yield of 2.95. It seems of late that mbs are very much attached to treasuries, following them higher and lower but to a lesser degree.
Mortgage Market Commentary
Mortgage Market Commentary
Mortgage backed securities (MBS) prices are lower (rates higher) paring yesterday's gains on concern the government's plan to rescue financial institutions, boost the economy and service a record budget deficit will require increased sales of debt. More debt causes rates to rise, including mortgage rates. FNMA 4.5% coupon 100.55bps, -12bps. Pending Home Sales fell 7.7% in January as a lack of credit and record foreclosures that are pushing property values down keep prospective buyers out of the market. Falling prices and lower borrowing costs have brought more homes within reach of buyers, however. Pending home sales are considered a leading indicator because they track contract signings. Fed Chief Bernanke and Treasury Secretary Geithner will be speaking today and investors are hoping for further details about government programs.
Mortgage backed securities (MBS) prices are lower (rates higher) paring yesterday's gains on concern the government's plan to rescue financial institutions, boost the economy and service a record budget deficit will require increased sales of debt. More debt causes rates to rise, including mortgage rates. FNMA 4.5% coupon 100.55bps, -12bps. Pending Home Sales fell 7.7% in January as a lack of credit and record foreclosures that are pushing property values down keep prospective buyers out of the market. Falling prices and lower borrowing costs have brought more homes within reach of buyers, however. Pending home sales are considered a leading indicator because they track contract signings. Fed Chief Bernanke and Treasury Secretary Geithner will be speaking today and investors are hoping for further details about government programs.
Monday, March 2, 2009
Article on Mortgage Rates and Home Loans
important imformation for Massachusetts borrowers looking for new mortgage loan.
Low Mortgage Rates a Mirage as Fees Climb, Eligibility Tightens
By James Sterngold
Feb. 27 (Bloomberg) -- Brian Wickert, a mortgage banker in Butler, Wisconsin, prides himself on screening applicants carefully. That’s why he was stunned when a customer who sailed through four home loans tried to do a refinancing in January, only to be rejected by three national lenders.
The borrower’s credit standing and income were solid, said Wickert, 47, president of Accunet Mortgage. The problem was that, with home sales plummeting along with prices, the appraiser couldn’t find the required three comparable sales in six months within a one-mile radius.
“The business has gotten tougher than I’ve seen it,” Wickert said. “The person who has decided he wants to give himself his own personal economic stimulus package by refinancing at low rates is being stymied by the rules and the fees. Too many people are being excluded.”
Bankers around the country say one reason the housing market hasn’t stabilized is that while mortgage rates have come down, hurdles have gone up. Rising default rates and bank losses have made lenders more risk-averse, leading to higher fees, increased insurance rates and difficulties refinancing loans.
The average rate on a 30-year fixed mortgage dropped to 5.07 percent for the week ending Feb. 26 from 6.63 percent for the one ending July 24, according to data compiled by McLean, Virginia-based Freddie Mac. Meanwhile, the percent of mortgage applications that led to closings fell nationwide to 59 percent in the first half of 2008 from 66.3 percent in 2006, the most recent period for which data is available, the Mortgage Bankers Association reported.
‘Too Tight’
“Underwriting standards have changed from lax to too tight,” said Lawrence Yun, chief economist at the Chicago-based National Association of Realtors. “The pendulum is swinging too far the other way. We can’t stabilize the housing market if buyers can’t get reasonable mortgages.”
Help may be on the way. Under the terms of President Barack Obama’s housing plan announced Feb. 18, as many as 4 million homeowners on the verge of foreclosure will be eligible to have their loans modified to reduce monthly payments. Another 5 million, whose homes are worth less than the principal of their mortgages, also may be able to refinance
The program, which takes effect March 4, only covers borrowers whose mortgages are owned or insured by Washington- based Fannie Mae or Freddie Mac -- about 40 percent of the total, according to Inside Mortgage Finance, a Bethesda, Maryland-based newsletter. They must still prove they have a solid payment history and sufficient income to meet monthly payments, and the loan can’t be more than 105 percent of the appraised value of the home to qualify.
FICO Scores
Those not covered by the Obama plan will have to contend with lenders requiring higher FICO scores than in the past or charging upfront fees to borrowers with scores once considered excellent. San Francisco-based Wells Fargo & Co., the second- largest U.S. home lender, boosted the minimum score for Federal Housing Administration and Veteran Affairs loans it makes through brokers to 620 on Jan. 27 from 600.
“A score of 700 was once near perfect,” said Gwen Muse Evans, vice president of credit policy at Fannie Mae, the government-controlled company that helps set lending standards. “Today, a 700 performs more like a 660 did. We have updated our policy to take into account the drift in credit scores.”
Consumer credit scores, called FICOs after creator Fair Isaac Corp., range from 300 to 850. The average FICO score on mortgages bought by Freddie Mac and Fannie Mae rose to 747.5 in the fourth quarter of last year from 722.3 in 2005, according to Inside Mortgage Finance.
Higher Fees
Accunet’s Wickert said that a 660 FICO score would have qualified most borrowers for loans with no upfront fees in the past. Now, someone trying to borrow $200,000 with a 660 score would have to pay a 2.8 percent fee, or $5,600, he said. Even someone with a 719 score would have to pay $1,750 in cash.
Wickert said that if customers don’t want to pay the fees in cash, he can increase the interest rate, since the wholesale banks he sells his mortgages to would pay more for the higher rate over the life of the loan. Before the crisis, a quarter-of- a-percentage-point increase in the rate was sufficient to cover a 1 percent fee. Now, Wickert said, he needs to double that.
Robert Satnick, a mortgage broker in California’s San Fernando Valley, said he has a customer whose efforts to refinance a loan at a lower rate might cost her about $600 a month more because the value of her condominium has declined.
The owner has good income and a FICO score in the high 700s, he said. The dilemma is that the value of her home has dropped to about $400,000, the amount of her mortgage. As a result, banks will charge her an upfront fee of 1.75 percent on a 6 percent refinancing. She also has to buy private mortgage insurance, adding another $63 a month to her cost.
Out of Reach’
“This is now a great opportunity to buy or refinance,” said Satnick, 44. “But getting the mortgage has gotten so hard it’s putting those properties out of reach of a lot of people.”
Another strain on consumers is a planned increase by Fannie Mae of add-on fees called loan-level price adjustments, which lenders often pass on to borrowers. Someone with a 699 FICO score borrowing 80 percent of the value of a home used to pay 1 percent in price adjustments. As of April 1, Fannie Mae will raise that to 1.5 percent. For a borrower with a 659 score, the adjustment will climb to 3 percent from 2.25 percent.
“These are targeted pricing adjustments aimed at aligning price with risk for the highest risk products in the market today, including interest-only loans, cash-out refinancings, low credit scores, high loan-to-value loans and condos,” said Fannie Mae spokeswoman Amy Bonitatibus.
Staff Reductions
Another issue is that mortgage lenders have eliminated jobs, slowing down the approval process.
“We’re very thinly staffed because we don’t know how long this will last,” said Christopher M. George, president of CMG Mortgage in San Ramon, California, referring to the global financial crisis.
George said he has gone from almost 800 employees in 2006 to 250. Nationwide, employment in the mortgage industry declined to 280,000 in December from 505,000 at the peak in February 2006, according to data compiled by the Mortgage Bankers Association in Washington.
Even with a smaller staff, George said, his underwriters do more checking than in the past. Before the crisis, he said, CMG asked borrowers to fill out an Internal Revenue Service form that allowed the lender to confirm income information, though it rarely sent the form to the IRS. Now, George said, CMG sends the form in before the closing, scrutinizes appraisals and contacts banks to check on the account balances of the borrowers.
“Everything is checked, and that makes it harder for some people,” he said.
Refinancing Program
Fannie Mae, taken over by the government in September after losses on its mortgage holdings, says it is doing what it can to help borrowers and is urging mortgage bankers to do the same.
A new program called DU Refi Plus that takes effect April 4 is intended to make it easier for consumers to refinance their mortgages, even if the value of their homes has declined. Lower FICO scores will be accepted, the requirement for an appraisal or home inspection will be waived in some cases, and borrowers will be able to submit a single pay stub to confirm their salaries rather than more extensive documentation.
Fannie Mae says it still won’t be easy to make low mortgage rates more accessible.
“There needs to be some creativity to get back into the marketplace and get through this fear,” said Fannie Mae’s Evans. “The message we’re trying to promote is we can’t be afraid to lend. We want to get back to the mentality of looking at prudent ways to say ‘Yes.’”
Wickert, whose mortgage-approval rate has declined to 93 percent from 98 percent a year ago, said the issue requires a flexibility that only a few lenders are showing. The customer who was rejected by three banks got her mortgage approved by a fourth, which focused on her high income and credit score, not the appraisal rule, he said, adding weeks to the process.
“A lot of people are frustrated because the rates look good, but someone has raised the bar on them,” Wickert said.
To contact the reporter on this story: James Sterngold in Los Angeles at jsterngold2@bloomberg.net
http://www.bloomberg.com/apps/news?pid=20601213&sid=a8ta_MEhUZ9E&refer=home
Low Mortgage Rates a Mirage as Fees Climb, Eligibility Tightens
By James Sterngold
Feb. 27 (Bloomberg) -- Brian Wickert, a mortgage banker in Butler, Wisconsin, prides himself on screening applicants carefully. That’s why he was stunned when a customer who sailed through four home loans tried to do a refinancing in January, only to be rejected by three national lenders.
The borrower’s credit standing and income were solid, said Wickert, 47, president of Accunet Mortgage. The problem was that, with home sales plummeting along with prices, the appraiser couldn’t find the required three comparable sales in six months within a one-mile radius.
“The business has gotten tougher than I’ve seen it,” Wickert said. “The person who has decided he wants to give himself his own personal economic stimulus package by refinancing at low rates is being stymied by the rules and the fees. Too many people are being excluded.”
Bankers around the country say one reason the housing market hasn’t stabilized is that while mortgage rates have come down, hurdles have gone up. Rising default rates and bank losses have made lenders more risk-averse, leading to higher fees, increased insurance rates and difficulties refinancing loans.
The average rate on a 30-year fixed mortgage dropped to 5.07 percent for the week ending Feb. 26 from 6.63 percent for the one ending July 24, according to data compiled by McLean, Virginia-based Freddie Mac. Meanwhile, the percent of mortgage applications that led to closings fell nationwide to 59 percent in the first half of 2008 from 66.3 percent in 2006, the most recent period for which data is available, the Mortgage Bankers Association reported.
‘Too Tight’
“Underwriting standards have changed from lax to too tight,” said Lawrence Yun, chief economist at the Chicago-based National Association of Realtors. “The pendulum is swinging too far the other way. We can’t stabilize the housing market if buyers can’t get reasonable mortgages.”
Help may be on the way. Under the terms of President Barack Obama’s housing plan announced Feb. 18, as many as 4 million homeowners on the verge of foreclosure will be eligible to have their loans modified to reduce monthly payments. Another 5 million, whose homes are worth less than the principal of their mortgages, also may be able to refinance
The program, which takes effect March 4, only covers borrowers whose mortgages are owned or insured by Washington- based Fannie Mae or Freddie Mac -- about 40 percent of the total, according to Inside Mortgage Finance, a Bethesda, Maryland-based newsletter. They must still prove they have a solid payment history and sufficient income to meet monthly payments, and the loan can’t be more than 105 percent of the appraised value of the home to qualify.
FICO Scores
Those not covered by the Obama plan will have to contend with lenders requiring higher FICO scores than in the past or charging upfront fees to borrowers with scores once considered excellent. San Francisco-based Wells Fargo & Co., the second- largest U.S. home lender, boosted the minimum score for Federal Housing Administration and Veteran Affairs loans it makes through brokers to 620 on Jan. 27 from 600.
“A score of 700 was once near perfect,” said Gwen Muse Evans, vice president of credit policy at Fannie Mae, the government-controlled company that helps set lending standards. “Today, a 700 performs more like a 660 did. We have updated our policy to take into account the drift in credit scores.”
Consumer credit scores, called FICOs after creator Fair Isaac Corp., range from 300 to 850. The average FICO score on mortgages bought by Freddie Mac and Fannie Mae rose to 747.5 in the fourth quarter of last year from 722.3 in 2005, according to Inside Mortgage Finance.
Higher Fees
Accunet’s Wickert said that a 660 FICO score would have qualified most borrowers for loans with no upfront fees in the past. Now, someone trying to borrow $200,000 with a 660 score would have to pay a 2.8 percent fee, or $5,600, he said. Even someone with a 719 score would have to pay $1,750 in cash.
Wickert said that if customers don’t want to pay the fees in cash, he can increase the interest rate, since the wholesale banks he sells his mortgages to would pay more for the higher rate over the life of the loan. Before the crisis, a quarter-of- a-percentage-point increase in the rate was sufficient to cover a 1 percent fee. Now, Wickert said, he needs to double that.
Robert Satnick, a mortgage broker in California’s San Fernando Valley, said he has a customer whose efforts to refinance a loan at a lower rate might cost her about $600 a month more because the value of her condominium has declined.
The owner has good income and a FICO score in the high 700s, he said. The dilemma is that the value of her home has dropped to about $400,000, the amount of her mortgage. As a result, banks will charge her an upfront fee of 1.75 percent on a 6 percent refinancing. She also has to buy private mortgage insurance, adding another $63 a month to her cost.
Out of Reach’
“This is now a great opportunity to buy or refinance,” said Satnick, 44. “But getting the mortgage has gotten so hard it’s putting those properties out of reach of a lot of people.”
Another strain on consumers is a planned increase by Fannie Mae of add-on fees called loan-level price adjustments, which lenders often pass on to borrowers. Someone with a 699 FICO score borrowing 80 percent of the value of a home used to pay 1 percent in price adjustments. As of April 1, Fannie Mae will raise that to 1.5 percent. For a borrower with a 659 score, the adjustment will climb to 3 percent from 2.25 percent.
“These are targeted pricing adjustments aimed at aligning price with risk for the highest risk products in the market today, including interest-only loans, cash-out refinancings, low credit scores, high loan-to-value loans and condos,” said Fannie Mae spokeswoman Amy Bonitatibus.
Staff Reductions
Another issue is that mortgage lenders have eliminated jobs, slowing down the approval process.
“We’re very thinly staffed because we don’t know how long this will last,” said Christopher M. George, president of CMG Mortgage in San Ramon, California, referring to the global financial crisis.
George said he has gone from almost 800 employees in 2006 to 250. Nationwide, employment in the mortgage industry declined to 280,000 in December from 505,000 at the peak in February 2006, according to data compiled by the Mortgage Bankers Association in Washington.
Even with a smaller staff, George said, his underwriters do more checking than in the past. Before the crisis, he said, CMG asked borrowers to fill out an Internal Revenue Service form that allowed the lender to confirm income information, though it rarely sent the form to the IRS. Now, George said, CMG sends the form in before the closing, scrutinizes appraisals and contacts banks to check on the account balances of the borrowers.
“Everything is checked, and that makes it harder for some people,” he said.
Refinancing Program
Fannie Mae, taken over by the government in September after losses on its mortgage holdings, says it is doing what it can to help borrowers and is urging mortgage bankers to do the same.
A new program called DU Refi Plus that takes effect April 4 is intended to make it easier for consumers to refinance their mortgages, even if the value of their homes has declined. Lower FICO scores will be accepted, the requirement for an appraisal or home inspection will be waived in some cases, and borrowers will be able to submit a single pay stub to confirm their salaries rather than more extensive documentation.
Fannie Mae says it still won’t be easy to make low mortgage rates more accessible.
“There needs to be some creativity to get back into the marketplace and get through this fear,” said Fannie Mae’s Evans. “The message we’re trying to promote is we can’t be afraid to lend. We want to get back to the mentality of looking at prudent ways to say ‘Yes.’”
Wickert, whose mortgage-approval rate has declined to 93 percent from 98 percent a year ago, said the issue requires a flexibility that only a few lenders are showing. The customer who was rejected by three banks got her mortgage approved by a fourth, which focused on her high income and credit score, not the appraisal rule, he said, adding weeks to the process.
“A lot of people are frustrated because the rates look good, but someone has raised the bar on them,” Wickert said.
To contact the reporter on this story: James Sterngold in Los Angeles at jsterngold2@bloomberg.net
http://www.bloomberg.com/apps/news?pid=20601213&sid=a8ta_MEhUZ9E&refer=home
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