Archive for the 'Mortgage Rates' Category

Freddie Mac: Mortgage rates fall to new lows

July 22nd, 2010

Written by Frost Mortgage

Long-term mortgage rates fell again this week, with both 30-year and 15-year fixed-rate mortgages at the lowest levels since McLean, Va.-based Freddie Mac began keeping track.

The average rate on a 30-year fixed-rate mortgage in the week ending July 22 was 4.56 percent, down from 4.57 percent last week, the lowest since at least 1971. A 15-year fixed-rate mortgage averaged 4.03 percent, the lowest since at least 1991.

A one-year, adjustable-rate mortgage averaged 3.70 percent, down from 3.74 percent last week.

“The decline in mortgage rates over the past few weeks echoes the recent signs of weakening confidence in the strength of the economy, particularly the housing and consumer sectors,” said Freddie Mac (OTC: FMCC) chief economist Frank Nothaft.

Read more: Freddie Mac: Mortgage rates fall to new lows – New Mexico Business Weekly

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Rates are even lower and tax credits may be extended

July 1st, 2010

Written by Frost Mortgage

It’s a busy week in the news for potential homebuyers.

First, both 15-year and 30-year loans hit record lows for the second week in a row.

Second, as Reuters reports, the tax credit extension has passed a key hurdle:

The House backed by a vote of 409-5 a measure to extend the closing deadline to September 30 for buyers who already met the April 30 deadline to have a signed contract. The current deadline requires those buyers to close the transaction by June 30 to receive the $8,000 tax credit for first-time homebuyers.

The measure must also go before the Senate for approval.

Rates are dropping and home sales are also down.

What this means is an exceptional window of opportunity for those looking for a new home. Please contact one of our loan officers today and allow us to help you find out what is available to you. We think you’ll be glad you did.

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FHA: Reverse mortgage support is crucial

May 4th, 2010

Written by Frost Mortgage

Reverse mortgage programs operated by Housing and Urban Development (HUD) require help to continue, the Federal Housing Authority (FHA) told a House subcommittee recently, Reverse Mortgage Daily reports.

In testimony, an FHA assistant secretary said that, without support, HUD will be forced to more drastically cut principal limit factors (PLFs), which “would significantly reduce the amount of funds that would be available to seniors (more than 30%), which is on average a $23,000 to $27,000 impact.”

We know what a reverse mortgage can mean to older members of our community. As a full eagle licensed FHA lender, Frost Mortgage is a great choice for your reverse mortgage questions. Please, contact us today and find out why we don’t just close mortgages–we open doors.

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Home loans: Many leap without looking

April 29th, 2010

Written by Frost Mortgage

As buyers rush to take advantage of the homebuyer tax credit, an important fact is being highlighted: Moving too quickly can be costly. You may race to get the tax credit but end up losing more than that in a deal you haven’t fully thought through.

A survey on homebuying conducted by Zillow and reported on by the New Mexico Business Weekly found that

borrowers who obtained a home loan in the past five years spent just five hours reviewing their options and got just three quotes. Thirty-one percent spent two hours or less, despite the fact that a home is one of the largest investments people make in a lifetime …

If you’re feeling rushed or thinking you may not have all the information you need to make a smart choice, please contact one of our experienced loan officers for assistance. You’ll get sound, professional advice and information to help you make the best move, because at Frost Mortgage, we don’t just close loans, we open doors.

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Mortgages are available despite confusing news

March 15th, 2010

Written by Greg Frost

We’re watching a slew of housing news from around the country and seeing mixed outlooks. National Mortgage News Online reports (here; subscription required) that housing starts were up slightly nationally, pointing to increased stability. In places like Southern California, where Frost Mortgage has several branch partners, home prices were up for January compared with last year, but still down from December. Here in our home base of Albuquerque, New Mexico, home sales are showing signs of “modest recovery.”

What does this mean to you as you look for a Veterans Administration (VA), Federal Housing Authority (FHA), 203k Rehab or USDA Rural Home Loan? From our perspective, the recovery news is likely to remain unclear for some time. Only after the fact will we be able to tell that real recovery has begun. In the meantime, life must go on, and despite the doom and gloom we see every day, conditions are actually great for borrowers. Rates are at historic lows, however, government withdrawal from mortgage backed securities in the coming weeks could precipitate a modest increase.

In short, as I wrote recently, it’s just not possible to “time the market.” We’ve seen a lot of ups and downs since we opened in 1991, and we’ve learned that what works best in the long run are the time-tested rules. And so, if you’re looking for a loan, please call me today at (800) 659-3767 and I’ll help you figure out what makes sense for you today.

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Home buyers can save today by not trying to “time the market”

March 4th, 2010

Written by Greg Frost

Though the jury’s out on where we stand in terms of an overall economic recovery, mortgage rates remain historically low and tax incentives remain intact. There’s arguably never been a better time to purchase a home. That being said, here are a few significant dates to keep an eye on:

1. On March 31^st, the Federal Reserve will discontinue purchasing Mortgage Backed Securities. Most economists believe we’ll see increased mortgage rates as a result.
2. Those wishing to take advantage of home-buyer tax incentives must have a binding purchase contract in place no later than April 30^th.

Today, I’d like to address a common mistake many home shoppers make – trying to ‘time the real estate market’. In other words, some shoppers try to make their purchase at or near the bottom. In theory, this seems like a good idea. However, the following illustration makes a powerful point:

Hypothetical Home-buying Situation A:

Alvin has his eyes on a home currently listed for $250,000. He’s pretty sure he can negotiate the seller down to $240,000, but right now, the seller’s stuck at $245,000. What if Alvin acts today and pays $245,000 for the home? Assuming he qualifies for a 30-year fixed mortgage with a 5.5% interest rate and puts 20% down*

1. Alvin ends up financing $196,000 ($245,000 x .8).
2. Alvin’s monthly payment (P+I) would be approximately $1,113.
3. Over the 30-year loan, Alvin will pay $204,631 in total interest.

Hypothetical Home-buying Situation B:

Alternatively, let’s assume that Alvin hangs in there for 60 days and gets his target price of $240,000. He feels great because he saved himself $5,000! However, let’s also assume that in the 60 days that passed, the rate on 30-year fixed mortgages increased from 5.5% to 6.5%*. (This type of rate increase can sometimes occur in a week, let alone a 60-day period.) Alvin’s still prepared to put 20% down, so

1. He’ll finance $192,000 ($240,000 x .8)
2. However, because interest rates rose from 5.5% to 6.5%, Alvin’s monthly mortgage payment is $100 higher ($1,213) than in Situation A when he’d paid $5,000 more for the home!
3. Furthermore, Alvin will pay over $40,000 more in interest ($244,885) in Situation B over the life of the loan!

As you can see, trying to time the market can be a risky proposition – and often backfires. If you or anyone you know is in the process of purchasing a home, please feel free to share this advice with them. As always, I’d be happy to conduct this analysis free of charge and am honored by the trust you’ve instilled in me as your mortgage advisor for life.

* By the way, for illustrative purposes I used hypothetical rates for the above scenarios. If you’d like to know what today’s mortgage rates are, please feel free to call me today!

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What’s Ahead For Mortgage Rates This Week : February 2, 2009

February 2nd, 2009

Written by Greg Frost

Consumer confidence reached an all-time low and 100,000 Americans were issued layoff notices last week, each playing a role in the mortgage market’s relative worsening.

For the third consecutive week, mortgage rates rose and average loan fees increased, too.

Amid all of the negative economic news, however, there were two bright spots worth identifying and discussing.  They show that country may be closer to economic recovery than expected.

First, the supply of “used” homes for sale fell from 11 months to 9 months nationwide.  This suggests that homebuyers are re-entering the housing market in force, a signal that home prices are nearing equilibrium.

And, second, the nation’s GDP — a measurement of the country’s complete economic footprint — didn’t fall by nearly as much as what the experts had predicted.  A positive surprise like this makes us wonder about what else the Doomsday Economists may be wrong.

We won’t have to wonder long.

With this week comes copious amounts of data, legislation and rhetoric to influence mortgage rates.  Some of the news-bites that mortgage markets will digest this week include:

• The Personal Consumption Expenditures Index report.  PCE is a preferred inflation measurement and inflation is the enemy of mortgage rates. A high reading will pressure mortgage rates up.
• Retail stores report on same-store sales.
• The Pending Home Sales report.  This notes the number of “homes under contract” and is a good gauge for buyer interest and the general health of housing.
• 20% of the S&P 500 firms will report earnings.
• Congress is expected to vote on the Stimulus package.

The biggest impact on rates, however, could come on Friday with the release of January’s jobs report.  Employment data is always market-mover and with the press giving so much attention to layoffs lately, expect Wall Street to be extra jittery it.

Markets expect the economy lose a half-million jobs in last month.

(Image courtesy: Wall Street Journal Online)

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Explaining What The Federal Reserve Did In Plain English (January 28, 2009 Edition)

January 28th, 2009

Written by Greg Frost Jr.

The Federal Open Market Committee voted to leave the Fed Funds Rate unchanged today.  It remains within a target range of 0.000-0.250 percent.

In its press release, the FOMC reiterated most of the key points from its December 2008 statement, including:

• The U.S. employment outlook continues to deteriorate
• Consumers and businesses continue to cut spending
• The housing sector is still showing weakness

In addition, the FOMC addressed the “extremely tight” credit conditions for U.S. households and business, even as it said some financial markets are showing signs of improvement.

To the Fed, the latter is a precursor for the former.  For Americans needing new mortgages or other forms of credit, it may mean that getting approved gets easier sometime late this year.

Most importantly, the Fed’s press release again mentioned the policy-setting group’s intention to “employ all available tools” to promote economic growth.  This includes the open-market purchasing of mortgage-backed debt that has helped fuel the current Refi Boom. The Fed indicated a willingness to extend the program beyond the initial $500 billion, if necessary.

For each of the Fed’s interventions, though, there is a trade-off.

Buying securities costs money and the Fed — literally — comes up with the cash by printing it.  The extra supplies devalue the U.S. dollar which, if left unchecked, can cause the Fed’s plan to backfire in the form of runaway money supply-led inflation.  The Fed is aware of this risk and is pledged to monitoring it closely.

Overall, mortgage rates worsened today after the Fed’s statement.

Source
Parsing the Fed Statement
The Wall Street Journal Online
January 28, 2009
http://online.wsj.com/internal/mdc/info-fedparse0928.html

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What To Expect From The Fed Today And How It May Impact Mortgage Rates

January 28th, 2009

Written by Greg Frost

The Federal Open Market Committee adjourns from its 2-day meeting today.

The monetary policy-setting group is expected leave the Fed Funds Rate within its current target range of 0.00-0.250 percent.

This is the lowest range for the Fed Funds Rate in history and, frankly, there isn’t much room left to go lower.  Therefore, markets aren’t really concerned about what happens to the benchmark lending rate today.

Instead, markets will focus on the Fed’s ideas to revive the U.S. economy.

In its post-FOMC press release last month, the Federal Reserve pledged to “employ all available tools” to get the economy moving in the right direction.  At the time, some of those tools were already in play, including making direct loans to large companies and buying bad debts from commercial bank balance sheets.

And since that meeting, the Fed has put its money where its press release is.

Early this year, the Fed started a program to buy $500 billion in mortgage-backed debt and those ongoing purchases are part of what’s keeping mortgage rates relatively low.  The Fed has since made it easier for member banks to borrow money, too.

Each of these steps is meant to pour gas into the U.S. economic engine and the Fed is pledged to keep trying new approached until something works.  And this is what mortgage markets will be concerned with today.

If the Fed’s next stimulus plan is deemed ineffective or too costly for its own good, mortgage markets will likely sell off, causing mortgage rates to rise.  The jump could be somewhat sudden because Fed announcements are often met with emotional, knee-jerk reactions.

By contrast, if the Fed’s next steps are deemed on target, expect mortgage rates to fall only slightly.  To some extent, this outcome is already priced into rates as of this morning.

The FOMC’s official press release hits at 2:15 PM ET.

(Image courtesy: The New York Times)

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Mortgage Markets In Review : January 26, 2009

January 26th, 2009

Written by Christopher Frost

Mortgage markets deteriorated last week on the heels of weak economic data and uninspiring corporate earnings.

Mortgage rates rose for the second week in a row.  They’re now measurably higher than the low point set 3 weeks ago.

For mortgage rate shoppers, though, last week’s most important stories weren’t necessarily last week’s most reported stories; the most obvious of which was soon-to-be Treasury Secretary Tim Geithner’s assertion that China may be manipulating its currency.

This assertion poses risks to mortgage rates because China is one of the largest buyers of U.S. mortgage-backed bonds.  Its ongoing bond buys helps keep mortgage rates down.  But an angry China is less likely to buy U.S.-backed debt and that would pressure mortgage rates hgiher.  Said China of the Geithner remarks, we’re angry.

Other mortgage rate-altering stories included:

• Corporate weakness at GE, Microsoft, and nearly every U.S. bank
• Concerns that political in-fighting could derail a stimulus plan
• Mounting job losses in nearly every economic sector

In addition, just to show how backwards markets are right now, in “ordinary” times, economic weakness often leads mortgage rates lower.  In this market, however, it’s having the opposite effect.  Whenever the economy looks sour, mortgage rates seem to rise.

Americans in want of a mortgage have been at the mercy of Wall Street’s fickle sentiment lately.  It’s a nerve-racking place to be.

This week, markets hope to be calmed.  There’s a handful of news releases including Existing Home Sales, New Home Sales and consumer confidence surveys that will help paint a clearer picture of the economy, but the Federal Reserve’s 2-day meeting should steal the spotlight.  The Federal Reserve is expected to hold the Fed Funds Rate at its current range of 0.000-0.250 percent.

However, the Fed Funds Rate is somewhat of an afterthought this week.  Markets are more concerned with what the Fed will be doing to loosen bank lending nationwide.

Markets will evaluate the Fed’s response and if they deem the stimulus to be too large (or too small), mortgage rates should rise.  If the Fed’s moves are “just right”, look for rates to fall.

The Federal Open Market Committee adjourns at 2:15 P.M. Wednesday.

(Image courtesy: The Wall Street Journal Online)

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