“The 12-month price growth of core personal expenditures remained at 1.4 percent in July, which kept overall inflation expectations well at bay,” said Amy Crews Cutts, deputy chief economist, Freddie Mac. “Fed chairman Bernanke reiterated this in his Aug. 27 speech in Wyoming, noting that with inflation expectations reasonably stable and the economy growing, inflation should remain near current readings for some time before rising slowly. As a result, mortgage rates eased further this week to new historic lows.”

Thirty-year fixed-rate mortgages (FRMs) averaged 4.32 percent with an average 0.7 point for the week ending Sept. 2, 2010, down from last week when it averaged 4.36 percent. Last year at this time, the 30-year FRM averaged 5.08 percent. Fifteen-year FRMs this week averaged a record low of 3.83 percent with an average 0.6 point, down from last week when it averaged 3.86 percent. A year ago at this time, the 15-year FRM averaged 4.54
percent.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.54 percent this week, with an average 0.6 point, down from last week when it averaged 3.56 percent. A year ago, the five=year ARM averaged 4.59 percent. The one-year Treasury indexed ARM averaged 3.50 percent this week with an average 0.7 point, down from last week when it averaged 3.52 percent. At this time last year, the one-year ARM averaged 4.62 percent.

“House prices, however, appear to be firming. Home prices rose 2.3 percent between the first and second quarter of this year, reaching the highest level since the fourth quarter of 2008, according to the S&P/Case Shiller National Home Price Index,” said Cutts. “In addition, 15 metropolitan areas in the 20-City Composite Index experienced annual house price growth in June, compared to 13 in May and 11 in April.”

Thu, 2010-09-02 14:34 — NationalMortgag…

The Market Composite Index, driven by refinancings, increased by 13.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 12.4 percent compared to the previous week. The four-week moving average rose by 2.6 percent. 

The seasonally adjusted Refinance Index increased by 17.1 percent from the previous week; this represented its highest level since the week ending May 15, 2009. The four-week moving average rose by 3.2 percent. The refinance share of mortgage activity increased to 81.4 percent of total applications from 78.1 percent the previous week, the highest share observed since January 2009.

The seasonally adjusted Purchase Index fell by 3.4 percent from one week earlier. The unadjusted Purchase Index decreased by 4.6 percent compared to  the previous week and was 38.6 percent lower than the same week one year ago. The four-week moving average rose by 0.1 percent.

Key interest rates moderated. The average contract interest rate for 30-year fixed-rate mortgages increased to 4.60 percent from 4.57 percent, with points increasing to 0.92 from 0.89 (including the origination fee) for 80 percent loan-to-value ratio loans.  The effective rate also increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.99 percent from 3.95 percent, with points decreasing to 1.05 from 1.08 (including the origination fee) for 80 percent LTV loans. The effective rate also increased from last week.

The average contract interest rate for one-year adjustable-rate mortgages decreased to 6.90 percent from 7.00 percent, with points decreasing to 0.21 from 0.22 (including the origination fee) for 80 percent LTV loans. The ARM share of activity decreased to 5.7 percent from 5.9 percent of total applications from the previous week.

The survey covers more than 50 percent of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.

Key, Melissa

Five-year adjustable-rate mortgages reached a new low of 3.63 percent, down from 3.76 percent last week and 4.73 percent a year ago; while one-year ARMs fell to 3.55 percent from 3.64 percent last week and 4.78 percent a year ago.

Wall Street Journal (08/06/10) P. C8; Hoak, Amy; Timiraos, Nick

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

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.

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.

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.

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.

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!

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)