April 3rd, 2009
Mortgage Rates Keep Falling
Each day there are new headlines out there proclaiming the latest lowest interest rates. While it is true that the rates are falling and mortgage applications are up across the board, there still underlying issues with the housing market beyond the lowest interest rates available.
Unemployment rates are still at close to an all time high, and until those numbers are going in a positive direction, it is almost irregardless how low the interest rates go. Lending guidelines have changed drastically in the last few years in order to curb the predatory lending that was rampant in years past. These new, stricter guidelines cause a vast majority of these applications to become declined.
The major reason why the low interest rate doesn’t help as much as you would think is the depressed house values. The loans with the lowest interest rates typically at limited to 80% loan to house value. Most houses have lost so much value that even if you bought your home several years ago and put 20% down; you still not qualify for this loan. What’s the point of a really low interest rate if only a select few can actually qualify?
When the rates come out next week, we might even see another small dip in the 30 year fixed to the 4.7 range. The economy needs more jobs for the record amount of unemployed entering the ranks. More jobs would mean more money being invested back into the financial markets as well as the housing market. But until people stop losing their jobs, these small decreases to the record low rates don’t help the average American or the health of the housing market.
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March 13th, 2009
Weekly Mortgage Round Up March 13
Mortgage rates dropped from 5.15% to 5.03% for the benchmark 30 year fixed rates. This includes a .7 point charge. The 15 year, 5/1 ARM and 1 year ARM all slightly dropped from last week. You can see the full numbers at Freddie Mac.
According to the Mortgage Bankers Association, there was a 11.3% increase in mortgage applications last week. However this number does not take into account if a borrower applies for a loan across multiple lenders. If a borrower applies 5 times with 5 different lenders, it will be counted 5 times. I have a feeling that borrowers are now applying with several different lenders in hope that at least one of their loans will be approved.
As I’ve mentioned before, there is an underlying assumption that the government is going to drop rates to be able to offer a 4.5% 30 year fixed loan. There is a lot of chatter about this on mortgage related blogs and forums, but there doesn’t seem to be a lot of downward activity in the mortgage rates to support that this 4.5% 30 year fixed is going to become available.
Right now, the best option is to contact your lender and see if they will modify your mortgage. If you can save money today by refinancing into a rate in the 5’s, holding out for a pipe dream of a 4.5% fixed mortgage seems foolish. Watch out though, there are plenty of unscrupulous loan modification companies out there, its best to do your own work and avoid the con artists.
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February 24th, 2009
Weekly Mortgage Roundup Feb. 24
Mortgage rates have become closely tied to the overall financial and economic health due reliance on the housing market. Mortgages are typically one of the largest investments and in order to provide as much information as possible we are beginning a weekly roundup of all things mortgage. Please post comments with questions or topics you’d like to see covered and we’ll do our best to answer them. So without further ado, here’s the inaugural edition.
There has not been much movement in the mortgage rates from last week to this week. Overall, mortgage rates dipped slightly based on a survey of nationwide lenders. The benchmark 30-year rate dipped from 5.16% to 5.04% with .7 points. Similarly, the 15-year, 5/1 ARM and 1 Year ARM are down slightly compared to last week’s numbers. You can check out this week’s and previous week’s rates at Freddie Mac.
Rates have stabilized as the industry is awaiting the details of the Obama administration’s housing plan. Investors have been buying Treasury bonds, but staying away from mortgage bonds. Most inventors seem to be waiting to get the specifics of President Obama’s foreclosure prevention plan before buying additional bonds.
Another change in the mortgage industry is the limits of jumbo conforming loans. Previously, the jumbo loan size was limited to $625,500. The new economic stimulus law raises the limits to $729,750 in the metro areas with the most expensive housing. This is the full list of counties and their new jumbo limits.
As discussed previously, a new $8,000 tax credit has been offered to 1st time home buyers that purchase this year. It is important to note that this is a full credit, not a tax deduction. This new benefits is extremely beneficial; Uncle Sam is essentially putting back $8,000 into your pocket if purchase a home. If you have been contemplating getting into the market; low interest rates, a surplus of available homes and $8,000 back is very enticing.
