(01-18) 04:00 PST McLean, Va.
Rates on 30-year mortgages set a record for a fifth straight week by dropping to below 5 percent, the lowest mark since Freddie Mac started tracking the data in 1971.
Freddie Mac reported Thursday that average rates on 30-year fixed mortgages dropped to 4.96 percent last week, down from 5.01 percent the previous week.
The average rate on a 15-year fixed-rate mortgage rose to 4.65 percent from 4.62 percent last week, while rates on five-year adjustable-rate mortgages fell to 5.25 percent. Rates on one-year adjustable-rate mortgages fell to 4.89 percent from 4.95 percent.
Showing posts with label Mortgages. Show all posts
Showing posts with label Mortgages. Show all posts
Wednesday, January 21, 2009
Friday, January 16, 2009
Many Home Buyers Need Higher Loan Limits, Upper-End Stalled
WASHINGTON, January 15, 2009
The drop in mortgage loan limits for conventional financing at the end of 2008 is hurting home sales and trade-up activity in higher price ranges across the country, according to the National Association of Realtors®.
The latest existing-home sales data shows transactions under $400,000 are 3 percent below a year ago. However, sales of homes priced at $750,000 or more have declined a whopping 47 percent.
Outside of FHA, Fannie Mae and Freddie Mac, mortgages that do not have government backing are still experiencing a credit crunch. Buyers who need jumbo mortgages must pay interest rates that are nearly 2 percentage points higher than conventional financing; as a result, the high-end market is not moving.
Lawrence Yun, NAR chief economist, said restoring higher mortgage loan limits is critical to this part of the market. “Buyers in higher price ranges are at a severe disadvantage because they have to pay higher interest rates,” he said. “Lower loan limits are having a pronounced impact on trade-up activity at the upper end of the market, which depends more on large downpayments to keep mortgage amounts below the maximums for conventional financing.”
While homes above $750,000 are considered luxurious in many areas, they are modestly sized homes in the midprice ranges of many high-cost markets. “However, the lower mortgage limits for conventional loans mean upper middle-class home buyers in much of the country, including many areas in the Midwest and South, also have to pay higher interest rates,” Yun said. “As a result, we are seeing a universal stalling of sales in higher price ranges across the country.”
To illustrate in dollar terms, if mortgage limits are permanently raised to $729,750, the maximum limit that expired at the end of December, the mortgage payment on such a loan would drop by $942 per month by lowering interest rates 2 percentage points. Over the life of a 30-year loan, the homeowner would save $338,000.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said all consumers should have access to today’s historically low mortgage interest rates. “It’s only fair that all hard-working, tax-paying, successful people who want to purchase a home have equal access to low interest rates regardless of where they live or where they want to buy,” he said.
“Every segment of the housing market needs a turnaround to spark an overall housing recovery, which will help the economy to begin to recover,” McMillan said.
Source: National Assocition of Realtors
The drop in mortgage loan limits for conventional financing at the end of 2008 is hurting home sales and trade-up activity in higher price ranges across the country, according to the National Association of Realtors®.
The latest existing-home sales data shows transactions under $400,000 are 3 percent below a year ago. However, sales of homes priced at $750,000 or more have declined a whopping 47 percent.
Outside of FHA, Fannie Mae and Freddie Mac, mortgages that do not have government backing are still experiencing a credit crunch. Buyers who need jumbo mortgages must pay interest rates that are nearly 2 percentage points higher than conventional financing; as a result, the high-end market is not moving.
Lawrence Yun, NAR chief economist, said restoring higher mortgage loan limits is critical to this part of the market. “Buyers in higher price ranges are at a severe disadvantage because they have to pay higher interest rates,” he said. “Lower loan limits are having a pronounced impact on trade-up activity at the upper end of the market, which depends more on large downpayments to keep mortgage amounts below the maximums for conventional financing.”
While homes above $750,000 are considered luxurious in many areas, they are modestly sized homes in the midprice ranges of many high-cost markets. “However, the lower mortgage limits for conventional loans mean upper middle-class home buyers in much of the country, including many areas in the Midwest and South, also have to pay higher interest rates,” Yun said. “As a result, we are seeing a universal stalling of sales in higher price ranges across the country.”
To illustrate in dollar terms, if mortgage limits are permanently raised to $729,750, the maximum limit that expired at the end of December, the mortgage payment on such a loan would drop by $942 per month by lowering interest rates 2 percentage points. Over the life of a 30-year loan, the homeowner would save $338,000.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said all consumers should have access to today’s historically low mortgage interest rates. “It’s only fair that all hard-working, tax-paying, successful people who want to purchase a home have equal access to low interest rates regardless of where they live or where they want to buy,” he said.
“Every segment of the housing market needs a turnaround to spark an overall housing recovery, which will help the economy to begin to recover,” McMillan said.
Source: National Assocition of Realtors
Tuesday, December 23, 2008
Coming Down...But Will They Go Lower?
TODAY'S RATES from Bankrate.com
Overnight Averages Today +/-
1 yr jumbo ARM 6.60%
3/1 jumbo ARM 6.07%
3/1 jumbo ARM (interest only) 5.95%
7/1 jumbo ARM 6.08%
7/1 jumbo ARM (interest only) 6.24%
2/28 ARM 6.45%
3/27 ARM 6.47%
40 yr fixed mtg 6.36%
30 yr fixed mtg 5.28%
15 yr fixed mtg 5.23%
1 yr ARM 5.67%
30 yr fixed jumbo mtg 6.97%
30 yr FHA mtg 5.74%
5/1 ARM 5.83%
5/1 jumbo ARM 5.95%
3/1 ARM 5.75%
7/1 ARM 5.99%
10/1 ARM 6.23%
15 yr fixed jumbo mtg 6.42%
10 yr fixed mtg 5.12%
20 yr fixed mtg 5.13%
3/1 ARM (interest only) 5.60%
5/1 ARM (interest only) 5.83%
5/1 jumbo ARM (interest only) 6.13%
7/1 ARM (interest only) 6.01%
Overnight Averages Today +/-
1 yr jumbo ARM 6.60%
3/1 jumbo ARM 6.07%
3/1 jumbo ARM (interest only) 5.95%
7/1 jumbo ARM 6.08%
7/1 jumbo ARM (interest only) 6.24%
2/28 ARM 6.45%
3/27 ARM 6.47%
40 yr fixed mtg 6.36%
30 yr fixed mtg 5.28%
15 yr fixed mtg 5.23%
1 yr ARM 5.67%
30 yr fixed jumbo mtg 6.97%
30 yr FHA mtg 5.74%
5/1 ARM 5.83%
5/1 jumbo ARM 5.95%
3/1 ARM 5.75%
7/1 ARM 5.99%
10/1 ARM 6.23%
15 yr fixed jumbo mtg 6.42%
10 yr fixed mtg 5.12%
20 yr fixed mtg 5.13%
3/1 ARM (interest only) 5.60%
5/1 ARM (interest only) 5.83%
5/1 jumbo ARM (interest only) 6.13%
7/1 ARM (interest only) 6.01%
Monday, December 22, 2008
Mortgage Activity Surges at US Banks
By Saskia Scholtes in New York
Published: December 22 2008 19:37 | Last updated: December 22 2008 19:37
US banks are having trouble handling a surge of mortgage applications spurred by dramatically lower interest rates, after record loan defaults and thousands of job cuts have stretched mortgage industry resources to the limit.
Applications for home loans more than doubled in the two weeks after the Federal Reserve said it would buy mortgage bonds to help stabilise the market, prompting mortgage rates to fall by more than three-quarters of a percentage point.
EDITOR’S CHOICE
In depth: Global financial crisis - Nov-11In depth: US banks - Nov-22In depth: US downturn - Dec-05With average rates for a 30-year, fixed-rate mortgage now at about 5.2 per cent, growing numbers of borrowers have an incentive to refinance to bring down their mortgage costs.
However, tighter underwriting standards for prospective borrowers, combined with funding and staffing difficulties for mortgage originators, are likely to restrict the supply of new mortgages.
“The mortgage industry is collectively unprepared to deal with a cascade of business; staffs were pared to the bone as the market for mortgages shrank over the past year,” analysts at HSH Associates wrote in a note to clients.
Mahesh Swaminathan, mortgage analyst at Credit Suisse, said that as a result, lower rates would not necessarily create a wave of mortgage refinancing on the scale that was seen in 2003, when credit markets were healthy.
“There is a lot of pipeline congestion. Originators don’t have the staffing or the credit lines to fund a lot of loans,” said Mr Swaminathan. “You have more due diligence which requires more staffing. It is not something that can be changed overnight.”
Part of the problem is that banks have directed the bulk of their manpower toward their servicing arms in an attempt to stem the tide of mortgage defaults and foreclosures.
While banks have pledged to use capital they have received from the US Treasury to boost consumer lending, they are also under intense political pressure to modify loan terms for struggling borrowers as a matter of urgency.
Loan modifications have continued to grow more quickly than other strategies such as subsidy programmes or refinancing into government loans, according to the Office of the Comptroller of the Currency.
The number of new loan modifications grew 16 per cent in the third quarter to more than 133,000, said the OCC. The rate of loan modification is likely to be even higher in fourth-quarter data, say analysts, as a result of recent initiatives by Fannie Mae and Freddie Mac, the two large mortgage financiers, as well as private sector loan modification schemes.
However, modified loans can still require substantial servicing resources, as more than 55 per cent of modified loans fall back into default in the first six months, according to the OCC.
Additional reporting by Nicole Bullock in New York
Copyright The Financial Times Limited 2008
Published: December 22 2008 19:37 | Last updated: December 22 2008 19:37
US banks are having trouble handling a surge of mortgage applications spurred by dramatically lower interest rates, after record loan defaults and thousands of job cuts have stretched mortgage industry resources to the limit.
Applications for home loans more than doubled in the two weeks after the Federal Reserve said it would buy mortgage bonds to help stabilise the market, prompting mortgage rates to fall by more than three-quarters of a percentage point.
EDITOR’S CHOICE
In depth: Global financial crisis - Nov-11In depth: US banks - Nov-22In depth: US downturn - Dec-05With average rates for a 30-year, fixed-rate mortgage now at about 5.2 per cent, growing numbers of borrowers have an incentive to refinance to bring down their mortgage costs.
However, tighter underwriting standards for prospective borrowers, combined with funding and staffing difficulties for mortgage originators, are likely to restrict the supply of new mortgages.
“The mortgage industry is collectively unprepared to deal with a cascade of business; staffs were pared to the bone as the market for mortgages shrank over the past year,” analysts at HSH Associates wrote in a note to clients.
Mahesh Swaminathan, mortgage analyst at Credit Suisse, said that as a result, lower rates would not necessarily create a wave of mortgage refinancing on the scale that was seen in 2003, when credit markets were healthy.
“There is a lot of pipeline congestion. Originators don’t have the staffing or the credit lines to fund a lot of loans,” said Mr Swaminathan. “You have more due diligence which requires more staffing. It is not something that can be changed overnight.”
Part of the problem is that banks have directed the bulk of their manpower toward their servicing arms in an attempt to stem the tide of mortgage defaults and foreclosures.
While banks have pledged to use capital they have received from the US Treasury to boost consumer lending, they are also under intense political pressure to modify loan terms for struggling borrowers as a matter of urgency.
Loan modifications have continued to grow more quickly than other strategies such as subsidy programmes or refinancing into government loans, according to the Office of the Comptroller of the Currency.
The number of new loan modifications grew 16 per cent in the third quarter to more than 133,000, said the OCC. The rate of loan modification is likely to be even higher in fourth-quarter data, say analysts, as a result of recent initiatives by Fannie Mae and Freddie Mac, the two large mortgage financiers, as well as private sector loan modification schemes.
However, modified loans can still require substantial servicing resources, as more than 55 per cent of modified loans fall back into default in the first six months, according to the OCC.
Additional reporting by Nicole Bullock in New York
Copyright The Financial Times Limited 2008
Tuesday, December 16, 2008
Current Historically Low Interest Rates Create Opportunities
On Tuesday, policy makers at The Federal Reserve are expected to lower their target for the overnight federal funds rate to 0.5 percent, a record low.
Recent headlines of the nations’ financial woes have brought even more attention to the changes in the Real Estate market. Most of these stories have failed to focus on the potential opportunities possible to the consumer with such low interest rates.
You may be able to take advantage of low interest rates by refinancing your current loan or seizing the moment to buy a new home! You may be able to lock in rates that may be advantageous over the entire life of your new mortgage.
For more information about current rates and the mortgages that are currently available please contact me at: bslaton@APR.COM
Recent headlines of the nations’ financial woes have brought even more attention to the changes in the Real Estate market. Most of these stories have failed to focus on the potential opportunities possible to the consumer with such low interest rates.
You may be able to take advantage of low interest rates by refinancing your current loan or seizing the moment to buy a new home! You may be able to lock in rates that may be advantageous over the entire life of your new mortgage.
For more information about current rates and the mortgages that are currently available please contact me at: bslaton@APR.COM
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