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December 2008
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2009 Mortgage Rate Forecast

In a recent home financing article written by Luke Mullins, he explores and declares “seven things you need to know about mortgage rates in 2009.”  Just last year, most mortgage executives forecasted higher interest rates for mortgage loans in an effort to curb the growing fears of inflation. Of course declining home prices across the nation and emerging foreclosure crisis did play a significant role in the Federal Reserve slashing key interest rates consecutively. Mike Larson, a real estate analyst at Weiss Research said, “The preponderance of forces that would typically operate on mortgage rates—the economic backdrop, the inflation backdrop, and, in this case, government policy—are all pointing towards lower interest rates.”

Mortgage rates have become more alluring when the thirty-year mortgage loans featuring fixed rate terms dropped below 5.5%. VA and FHA mortgage rates continued to decline as well. This spurred an increase for both new home purchase and mortgage refinancing application volumes. Mullins examines the current mortgage rates while look forward into 2009 where many real estate financing experts anticipate more rate cuts and expanded FHA loan programs in an effort to stem the foreclosure crisis.

1. 2009 Rate Outlook: Thirty-year fixed mortgage rates should begin 2009 at around 5½ %, says Keith Gumbinger of HSH Associates. From there, they will “wax and wane” in the 5½-to-6 % range, before closing out the year somewhere between 6 and 6¼ %. “That’s still very attractive,” he says. “There is no reason to think that mortgage rates are going to go up so substantially so as to erode the marketplace.” Read complete article >

Five Smart Moves to Get the Best Mortgage Rates

According to a recent article from, if you’re in the market for a home, there are five smart moves you can make to help you qualify for the cheapest possible mortgage. The tantalizing interest rates mortgage refinance lenders put in their ads are for borrowers with the best credit scores, substantial down payments and the biggest gap between how much they earn and how much they owe each month.

Many home buyers will pay a lot more, but you don’t have to be one of them. With lenders demanding better credit scores, bigger down payments and lower debt-to-income ratios before they offer a mortgage, you have to improve your numbers. Plan ahead so that when you go for that home loan, you’re showing your best financial face. Every tenth-of-a-point is worth fighting for. Potentially, getting a lower mortgage rate could save you thousands of dollars a year. Read the complete article, 5 Smart Moves to Get the Best Rate.

Mortgage Rate Trend Has Mortgage Brokers and Homebuyers Salivating

Lead generation gurus, Mortgage Lead Vault posted a recent article quoting Kelly Media Group President, and his optimism of a mortgage rebound helping to boost home sale and ultimately property values in 2009. Cardiff points out that the note worthy efforts from the mortgage players like the Fed, FHA and Freddie Mac to reduce interest rates for home mortgages while make credit more available for mortgage refinancing and new home-buying.

Fed Makes History by Cutting Interest Rates to the Lowest Level

The Federal Reserve stepped to the financial platform and announced key interest rates that reach historic levels. Mortgage lenders reported interest rates at 5% for mortgage refinancing and home financing. Many mortgage brokers believe the rumors are true that the government will induce lenders to offer mortgage rates in the 4.5% range.”

The Fed’s unprecedented move to further reduce its fed funds target rate to a range of 0 to 0.25% rather than a fixed point was a surprise. The move is an acknowledgment that interest rates in the marketplace had been well below the Fed’s 1% target, which it set at its previous meeting on October 29. The central bank also cut the lending rate for loans directly to banks. “Today was a reminder that the Fed was on the case,” said Jim McDonald, director of equity research at Northern Trust in Chicago. “It was a reaffirmation of their willingness to be very aggressive.” “What we heard today was not revolutionarily different but it was a reminder that they are committed to using their balance sheet to the fullest extent to repair the financial markets and stimulate the economy.”

Many analysts had expected the Fed would cut its fed funds rate to 0.5% from 1%. “In some senses the whole point of this meeting was to say ‘Quit watching interest rates, watch the other things that we can and will do,’” said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland. Jack A. Ablin, chief investment officer at Harris Private Bank, said the fact that the Fed targeted a range for its fed fund rate indicates that policy makers did not want to bring the rate all the way to zero. Further rate cuts could have create problems with complications for money market funds, in which fees might outpace yields.

Lower Mortgage Rates Causing Spike in Home Loan and Refinance Applications

Since the Fed slashed rates and the Government agreed to buy bad home loans, mortgage news has dominated the financial circuits. As mortgage rates drop, local loan officers are seeing a big jump in the number of applications for mortgage refinancing and new home loans, mirroring a national phenomenon. Many consumers appear to be waiting eagerly on the sidelines for deeper mortgage rate cuts.

The Mortgage Bankers Association reported last week that its index of refinance applications has tripled. It’s the largest increase since 1990, when the organization began tracking the numbers. “I’m not sure it’s the biggest increase since 1990, but I’ve definitely seen an increase since last month,” said Barry Braverman of New Equities Mortgage Corp. in Capitola. Braverman estimated the number of applications in his office has possibly quadrupled in the past month.

Conforming mortgage rates have been the primary benefactor of the Federal Reserve’s industry bailout plan announced November 24th, according to HSH Market Associates, a national mortgage and consumer loan data company in New Jersey. The Federal Reserve committed to buying up to $600 billion of debt issued or backed by four major lenders: Fannie Mae, Freddie Mac, Ginnie Mae and Federal Home Loan.

Friday, HSH reported that the daily national average for thirty-year conforming mortgage loans was 5.33% — the lowest it’s been since the spring of 2004. “Mortgage borrowers, start your engines,” HSH posted on a company Web site blog.

Jumbo mortgage loan rates haven’t fallen as far or as fast, and continued credit-pricing issues still have to be worked out, according to the report, which said jumbo loans, while more affordable, cost on average 1.8 % more than a comparable conforming loan.

“If the lower rates are spurring you to action, you’re not alone; mortgage lenders everywhere are reporting a lot more activity than normal, which is remarkable given it’s the holiday season,” HSH reported. Last week, the average for a conforming thirty-year, fixed-rate mortgage loans slipped to 5.57 %, down from an October 15 recent peak of 6.7 % and well below the 6.06 % seen about two weeks ago, HSH reported. Since then, it’s slipped even more, according to local loan officers who report a 5.75 % on a no-point loan and about 5.25 % if the applicant is paying the point.

The number of new home loan applications has increased as well, according to several Santa Cruz County loan officers. The loans are increasingly involving more traditional sales rather than foreclosures or short-term investments, loan officers say. “It could be an interesting December and January,” Braverman said. Many of the inquiries aren’t from qualified applicants, however. “In many cases they can’t refinance because the value has gone down in their home or they’re not employed,” said Jesse Solomon of Watsonville Mortgage Co.

Josh Fischer, managing director of Sterling Pacific Financial in Watsonville, brokers prefer private investment deals rather than home mortgages. But he couldn’t help pointing out that he’d just seen a sub-5% loan on a thirty-year home loan for residential property. “The scenario there is, if you can qualify — and that box has shrunk incredibly — it’s some of the best money you can get.” For some, it still isn’t low enough. Rumors that rates could drop again to 4.5 % — a topic of discussion for the Treasury Department — are causing some people to wait and see. Jose Mendoza, a loan broker with Meyer Mortgage in Capitola, said loan officers in the office have probably doubled their production since last year. “We try to tell people it’s an excellent time to refinance,” he said. The important thing is to be ready, said Jim Chubb of Pacific Inland Home Mortgage. “The people who get those mortgage rates are the ones who are prepared.” Article written by Jennifer Pittman

Freddie Mac Reports 30-Year Mortgage Rate Average at 4-1/2 Year Low

Freddie Mac said Thursday that the 30-year fixed-rate mortgage loan average declined from a week ago to a four-and-a-half year low as bond yields declined. The thirty-year fixed-rate average was 5.47% with an average 0.7 point for the week ending December 11th, down from 5.53% a week ago. Last year the average interest rate was 6.11%. The Current FHA mortgage rates dropped to 5.5% for the lowest FHA home loan rates in five years for 30 year home mortgages.

The thirty-year average has not been lower since March 25, 2004, when it averaged 5.4%, Freddie Mac said. “Following the release of the November employment report, which showed the largest monthly decline in jobs since December 1974, bond yields fell slightly this week allowing fixed-rate mortgage loans room to ease back a little further,” said Frank Nothaft, Freddie Mac chief economist, in a statement. Get the latest mortgage rate updates online.

Fed Considering More Interest Rate Cuts

Another issue, he said, is that Treasury’s plan would address only new home buyers, not those looking to refinance existing home loans. That could be impractical to implement, as well as unfair, to those homeowners stuck with mortgage loans at higher rates. “How can you separate purchase borrowers from refinance borrowers in terms of mortgage rates?” Mr. Cavin said. If the government directly buys loans extended for home purchases, it will create a two-tier market, said Mahesh Swaminathan, mortgage strategist at Credit Suisse. Refinancings “will occur in the regular market and possibly at higher interest rates,” he said. FHA home mortgages have been most supportive of the programs designed to help fight the foreclosure crisis. Steve Park of Mortgage Brokers Network said, “FHA home loan programs have become Main Street for brokers and lenders nationally. Park continued, “The good news is that any bit of lower rates will help everyone.” Read complete article > Fed Planning More Rate Cuts to Stimulate Mortgage Lending.

Mortgage Rates Move Lower

Mortgage rates for fixed-rate home loans tanked this week with the biggest weekly drop in 27 years for mortgage rates on thirty-year fixed-rate mortgage loans. Once the Federal Reserve’s announced rate cut measures to increase liquidity in the home loan market, Freddie Mac’s chief economist said on Thursday.

According to California Mortgage Broker, Rob Black, “This is huge for the homeowners and the last few mortgage companies trying to survive.” Black continued, “The combination of low mortgage rates and new FHA loan programs could put an end to the mortgage mess.”

“After Federal Reserve actions to increase liquidity in the mortgage market, interest rates for fixed-rate mortgages took a dive,” said Frank Nothaft, Freddie Mac vice president and chief economist, in a news release. “This week’s decline was the largest since the week of November 27, 1981, and 30-year fixed-rate mortgage rates are now almost a full percentage point lower since the last week in October, 2008.” FHA home loan rates continued to decline as well, so new home buyers and homeowners looking for a bad credit mortgage refinance may benefit from lower payments. FHA loans continue to play a major role in foreclosure prevention with new loan modification and short refinance programs like the FHA Hope for Homeowners and FHASecure.

The thirty-year fixed-rate mortgage averaged 5.53% for the week ending Dec. 3, down from 5.97% last week and 5.96% a year ago, according to Freddie Mac’s weekly survey. That mortgage rate hasn’t been lower since January 24, when it averaged 5.48%. Fifteen year fixed-rate loans averaged 5.33% this week, down from last week’s 5.74% average and 5.65% a year ago. That interest rates haven’t been this low since March 20, 2008 when it averaged 5.27%.

Mortgage interest rates on adjustable-rate mortgage loans didn’t fall as much. Five-year Treasury-indexed hybrid adjustable-rate mortgage loans averaged 5.77% this week, down from 5.86% last week and 5.75% a year ago. One-year Treasury-indexed ARMs averaged 5.02% this week, down from 5.18% last week and 5.46% a year ago.