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August 2019
« Sep    

Rates on Home Mortgages Remain Low and Affordable

The average fixed interest rate on a 30-year loan has fallen to near its record low set earlier this month. The rate on the most popular mortgage dipped to 3.37% from 3.39 last week, mortgage buyer Freddie Mac said. Two weeks ago, the rate reached 3.36%, its lowest level on records dating to 1971. The average rate on the fixed 15-year loan, often used for refinancing, set a record low of 2.66%, down from last week’s 2.7%. Today applicants that seek a no cost home loan will typically pay a point. Less costly mortgages are helping fuel a modest but steady housing recovery. The average rate on the 30-year loan has remained below 4% all year. And rates have fallen even further since the Federal Reserve started buying mortgage bonds in September to encourage more borrowing and spending. The Fed said it would continue buying bonds until the job market shows substantial improvement. When home prices rise, people tend to feel wealthier and spend more freely. And consumer spending drives nearly 70% of economic activity.

With refinancing activity surging, it makes sense to shop lenders and compare mortgage refinance rates online.

Sales on houses have inched up slightly from last year, and prices are rising more consistently in most areas. Builders are clearly more confident but has the housing market turned the corner for good. Read
the Interest Rate Article from the Detroit News.

Good Credit Equates to Low Interest Rates

Lenders Rewarding Borrowers with Low Mortgage Rates for Good Credit Scores

Most consumers in the digital age understand that credit scores play a significant role in mortgages, home loans and refinancing. Getting approved for the best home loan rate often is driven by the average of your three credit scores. Trans Union, Experian and Equifax are the three main credit repositories that best mortgage lenders use for underwriting home loans in the United States.

Mortgage Lenders Still Basing Loans on FICO Scores

It’s no secret that loan companies offer the best fixed mortgage rates to applicants that have high fico scores. The most common scores are based on models established by Minneapolis-based FICO, formerly known as Fair Isaac Corp., which are used to gauge a consumer’s financial health. The numbers, which range from 300 to 850, affect the ability to get mortgages and credit cards, as well as the rates borrowers pay for them. The score is used by 90 of the 100 largest U.S. financial institutions, according to FICO’s website.

About 18 % of 200 million consumers in the U.S. with credit scores, or 36 million Americans, had credit scores of 800 or higher in 2011, according to estimates from FICO. More than 75 million had scores of at least 750 while the median credit score last year was about 711, FICO said.

Good Credit Opens Up Doors

According to Freddie Mac the average 30-year mortgage rates that were tied to a fixed term came in at 3.89% this week.  According to the Federal Reserve the average interest rate charged on credit card balances was 12.8 % in the 4th quarter of 2011.

Maximize Your Financing Opportunities

A credit score of 760 or higher on a $300,000 fixed thirty-year home loan may qualify a borrower for a 3.625% rate or $1,368 monthly payment, compared with a 3.85 % rate and monthly payment of $1,406 for those with scores from 700 to 759, according to Having a credit score of at least 720 typically translates to the best mortgage rates available. In many cases, when a borrower has a credit score that exceeds 720 it enables lenders to be more aggressive with loan to value and debt to income ratios used to qualify home mortgage loans.

Low Rates and Mortgage Friendly Guidelines

Let’s be honest, low interest rates and mortgage friendly guidelines drive the housing market. Mortgage lenders and banks continue to ask borrowers for more loan documentation. The streamline refinance is the one exception for tighter guidelines. This unique refinance loan does not require income documentation and in some cases no appraisals.

Having record low mortgage rates with tight lending guidelines will not help the housing sector rebound. We have had record low rates for 3 straight years and the home sales remain sluggish. Historically low home loan rates are a crucial component of record affordability for home buyers, but lack of confidence in the market and fear of further price declines are challenges that are outweighing that factor, Credit Suisse analysts wrote Wednesday. Record low interest rates have dominated mortgage news for most of 2012. The fact is that lenders stopped approving bad credit equity loans. Many consumers are hoping that lenders ease some of the lending requirements in the year to come.

Existing home sales were down in all 50 states in the 3rd quarter with double-digit year-over-year declines in 47 states, the result of weakened demand after the homebuyer tax credit. In new construction, housing starts in October were at a seasonally adjusted annual rate of 519,000, down 1.9% from the October 2009 rate and 11.7% below September’s rate, the Census Bureau and Department of Housing and Urban Development reported Wednesday.

Tips for Refinancing into the Lowest Home Mortgage Rates

By now most homeowners realize that a mortgage refinance loans may be the best way to increase cash flow and reduce housing expenses. Just when it looked as if mortgage rates couldn’t fall any further, they did. Mortgage interest rates on 30-year fixed home loans hit an average of 4.25% in September, the lowest level since 1953, according to Freddie Mac, and are still hovering below 4.5%. Jumbo mortgage rates fell to 5.125% which is the lowest level for jumbo rates in years. Many consumers searching for a poor credit mortgage solution have been selecting the government loans because they are more flexible with credit guidelines. FHA mortgage rates fell to 4.125% in October which enabled thousands of borrowers to refinance their adjustable rate loans.

1. Maintain good credit scores. High ficos are needed to maximize the lowest possible rates.

2. Work with a trusted lender that offers competitive rates. Working with a shady lender offering lower rates will end up biting you.

3. Consider a variety of home loans in an effort to find a great rate mortgage that meets your needs.

15year interest rates are even more enticing at 3.75%. The most creditworthy borrowers may even find lower payments, with interest rates as much as quarter of a percentage point lower.

Mortgage Interest Rates Hit Record Lows

Mortgage Interest Rates Hit Record Lows

Freddie Mac announced the lowest mortgage interest rates since 1971, yet the demand for new home loans remained weak. US mortgage loans did inch up last week but even with record low mortgage rates new home-buyers were not impressed. Lending companies have been taken back by the lack of interest from loan applicants. Mortgage industry insiders insist that the unemployment and tighter home loan guidelines are driving away the growth of home-ownership. .

Home purchase and mortgage refinancing applications rose by less than 1% in the first week of August, even as 30-year mortgage interest rates fell to 4.57%, the lowest in 20 years of record keeping by the Mortgage Bankers Association.

Thirty Year Mortgage Rates Drop to 4.79%

Borrowers across the nation are lining up for home refinancing offers as mortgage interest rates drop once again. The current mortgage rates remain low as the 30-year fixed-rate mortgage average rose slightly to 4.79% with an average 0.8 point for the week ended June 3, according to the buyer of home mortgage loans. In the prior week, the average rate was 4.78%, the lowest since early December. The year-ago average for the thirty-year home loan stood at 5.29%. “The economy grew at a slower rate than originally reported in the first three months of the year … which suggests inflation will remain tame in the near term,” Freddie Mac chief economist Frank Nothaft said, referring to revised data on U.S. gross domestic product. See full story on first-quarter GDP revision pegging growth at 3.0% pace. “As a result, home loan rates held at historic levels this week,” he said in a statement. Underscoring this, interest rates on fifteen-year fixed-rate mortgages reached a new record low, averaging 4.2% — the lowest level since Freddie Mac began tracking the mortgage rates back in 1991 — down from 4.21% in the prior week.

One-year Treasury-indexed adjustable-rate mortgages averaged 3.95%, unchanged from the prior week, and the lowest level since May 2004. The 1-year ARM averaged 4.81% a year ago. The 5-year Treasury-indexed hybrid ARM averaged 3.94%, down from 3.97% in the prior week. A year ago, the 5-year ARM averaged 4.85%.

To obtain the rates, the 30-year fixed-rate mortgage required a payment of an average of 0.8 point. The other mortgages required a payment of an average 0.7 point. A point is 1% of the mortgage amount, charged as prepaid interest.

Online Loan Shoppers See Lower Mortgage Rates

CBS News reported that the Greek debt crisis led to an unexpected drop in fixed mortgage rates. The Royal Bank, along with all of the other four big banks, dropped the popular five-year fixed closed mortgage 0.15 percentage points to 6.10% on Tuesday. Most banks also dropped the benchmark rate for their discounted five-year mortgage by a similar amount to 4.70%. Some online and smaller mortgage lenders offer no cost refinance loans. This is good news for online home loan shoppers who’ve experienced higher fixed mortgage rates that have risen over 1% in the last month. Many banks followed with reported lower mortgage rates for home buying in the US and Canada. Longer-term fixed interest mortgage rates typically follow longer-term bond yields. The Greek debt crisis put a stop to rising bond yields as traders moved money out of risky assets. “Both treasuries and Government of Canada bonds have recently benefited from lower mortgage interest rates in the Unites States.” Many mortgage loan experts say the lower interest rates are just temporary and note that bond yields are already edging higher as the EU’s bailout package eases Greek default concerns. Adjustable rate mortgage loans are tied to the overnight lending rate. That mortgage interest rate has been at a rock-bottom 0.25% for over a year.

Fed Reserve Raises Interest Rates

In subprime mortgage debacle and financial crisis, the Federal Reserve urged the national banks to step up to its discount window, pushing the banking industry to get over the stigma on borrowing from the government. When banks and finance companies stopped lending to each other overnight altogether in the fall of 2008, discount window for home mortgage loans became even more crucial. The Fed even narrowed the penalty banks paid for using discount window money, moving the discount rate closer to the Federal funds rate during the crisis.

Watch Video on the Fed Raising the Discount Rate

According to mortgage executive, Bryan Dornan, “Clearly, the Fed is signaling a change in direction for interest rates.”  Dornan continued, “Now that the Fed is raising rates, expect mortgage rates to begin retreating upwards.” Now that the crisis has blown over, the Federal Reserve wants things to get back to normal. Late Thursday afternoon, it surprised the markets by raising the discount rate it charges though its emergency window to 0.75% from 0.50% while keeping its targeted Federal funds rate at between zero and 0.25%. The change will take effect on Friday. Meanwhile, the duration of the mortgage loans will revert to the normal overnight period from 30 days come mid-March. Though many thought the Fed was headed in this direction, most everyone thought it wouldn’t act until its next Open Market Committee meeting next month.

The Fed explained in a brief statement that it wants banks to return to the private debt markets. The increase “will encourage depository institutions to rely on private funding markets for short-term credit and to use the Federal Reserve’s primary credit facility only as a backup source of funds.” The central bank added the move was not a signal it was tightening money nor a signal its outlook on the economy had changed. It is a further indication; however, that the government is pulling away from the extraordinary assistance it has given the financial markets over the last few years.

Later this spring the Fed is expected to stop buying bad credit mortgages and mortgage-backed securities, a move that is worrying those in the housing markets who had hoped for a smooth recovery. The government’s numerous bank industry lifelines have been criticized for allowing banks to make heaps of money by borrowing from the Fed at next to nothing and profiting from the spreads they can make by investing that cash in the Treasury markets. But the Fed also has to come up with an exit strategy for a balance sheet that has become bloated with Wall Street’s unwanted assets. Forcing banks back to the short-term debt markets for funding (or even to rely on their own deposit taking operations) is another baby step to getting the banks out of the emergency safety net.

Which Way Will Mortgage Rates Go?

Mortgage interest rates continue to hover around the 5% mark. Conforming, FHA and VA mortgage rates all continue to be reported in the low 5 percent range for home loans and mortgage-refinancing. There have been positive signs in the last quarter regarding job losses, the financial markets and even the housing sector, but economic recovery is likely still a few months away, Freddie Mac’s chief economist said today. In an article titled, “Are We There Yet?” the outlook from Freddie Mac’s Frank E. Nothaft for 2010 is mostly positive, although there are cautionary flags ahead – particularly with higher mortgage interest rates and the expiration of home-buyer tax credits.

Most economists will be looking at the aftermath from the government’s winding down of its purchases of mortgage loan backed securities from Freddie Mac and Fannie Mae. By discontinuing its purchase program in April, the central bank is hoping that private buyers of mortgage-backed securities will return, and rates won’t rise much after that. Investors in mortgaged-backed securities have stayed mostly on the sidelines. “U.S. Department of the Treasury MBS purchases were completed by year-end, and Federal Reserve purchases of MBS and Freddie Mac and Fannie Mae debt are scheduled to terminate by the end of the first quarter 2010 – both potentially pose the risk of a rise in mortgage rates relative to benchmark yields,” Nothaft said.

Another potential strain on interest rates is the expiration of tax credits for home buyers. Under the federal program, home purchase contracts must be signed by April 30 to qualify for the tax credits. “The tax credits have likely caused some families to purchase a home earlier than they might have otherwise, thus moving sales forward in time and helping support the housing market. High affordability and improved buyer sentiment further bolster sales,” Nothaft wrote.

So when will we get there? “While there may be some bumps along the way, the transition into economic recovery appears to be underway as we head into 2010: real economic growth in the 3 to 3.5 percent range, a cessation of job losses in the first quarter, rising home sales, and a strengthening of housing starts in some markets,” Nothaft wrote “We should be ‘there’ in the next few months, if not already.” Read the original article online.

Mortgage Rates Inch Up

Mortgage interest rates continue to teeter the monumental 5% mark and the demand for mortgage refinancing continues to rise. One problem for most loan applicants is that they do not qualify because conventional and FHA mortgage guidelines have tightened to the point that only a small percentage of borrowers qualify for home refinancing or new home loans. The financial crisis and Great Recession have their roots in the housing bust. When it comes, a lasting recovery will be evident in a housing rebound. Unfortunately, housing appears to be weakening anew.

Housing figures released last week show that after four months of gains, home prices flattened in October. At that time, low current mortgage rates courtesy of the Federal Reserve and a home buyer’s tax credit (courtesy of Congress) were fueling sales. That should have propped up prices. But it was not enough to overcome the drag created by a glut of 3.2 million new and existing unsold single-family homes — about a seven-month supply.

The situation, we fear, will only get worse in months to come. Rates already are starting to rise as lenders brace for the Fed to curtail support for mortgage lending as early as the end of March. The home buyer’s tax credit is scheduled to expire at the end of April. And a new flood of foreclosed homes is ready to hit the market. It is increasingly clear that the Obama administration’s anti-foreclosure effort which pressed mortgage lenders to reduce interest rates — isn’t doing nearly enough. High unemployment rates also mean that many borrowers who did qualify for aid have been unable to keep up with even reduced monthly payments.