Mortgage Rates Rise, Home Refinancing Applications Decline
Unfortunately, not that many homeowners qualify for the low conventional mortgage rates that dipped below 5% a few weeks back. Even FHA home loan programs have experienced changes that require higher credit scores and more equity. Many rejected borrowers remain in search for mortgage modification plans with loan modification agreements that enable existing mortgages to be renegotiated without actually refinancing the mortgage.
Refinancing applications hit their highest levels in years after mortgage rates plummeted to record lows several weeks back, according to the Mortgage Bankers Association. But now that thirty-year fixed rate mortgages have pushed back above 5 %–to still attractive levels–interest in mortgage refinancing appears to be declining.
The Mortgage Bankers Association released its Weekly Mortgage Applications Survey for the week ending January 23, 2009. The Market Composite Index, a measure of mortgage loan application volume, was 732.1, a decrease of 38.8% on a seasonally adjusted basis from 1195.3 one week earlier…
Mortgage interest rates remain at the lowest point in decades and Investment Advisor Jill Schlesinger spoke to Harry Smith about the right time for home-buying.
Home Prices Fall Again Even with Low Mortgage Rates
The Home Refinancing Index declined 48% to 3373.9 from 6491.8 the previous week and the seasonally adjusted Purchase Index decreased 2.9 % to 294.3 from 303.1 one week earlier…The refinance share of mortgage activity decreased to 72.8% of total applications from 83.3% the previous week…The average contract interest rate for 30-year fixed-rate mortgages decreased to 5.22% from 5.24%, with points decreasing to 1.05% (including the origination fee) for 80% loan-to-value (LTV) ratio loans.
Mortgage Interest Rates May Reduced by the Fed Again
The mortgage industry has been awaiting some good news and Michigan homeowners have been waiting out the present state-wide housing slump that could receive a big boost, particularly for those looking to refinance. If you thought mortgage rates couldn’t fall any further, think again. Some economists expect the Federal Reserve to reduce current mortgage interest rates as low as 3.85 %. That would be truly amazing. I don’t know if mortgage rates have ever been that low,” said Amanda Crews, the housing director at Metro Housing in Flint.
Fed Cuts Rates to Target Range of 0%-0.25%
Watch Roundtable Reaction to the Federal Reserve and Potential Mortgage Rate Cuts.
Currently, conventional home mortgages are being published below 5%. Just a few months back, they were in the low 6% range. A cut below four % could save home owners a ton of cash. “One thousand dollars a year for every point for a $100,000 loan — two points. That would save a borrower $200 a month after refinancing a $100,000 mortgage loan.”
The average rate on 30-year fixed mortgage loans rose last week to 5.12 %, from a record low of 4.96 % a week earlier, according McLean, Virginia-based Freddie Mac. After the Federal Reserve announced plans to buy $500 billion of bad credit home loan security bonds, rates fell from 6.46 % in October, about tripling the pace of home loan applications between the four weeks ended Jan. 16 and Nov. 21, according to the Mortgage Bankers Association. If mortgage lenders introduced even lower rates, they would not be able to handle the resulting surge in applications, Heiden said. “As mortgage interest rates improve, volume increases,” she said.
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Treasury Down After Bernanke Says Fed May Buy US Debt
Treasury prices declined Tuesday as yields moved higher, with bond traders playing off Federal Reserve chief Ben Bernanke’s comments restating that the U.S. central bank could buy longer-term Treasury’s to keep loan rates low. Last week, mortgage rates dropped below 5% on thirty year mortgage loans and FHA home loans.
More aid to the banking system would be needed to foster an economic recovery, Bernanke also said in a speech he delivered in London. Two-year note yields (UST2YR) rose 4 basis points to 0.79%. A basis point is one one-hundredth of a percent. Ten-year note yields (UST10Y) were little changed at 2.31%.
The timing and strength of any global recovery remain “highly uncertain,” Bernanke said. The Fed has begun a plan to buy billions of dollars in mortgage-backed securities and debt sold by housing agencies including Fannie Mae (FNM) and Freddie Mac (FRE) to lower mortgage rates and spur growth in the housing market.
So far, the program has been successful in bringing down mortgage interest rates by reducing the gap between Treasury’s is a benchmark for many types of home loans, and yields on mortgage or agencies bonds. Bernanke also said it may expand its program to buy asset-backed securities, which pool borrowings such as car loans and credit-card debt. Also Tuesday, a government report showed the U.S. trade deficit in November plunged to $40.4 billion, reflecting weakening demand for imports as the nation’s economic woes deepened
New York Fed Begins Purchasing Mortgage-Backed Securities
The Federal Reserve Bank of New York today began purchasing fixed-rate mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae. Selected private investment managers are acting as agents of the New York Fed in these purchases. Summary data detailing these operations will be available on the New York Fed’s website beginning Thursday, January 8, 2009, and will be updated on a weekly basis each Thursday.
Get updated home loan guidelines and daily mortgage interest rates online. Many insiders believe that the Fed will continue to keep interest rates low for home purchase and refinancing through 2010, or when the housing markets recover.
This program, first announced on November 25, 2008, is intended to support the mortgage and housing markets and foster improved conditions in financial markets more generally. Read the original financial article>
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 Interest.com, 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 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, Jason Cardiff 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.
The Real Estate Related News article quotes real estate mogul, Jason Cardiff, “2009 may see the housing sectors and mortgage markets rebound after all.” The trend of mortgage rates has made mortgage brokers and homebuyers salivate as interest rate rumors continue to speculate that 30-year rates may drop to 4.5%.Read the entire article > Jason Cardiff Remains Optimistic of 2009 Mortgage Rebound.
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 nationl 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%. 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.
Mortgage Interest Rates Decrease Slightly
Mortgage rates dropped for a second straight week, reflecting the impact of a softening economy may have on financial mortgage markets. Freddie Mac reported Thursday that rates on thirty-year fixed-rate mortgages averaged 6.14 % last week, down from 6.2% the previous week. It marked a sharp decline since rates hit a high of 6.46% two weeks ago.
Analysts attributed the back-to-back decreases to financial markets growing more confident that the Federal Reserve will cut rates again at its final meeting of the year in December in an effort to combat a severe slowdown many economists fear could deepen into a prolonged recession. “Long-term mortgage rates fell slightly … as signs the overall economy is weakening brought interest rates down market-wide,” said Frank Nothaft, chief economist for Freddie Mac. Interest rates on other types of home loans also fell last week with the exception of one-year adjustable-rate mortgage loans. For fifteen-year fixed-rate mortgages, rates dropped to 5.81% from 5.88%. Rates on five-year adjustable-rate home loans decreased to 5.98% from 6.19%, and rates on one-year adjustable-rate mortgages edged up slightly to 5.33% from 5.25%. FHA home loan rates remained under 6%
The mortgage rates do not include points. The national average on fees for thirty- and fifteen-year mortgage loans averaged 0.7 of a point last week. The fee on five-year adjustable-rate mortgages averaged 0.6 of a point, while the fee on one-year adjustable-rate mortgages averaged 0.5 of a point. A year ago, the nationwide average rate on 30-year mortgages stood at 6.24%, 15-year mortgage rates averaged 5.88%, 5-year adjustable-rate mortgage loans were at 5.96%, and 1-year adjustable-rate home mortgages stood at 5.5% Read Complete article >
Mortgage Rates Decline Slightly
Home mortgage rates declined this week after spiking last week, continuing 5 weeks of turbulence that has seen rates interest increase and decrease unusually as the foreclosure crisis keept the credit markets in turmoil. The national average interest rate on the benchmark 30-year fixed mortgage dropped to 6.20% this week from 6.46% a week ago, Freddie Mac said in its Thursday rate survey. The mortgage rate had jumped last week from 6.04% just two weeks ago. It was at 6.46% three weeks ago and at 5.94% the week before that. A year ago the 30-year averaged 6.24%.
FHA home loan applications had dropped last week, but this week they rebounded as FHA mortgage rates decreased slightly.
The 15-year fixed-rate mortgage, a popular refinancing choice, fell to 5.88% from 6.19% a week earlier. A year ago, the loan averaged 5.90%. The five-year Treasury-indexed hybrid mortgage dropped to an average 6.19% from 6.36%, and the one-year Treasury-indexed adjustable-rate mortgage hit 5.25%, down from 5.38%. A year ago the hybrid was 5.89% and the ARM 5.50%. The 30-year and 15-year loans required the payment of an average 0.7 point to achieve the rate, while the hybrid needed 0.6 point and the ARM 0.4 point. A point is 1% of the loan amount, charged as prepaid interest.
“Mortgage rates fell this week amid new indications of a pullback in consumer spending and a weaker jobs market,” said Frank Nothaft, Freddie Mac chief economist. “The economy shrank by 0.3 % in the third quarter, led by the first decline in consumer spending since the fourth quarter of 1991. In September alone, consumer spending fell by the most since June 2004. More recently, job layoffs more than doubled in October compared to September on year-over-year basis.”
The poor economy coupled with the ongoing mess in financial markets has made getting a mortgage more difficult, Nothaft said. “With the economy contracting and experiencing record home foreclosures, mortgage lenders tightened their credit standards further, according to the October Federal Reserve Senior Loan Officer survey. Approximately 70% of banks raised their lending standards for prime mortgage loans and about 90% of banks that offer nontraditional mortgages did so as well,” he said.
Mortgage Interest Rates Spike to 6.46%
Mortgage interest rates for thirty year mortgage loans spiked this week, following a rise in long-term Treasury bonds yields. Mortgage Loan Company Freddie Mac reported Thursday that thirty year fixed-rate mortgages rose to 6.46%, which is up from 6.06% last week and above the 6.26% rate this time last year. The increase reverses a decline from 6.46 % two weeks ago. According to North Carolina mortgage broker Hayden McBride, “As the long as the rates for FHA home loans remain below 7%, we will be able to refinance people into fixed rate mortgages.”
Mortgage rates on fifteen year fixed-rate mortgages rose to 6.19% from 5.72% last week. A year ago, the rate was 5.91 %. Five-year adjustable-rate mortgage loans rose to 6.36%, from 6.06% last week. A year ago, the rate was 5.98%.The Federal Reserve Board on Wednesday reduced the federal funds rate what banks charge each other for overnight lending a half-point to 1%. Analysts say that is likely to keep short-term interest rates low, holding initial interest rates on ARMs near current levels.
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