Category Archives: Mortgages

Mortgage Rates Fall Below 4%

Mortgage Rates Fall Below 4%

By Nick Timiraos

Associated Press
Despite low rates, mortgage applications fell last week.
What if the 30-year mortgage rate fell below 4% and few people cared?

We may not have to wonder much longer. The average 30-year mortgage dropped to 3.94% for the week ending Wednesday, according to Freddie Mac’s weekly rate survey released on Thursday.

Reflecting both tight credit standards and anemic demand, applications for mortgages actually fell last week, according to a separate report from the Mortgage Bankers Association on Wednesday. The MBA said overall mortgage application volume was down by a seasonally adjusted 4.3% from the prior week.

Many borrowers can’t refinance today because they don’t have enough equity or they can’t qualify under lending standards that are far tougher than when they initially obtained their mortgages.

Rates also haven’t fallen as much as might be expected, given recent drops in banks’ borrowing costs, because banks are short-staffed. To manage volumes, they’ll sometimes raise the spreads between their borrowing costs and the rates that are offered to consumers.

Refinance applications were down by 5.2% from the prior week, while home-purchase apps were down by 0.8%, according to the MBA.

More troubling for the housing market is the fact that home-purchase applications were down 12% from one year ago—a signal that worries about the economy and potential home price declines are keeping borrowers on the fence, even though mortgage rates have probably never been this low.

Freddie Mac says the rates are the lowest since its survey began in 1971, and academic research suggests that rates for 30-year mortgages were as low as 4%—but not any lower—under a loan program for war veterans in the mid-1940s. Eric Rosengren, president of the Federal Reserve Bank of Boston, spoke to the problem facing policy makers’ inability to help consumers benefit from low rates in a speech last week in Sweden. Falling home prices “have disrupted the transmission of monetary policy,” he said, resulting in “a situation where the availability of credit is more important in many cases than the cost of credit.”

Low rates could give more urgency to a recent push by the White House to fix an administration effort that allows homeowners to refinance their mortgages if they owe more than their loans are worth. The program is open to borrowers with loans backed by Fannie Mae and Freddie Mac.

“Clearly getting more money into the hands of homeowners who would spend it could help to fuel GDP growth,” said Mr. Rosengren.

Fannie Mae, Freddie Mac, Mortgage Rates

Buy vs. Rent? Check our First Time Homebuyer resource center.

Housing Affordability Reaches 20 Year High

Housing Affordability Reaches 20 Year High
by Carla Hill

Housing affordability is higher today than it has been for decades. What does this mean for today’s buyer? It means now is the time to buy.

According to the latest National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) data, “73.9 percent of all new and existing homes sold in the fourth quarter of 2010 were affordable to families earning the national median income of $64,400.”

“Today’s report shows that housing affordability at the end of 2010 was at its highest level since we started computing the HOI,” said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. “However, while this is good news for consumers, both home buyers and builders continue to confront extremely tight credit conditions, and this remains a significant obstacle to many potential home sales.”

Are you looking for the best of the best when it comes to affordable markets? Indianapolis-Carmel, Indiana, is a great place to start. It was ranked as the most affordable housing market in the entire country. Ninety-three percent of homes sold in the city were affordable to households earning to area median of $68,700.

On the opposite end of the spectrum, Santa Cruz-Watsonville, CA, was ranked as the least affordable city in the country. Only 45 percent of homes were affordable to families making the median household income of $84,200.

Also near the bottom of the list, according to the NAHB, were: Ocean City, N.J; San Luis Obispo-Paso Robles, Calif.; Laredo, Texas; and Santa Barbara-Santa Maria-Goleta, Calif.

Nearly all of the lowest range major metro areas were in California, which is not surprising considering the housing bubble that formed in the early 2000s.

Published: February 23, 2011

A New Must-Have Book for Buyers

Over the past two days, I’ve had the pleasure of co-touring with Michael Corbett, best-selling real estate author and host of NBC’s Extra’s Mansions and Millionaires, to spread the word about his new book, Before You Buy, in which I was honored to be a contributor.

Jim Gillespie and Michael Corbett in studio for book launch

As many of you know, I have been in the real estate industry for more than 35 years now, and I still get the same thrill out of helping people achieve home ownership as I did when I began my career as an agent. When Michael asked me to write the foreword and share insight for this book, I was once again reminded of how satisfying it is to help people buy the home of their dreams and ensure they feel protected, especially in these tough times.

With so many choices and such a unique market, it’s more important than ever for buyers to be well-informed. During a media interview yesterday, Michael and I were discussing an interesting paradox: in spite of the vast and helpful resources available (especially online), recent surveys indicate that home buyers are overwhelmed.  They’re confused – and some of them are downright afraid about making a mistake in what could be the biggest investment of their lives. They need to work with a trusted real estate agent so they can make a smart decision.  Michael’s book Before You Buy breaks down everything buyers need to know, step-by-step, so they’re educated and prepared for every single part of the process. 

There’s no question that now is smart time to buy a home for those who are financially prepared, and Michael touches upon exactly how financially-ready one needs to be. For example, he recommends that ideally, buyers should be able to put 20 percent of the home’s value in a down payment. He also recommends that buyers look for homes priced less than the maximum their lender allows them to borrow.  For those interested in rental properties, Michael has a helpful section on becoming a landlord and “getting strangers to pay your mortgage.” He delves into foreclosures, and “bargain home buying,” among many other timely topics.  Thankfully, with inventory and prices where they are today, there are plenty of fantastic homes on the market for buyers in any price bracket.

Do you have questions about buying a home?  Let me know.

Mortgage rates back above 5%

MBA survey shows weak demand for purchase, refinance loans

By Inman News, Thursday, February 10, 2011.

Inman News™

Signs that an economic recovery is picking up steam sent mortgage rates surging this week, with 30-year fixed-rate mortgages breaking through 5 percent to their highest level since April 2010, Freddie Mac said in releasing the results of its weekly Primary Mortgage Market Survey.

A separate survey by the Mortgage Bankers Association suggests rates were already under pressure last week, denting demand for refinance and purchase mortgage applications.

According to Freddie Mac’s survey, rates on 30-year fixed-rate mortgages averaged 5.05 percent with an average 0.7 point for the week ending Feb. 10, up from 4.81 percent last week and 4.97 percent a year ago.

The 30-year fixed-rate mortgage hit a low in Freddie Mac records dating to 1971 of 4.17 percent during the week ending Nov. 11.

Rates on 15-year fixed-rate mortgages averaged 4.29 percent with an average 0.7 point, up from 4.08 percent last week but down from 4.34 percent a year ago. The 15-year fixed-rate loan hit a low in records dating back to 1991 of 3.57 percent in November.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.92 percent with an average 0.6 point, up from 3.69 percent but down from 4.19 percent a year ago.  The 5-year ARM hit a low in records dating to 2005 of 3.25 percent in November.

Rates on 1-year Treasury-indexed ARMs averaged 3.35 percent with an average 0.6 point, up from 3.26 percent last week but down from 4.33 percent a year ago.

The MBA survey detected a surge in rates a week earlier, pegging the average contract interest rate for 30-year fixed-rate mortgages at 5.13 percent during the week ending Feb. 4, up from 4.81 percent the week before. Points decreased to 0.84 from 1.02 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The rate increase helped push applications for refinancings down 7.7 percent from the week before, the MBA said, and purchase loan applications were also off a seasonally adjusted 1.4 percent. Demand for purchase loans was down 16.6 percent from a year ago.

“Mortgage rates increased last week as many incoming economic indicators continue to show stronger growth than had been anticipated. Refinance volume continues to be low, as fewer homeowners with equity have any incentive to refinance,” said Michael Fratantoni, MBA’s vice president of research and economics.

“We are at the beginning of the spring buying season, but purchase volume remains weak on a seasonally adjusted basis.”

In their most recent rate forecast, MBA economists said they expect rates on 30-year fixed-rate loans will climb to an average of 5.5 percent during the fourth quarter of 2011, and to an average of 6.1 percent during the final three months of 2012.

The MBA survey covers more than 50 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.

Freddie Mac’s survey is based on lender quotes for first-lien prime conventional conforming mortgages with a loan-to-value of 80 percent. Rates and points are indicative of what a consumer could expect to be offered if they were to request a loan on that day.

About 25 lenders from each of Freddie Mac’s five regions are surveyed each week. The mix of lenders surveyed approximates the volume of mortgage loans that each lender type originates nationwide.

US Mortgage Applications Hit 4-Month Low – CNBC

US Mortgage Applications Hit 4-Month Low – CNBC.

 U.S. mortgage applications dropped last week to their lowest level in four months as home loans rates jumped, an industry group reported on Wednesday.

Property Tax

 The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes loans for home purchases and refinancings, fell 14.4 percent to 713.6 in the week ended Nov. 12, the lowest since the July 9 week.

 Borrowing costs on 30-year fixed-rate mortgages surged to a two-month high of 4.46 percent in the week, up from 4.28 percent in the previous period. The rate last month reached 4.21 percent, the lowest level in the survey, which has been conducted weekly since 1990.

 Market interest rates have risen despite the U.S. Federal Reserve’s pledge to keep them low with the purchase of $600 billion in U.S. Treasury securities. Treasury rates, which help guide mortgage rates, have jumped amid concern that the Fed’s effort would be its last, or even cut short if the economy shows more signs of life, economists said.

“Rates increased sharply last week due to stronger economic data and lingering uncertainty regarding the structure and impact of the Fed’s” program, known as quantitative easing, Michael Fratantoni, the MBA’s vice president of research and economics, said in a statement.



The MBA’s seasonally adjusted index of refinancing applications slumped 16.5 percent to 3,831.0. The seasonally adjusted purchase index slipped 5 percent to 179.2.

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Mortgage Applications Rise, Rates Near Record Lows – CNBC

Mortgage Applications Rise, Rates Near Record Lows – CNBC.

 U.S. mortgage applications for home purchasing and refinancing rose last week as consumers sought to take advantage of near-record low interest rates, data from an industry group showed on Wednesday.

home with fence

 While the uptick bodes well for the housing market, which has been showing signs of improvement, demand has been tepid, reflecting the inability of many consumers to take advantage of rock-bottom rates.

 The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes purchase and refinance loans, increased 3.2 percent for the week ended Oct. 22. The four-week moving average, which smooths the volatile weekly figures, was up 1.4 percent.

 It was only the second time in eight weeks activity rose.

Michelle Meyer, senior U.S. economist at BofA Merrill Lynch in New York, said demand remains sluggish despite the rise.

“This implies that the soft trend in home sales should persist amid high unemployment, tight credit and depressed consumer confidence,” she said.

Meyer said “underwater” mortgages — where the amount owed on the mortgage exceeds the value of the home — are one of the biggest banes of the homeowners.

This negative equity makes many of them unqualified for home loan refinancing and prevents some from selling.

“The refinancing index has increased notably, but still less than to be expected given incredibly low mortgage rates,” she said.

The MBA’s seasonally adjusted index of refinancing applications increased 3.0 percent.



Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 4.25 percent, down 0.09 percentage point from the previous week. Interest rates were also below their year-ago level of 5.04 percent.

Last week’s rate matched that of the week ended Oct. 1, which was the second lowest level in the survey, which has been conducted weekly since 1990. A record low of 4.21 percent was reached in the week ended Oct. 8.

If home loan refinancing continues to climb it will bode well for the flailing U.S. economy as this activity typically encourages an increase in consumer spending.

By lowering monthly mortgage payments, lower rates may also help some homeowners avoid default and foreclosure if their credit is good enough.

The MBA’s seasonally adjusted purchase index, a tentative early indicator of home sales, rose 3.9 percent.

The housing market has been struggling since the expiry of popular home buyer tax credits earlier this year. To take advantage of the tax credits, buyers had to sign purchase contracts by April 30. Contracts originally had to close by June 30, but that was extended by three months.

The tax credits pulled sales forward and activity dropped after the expiry.

Encouraging news this week indicate this payback may be easing. The National Association of Realtors on Monday said sales of previously owned U.S. homes in

September increased 10 percent from August.

More insight into the state of the housing market will emerge on Wednesday when the Commerce Department releases September new home sales data.

The MBA said fixed 15-year mortgage rates averaged 3.67 percent, down from 3.74 percent the previous week and the second lowest on record, with the lowest being 3.62 percent two weeks prior. Rates on one-year adjustable-rate mortgage, or ARMs, decreased to 7.07 percent from 7.17 percent.

Copyright 2010 Thomson Reuters. Click for restrictions.