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Mar-19-2009Oil futures leap to near $52 a barrel following Fed move(topic overview)
CONTENTS:
- The Fed announced "a shopping spree that would make Donald Trump blush," said Bob Walters, chief economist at Quicken Loans in Livonia, Michigan, which already cut the mortgage rates it offers by 1/4 to 3/8 point. (More...)
- According to Mortgage Choice, variable rate loans now account for 92per cent of all home loan approvals, a level not seen since the broker started recording the data in January 2003. (More...)
- The APR takes into account the initial mortgage rate, the standard variable rate (SVR) and the mortgage fees. (More...)
- With the average rate now at 5.29 percent, the monthly payment for the same size loan would be $1,109.37, a savings of $186 per month for a homeowner refinancing now. (More...)
- If the historical yield spread between the bond and the 30 year mortgage is re-established, we may see a 30 year fixed rate in the 3.5% range. (More...)
- "There is not a gun to your head," Gumbinger says. (More...)
- A 20 per cent deposit will avoid mortgage insurance, which protects only the lender. (More...)
- Lower rates mean sellers hang on to higher list prices and buyers will almost certainly pay an inflated price relative to not-artificially-lowered-interest periods just because ppl are still in the short-sighted 'cost per month' trap. (More...)
- Applications for conventional purchase loans were up 2.1 percent, while applications for government-backed purchase loans (largely FHA) were up 0.4 percent. (More...)
- A variable rate has the advantage of dipping into all-time lows, saving you more money. (More...)
- The deal is guaranteed to stay below 5.99% for the next five years, so if Base Rate goes up to 4% or beyond, your payrate will not track it any further than 5.99%. (More...)
- In February, the average price of a home sold in Frederick County was $260,300, down more than 23 percent from February 2008, according to the Maryland Association of Realtors. (More...)
- The Federal Reserve announced that it intends to purchase massive amounts of mortgaged backed securities and long term treasury debt. (More...)
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The Fed announced "a shopping spree that would make Donald Trump blush," said Bob Walters, chief economist at Quicken Loans in Livonia, Michigan, which already cut the mortgage rates it offers by 1/4 to 3/8 point. The Fed, as part of its ongoing efforts to cut loan rates to stimulate borrowing and revive the worst housing market since the Great Depression, said it would buy long-term Treasuries as well as more mortgage securities. An added $750 billion would bring the Fed's total buying of Fannie Mae, Freddie Mac and Ginnie Mae mortgage bonds as high as $1.25 trillion this year. The Fed will also double its potential note purchases from Fannie, Freddie and the Federal Home Loan Bank System to up to $200 billion and absorb as much as $300 billion in Treasuries. All related markets rallied sharply as a result on Wednesday, leading many lenders to reduce mortgage rates or expect to reduce them this week. The Fed's actions state "we will not walk away from supporting this marketplace," said Keith Gumbinger, vice president of HSH Associates, a mortgage information publisher in Pompton Plains, New Jersey. "This means that there is going to be a buyer for mortgages at these levels for the foreseeable future," Gumbinger said. "That serves to enforce to the consumer that not only are interest rates low, but they are going to remain low and be stable" through the year. The total targeted mortgage bond purchases will "obviously dwarf" net issuance this year, according to JPMorgan. [1] Interest rates on 30-year fixed-rate mortgages fell more than 0.40 percentage point from Wednesday to 4.79 percent, according to the Zillow Mortgage Rate Monitor, compiled by real estate website Zillow.com. The sharp drop came after the Federal Reserve said on Wednesday it would more than double its planned purchases of mortgage-related securities. The Fed said it would also buy long-term Treasuries as part of its ongoing efforts to reduce mortgage rates to stimulate borrowing and boost the U.S. housing market, currently in the throes of the worst downturn since the Great Depression. The Fed said it would buy an additional $750 billion of agency mortgage-backed securities, bringing total purchases to as much as $1.25 trillion this year. It also said it would double its potential purchases of agency debt securities, to up to $200 billion.[2]
This morning, I received a frantic and adrenaline-laced email from a mortgage broker I've interviewed before, someone whose depth of knowledge I respect. She made it clear: If you've been thinking of getting a loan for a house or refinancing, in order to bring down your monthly mortgage payment, "TODAY IS THE DAY TO DO IT," her email thundered. My email sender, Kelly Zuccarelli, was, and is, excited because yesterday the Federal Reserve took an historic step to drive mortgage rates lower by announcing that they plan to buy up to $300 billion of long-term government bonds and $750 billion in additional mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac.[3] The Fed also said it will buy more mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac to help that battered market. The central bank will buy an additional $750 billion, bringing its total purchases of these securities to $1.25 trillion. It also will boost its purchase of Fannie and Freddie debt to $200 billion. "This is not only going to keep mortgage rates low for a long period of time," said Greg McBride, a senior financial analyst at Bankrate.com.[4] To that end, the Fed announced two key steps Wednesday that should drive mortgage rates lower. Fannie Mae and Freddie Mac assets: The Fed unveiled plans to buy up to an additional $750 billion of mortgage-backed securities backed by government-controlled entities such as Fannie Mae and Freddie Mac, on top of the $500 billion it already committed to purchasing.[5]
In the original plan, the Fed said it would buy as much as $500 billion of mortgage securities backed by Fannie Mae ( FNM.P )( FNM.N ), Freddie Mac ( FRE.P )( FRE.N ) and Ginnie Mae. It also entailed buying as much as $100 billion of debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks.[2] The Fed has already announced $217.1 billion in net purchases out of $500 billion planned through June, under a program unveiled in November. The central bank will also double to as much as $200 billion this year its planned purchases of debt issued by Fannie Mae, Freddie Mac and Federal Home Loan Banks.[6]
U.S. central bankers decided yesterday to buy as much as $300 billion of long-term Treasuries and more than double mortgage-debt purchases to $1.45 trillion, aiming to lower home-loan and other interest rates. Yesterday's decisions will add $750 billion in purchases this year of mortgage-backed securities issued by government- sponsored enterprises Fannie Mae, Freddie Mac and Ginnie Mae, for a total of $1.25 trillion.[6] In an announcement Wednesday afternoon, the Fed revealed intentions to purchase an additional $750 billion of mortgage-backed securities, as much as $100 billion more in debt issued by government sponsored entities Fannie Mae and Freddie Mac, and up to $300 billion in long-term government debt.[7]
Following the Fed's announcement of a new round of initiatives it hopes will speed economic recovery, yields on 10 year treasury bonds fell by about a half percentage point, marking the largest one-day decline since Oct. 20, 1987. Reports this week suggested existing homeowners are already lining up to lock in new mortgages at lower rates. Fannie Mae (NYSE: FNM) said this week its refinancing volume surged to $41 billion last month.[8] Earlier in November, the rate had risen above 6 percent. Both the Mortgage Bankers Association and Fannie Mae on Wednesday reported spikes in home refinancing as rates have fallen. "This is stepping up in a very big way," Greg McBride, senior financial analyst at Bankrate, said of the Fed's expanded buying programs. "This assures an environment of low mortgage rates that will persist throughout 2009," McBride said. "In the past, when mortgage rates dropped very sharply, they tended to rebound just as sharply. If you blinked you missed it, and that's unlikely to be the case in this instance" because of the ongoing Fed presence, he added.[1] "We are getting a lot of first-time buyers." She said besides low rates and home prices, consumers have a large inventory of homes to choose from. "Wells Fargo is experiencing a significant increase in contact from customers who want a responsible lender to help them with a refinance or home purchase. This is a great time for customers to achieve homeownership in a way that is sustainable for the long-term," said Greg Gwizdz, executive vice president, national sales manager, Wells Fargo Home Mortgage. "From a purchase perspective, the 30 percent average drop in home prices, mortgage rates below 5 percent and the $8,000 first-time homebuyer tax credit are making this the best time in over a decade for Americans to become homeowners. It is also a good time to leverage a refinance to lower monthly mortgage payments and to reduce the term on your existing mortgage. Homeowners looking to refinance need to think about how long they plan to stay in the house, the cost to refinance their mortgage and how refinancing can support their overall financial goals." The Mortgage Bankers Association said mortgage applications are still down from its peak in May 2003, when home sales were booming.[9] Refinancing applications jumped 30 percent in the week ended March 13 as the borrowing rate dipped 0.07 percentage point to 4.89 percent, tying the record low reached in early January in a survey that dates to 1990. The MBA's market index, which includes both purchase and refinance loans, jumped 21.2 percent to 876.9, the highest since mid-January. The Mortgage Bankers Association said its seasonally adjusted refinancing applications index jumped 29.6 percent to 4,497.6, also the highest level since mid-January. Purchase applications continued to lag those for refinancing, rising just 1.5 percent to a one-month high of 257.1.[10] Applications for refinance loans jumped nearly 30 percent during the week ending March 13, as interest rates for 30-year fixed-rate loans dipped below 5 percent to tie a record low seen in January. In its weekly survey of members, the Mortgage Bankers Association said.mortgage applications were up 21.2 percent from a week earlier, driven by a 29.6 percent increase in applications for refinance loans.[11] Mortgage applications jumped last week, as low interest rates fueled refinancing activity. The Mortgage Bankers Association said Wednesday its weekly application index climbed 21.2 percent for the week ended March 13.[12]
NEW YORK, March 18 (Reuters) - U.S. mortgage applications surged last week, driven by a spike in demand for refinancing as the average 30-year fixed-rate home loan rate fell, the Mortgage Bankers Association said on Wednesday.[10]
You thought 5 percent was a good rate? After already bringing mortgage rates down near 50-year lows, Fed Chief Ben Bernanke unleashed a surprise attack on the housing slump Wednesday by announcing aggressive steps that should make home loans even more attractive. Lower rates, of course, can help push timid buyers off the sidelines so they can mop up the excess inventory that's been driving down home prices. "This is a huge step forward," Ian Shepherdson of High Frequency Economics, wrote in a report shortly after the announcement. What is the Fed doing? With the federal funds target rate--which is the Fed's conventional monetary policy weapon--already down to as low as zero percent, Bernanke has been forced to get more creative in his efforts to resolve the economic mess.[5] The Fed also committed to buying long-term bonds, a move that could also drive down long-term interest rates. Just as consumers borrow the money to buy a home, mortgage lenders borrow the money they bring to the closing table until the mortgage is securitized and sold to investors. "If the industry can't do short-term financing because the banking system itself is blocked, then it's promising something that can't be achieved," Lansing said. Mike Oswald, a mortgage broker with American Home Funding, said he's been doing loans with interest rates below 5 percent for some time and he's got lenders in place to handle the demand. "I hope this gets people off the fence," he said.[13] The pricing of a loan can be affected by many things; including your credit score, your amount of down payment, whether the home is attached or detached, the length of time the interest rate is locked for, the type of loan program, impounds that are included, the level of mortgage insurance used whether the loan is for a purchase or refinance, and your income to debt ratio among other things.[14] The Federal Reserve's move to increase its purchases of mortgage- backed securities is expected to drive rates below 5 percent, but consumers wanting to refinance may have a tough time taking advantage of it, according to local mortgage lenders. One issue is the capacity of lending institutions to handle the volume. Another is a lack of credit lines, making it difficult for mortgage originators to get qualified borrowers the loans they want.[13] NEW YORK (Reuters) - U.S. 30-year fixed home loan rates on Wednesday slid by as much as 3/8 percentage point to about 5 percent, nearing record lows, after the Federal Reserve more than doubled its planned purchases of mortgage-related securities.[1]
On the news that the Federal Reserve would buy as much as $300 billion of long-term U.S. Treasury securities, the rate on a 30-year fixed mortgage fell to 4.75% from around 5% on Wednesday. Rates may go even lower, predicts a real estate analyst at Weiss Research in Jupiter, Fla. Mike Larson tells Bloomberg that he thinks that the rate on 30-year mortgages may drop to 4.5%.[15] Interest rates have plunged since the Federal Reserve said in November it would buy up to $500 billion in mortgage-backed securities in an effort to bolster the long-suffering housing market.[16]
WASHINGTON (AP) — Rates on 30-year mortgages plunged this week to the lowest level since January, and are poised to fall further after the Federal Reserve launched a new effort to prop up the flailing housing market. Mortgage finance giant Freddie Mac said Thursday that average rates on 30-year fixed-rate mortgages dropped to 4.98 percent this week. That was down from 5.03 percent last week. It was the lowest since the week of Jan. 15, when it was at 4.96 percent.[17] Market watchers expect the Federal Reserve's decision to buy U.S. Treasuries will drive down mortgage rates in coming weeks, but they were already falling this week. Freddie Mac's weekly rate report says 30-year fixed-rate mortgages fell to an average of 4.98 percent this week, down from 5.03 percent last week and just shy of the all-time low 4.96 percent in mid-January.[8] After a slight drop last week, mortgage rates continued to fall in the week ending March 19, reaching near-record lows, according to Freddie Mac's ( FRE : 1.04 +26.83% ) Primary Mortgage Market Survey released Thursday. 30-year fixed-rate mortgages averaged 4.98 percent with an average 0.7 point, down from last weeks 5.03 percent average, and significantly below the average last year at this time 5.87 percent. '''Long-term mortgages followed bond yields lower for the second week as reports of slower industrial production suggested that business spending might ease this year,''' said Frank Nothaft, FreddieMac vice president and chief economist.[18] Nine weeks earlier, mortgage rates were 4.96 percent, which was the lowest since Freddie Mac started the Primary Mortgage Market Survey in 1971. "Long-term mortgages followed bond yields lower for the second week as reports of slower industrial production suggested that business spending might ease this year," Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement. The battered U.S. housing market is both the source and a major casualty of the credit crisis.[2]
The rate quotes included in Freddie Mac's survey were taken before the Fed said Wednesday it will pump $1.2 trillion into the economy in an effort to lower rates on mortgages and other and loosen credit. That is expected to drive mortgage rates down further.[17]
Thanks to the Federal Reserve's move yesterday, mortgage rates are most likely going to continue falling after the Fed committed to buying $750 billion in mortgage paper and $300 billion in Treasuries. The Fed's move was intended on lowering the cost of borrowing for businesses and consumers alike, though the action made the dollar fall 1.6 cents Thursday morning, its largest one-day loss in value since 1971.[19] Mortgage rates had fallen as low as 4-3/4 percent in late November, after the Fed first announced intentions to buy up to $600 billion in mortgage-related debt.[1]
Today's Fed move should further boost refinancing activity. "It's a huge positive for refinancing, because it means that everyone who hasn't done it is going to come in and do it," Gault says. Its impact on the housing market will be less profound, says Richard Moody of Mission Residential. It will help "very little," he says. That's because "the overriding factor is the labor market, and consumer confidence," he says. Even with lower mortgage rates, housing won't rebound without improvement on these fronts--and Moody doesn't expect that to occur anytime soon. "You can't make the argument that mortgage rates have been the impediment to home sales over the past several months," he says. How can I qualify for these low rates? As banks jack up their lending standards in the face of higher delinquencies, not all borrowers will be able to get their hands on today's lowest cost of financing.[5]
Five year fixed rate mortgages are making a comeback, illustrating that lenders are looking to the future again by offering long-term security over short-term gains. As lenders judge that the Bank of England base rate might be nearing rock bottom at 0.5 per cent, making tracker mortgages less attractive, they are offering longer term loans, such as five year fixed rate mortgage. Abbey mortgages has launched a new five year fixed rate mortgage at 3.95 per cent, with a fee of ''995, but is only available to homeowners with a 40 per cent deposit. Others with 40 per cent of the property's value ready to put down as a deposit could also apply for a new deal from HSBC which offers a rate of 3.99 per cent with a fee of ''999, or customers with a 25 per cent deposit can fix their mortgage rate for five years at a rate of 4.84 per cent. Those who are lacking a 40 per cent deposit can get their hands on five year fixes from other lenders, such as the Post Office, which is offering a rate of 4.15 per cent for those with a 20 per cent deposit, or a rate of 6.01 per cent for borrowers who have just 10 per cent of the property's value as a deposit, both with a fee of ''599.[20] Now that the Bank of England's interest base rate is deemed to be at or very close to rock bottom, mortgage lenders seem to be recovering confidence in the market and the five year fixed rate mortgage has returned.'' There are several good offers on the market now for those with large deposits and even those with smaller deposits have a few options open to them. For those with a 40 per cent deposit, the Abbey is offering five years fixed at 3.95 per cent with a fee of ''995 and the HSBC is also offering them a 3.99 per cent deal with a ''999 fee. For those with a 25 per cent deposit or a 10 per cent deposit, the Post Office has a five year fixed rate mortgage offer of 4.15 per cent and 6.01 per cent respectively.''[21]
While tracker mortgages have seen a surge in popularity recently as the Bank of England has slashed interest rates to 0.5 per cent. It is unknown how further interest rates will fall, and many homeowners still opt for fixed rate mortgages because of the security they offer, remaining unaffected by changes in the Bank of England base rate, which helps them to plan for the future and budget their monthly outgoings.[20]
Since September, the Reserve Bank has lowered the official cash rate by 4 percentage points to a 45-year low of 3.25 per cent, making the average mortgage holder with a 25-year loan of $300,000, $744 better off a month. "(First home buyers) need to be factoring in whether they can repay that current loan at 2 to 3 per cent higher than what it is now.[22] A 20 per cent deposit therefore would allow borrowers to avoid having to pay the additional cost; but, for first home owners who want to purchase a property sooner, Montgomery says saving at least a 10 per cent deposit would be a prudent strategy. She also advises first home buyers to consider whether they can afford the loan repayments when interest rates inevitably rise.[22] Mortgage Choice senior corporate affairs manager Kristy Sheppard says the reduction in fixed rate loans suggests Australians are confident that interest rates will remain at historically low levels for the short term at least. The experts say first home buyers should also consider rectifying any gaps in their insurance coverage, such as income protection or life insurance, and testing a budget before taking out the loan.[22] To do so, most home buyers will need to have a FICO score of roughly 720 or higher, a down payment of at least 3.5 percent--although it could be significantly higher in certain markets--and documented income verification. To refinance, borrowers will need to meet similar credit score and income documentation requirements and have minimum of 10 percent equity in their homes, Moody says. What does that mean for me? Should I refinance now or hold off for a better rate? With rates poised to drop to even more attractive levels, fixed rate borrowers that meet the credit requirements should certainly consider refinancing now. (Refinancing, however, only make sense for borrowers who can obtain a large enough break in their interest rate to compensate for the fees associated with the process.)[5]
Almost 73 percent of applications came from borrowers seeking to refinance home loans at lower rates, not home buyers.[12] The index came in at 876.9, up from 723.4 a week earlier. '' '' The group says the index rose 20.7 percent on an unadjusted basis compared with the previous week. '' '' About 72.9 percent of applications came from borrowers seeking to refinance home loans at lower rates, rather than purchase homes.[23]
According to Mortgage Choice, variable rate loans now account for 92per cent of all home loan approvals, a level not seen since the broker started recording the data in January 2003. [22] In the good old days ''' i.e., just a year ago ''' the standard variable rate mortgage was three-quarters of a percentage point below bank prime ''' now 2.5 per cent. That makes for a to-die-for rate of 1.75, but only for those already possessing a variable mortgage.[24] Last week, I was offered a 4.8 per cent, five-year mortgage from our present bank. Another bank offered 4.5 per cent and a credit union offered 4.3 per cent. We're probably going to be in this house for no more than three to five years, so is a 10-year mortgage to our advantage? If we get a 10-year assumable mortgage and the rate goes up, it could be a good selling feature, though if it stays down and we want out, it could be detrimental.[24] Each deal has a ''599 fee. As we discussed recently, there are still two year fixes available for those who do not wish to tie in for a five year period, such as the 2.89 per cent deal from HSBC for those with a 40 per cent deposit although it does come with a ''1,499 arrangement fee. It is good to see some decent fixed rate mortgages coming back onto the market, making the mortgage advisor's job a lot easier.[21]
The average 15-year fixed rate mortgage inched lower to 4.86 percent and the average jumbo 30-year fixed rate slid to 6.88 percent. Mortgage rates were flirting with record lows, and that was before the Federal Open Market Committee announced a substantial increase in the amount of debt purchases to take place this year.[7] The rationale for seeing generational lows in rates is the same as I proposed on January 12, 2009. The Federal Reserve's direct purchases of mortgage backed securities initiated late last year was successful in its goal of lowering mortgage rates.[6]
The Fed's plan to purchase a massive amount of mortgage backed securities is certain to cause a large drop in mortgage rates.[6]
Last week, a borrower with excellent credit, necessary income and home equity was able to obtain a par rate of 4.5%. The question of whether the Fed is manipulating mortgage pricing at this point or how long such price support can last is somewhat irrelevant. The major fact to keep in mind is that the Fed appears to be relentless in its campaign to drive down mortgage rates.[6] Even more significant than the immediate "honeymoon effect" on mortgage rates is the intent of the Fed to keep mortgage rates low through the remainder of 2009, a critical factor in getting homebuyers into the market to absorb the inventory of unsold and foreclosed homes.[7]
Low mortgage rates have generated demand for home refinancing loans and should continue to do so.[2] The average 30-year fixed mortgage rate in mid-October was 6.74 percent, meaning a $200,000 loan would have carried a monthly payment of $1,295.87.[7] NEW YORK, March 19 /PRNewswire-FirstCall/ -- Mortgage rates fell this week, with the average 30-year fixed mortgage rate dropping to 5.29 percent.[7]
How low will mortgage rates go? Nigel Gault, chief U.S. economist for IHS Global Insight, says 30-year fixed mortgage rates could drop to as low as 4.5 percent.[5] Fixed mortgage rates are indirectly associated with yields on mid-term Treasuries. This afternoon the yield on a 10-year Treasury dropped to about 2.5 percent from 3 percent yesterday.[25]
Given the Fed's open ended determination to lower mortgage rates, it is very likely that we may see the 30 year fixed rate mortgage at 3.5% or lower.[6] For one, '''there will be a honeymoon effect on mortgage rates,''' says Greg McBride of Bankrate.com, like we saw the first time the Fed announced it would buy agency MBS But the first time, at the end of last year, rates on the 30-year fixed dropped about 50-75 basis points, but the lower rates didn't last because the market wasn't sure what the fed's longer term commitment might be.[26]
According to Zillow, rates for 30-year fixed mortgages in the week ended March 15 fell for the first time in a month, to 5.21 percent from 5.28 percent the previous week.[2]
15-year fixed rates slipped down slightly to 4.52 percent from 4.54 percent the week before, and one-year adjustable-rate mortgages averaged a 6.2 percent interest rate, down slightly from 6.21 a week earlier.[27] The MBA, which also tracks mortgage interest rates, found rates eased across the board in the week, with 30-year fixed rates down to 4.89 percent from 4.96 percent a week earlier.[27]
Lisa LaMotta, 03.18.09, 02:20 PM EDT Mortgage applications surge as the company reports a significant jump in February volume. Americans are jumping on the home refinancing bandwagon as they try to take advantage of Washington's ability to push down interest rates.[28] Lower interest rates on fixed- and adjustable-rate mortgages attracted homowners as well as people seeking to buy homes.[29]
"In a survey of clients, the early indication is the tax credit is attractive and motivates primarily first time buyers," said Patrick Lashinsky, chief executive of ZipRealty brokerage in Emeryville, California. "Other programs such as loan modification, low interest rates and state incentives directed at current home owners don't seem to provide the solution they need to sell their homes at this time," he added.[10] Bankrate.com is the leading aggregator of rates and other information on more than 300 financial products, including mortgages, credit cards, new and used auto loans, money market accounts and CDs, checking and ATM fees, home equity loans and online banking fees.[7] Sydney house prices fell 3.9 per cent. According to mortgage broker Australian Finance Group, loan to value ratios have risen steadily in the past 12 months and hit a new high of 72.5 per cent in January, up from 62.7 per cent in January 2008, as property prices fall and people incorporate expensive personal debt, such as credit card debt, into their loan. Montgomery warns new borrowers that the higher their LVR, the more mortgage insurance they will be forced to pay, often adding thousands of dollars to the loan.[22] Mortgage insurance protects the lender in the instance the borrower defaults on the loan, and is required on new mortgages with an LVR above 80 per cent.[22]
I would even go as far as saying 3 to 4 per cent (higher)," Montgomery says. While she says it is unlikely rates will climb to the 18 per cent highs of the 1990s, borrowers should be prepared for a return to the 5 to 9 per cent level. "Rates are cyclical and we are coming to the end of that cycle, that downward trend, so it's best to prepare for what has most recently occurred," Montgomery says. This raises the question whether now would be a good time to apply for a fixed rate loan.[22] Fixed rate loans represent only 2.5 per cent of all home loan approvals. In November 2007, they peaked at 38 per cent.[22]
Considering that five-year closed mortgages are available in the 4.24 per cent range, there isn't much of an advantage to taking a risk on a variable mortgage, especially with rates at historic lows and likely to rise in the future.[24] The best rate I could find last week was 3.3 per cent for a variable closed mortgage and four per cent for a variable open. The latter allows you to pay the mortgage off or make lump sum payments of more than 10 per cent annually without penalty.[24]
Ernest D. A: It's in the wind. mortgage questions. When the central bank rate dipped to 0.5 per cent it seemed to be the tipping point as many homeowners started eyeing their mortgages and wondering about getting a better deal.[24]
Separately, home funding company Freddie Mac said rates on 30-year fixed-rate mortgages fell 0.05 percentage point in the week ended Thursday. It said rates averaged 4.98 percent, with an average 0.7 point, for the week ending March 19, down from the previous week's 5.03 percent.[2] Rates in Orange County dipped today on 30-year fixed-rate mortgages that can be sold to Fannie Mae or Freddie Mac, said Jeff Lazerson, head of online brokerage Mortgage Grader in Laguna Niguel. He said buyers with good credit can get 4.625 percent with a one-point fee, down from about 4.750 percent yesterday.[25]
Refinancings requests represented about 73 percent of all mortgage applications last week. Fannie Mae ( FNM.N ) ( FNM.P ), the government-controlled home funding company, on Wednesday said its February refinancing volume nearly tripled from January to more than $41 billion.[10] While the national trend is toward refinancing, home purchases are the driving force locally. Hugh Gordon, branch manager for First Home Mortgage in Frederick ]] Frederick ]] Frederick, said he has seen a 300 percent on average increase in mortgage applications this month compared to the past 12 months.[9]
Gordon sees housing as a key to economic recovery. "It has to start at the low end of sales. Someone has to sell their home to buy another one and the dominoes fall up." Julie Donat, regional sales manager for PNC Mortgage LLC, said applications at her office have been steady since January. The office in Frederick, a division of PNC Bank, has been "certainly busier this quarter than a year ago." Donat said both purchase and refinancing applications are up.[9]
While homeowners are often compelled to cut current costs, worries about job loss or hopes that prices will cheapen further have keep many potential buyers at bay. First-time buyers are better positioned to take advantage of low rates and some measures to help the housing market, as they are unburdened with existing homes to sell in a market flooded with unsold houses. They can also access a new $8,000 tax credit created by President Barack Obama's $275 billion housing stimulus.[10] "I don't think we are going to have a plummet, but I do think it helps to support some downward pressure on rates," Gumbinger says. What does this mean for the housing market as a whole? Before today's developments, lower mortgage rates have benefited those looking to refinance more so than home buyers, said Guy Cecala, the publisher of Inside Mortgage Finance, in an interview that took place before the announcement.[5] NEW YORK (Reuters) - U.S. mortgage rates fell on Thursday, boosting government efforts to bring mortgage rates down to levels that will spur demand and help the hard-hit housing market begin to recover.[2]
"Lower prices and prior reductions in mortgage rates have already led to the best housing affordability in four years," said Sal Guatieri, Senior Economist, BMO Capital Markets.[30] There are arguments being put forth that due to the Fed's intervention, mortgage rates have artificial price support.[6] Thirty-year mortgage rates had mostly been on a downward trend since the Fed unveiled a plan to buy mortgage-backed debt in late November.[2] The Fed's bond-buying binge may bring mortgage rates to their lowest levels since World War II.[15] The big move by the Fed is expected to push mortgage rates lower but it may not be that simple, reports CNBC's Diana Oli.[26]
The firm estimates up to $480 billion of issuance, assuming a mortgage rate of 4-1/2 percent to 5 percent.[1] Average mortgage rates were 4.89 percent for a 30-year fixed-rate and 4.52 for a 15-year fixed-rate, the association said.[9] Rates continue to drop, with the 30-year fixed-rate mortgage sliding to 4.89 percent and the 15-year fixed-rate mortgage to 4.52 percent, according to a weekly survey by the Mortgage Bankers Association. That 30-year rate matches the survey's all-time low set the week ended Jan. 9.[31] Based on an 80 percent loan-to-value mortgage, rates for the 30-year fixed-rate mortgage dropped to the record low from the previous week's 4.96 percent, although points, including the origination fee, increased to 1.23 from 1.16 in the last survey.[31]
The benchmark 30-year fixed-rate, according to Bankrate, declined 8 basis points to 5.29 percent, while the benchmark 15-year fixed-rate fell 2 basis points to 4.86 percent. Bankrate's Chris Kissell points out that the survey occurred before the Federal Reserve's announcement Wednesday to purchase additional long-term Treasury bonds and mortgage-backed securities; meaning, rates have fallen further and it's not unlikely they're continuing to do so as you read this sentence.[18] Earlier today the Federal Reserve said it plans to spend up to $750 billion more buying securities backed by loans that have been touched by Fannie or Freddie. It will buy up to $300 billion in U.S. Treasury bonds.[25] The Federal Reserve is planning to spend a trillion dollars to buy up Treasurys and agency mortgage-backed securities.[26]
The Federal Reserve's bold move yesterday, buying Treasuries on the open market, will reduce all rates and maturities to some degree. I agree that how and why it's being done is irrelevant -- it's an opportunity for current home owners and prospective buyers to lock in once in a lifetime rates. The Fed's action will also help to stabilize home prices, but the degree to which this happens depends on factors such as the overall economy and employment.[6] The Federal Reserve purchases of mortgage-related assets is nearing the half-way mark targeted by the end of June to help cut mortgage costs and revive housing.[10] Facing rising foreclosures, the Federal Reserve has stepped in to buy up mortgage-related assets and revive the housing markets with the help of President Barack Obama.[28]
The APR takes into account the initial mortgage rate, the standard variable rate (SVR) and the mortgage fees. It does not take into account unknown factors, including early repayment charges. Standard Variable Rate (SVR) - This is simply the basic mortgage rate offered by each of the lenders. It is notionally linked by the lender to the Bank of England base rate but it is set arbitrarily by each mortgage provider. Mortgage Arrangement fees - these are fees charged by the mortgage provider to set up a mortgage or reserve funds for the mortgage at a specific rate. They can be significant, ranging up to around ''1,000. [32] During the last 18 months, fixed rate mortgages have looked pretty expensive, even as the Bank of England began to reduce Base Rate nearly six months ago. Now we are at last seeing lenders drop their fixed rates slowly and steadily, as I recently wrote in Fixed rates fall further. For those who need peace of mind, fixed rates are now starting to look appealing against their variable rate counterparts. There is a more important reason that many borrowers are taking them out -- they have no choice. Variable rates are still few and far between at high loan-to-values (for those borrowing a large proportion of the property's value).[33]
The program will use cash incentives to get servicers, lenders, investors and borrowers to rework distressed mortgages into ones with lower more manageable payments, equal to 38.0% of a borrower's income. Fannie Mae said more than 150,000 people have contacted the company through phone and e-mail to see if they are eligible for refinancing under the new Obama plan. Refinancing helps homeowners reduce their payments, potentially freeing up cash for spending, although savings rates have been rising ass American consumers become wary of debt. Thomson Reuters contributed to this article.[28] Fannie Mae also said Wednesday that it has seen an increase in mortgage refinances, with volume jumping to more than $41.0 million in February -- three times higher than the January rate.[28] Fannie Mae reported today that the company'''s refinancing volume jumped to more than $41 billion in February, ''' nearly three times the refinancing volume the company experienced during the month of January and the largest refinancing volume in nearly a year.'''[26]
With the average rate now at 5.29 percent, the monthly payment for the same size loan would be $1,109.37, a savings of $186 per month for a homeowner refinancing now. [7] A borrower can get 4.250 percent on a 15-year loan. Those rates are for loans up to the old conforming limit of $417,000.[25]
"We continue to hear from homebuilders about the inability of potential buyers to source even the minimum 3.5% down payment necessary for an FHA-insured loan. Homebuilders have run sales in which they have agreed to sponsor low mortgage rates and the uptick in sales has typically been marginal," he writes.[15] "Borrowers are increasingly taking advantage of the low mortgage rates available in the market today," said Tom Lund, executive vice president, Single-Family Mortgage Business.[28] A separate survey conducted by Bankrate.com also found that mortgage rates slid close to all-time lows.[18]
More than half of the panelists, 53 percent, expect mortgage rates to fall even further in the next 30 to 45 days, and 41 percent predict rates to remain more or less unchanged.[7] Today's announcement represents a significant expansion of the initial initiative announced last fall, which drove mortgage rates from 6.2 percent in mid-November to 5.2 percent in the week ending March 13, according to HSH.com.[5]
The average rate for one-year adjustable-rate mortgages (ARMs) decreased to 6.2 percent from 6.21 percent, with points decreasing to 0.14 from 0.16 - although ARMs made up only 2 percent of all mortgage applications.[31] There is little incentive left for homeowners or buyers to choose riskier adjustable rate mortgages. The average one-year adjustable rate mortgage (ARM) this week was 4.91 percent, nearly on par with current fixed rate averages.[8] Of course, the ERC-free deals give you the chance to switch to a new deal. The good news is, some lenders offer tracker mortgages that allow you to switch to one of their own fixed rates should you decide at any stage you would prefer the safety of a fix. Nationwide and Cheltenham & Gloucester, for example, agree to waive any ERCs on your tracker if you take one of their fixed rate products at any stage.[33] Key Facts Illustrations - outline the key facts about the mortgage, including the cost of the mortgage, repayments, all fees and the interest rate, the APR. Initial Disclosure Documents - give details about the mortgage providers services and whether they are tied to selling mortgage products from one company or whether they can offer mortgages from multiple companies. Bookmark With: These icons link to social bookmarking sites where readers can share and discover new web pages.[32] I've had a variable rate mortgage for nine years and it has been very good as the interest rates steadily declined since then.[24] I wouldn't pay a premium for an assumable mortgage. It could, and I emphasize could, be a selling point if interest rates soar, but in the meantime you'll be coughing up your own hard-earned bucks to pay the higher rate. Mortgages are far less standardized than they were a few years ago.[24]
In the past, three months interest payment was the norm for penalties but, increasingly, there are Interest Rate Differential clauses in mortgages that base the penalty on the difference between the current rate and the rate when you initially took out the mortgage. (You're compensating the lender for lost income.) Before you sign, create a couple of scenarios for lenders and ask them to calculate the penalties in each case. That way, you know what the stakes are if you pay it off early.[24] In 1945, the average annual rate for a mortgage was 4.7%, Mr. Larson said, citing data in the book 'A History of Interest Rates,' published by Rutgers University Press.[15] Annual Percentage Rate (APR) - The APR really is the interest rate over the period of the mortgage. It is the rate to take note of as it can be used to compare mortgages from different providers.[32]
The rise is due partly to the Government's sweetened incentive -- a $14,000 grant for existing properties and $21,000 for newly constructed homes -- and partly to improved housing affordability because of lower interest rates and falling house prices.[22] The agency said it would as much as double--to up to $200 billion--its purchase of Fannie and Freddie debt. The moves will help to reduce Fannie and Freddie's financing costs, which should enable them to pass savings on to consumers in the form of lower interest rates.[5] If you are getting a lower interest rate, let'''s say about 7.5% for a $200,000 30-year loan, you will be paying $1,398, which is already $70 less than your present monthly bills.[34]
Home loan rates have fallen as the government has purchased more than $250 billion of mortgage-related assets and announced unprecedented steps to stabilize the deepest housing slump since the Great Depression.[10] On a week-to-week basis, applications for mortgages to buy homes rose a seasonally adjusted 1.5%, while filings to refinance existing home loans increased 29.6%.[29] Cecala said that in the fourth quarter of 2008, 51 percent of mortgage originations were for loan refinancing, while 49 percent went toward home purchases.[5]
Raw mortgage application volume rose 21.2 percent for the week ending March 13, according to a survey published Wednesday by the Mortgage Bankers Association. It was the second consecutive week of increased raw activity, while refinancing applications continued to rise, surging 29.6 percent over the previous week.[27] Mortgage applications have jumped more than 21 percent nationwide, according to the Mortgage Bankers Association.[9]
The Mortgage Bankers Association said applications to refinance existing mortgages jumped 30 percent last week.[8]
If the historical yield spread between the bond and the 30 year mortgage is re-established, we may see a 30 year fixed rate in the 3.5% range. Something to think about for those contemplating a mortgage refinance. [6] You may have a 2 year fixed rate mortgage but the overpayment charge applies beyond 2 years.[32]
Lived with in our means, saved despite loss of a job, smart conservative investments, live in the Harbour area and the house we bought is still worth on today's market 2 1/2 times of what we paid on a conventional loan fixed rate 30 year loan ten years agono we do not live in a getto and that is a stereotyping that you need to pull your head out of the sand. If people bit off more than they could chew than I would call this economic Darwinism.[25] The rate was 7 1/2% which was the norm then. We have a generation of people who seem to think they have an "entitlement" to have a home. Some people just shouldn't own houses, either because they can't afford them or because they don't know how to maintain the property. The Government should stay out of this mess. The large majority of people are paying their mortgage on time.[6]
In almost every case the lowest middle score for all borrowers must be a minimum of 620. This is true for FHA also. FHA just increased their standards to this new minimum score. The borrower that will be helped is your Mr. and Mrs. Smith who are living paycheck to paycheck, but still pay on time, have a bit of equity in their home and are still employed. So what's the mood like in your office today? After all, your first email to me said that this is "the biggest story in the history of mortgage banking." It's the glimmer of hope this industry and your average Joe needed. I personally emailed every person I know, including yourself, and told them that this is a small window of opportunity for them--and everyone they know.[3] New figures from the Australian Bureau of Statistics show mortgage sales to first home buyers are at record highs as the June 30 deadline to access the Federal Government's boosted contribution approaches, with no guarantee of an extension despite entreaties from the property sector.[22] Mortgage sales to first home buyers rose to 26.5 per cent of all mortgages arranged in January, the highest proportion since the series commenced in 1991. This was up from 25.7 per cent in December and 23.6 per cent in November.[22]
Lisa Montgomery, head of consumer advocacy at mortgage lender Resi, says there is a real sense of urgency among first home buyers to secure a property before the grants expire, which can lead to risky, spur-of-the-moment purchases.[22]
Tupicoffs financial adviser Neil Kendall says job security and the ability to repay the loan in the case of redundancy are also important considerations, especially as unemployment levels are on the rise. "I am enormously concerned that (encouraging) first home buyers has a big sting in the tail because they are the people most likely to be losing their jobs, least able to afford it and often stretching themselves because of the deadline for the bonus first home owners grant," he says. He urges first home buyers not to rush in without the safety net of a cash reserve.[22]
So far, the low rates have had little to no impact on demand for loans to buy homes.[2] If crappy home loans got us into this mess (along with unrestrained consumer lending, now going bad at a rate not seen for decades) then surely the way out is.[4]
The Government's $21,000 grant for a newly built home is 7 per cent of a $300,000 loan, which Senlitonga says may not provide alarge enough buffer in a falling property market.[22] Determine whether you can afford a 3 per cent to 4 per cent rise in interest rates.[22] USD (currency)''is doomed. "But This One Goes to Eleven!" "When you need that little 'extra'." Interest rates drop.eventually they will rise with expected inflation/risk and people will be stuck in homes that they can only sell for less than they paid for.''''''''[4] As you can see there are many factors that can affect the interest rate you receive at closing. The problem of rates quoted in print and online has received so many complaints that the Department of real estate in California has instituted new laws requiring lenders to be able to prove their ability to deliver rates that are advertised.[14]
A huge benefit of variable rates is that many of the deals come free of early repayment charges (ERCs), which means you are not tied into the mortgage. Lifetime trackers and the standard variable rates (SVRs) of lenders specifically tend to offer this flexibility. This makes these deals an attractive option for those who want to take advantage of low rates now, but would like the freedom to switch to a fix should rates begin to rise.[33] If you have 25% equity, or even 40%, variable rates are still the cheapest deals on the market, with a range of deals under 4%, and even some sub-3% rates. Clearly the most attractive thing about a variable rate is the fact that it is currently very low, and while it remains this low you can benefit from cheap mortgage payments. With this in mind you could even overpay on your mortgage if you have the extra cash. Variables (which include trackers, discounted rates and standard variable rates ) also tend to come with relatively reasonable fees, although they do range considerably.[33]
"There is not a gun to your head," Gumbinger says. Borrowers with these products should keep close tabs on the market and look for an opportunity--perhaps now, perhaps in the coming months--to get into a more conservative, fixed-rate mortgage while rates remain low. [5] The average rate for traditional, 30-year fixed-rate mortgages dipped to 4.89% from 4.96% a week earlier, according to the MBA report.[16] Rates on 30-year fixed-rate mortgages averaged 4.89% last week, down from 4.96% the week before, while the average rate on 15-year fixed-rate mortgages eased to 4.52%, down from 4.54%.[29]
The average rate for 15-year fixed-rate mortgages slipped to 4.52% from 4.54% a week earlier, while the average rate for one-year adjustable-rate mortgages was fell to 6.20% from 6.21%.[16]
You should get a significantly lower rate for refinancing to make sense. Don't rush to refinance unless it's truly worth your while. If you're working with a mortgage broker rather than going it alone, you can be assured that they're bringing you the best offers out there.[35] It seems like everyone in Texas is jumping on the mortgage refinancing bandwagon. Maybe you're thinking about it yourself? After all, with rates as low as they are, the promise of lowering your monthly payments, sometimes significantly, is a great attraction for many homeowners.[35]
Yields on the 10 year treasury, from which mortgage rates are based, saw the biggest drop in yield since 1962.[6] The announcement has already helped push yields on 10-year Treasury notes--which play a key role in mortgage rates--down sharply. This could also help lower mortgage rates.[5]
"The mere announcement may produce a honeymoon effect and bring mortgage rates down to even lower levels in the coming days." It's clear Bernanke and co have zero ideas. I wonder how much time they spend praying that the same old snake oil will work a miracle this time around.[4] Mortgage rates have dropped substantially since the peak of financial tensions five months ago.[7]
The Fed's direct purchases of MBS has stabilized the mortgage market and lowered rates.[6] If the Fed can stabilize the MBS market we may be looking at mortgages rates in a range we never thought possible a short time ago.[6]
Thanks for the excellent article. I like your comment, "The question of whether the Fed is manipulating mortgage pricing at this point or how long such price support can last is somewhat irrelevant.[6]
Since rates are expected to remain attractive for some time, there's no pressure to refinance immediately. Moody points out that with home prices on the decline, borrowers who wait too long to refinance could find that they no longer have enough equity in their home to qualify.[5] We had been waiting for rates to drop on our refinance and today our bank called us and we were able to lock at 4.875 on a 30 year fixed rate refinance, with no points. Our lender said she didn't think rates would go much lower.[5] Unlike a fixed rate, your monthly repayments are not guaranteed and if the Bank of England increases Base Rate, your rate will rise by the same amount (if you're on a tracker).[33]
A variable closed means the rate fluctuates with the bank prime but, if you pay out your mortgage before the term ends, you get smacked with a penalty.[24] "In 2008, more than 50 percent of troubled property still resulted in foreclosure within six to 12 months," McCabe said. "It will be interesting to track whether the 2009 mortgage parallel the same high rate of near-term foreclosures as housing values continue to decline, unemployment accelerates and the recession's severity escalates."[31] A year ago, 30 year mortgages were averaging 5.87 percent. "Long-term mortgages followed bond yields lower for the second week as reports of slower industrial production suggested that business spending might ease this year," said Freddie Mac (NYSE: FRE) chief economist Frank Nothaft.[8] Now you have a much bigger and more confident commitment through all of 2009. That will '''keep a lid on martgage rates through the end of the year, in contrast to the '''here today, gone tomorrow''' moves in mortgage rates''' that we'''ve seen, adds McBride.[26] At 3.5% rates, it would make sense for almost every homeowner with a mortgage to refinance again.[6] "There is some refinance, but it is primarily home purchase mortgage applications," Gordon said.[9] Plano, Texas based Mortgage Broker James & Melissa Brown reveals mortgage refinancing secrets at a new web site that is full of free reports, a home buying guide and free mortgage calculators. The site is designed to give Texas residents all the facts about mortgage refinancing so they can make an educated decision when obtaining a mortgage.[35] The survey provides a snapshot of mortgage lending activity involving mortgage bankers, commercial banks and thrifts. It covers about half of all new residential mortgage loans made each week.[16] Read up on mortgage news, and join forums. You can ask the silliest questions, assuming your knowledge on these matters How you got the first loan is questionable, and you are suffering for your haste and ignorance.[34]
Most lenders make it hard for people with less than perfect credit to get the best deals. Again, if you choose to let an expert like a mortgage broker get involved in the process, they can often find loan options that most homeowners didn't even know existed - which can save you thousands over the long haul. Plano, Texas - based mortgage expert James & Melissa Brown specializes in providing mortgage information to Texas residents that allows them to make informed decisions about their mortgage financing options and learn the insider secrets that can save them thousands of dollars over the life of their loan.[35] "With refinancing as popular as it is right now, Texas residents have to be even more careful about shopping for the best loan," says James & Melissa Brown, a Plano, Texas based mortgage consultant.[35] You will be breaking even after 29 months. This is the grunt part of your refinancing mortgage loan.[34] Before you announce your grand design for a refinancing mortgage loan, do your assignment.[34]
Refinancings made up 72.9 percent of the total mortgage applications, up from 67.9 percent during the previous week.[31] A separate study conducted by Mortgage Maxx LLC found that household application activity rose 6.5 percent the same week. It was the first week household activity has risen since mid-February. Mortgage Application Index or MAX publisher Paul Descloux in his commentary on the index cautioned against undue optimism in the face of weekly gains in activity. "Mortgage applications continue to keep pace well below year-to-date highs," he wrote.[27] The survey covers about 50 percent of all U.S. retail residential mortgage applications. It has been conducted weekly since 1990.[31]
Refinancings made up 72.9% of last week's mortgage applications, up from 67.9% the week before.[29] Application volume for the week ended March 13 was up an unadjusted 31.2% from the same week in 2008, the Washington-based MBA said. Its weekly survey covers about half of all U.S. retail residential mortgage applications.[29]
A 20 per cent deposit will avoid mortgage insurance, which protects only the lender. [22] Perth property prices were the worst hit, plunging by an average of 12.2 per cent, followed by Melbourne with a drop of 9.8 per cent and Canberra with a fall of 8.9 per cent.[22] The Real Estate Institute of Australia/Mortgage Choice Market Facts Report revealed property prices decreased by an average of 6.2 per cent between December 2007 and December 2008.[22]
Lower rates mean sellers hang on to higher list prices and buyers will almost certainly pay an inflated price relative to not-artificially-lowered-interest periods just because ppl are still in the short-sighted 'cost per month' trap. [15] If the Base Rate rises to 2.5%, which is still an extremely low level, your pay rate would increase to 5% and your payments would go up to £876 a month. If Base Rate was increased to 5% (and it was at this level or higher for most of last year) your payrate would be 7.5% and your monthly repayments would shoot up to £1,108 -- an increase of £397 each and every month, or £4,764 a year. As long as you are aware of this, and can afford a jump in payments, now is still a great time to benefit from the lower rates available.[33]
The benefit of working with your real estate agent'''s loan officer is usually a proven track record of rates quoted and delivered. Another great reference could be a referral from a friend or family member who has had a good experience with a lender.[14] My take is that we will have a record day for locks, which means we will lock in a lot of individual loans, but because the volume will be so high and staffing for all lenders is an issue, rates will pop up in an effort to to minimize the volume.[3]
Just a thought. These rates are for the old conforming limit of $417,000.00 alot of good that does for people with loans over that amount.[25] Generally speaking the rate quotes that you get online may be lower than what you receive from your referred loan broker or a tried and true brick-and-mortar bank.[14]
If you're planning to buy your next home, your first home, that dream home, a condo, vacation home, investment property or looking to refinance in California or the surrounding areas, you will find that this site is a complete resource full of insider secrets that will allow you to choose the loan program best suited to your financial needs. Here is just a small sample of the secrets revealed on this site.[36] Finding a loan officer with a good reputation and a proven track record can prevent you from overpaying for your loan or even losing your deposit and home you are trying to buy.[14]
Applications for conventional purchase loans were up 2.1 percent, while applications for government-backed purchase loans (largely FHA) were up 0.4 percent. [11] The MBA says the refinance rate was up from 67.9 percent in the prior week. '' '' The index also shows refinance volume jumped 29.6 percent while purchase volume edged up 1.5 percent.[23] The refinance rate was up from 67.9% in the prior week, the MBA said. The trade group's application index remains below its peak of 1,856.7, reached in May 2003 at the height of the housing boom.[16]
With rates inching downward and hype over President Barack Obama's foreclosure prevention plan no doubt causing an influx of interest, it stands to reason refinance products would take the cake.[27] The only benefit an online broker can offer you is a lower appearing interest rate.[14] You may be better off getting the process started sooner rather than later. Homeowners with adjustable rate loans--who have likely seen their interest rate fall recently--should not feel compelled to act this very second.[5]
A variable rate has the advantage of dipping into all-time lows, saving you more money. [34] If you want the lowest monthly repayments and you have equity in your property, variable rates still rule. They offer a level of certainty that is invaluable for many homeowners who need to juggle their household bills and other financial commitments.[33] Yorkshire Building Society has today launched a 3.39% two-year tracker rate that is capped at 5.39% (with a 3% collar). It's available up to 75% LTV and comes with a fee of £995. For those willing to take a chance with a variable rate, some tempting deals abound.[33] With variable rates priced at chunky margin in relation to Base Rate, your costs could rise dramatically.[33]
The deal is guaranteed to stay below 5.99% for the next five years, so if Base Rate goes up to 4% or beyond, your payrate will not track it any further than 5.99%. [33] We've been waiting on rates to drop since. The bank emails me today; the rate is 4.625% It's not worth it to buy the point to 4.5%, but knowing they've been there I can't bring myself to lock, hoping they'll get there again.[5] According to Bankrate.com's weekly national survey, the average 30-year fixed mortgage has an average of 0.33 discount and origination points.[7] Plus, even if you're game to jump into the market, tightened lending standards and new restrictions from Fannie Mae are making it difficult to get a mortgage.[15] "There have been a lot of borrowers on the fence waiting to see whether it would be appropriate to refinance," said Pete Lansing, president of Universal Lending, one of Denver's largest independent mortgage providers. "It's like asking to get your windshield repaired after a hailstorm. The repair shops can't get to you as fast as you'd like them to."[13] Terry Jones, president of the Colorado Mortgage Lenders Association, said there already has been a rush on refinances over the past two or three months, and the Fed's move will keep the trend alive.[13] "I hope people finally wake up and take advantage of it." Other lenders said they have been swamped with refinances and purchases, especially since the announcement of an $8,000 tax credit for first-time buyers, which was included in the economic stimulus bill.[13] Why is that people a year ago had good credit now bad? Thank the appraisers and irresponsible lenders and the owners for sucking the equity out for instant gratification. I agree with you but unfortunately, too many people are losing their homes.[25]
In February, the average price of a home sold in Frederick County was $260,300, down more than 23 percent from February 2008, according to the Maryland Association of Realtors. [9] "I don't know if it is the spring market or low home prices and interest rates," Gordon said of the increase. A number of limited liability companies are also forming, he said, buying up low-end properties as investments to rent or sell later on. "More buyers are seeing houses disappear and maybe they are finally getting off the fence," he said.[9] Canstar Cannex senior financial analyst Harry Senlitonga says falling property prices should be of particular concern to borrowers who have not saved a substantial deposit. "A characteristic of first home buyers is they have a small or no deposit at all (and) with the small equity in the property to start with, there is the likelihood that they might be in a negative equity position if the property price falls further," he says.[22]
The low rateson top of the $8,000 homebuyer tax credit and price cuts on homesmay not be enough to entice buyers.[15] Low prices are better. In this economy, low rates work if you can wait out the storm, and how many are in that position? Builders here are offering whopping incentives; but the developments are 15-20% complete, if that, most of them look like abandoned salt mines, the common areas are completely neglected, and the fine print on the HOA regs is daunting.[15]
Providing broader access to affordable, sustainable mortgages through expanded refinancing opportunities is a critical part of preventing future foreclosures and hastening recovery." Many American homeowners are stuck with mortgages they can't afford, thanks to the subprime mortgage crisis, and declining prices are making it difficult for them to sell their properties.[28] Since your refinancing mortgage lender has your files and is aware of your performance, you might get a better deal the second time around.[34] After making several bumbling errors, don'''t make a serious mistake, not with a refinancing mortgage plan. A costly mistake at this time of economic hardships will surely make you miserable, while your friend is having a good time with his smart choice of almost everything.[34]
The Federal Reserve announced that it intends to purchase massive amounts of mortgaged backed securities and long term treasury debt. [6] The 15-year fixed-rate loan dipped slightly, to 4.52 percent from the previous week's 4.54 percent, while points dropped to 1.18 from 1.2 in the last survey.[31] The Commerce Department reported Wednesday that the current-account deficit, which includes investment flows and other transfers as well as trade, dropped 7.9 percent to $673.3 billion in 2008 from $731.2 billion in 2007. Economists expect the improvement in the U.S. current account to continue this year, but mostly because of rapid falls in imports as the recession cuts into consumers' buying power.[12]
SOURCES
1. U.S. 30-year mortgage rates slide toward record lows | Special Coverage | Reuters
2. U.S. mortgage rates fall, spurred by Fed move | Special Coverage | Reuters
3. The Fed's latest move means you need to move on refinancing
4. Bernanke: But This One Goes to Eleven!
5. Mortgage Rates to Fall Further: 7 Things to Know - US News and World Report
6. As Mortgage Rates Plunge, 30 Year Fixed Rate of 3.5% Seems Likely -- Seeking Alpha
7. Bankrate, Inc. :: Bankrate: Fed Takes Aim at Mortgage Rates
8. Mortgage rates near all-time low - Washington Business Journal:
9. The Frederick News-Post Online - Frederick County Maryland Daily Newspaper
10. UPDATE 1-US mortgage applications spike on refinance demand | Markets | Bonds News | Reuters
11. Low rates spur rush to refinance | Real Estate and Technology News for Agents, Brokers and Investors | Inman News
12. Mortgage rates fall, applications jump
13. Bottlenecks remain in mortgage stream - The Denver Post
14. Mortgage - Depokmetro.com
15. Mortgage Rates May Fall Further, But Who Wants to Buy a House? - Developments - WSJ
16. With 30-year rate at 4.89%, mortgage applications rise - USATODAY.com
17. The Associated Press: Mortgage rates sink; likely to fall further
18. Bond Yields Pull Mortgage Rates Down : HousingWire || financial news for the mortgage market
19. Mortgage rates plunge to lowest level since January
20. 5 year fixed rate mortgages resurface as lenders go back to the future
21. Five year fixed rate mortgages return | Beacon Financial Training
22. First home buyers told to keep spare cash | Money | News.com.au
23. Economy in Crisis: Mortgage applications up as refinancing increases - News- msnbc.com
24. TheStar.com | living | Know options before renewing mortgage
25. O.C. mortgage rates drop after Fed statement - Mortgage Insider - OCRegister.com
26. Will The Fed Move Move The Housing Market? - Realty Check with Diana Olick - CNBC.com
27. Weekly Mortgage Applications Rise : HousingWire || financial news for the mortgage market
28. Business Is Booming At Fannie - Forbes.com
29. UPDATE: Mortgage Applications Rose 21.2% Last Week: MBA - EasyBourse actualit'
30. CNW Group | BMO BANK OF MONTREAL | BMO Bank of Montreal Decreases Mortgage Rates
31. Mortgage rates down, activity up - South Florida Business Journal:
32. Mortgages - What to look out for | MoneyHighStreet.com
33. Get the cheapest mortgage deal
34. Mortgage - Depokmetro.com
35. The Truth About Mortgage Refinancing Revealed By Texas Mortgage Expert
36. West Covina, California Mortgage Consultant Reveals Insider Loan Secrets Other Mortgage Lenders Don't Want The Public To Know
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