Mortgage Rates & Trends: Mortgage Blog

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  1. Mortgage Rates Rebound

    By Robert Hyder on May 29, 2009

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    After a dismal past couple of days on the mortgage-rate front, mortgage bonds guaranteed by government-sponsored enterprises Fannie Mae and Freddie Mac rebounded today, stabilizing current mortgage rates. After recouping some of the widening risk premiums earlier in the week, the markets have been much steadier today, resulting in appealing prices on mortgage bonds that garnered interest from investors.

    However, despite the improved relief in mortgage pricing on the secondary market, mortgage rates have yet to delve back to the historic lows we’ve grown accustomed to over the past couple of months.

    –Robert Hyder

    Category: Current Mortgage Rates, Fixed Rate Mortgages, General, Mortgage Rate Trends and Analysis

  2. Mortgage Rates Increasing with Treasury Notes

    By Robert Hyder on May 27, 2009

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    The federal government’s effort to make mortgages more affordable has taken a severe blow in the past week as rising mortgage-bond yields have been propelled higher by surging Treasury rates. The proverbial shot has been fired over the bow of the mortgage industry, jeopardizing the federal government’s ability to maintain historically low mortgage rates.

    Today marked the fourth consecutive day in which mortgage bonds escalated.  Yesterday, mortgage bonds exceeded the point in which they existed prior to the Federal Reserve’s announcement on March 18 to purchase $300 billion of long-term Treasury bonds, in addition to $750 billion in mortgage-backed securities. The announcement was intended to encourage home purchases and advocate for existing homeowners to refinance by driving down mortgage rates.

    In the midst of a harsh recession not seen since World War II, prices of homes continue to plummet, as well. Experts believe it may take another mortgage-bond-buying spree by the federal government to keep mortgage rates low.

    –Robert Hyder

    Category: Current Mortgage Rates, General, Mortgage Rate Trends and Analysis, Stimulus

  3. FHA to Allow Tax Credit as Down Payment

    1 By Robert Hyder on May 13, 2009

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    U.S. Housing and Urban Development Secretary Shaun Donovan announced on Tuesday that first-time homebuyers will be eligible to use the federal government’s $8,000 tax credit as a down payment with FHA mortgage loans. At the National Association of Realtor’s Midyear Legislative Meetings & Trade Expo in Washington, D.C., Donovan said, “We all want to enable FHA consumers to access the tax credit funds when they close on their home loans so that the cash can be used as a down payment.”

    According to Donovan, FHA will release the details around the new program soon. It is believed that FHA will allow borrowers the benefit of using the $8,000 tax credit up front as a bridge loan, with borrowers simply paying it back to FHA when the tax credit is officially received in their tax refunds.

    The IRS has a rule pertaining to the tax credit that bars taxpayers from authorizing another party to receive their funds. However, there are many interested parties working on a resolution to this issue concerning the IRS. By turning the $8,000 tax credit into a type of down payment assistance, first-time homebuyers are being provided yet another opportunity to take advantage of the near-historically low current mortgage rates.

    Because FHA loans were essentially discounted with the upsurge in sub-prime mortgage loans in recent years, Americans are again turning to FHA to help their dream of homeownership become a reality.

    –Robert Hyder

    Category: Current Mortgage Rates, FHA, General, Mortgage Rate Trends and Analysis, Stimulus

  4. Citi to Earmark $1 Billion in Refinance Effort

    By Robert Hyder on May 12, 2009

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    Qualified homeowners hoping to refinance and take advantage of today’s extremely low current mortgage rates have been given a boost by Citigroup’s announcement to lend $1 billion in mortgage loans on primary residences. Citi’s announcement comes on the heals of TARP stress test results that revealed the lending giant will need $5.5 billion in additional funds in order to endure any further ominous economic conditions that have been projected by federal regulators.

    Additionally, Citi announced that they have already committed $8.2 billion to the economy as of the end of March, essentially to buy mortgage securities on the secondary market, while freeing capital to be lent. Citi executives claim to have averted as many as 80,000 foreclosures in the first quarter of 2009 alone, totaling over $50 billion. Citi’s ratio for solutions to foreclosures has been compiled at 10:1.

    Citi also intends to lend up to $5 billion to local and state governments, nonprofit hospitals and universities to fund projects aimed at creating jobs and stimulating economic growth. Furthermore, Citi is prepared to pledge $2 billion for supplier financing and providing liquidity to small-to-medium-sized companies. Finally, Citi intends to lend $250 million to consumers through auto dealerships nationwide.

    –Robert Hyder

    Category: Current Mortgage Rates, General, Mortgage Rate Trends and Analysis, Stimulus

  5. Current Mortgage Rates Holding Steady

    3 By Darren Daneault on May 8, 2009

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    Current mortgage rates have remained very low over the past several months. Refinancing is still very popular, and we’ve even seen non-conforming loans make a comeback thanks to jumbo mortgage rates becoming more and more attractive. Over the past few years, mortgage rates spiked a bit during the summer months and then dropped as we entered the fall and winter seasons. Some analysts predict that this year will display the same trend.

    It’s hard enough to predict whether the current mortgage rates will be on the rise or decline in the future. Even day-to-day, mortgage rates can bounce around significantly. A borrower’s primary concern when looking for a mortgage is the interest rate since this is typically a 30 year commitment. Here are two chapter summaries taken from the Current Mortgage Rates 101 textbook, to provide a little more insight for borrowers as to why mortgage rates vary on a day-to-day basis.

    Shelf Life of rate quotes-
    Mortgage rates are adjusted everyday by lenders. More often than not, the rates can be updated several times throughout a day, depending on existing market conditions and volatility. This is the reason why when you are looking for current mortgage rates, you may get several different figures over the span of a day or two. The changes can range in severity, but most of the time the changes are minor. You might call in the morning, and find out a few hours later that the rate is no longer available. On the other hand, you might be able to get a lower rate if the markets improve. Just be mindful that the rate you were quoted on one day may not be the same in the near future.

    Competition and Current Mortgage Rates-
    You might think that banks want to remain competitive to some degree. This is generally true of most businesses, but during certain times, lenders do not want your business. When lenders have a sudden increase in volume, a common tactic is to temporarily increase mortgage rates. This is to deter business (at least until they catch up on their work), and to offset the cost of having to pay employees to take on the extra volume. Borrowers do need a healthy balance sometimes, especially those who are purchasing a home and need to close by a specific date. It may not do a borrower any good to save 1/8th on a rate if the lender takes several weeks to issue an approval or clear conditions due to their high volume. Don’t fret, if you are primarily concerned with obtaining one of the lowest mortgage rates, there will always be a lender out there to meet your needs.

    Now that you have further understanding of how and why current mortgage rates jump around so frequently, you will be better prepared when it comes time to lock in your rate.

    by Darren Daneault

    Category: Adjustable Rate Mortgages, Current Mortgage Rates, FHA, Fixed Rate Mortgages, General, Jumbo Mortgage, Mortgage Rate Trends and Analysis

  6. Connecticut Home Prices Declining

    By Darren Daneault on May 5, 2009

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    Connecticut Home Prices: Time for some local news…

    Connecticut is definitely not immune to the housing market crisis. The average prices of single-family homes are down 18% in the first quarter of this year compared to the first quarter of 2008. The 18% drop also roughly represents the decline in price from this March to March of 2008.

    Even with all the government programs in place, low mortgage rates, and the first-time homebuyer’s tax credit, recovery has been relatively slow. Many homeowners looking to upgrade, and those looking to purchase their first home are still facing job losses and salary cuts, making it harder to get approved for a mortgage loan.

    Home sales in Connecticut have also been on the decline. About 3,600 homes were sold in the first quarter of this year compared to almost 5,000 sales in the first quarter of 2008. The most significant impact was on condominium sales, down almost 40% in the first quarter compared to that of 2008. However, average prices on condos did not decline as significantly as single-family homes.

    by Darren Daneault

    Category: Current Mortgage Rates, General, Mortgage Rate Trends and Analysis, Stimulus

  7. Should I Refinance?

    3 By Robert Hyder on May 5, 2009

    by Robert Hyder

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    As mortgage rates remain historically low as a result of the federal government purchasing more and more mortgage-backed securities, homeowners can still save hundreds of dollars a month on their monthly mortgage payment, and tens of thousands of dollars over the term of their mortgage. However, the crucial question remains: how do I know if refinancing is right for me?

    The answer is actually quite simple. It all depends on how long a homeowner plans on living in the home. Because refinancing a home entails closing costs, it could mean a few thousand dollars added to your mortgage loan if you roll the closing costs into the new mortgage amount. The length of time a homeowner plans on living in a particular home will largely determine how long it will take to recoup those closing costs. If a homeowner plans on living in the home for at least 10 years and it only takes 5 years to recoup the closing costs, then refinancing now is well worth the effort. Many online mortgage calculators will help assess this for you.

    It is difficult to gauge how long the current mortgage rates will remain this low, so experts recommend that if you’re thinking about refinancing, act sooner rather than later.  (A dependable web site that closely monitors mortgage rates is monitorbankrates.com.)  It is widely assumed the government will continue to purchase mortgage-backed securities through the end of 2009, but when they stop, mortgage rates will undoubtedly increase.

    Category: Current Mortgage Rates, Fixed Rate Mortgages, General, Mortgage Rate Trends and Analysis, Stimulus

  8. Increased Regulation for Mortgage Brokers

    By Darren Daneault on May 5, 2009

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    With the increase in mortgage fraud, brokers are about to face some stricter regulations. At least this is the plan in one southern state.

    Florida Governor Charlie Crist is taking drastic steps to prevent mortgage fraud and will likely sign legislation that would require, among other things, criminal background checks for mortgage brokers. This action stems from an investigation conducted by the Miami Herald, which exposed numerous levels of mortgage fraud in recent years. Part of the investigation uncovered that approximately 550 mortgage brokers were convicted of crimes after receiving their licenses, 20 of which were specifically convicted of mortgage fraud.

    Along with criminal background checks, the legislation would require fingerprinting and credit report disclosure to the state. The legislation would also create a state fund that would pay victims if they are awarded judgments in litigious matters, but are unable to collect due to the defendant’s insolvency.

    Florida has one of the highest records of reported mortgage fraud happening in the United States today. In the past, complaints were ignored or improperly addressed, and investigations were not successful. The proposed legislation hopes to correct and restructure the existing regulation standards, and put an end to all levels of mortgage fraud.

    by Darren Daneault

    Category: General, Mortgage Rate Trends and Analysis, Stimulus

  9. Mortgage Lenders Tighten Regulations on Condominiums

    By Robert Hyder on May 4, 2009

    by Robert Hyder

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    Before extending approval letters to borrowers looking to purchase a condo, mortgage lenders are now being required to scrutinize the makeup of the overall complex. The additional scrutiny is making it increasingly difficult for both the buyers and the sellers of condo units. Interestingly, it’s others within a condominium complex that may behind on their association dues that can potentially undermine the approval of a neighbor hoping to refinance and take advantage of the historically low mortgage rates.

    Is it fair for one borrower to have to depend on the creditworthiness of a neighbor in order to refinance? Well, condo owners are not just sharing lobbies and a swimming pool anymore. They are now sharing each other’s financial responsibilities. Recent changes in mortgage industry policies are tightening the regulations, forcing mortgage lenders to delve deeper into the composition of the entire complex before issuing loan approvals to prospective homeowners or those who already own and simply want to refinance.

    If the market wasn’t difficult enough to sell a home, the increased scrutiny into condo complexes is making it virtually impossible. Condos are already considered risky because of their popularity with financially vulnerable first-time homebuyers, as well as speculators, so the more stringent criteria is making condo sales extremely complicated.

    Many of the nation’s foreclosures have been on condominiums, ultimately driving prices lower while wreaking havoc on condo association budgets. As a result, mortgage lenders are requiring larger down payments and collecting higher fees. With the continuing threat that there will be additional fallout as a result of the high number of condo foreclosures, more and more conditions are being placed on mortgage loans for condos.

    When the mortgage industry was booming just a few short years ago, many building contractors of condos never concerned themselves with getting their projects approved with the Federal Housing Authority (FHA). Because sub-prime mortgages were so readily available, FHA mortgage loans were simply an afterthought. As the sub-prime mortgage era brought the mortgage industry to its knees, many borrowers are now turning to FHA for approval because of their low 3.5% down payment requirement. However, because the condo complexes were never approved by FHA when they were built, they must be approved now. FHA spot approvals are required, but there is no telling how long one may take.

    Category: FHA, General, Mortgage Rate Trends and Analysis

  10. Pending Home Sales on the Rise

    By Darren Daneault on May 4, 2009

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    Home sales could be gaining some ground. According to the Pending Home Sales Index, purchase contracts signed in March increased over 3% from the previous month. In the grand scheme of things, this might not mean much: these are after all pending home sales. But at this point, we should accept any positive market news that comes our way.

    Home prices are down roughly 30% across the country from their highs in 2006. With low interest rates, up to $8,000 in tax credits for first-time homebuyers, and the increased popularity of FHA loans, it should be no wonder we are seeing (and will hopefully continue to see) home sales back on the rise. Refinancing has accounted for most of the mortgage activity as of late, but with all the incentives available, home purchasing could make a huge comeback very quickly.

    It will likely take months of positive data like this to build confidence back to normal levels. For now, we can only cross our fingers and wait to see what next month holds.

    by Darren Daneault

    Category: Current Mortgage Rates, FHA, General, Mortgage Rate Trends and Analysis, Stimulus
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