Mortgage Rates & Trends: Mortgage Blog

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  1. Freddie Mac to Discontinue Purchasing Interest-Only Mortgage Loans

    By Robert Hyder on February 26, 2010

    Freddie Mac to Discontinue Purchasing Interest-Only Mortgage Loans

    Freddie Mac, one of the country’s mortgage-finance giants in government conservatorship, announced today it will no longer purchase or securitize interest-only mortgage loans as of September 1, 2010. This announcement includes Freddie Mac’s Initial Interest Fixed-Rate and ARMs (adjustable-rate) mortgage loans. Don’t be surprised when and if Freddie Mac’s sister company, Fannie Mae, makes a similar announcement in the near future.

    An interest-only mortgage is a loan that allows borrowers to pay only the interest portion of monthly mortgage payment for a specific term – typically five or 10 years – with the original principal balance remaining unchanged. At the end of the interest-only period, the principal balance is amortized for the remainder of the term of the mortgage loan. When amortized, the principal balance is divided into monthly installments and includes both principal and interest.

    Freddie Mac expects to provide additional information soon to its seller/servicers in forthcoming Single-Family Seller/Servicer Guide. Freddie Mac lost nearly $26 billion in 2009, with nearly 25% of the company’s losses resulting from interest-only mortgage loans.

    –Robert Hyder

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    Category: Mortgage Rate Trends and Analysis

  2. New Jersey Mortgage Rates and Outlook

    By Michael Kraus on February 26, 2010

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    Like most states, New Jersey did not come out of the economic turmoil of the last three years unscathed.  Despite low mortgage rates in New Jersey, overall median home values fell 12.4% across New Jersey over the last three years.  Foreclosure rates rose and houses languished on the market.

    The New Jersey housing market can be divided into two segments: North Jersey which includes part of the New York City Metro Area, and the central and southern portions of the state which include part of the Greater Philadelphia Metro Area.

    In juxtaposition to most other parts of the country, 2009 was not a terrible year for the housing market in South/Central New Jersey. Home sales were stable, and while house prices fell, the losses were in single digits.  The amount of time it took to sell a house remained approximately the same.  The market actually grew slightly in the second half of the year.

    In contrast, home values in Northern New Jersey took a beating, falling 5.5% in the fourth quarter of 2009 alone.  The median home value is now $434,000, off more than $100,000 from 2006 peak prices.  Proximity to New York City has hurt North Jersey more than other portions of the state because the run-up in home values was more exacerbated during the bubble years and the market is slower to correct.  Homes on the lower end of the pricing spectrum are selling relatively quickly, suggesting that cheaper houses are now properly valued.

    There are several drivers behind the improving market, among them are low current mortgage rates,  government programs such as the first time home buyer tax credit, reduced home prices, and increased housing demand.  It is difficult to predict what will happen in New Jersey once government support is removed from the housing market.  At the very least the Federal Reserve pledged to keep interest rates low in the near term until the economy exhibits more stability.  Most analysts agree that in order for a sustained recovery to occur, unemployment must decrease so that consumers feel more confident purchasing a home.

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    Despite the challenging market New Jersey real estate remains a superb long-term investment.  New Jersey real estate has been an exceptional long-term investment.  Despite the set-backs of the last three years, New Jersey home values increased 6% over the last five years according to the Federal Housing Finance Agency.  The median home price has risen 129% since the agency started keeping statistics in 1991. Total Mortgage Services offers some of the most competitive mortgage rates in New Jersey:

    Loan Type Rate APR
    New Jersey 30 Year Fixed Conventional Mortgage 4.5% 4.710%
    New Jersey 15 Year Fixed Conventional Mortgage 4.0% 4.363%
    New Jersey 30 Year Fixed FHA Mortgage 4.500% 5.422%
    New Jersey 30 Year Fixed Jumbo Mortgage 5.750% 5.969%
    New Jersey 15 Year Fixed Jumbo Mortgage 4.0% 4.352%
    New Jersey 5/1 ARM Conforming Mortgage 3.00% 3.269%
    New Jersey 5/1 ARM Jumbo Mortgage 3.625% 3.305%

    * All rates shown are for 30 day rate locks. Longer locks available. The APR for conventional loan amounts is calculated using a loan amount of $417,000, 2 points, a $495 application fee, $500 loan processing fee, $715 underwriting fee and a $16 flood certification fee. The APR for jumbo loan amounts is calculated using a loan amount of $500,000, two points, a $495 application fee, $500 loan processing fee, $715 underwriting fee and a $16 flood certification fee. The APR for FHA loan amounts is calculated using a loan amount of $295,000, two points, a $495 application fee, $500 loan processing fee, $715 underwriting fee and a $16 flood certification fee. Some rates and fees may vary by state. All interest rates listed are for qualified applicants and are subject to mortgage approval. All rates are subject to change without notice. All rates assume a credit score of 740+ and are subject to change. Rates are quoted from Totalmortgage.com as of 3PM on Thursday, February 25, 2010.

    Total Mortgage Services has been providing the New Jersey market for more than a decade.  From Asbury Park to Cape May, from Bayonne to Cherry Hill, Total Mortgage provides the best combination of rates, customer service, and customized lending solutions you will see anywhere.  To speak to one of our loan specialists, call 888-868-2509 today.

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    Category: FHA, Fixed Rate Mortgages, Jumbo Mortgage, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates, Stimulus

  3. Federal Government Considering Additional Protection for Troubled Homeowners

    By Robert Hyder on February 25, 2010

    Federal Government Considering Additional Protection for Troubled Homeowners

    The Obama administration has continually made great efforts to assist troubled homeowners during the most-recent economic downturn that particularly affected the housing market. While constantly reevaluating their efforts, the federal government is again mulling another change to the mortgage relief program that will ensure homeowners are dealt with fairly and equitably.

    The Associated Press obtained a draft of the new policy from the Treasury Department. A summary of the draft outlined a number of ongoing criticisms by housing counselors concerning the treatment of homeowners who were already in the process of being considered for help. Housing counselors have pointed out numerous instances in which some lenders have actually continued with the foreclosure process with the knowledge that the homeowners were already in the midst of being evaluated for mortgage assistance. The new policy specifically targets and bans this action by lenders. Although the document obtained by the Associated Press “has not been approved and there are no immediate planned announcements on the issue,” Meg Reilly of the Treasury Department’s Public Affairs office did confirm its authenticity.

    Contained within the new policy will be strict enforcement of mortgage lenders halting the foreclosure process once a borrower is enrolled in the mortgage relief program. If a homeowner is eliminated from consideration from the mortgage relief program, they will be given a 30-day period in which they can appeal the decision. During the appeal process, mortgage lenders would not be allowed to resume legal action. However, they would be permitted to arrange a foreclosure sale, but would not be permitted to carry it out until the appeal process is complete.

    In addition, mortgage lenders would be obligated to review applications from borrowers who are in bankruptcy. Previously, lenders were not required to do so as it was optional for such borrowers. Under the $75 billion Home Affordable Modification Program, borrowers whose mortgage loans were owned by either Fannie Mae or Freddie Mac had an opportunity to take advantage of the historically low current mortgage rates. Unfortunately, there are still nearly one million homeowners who are either not eligible for the program or simply did not complete the process of enrolling. Of the approximately one million homeowners who are eligible, only approximately 116,000 have been able to benefit from the program.

    –Robert Hyder

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    Category: Stimulus

  4. Interest Rates to Remain Low for Foreseeable Future

    By Michael Kraus on February 25, 2010

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    Federal Reserve Chairman Ben Bernanke made the Fed’s semiannual monetary report to congress on Wednesday. Citing continued high unemployment and the still shaky economy the Fed Chief indicated there are no plans to raise the prime rate in the near future, which means current mortgage rates should remain low.

    Bernanke said that “Although the federal funds rate is likely to remain exceptionally low for an extended period, as the expansion matures, the Federal Reserve will at some point need to begin to tighten monetary conditions to prevent the development of inflationary pressures”.

    Bernanke further predicted that the economic recovery would be slow, that consumer demand was growing “at a moderate pace” and that the “job market remains quite weak”.

    New homes sales fell 11.2% in January, and many analysts are worried about what will happen to the housing market when the government ends the first time home buyer tax credit. Bernanke assured Congress that the Fed will continue to support the housing market by keeping interest rates low and holding onto the $1.25 trillion worth of mortgage backed securities it purchased. This support will likely continue until the economy is more stable or inflation becomes too great.

    This is good news for those looking to purchase a new home or refinance their current mortgage. Although the Federal Reserve clearly intends to raise rates in the future, rate hikes do not seem probable until the economy is further along the road to recovery.

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    Category: Mortgage Interest Rates, Mortgage Rates, Stimulus

  5. Purchase Applications Fall to 13-Year Low

    By Robert Hyder on February 24, 2010

    Purchase Applications Fall to 13-Year Low

    For the third consecutive week, mortgage applications declined nationwide. Of particular interest is the drop in purchase applications to the lowest level since 1997. Despite the continued availability of the $8,000 first-time homebuyer tax credit and the $6,500 move-up homebuyer tax credit, it now appears the beleaguered housing market may remain in a weak position without further intervention from the federal government.

    Earlier this month, William C. Dudley, President of the Federal Reserve Bank of New York, indicated that the Federal Reserve may choose to buy additional mortgage-backed securities beyond the $1.25 trillion they are obligated to purchase by March 31. “Obviously, if mortgage rates were to back up a lot and if that had a big consequence for the economy, then we very well could rethink the issue about whether we wanted to buy more mortgages.”

    For the week ending February 19, the Mortgage Bankers Association (MBA) reported a decline of 8.5% for all mortgage applications, including both refinances and purchases. The report released by MBA is comprised of data from more than half of all retail residential mortgage applications nationwide, and is considered one of the most-trusted resources of mortgage application statistics since 1990. The decline in purchase applications alone represented a 7.3% decrease from one week earlier, and represents the lowest level since May 1997.

    When current mortgage rates rise, the increase is typically less of a factor in purchase demand when compared to refinances. Therefore, government intervention in terms of keeping current mortgage rates artificially low may not be the answer. Alternatively, any intervention from the federal government should be in terms of purchase incentives in the form of new tax credits.

    Some market analysts believe the decline in purchase applications could be blamed on the recent winter weather that dumped several feet of snow up and down the East Coast, but that is only a single factor. According to Michael Fratantoni, MBA’s Vice President of Research and Economics: “As many East Coast markets were digging out from the blizzard last week, purchase applications fell, another indication that housing demand remains relatively weak … With home prices continuing to drift amid an abundant inventory of homes on the market, potential homebuyers do not see any urgency to lock in purchases.”

    Time will certainly tell.

    –Robert Hyder

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    Category: Mortgage Rate Trends and Analysis

  6. Low Mortgage Rates in Pennsylvania From Total Mortgage

    By Michael Kraus on February 24, 2010

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    As of February 12, 2010 we at Total Mortgage Services are proud to announce that we are now a licensed lender in the Commonwealth of Pennsylvania. We offer some of the best current mortgage rates in Pennsylvania and look forward to fulfilling Pennsylvania’s mortgage needs for many years to come.

    The Pennsylvania housing market is not really one unified market, but rather three disparate markets, with urbanized Pittsburgh and Philadelphia buffering the more rural interior portion of the state.

    In Philadelphia home sales are slowly coming back from a three year decline, picking up steam over the last year. The median sales price for a house increased throughout 2009 before retreating a bit in the fourth quarter of 2009.

    On the other end of the state, Forbes magazine recently named Pittsburgh as one of the top 25 “Best Bang For the Buck Cities”. Pittsburgh is one of the few cities where housing prices are expected to grow in 2010. Forbes also named Pittsburgh one of the best places to buy a house, as the city by and large did not participate in building explosion leading up to the housing bubble and is not facing a glut of houses.

    In Harrisburg and Scranton, cities that did not experience an explosion in home construction during the bubble inflation, home prices and sales declined slightly, but not significantly in 2009.

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    While mortgage rates across the country increased on Tuesday, mortgage rates in Pennsylvania on a 30 year fixed mortgage fell on average 11 basis points, from 4.89% to 4.78%. In contrast the national rate rose to 4.84%.  We are able to offer interest rates far below the state average. Total Mortgage offers a low 30 year fixed rate of 4.5%.

    See some of our other low current mortgage rates for our most popular products in Pennsylvania:

    Loan Type Rate APR
    Pennsylvania 30 Year Fixed Conventional Mortgage 4.5% 4.710%
    Pennsylvania 15 Year Fixed Conventional Mortgage 4.125% 4.489%
    Pennsylvania 30 Year Fixed FHA Mortgage 4.500% 5.422%
    Pennsylvania 30 Year Fixed Jumbo Mortgage 5.750% 5.969%
    Pennsylvania 15 Year Fixed Jumbo Mortgage 4.125% 4.478%
    Pennsylvania 5/1 ARM Conforming Mortgage 3.00% 3.269%
    Pennsylvania 5/1 ARM Jumbo Mortgage 3.625% 3.305%

    * All rates shown are for 30 day rate locks. Longer locks available. The APR for conventional loan amounts is calculated using a loan amount of $417,000, 2 points, a $495 application fee, $500 loan processing fee, $715 underwriting fee and a $16 flood certification fee. The APR for jumbo loan amounts is calculated using a loan amount of $500,000, two points, a $495 application fee, $500 loan processing fee, $715 underwriting fee and a $16 flood certification fee. The APR for FHA loan amounts is calculated using a loan amount of $295,000, two points, a $495 application fee, $500 loan processing fee, $715 underwriting fee and a $16 flood certification fee. Some rates and fees may vary by state. All interest rates listed are for qualified applicants and are subject to mortgage approval. All rates are subject to change without notice. All rates assume a credit score of 740+ and are subject to change. Rates are quoted from Totalmortgage.com as of 1PM on Wednesday, February 24, 2010.

    For the most part it is a buyer’s market right now in Pennsylvania. Nationwide new home sales fell 11% in January to the lowest level since the Commerce Department started keeping track almost fifty years ago. Even reality TV “stars” Jon and Kate Gosselin were forced to sell their former home in Elizabethtown, PA for $70,000 less than the asking price. The conflux of historically low interest rates, government incentives, and undervalued homes will not last forever.  Whether you eat cheesesteaks from Pat’s or Gino’s, sandwiches from Primanti’s, or kisses from Hersheys, Total Mortgage would like to help you secure financing today. We have a team of professionals who understand the market conditions where you live and would like to find a customized solution to your lending needs. Contact us today at 877-868-2503.

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    Category: Mortgage Rates

  7. Second Home Purchase – How To Get a Second Mortgage?

    By John Walsh on February 24, 2010

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    Current mortgage rates are near a historic low point and property values are as depressed as they have been in recent memory. Home owners who are considering refinancing their home or purchasing a second home would be wise to take advantage of this opportunity.

    Recently I spoke to Bob Tedeschi of The New York Times on the topic of vacation homes.  Obtaining a mortgage for a second home has become more difficult due to tighter lending guidelines, stricter requirements, and regulations. Pristine credit and a large down payment are generally required for a second mortgage. It is hard to qualify for a second mortgage but it is considerably more affordable than it was in the past.

    Here are some things to consider when purchasing a second home:

    • Second homes must be located a reasonable distance from the borrower’s primary residence.
    • Second homes must be occupied by the borrower for a portion of the year.
    • Second homes are limited to one-unit homes.
    • Second homes must include utilities suitable for year-round occupancy.
    • The borrower must have sole control of the second home.
    • Occupancy of second homes cannot be controlled by a management agency.
    • Second homes may not be rental properties or timeshares.

    As recently as three years ago borrowers with a credit score as low as 560, and as little as 5% for a down payment were able to obtain subprime mortgages for second homes. These subprime loans were one of the primary catalysts for the current economic crisis and we are unlikely to see these kinds of loans again.

    Today a 20% down payment for a second home is de rigueur. A few mortgage companies will accept a 10% down payment but only if the property is in Arizona, California, Florida, Michigan, or Nevada. Additionally, the borrowers must have a credit score of at least 720, a debt to income ratio at or below 41%, and have at least two months of principal, interest, taxes, and insurance (PITI) in liquid reserves.

    While the housing market shows some signs of stabilization, many prominent analysts are predicting hikes in mortgage rates when the Federal Reserve begins to withdraw stimulus money from the economy later in the year. If you are on the fence about purchasing or refinancing a second home, you may want to do so before conditions become less favorable.

    To speak with a certified mortgage professional at Total Mortgage Services about any of your mortgage needs, please call us at 877-868-2503.

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    Category: Mortgage Rates

  8. Current Georgia Mortgage Rates, News

    By Michael Kraus on February 23, 2010

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    The Georgia real estate market was decimated by the housing bubble. Georgia ranks seventh in the nation in foreclosures and by the end of 2009 13% of mortgage-holders were at least 30 days delinquent on their loan. Under current conditions  as many as 350,000 homes could be lost to foreclosure between now and 2012, damaging the equity of neighboring homes to the tune of $13 billion.

    Almost one out of every four Georgia mortgages is underwater, one of the highest rates in the nation. Home prices in Atlanta dipped 4% over 2009.

    Despite the bad news, there are some signs that the worst of the storm has passed. Home prices rose across the nation in December, an indication that the housing market is slowly but surely recovering. The S&P/Case-Shiller 20 city home price index showed a seasonally adjusted .3% price increase from December to November. Nationwide this marks a 7th straight month of increasing home values.

    While the Atlanta market was stagnant in December posting a 0.0% price change, there has been modest improvement since the spring. The price increase can be attributed to low Georgia mortgage rates, government incentives (such as the first time home buyer tax credit), and depressed home prices. After 13 consecutive quarters of decreasing home values in Georgia, housing prices increased in the 4th quarter of 2009.

    While the worst of the recession may be over, many expect that the housing market in Georgia will make a slow recovery that will take at least two years. Nevertheless there are a bevy of reasons to consider a home purchase in Georgia. Foremost among them are historically low interest rates. Take a look at our low current Georgia mortgage rates for some of our most popular mortgage options:

    Loan Type Loan Amount Rate Monthly Payment Total Principal and Interest Over Life of Loan
    Georgia 30 Year Fixed Conventional Mortgage $250,000 4.5% $1266.71 $456,016.78
    Georgia 15 Year Fixed Conventional Mortgage $250,000 4.125% $1864.92 $335,685.41
    Georgia 5/1 ARM Conforming Mortgage $250,000 3.0% $1054.01 *

    Note: Current mortgage rates change each business day, often several times throughout the day. Rates quoted at 2:00 p.m. (EST) on Tuesday, February 23, 2010.
    *All rates are calculated for borrowers with a credit score of 740+.
    *All rates shown are based on a 30-day lock for a purchase or rate/term refinance.
    *All rates are calculated with 2 points, 80% LTV, and $2000 in closing costs.
    *Due to the changing nature of interest rates, it is not possible to accurately compute the total amount a borrower would pay with an adjustable rate mortgage over the life of the loan.

    Many homeowners in Georgia have taken advantage of low interest rates to refinance their home.  Take for instance someone who got a $250,000, 30 year fixed rate mortgage 3 years ago in February 2006.  The average mortgage rate (with no points) was around 6.25%.  If that customer refinances at the current interest rate (with no points) of 4.875%, they would stand to save about $200 per month, and close to $80,000 over the life of the loan.  This assumes a worst case scenario where the refinance amount is equal to the amount of the original mortgage.

    With home values slowly rising and impending interest rate hikes by the federal reserve, there may be no better time than now to refinance or purchase a new home.  Our experts have helped many Georgians with all their mortgage questions and needs.  For a professional consultation please do not hesitate to contact us at 877-868-2503.

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    Category: Mortgage Rates

  9. Assistance Planned For Hardest-Hit Communities

    1 By Michael Kraus on February 23, 2010

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    On the heels of news that foreclosures have slowed, the Obama Administration renewed its commitment to helping shore up the housing market. On February 19th in Las Vegas, the President committed $1.5 billion of Troubled Asset Relief Program (TARP) funds to helping homeowners in some of the United States’ hardest hit housing markets. The program is dubbed Help for the Hardest-Hit Markets.

    States where home values have fallen by more than 20% of their peak value will be eligible for this program. The states most devastated by the housing bubble that will be helped by this initiative are Nevada (65% of houses underwater), California (35%), Florida (45%), Arizona (48%), and Michigan (37%).

    Unlike previous attempts at buoying the housing market, the money will be made available to State Housing Finance Agencies to assist local homeowners. These agencies will determine how the money is disbursed. Previous efforts at loan modification have been met with moderate success, helping only 116,000 homeowners to permanently modify their mortgages, with an additional 947,000 homeowners getting temporary relief. Secretary of the Treasury Timothy Geithner said, “This innovative program will allow us to work directly with states and localities to tailor housing assistance to local needs. It’s an opportunity to provide additional relief to the hardest hit states while continuing to strengthen our housing market stabilization needs”.

    While no specifics of the plan were unveiled, it is likely the assistance may come in the form of help for unemployed homeowners, assistance for those whose mortgage is underwater, programs that deal with complications arising from second liens, and “other programs encouraging sustainable and affordable homeownership”.

    The administration made clear that this is not the end of relief for homeowners. HUD Secretary Shaun Donovan said “As the crisis is evolving, I think you can see we’re going to have additional initiatives that reach a broad range of places.”

    For expert assistance with any of your mortgage needs, contact one of our friendly Total Mortgage experts at 877-868-2503.

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    Category: Stimulus

  10. Mortgage Delinquencies and Unemployment Rates Wane; Indicates Housing Market Recovery

    By Robert Hyder on February 22, 2010

    Mortgage Delinquencies and Unemployment Rates Wane; Indicates Housing Market Recovery

    In the fourth quarter of 2009, the number of mortgage delinquencies dropped to 9.47%, down from 9.64% at the end of the third quarter of 2009. The information was produced by the National Delinquency Survey, which is arguably the most recognizable source for information pertaining to mortgage delinquency and foreclosure. Produced by the Mortgage Bankers Association, the National Delinquency Survey presents quarterly delinquency and foreclosure data on the national, regional and state level.

    This information indicates the mortgage market may finally be on an upswing. Even if the .17% decline in delinquencies is so small it seems trivial, it undoubtedly is not. This reduction in mortgage delinquencies denotes the first decline since 2006. Jay Brinkmann, the Chief Economist and Senior Vice President of Research and Economics for the Mortgage Bankers Association said, “We are likely seeing the beginning of the end of the unprecedented wave of mortgage delinquencies and foreclosures that started with the subprime defaults in early 2007, continued with the meltdown of the California and Florida housing markets due to overbuilding and the weak loan underwriting that supported that overbuilding, and culminated with a recession that saw 8.5 million people lose their jobs.”

    While the rate of delinquencies remains 1.59% higher than it was in the fourth quarter of 2008, Brinkmann believes the pattern of mortgage delinquencies will parallel the unemployment figures. According to the Bureau of Labor Statistics, the national unemployment rate finally fell below 10% to 9.7% in January. If that is any indication of what’s to come, mortgage delinquencies should continue to decline as well. The next release of employment information is scheduled for March 5, 2010.

    –Robert Hyder

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    Category: Mortgage Rate Trends and Analysis
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