Mortgage Rates & Trends: Mortgage Blog

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  1. Low Mortgages Rates Continue to Fuel Refinancing

    By Michael Kraus on September 8, 2010

    Today the Mortgage Banker’s Association released its newest Mortgage Applications Survey.  It found that total mortgage applications decreased slightly, falling 1.5 percent (on a seasonally-adjusted basis) from the previous week.  Refinance activity declined 3.1 percent from the week prior, while purchase activity increased 6.3 percent from the previous week.

    Michael Fratantoni, The MBA’s VP of Research and Economics commented:

    “Purchase applications increased last week, reaching the highest level since the end of May.  However, purchase activity remains well below levels seen prior to the expiration of the homebuyer tax credit, and is almost 40 percent below the level recorded one year ago,” said Michael Fratantoni, MBA’s Vice President of Research and Economics.  “On the other hand, refinance volume dropped last week for the first time in six weeks, but the level of applications to refinance remains close to recent highs, as historically low mortgage rates continue to draw borrowers into the market.”

    The four week moving average for purchases is up 1.3 percent, while the four week moving average for refinances is up 5 percent.  These figures smooth out the volatility in the one week numbers and show that both indexes have been increasing somewhat over the past month.

    These survey demonstrates that while low mortgage rates have prompted many people to refinance their current mortgage (refinances account for about 82 percent of total mortgage applications), they have been ineffective in getting people to move forward with home purchases.  Part of this could be due to the lack of demand for homes following the expiration of the first time homebuyer tax credit, and part of it is due to the state of the economy and the possibility that home prices may continue to fall in the coming months (postponing purchases is a classic feature of deflationary spirals, and we could well see continued deflation of the housing market if not the broader economy).

    It seems likely that we will continue to see diminished purchase activity through the remainder of the year (especially as we enter the normally slow holiday season) and into early next year, barring a dramatic change in prevailing economic conditions or the national mood.  We can probably also expect to see refinance activity slowly decrease as the pool of borrowers eligible for refinance dwindles, barring a drastic dip in mortgage rates of a general loosening of credit/easing of underwriting conditions.

    Category: Mortgage Rates

  2. Mortgage Activity Up, Mortgage Rates Hit New Lows

    By Michael Kraus on September 1, 2010

    According to this week’s Weekly Application Survey from the Mortgage Banker’s Association, mortgage applications increased slightly from the previous week, rising 2.7 percent (seasonally adjusted).  Refinance activity increased again, and is up 2.8 percent (seasonally adjusted) from the week prior.  Refinance applications are now at their highest point since May of 2009.  Purchase applications also rose, and are up 1.8 percent (seasonally adjusted) from the previous week.

    Excerpted from the survey:

    “Refinancing activity picked up again last week, reaching new 15-month highs, as borrowers took advantage of even lower mortgage rates.  The drop in mortgage rates was in line with Treasury rates as the latest data continue to show weak economic growth and an exceptionally weak housing market,” said Michael Fratantoni, MBA’s Vice President of Research and Economics.  “The sharp decline in MBA’s Purchase Application index in May had provided a clear leading indicator of the drops in new and existing home sales that were reported for June and July.  Despite the slight increase in purchase activity in the past week, the continued low level of purchase applications indicates we are unlikely to see an increase in new home sales reported for August or existing home sales reported for September.”

    The continuing increase in refinance activity is not surprising, as mortgage rates continue to hit all-time lows.  According to Zillow, the average rate on a 30 year fixed rate mortgage is now 4.26 percent.  According to Freddie Mac the average rate is 4.36 percent (I believe the discrepancy comes from the methodology used to ascertain the average rate).

    While purchase applications increased a little bit, they are still close to 15 year lows.  This is also anticipated based upon the collapse in demand for housing and very weak labor market (U-3 unemployment is still at 9.5 percent and broader measures of unemployment are above 16 percent).

    Until we see any real improvements in the labor market, we are unlikely to see purchase applications increase significantly and we are unlikely to see substantial improvement in the housing sector as a whole.

    Category: Mortgage Rates

  3. Home Refinancing Continues to Rise on Record Low Mortgage Rates

    By Michael Kraus on August 25, 2010

    This guy likes green leafy shoots and low mortgage rates.

    Today the Mortgage Banker’s Association released their Weekly Application Survey. Total mortgage applications rose 4.9 percent on a seasonally adjusted basis from last week.

    Refinance activity continues to dominate the mortgage market, increasing 5.7 percent from the week prior.  Refinance applications are at their highest point since May 2009.  Purchase activity decreased 0.6 percent on a seasonally adjusted basis from the week before.

    From the press release:

    “The volume of refi applications last week was up 26% over their level four weeks ago.  Mortgage rates dropped to their lowest level in the survey, going back to 1990, as incoming data continue to indicate that economic growth has slowed,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. “We are at a new 15 month high for the Refinance index.  With rates this low, many borrowers who refinanced in the past two years may well have an incentive to refinance again, and this is likely increasing refi application activity.”

    Refinance activity continues to dominate mortgage applications, accounting for 82.4 percent of all activity.  This should not come as a surprise to anyone, as mortgage refinancing has been driven by record low mortgage rates.  According to Freddie Mac’s weekly mortgage rates survey, the average mortgage rate on a 30 year fixed rate mortgage is 4.42 percent, the lowest since Freddie Mac has been keeping track, and likely the lowest rate since the 1950s.

    This report has been more or less the same for the last few weeks, and there’s not much more to say about it.  If you are paying more than 1 percent above the current offered mortgage rate, you should really consider seeing if you qualify to refinance.  Call one of our mortgage professionals today at 877-868-2503.  See if we can save you some money.

    Category: Mortgage Rates

  4. Refinance Activity Booms on All Time Low Mortgage Rates

    By Michael Kraus on July 21, 2010

    Today the Mortgage Bankers Association released the Weekly Mortgage Applications Survey for last week.  The survey found that total mortgage activity increased 7.6 percent on a seasonally-adjusted basis from the previous week.

    Refinance activity went up 8.6 percent from the week prior.  For the first time in several weeks, purchase activity also increased, rising 3.4 percent on a seasonally-adjusted basis.

    Michael Fratantoni, Vice President of Research and Economics for the MBA attributed much of the increase to all-time low mortgage rates, saying:  “As rates on 30- and 15-year fixed-rate mortgages declined to the lowest levels recorded in the survey, refinance activity increased last week. The refinance index is up almost 30 percent over the past 4 weeks, but is still well below the peak seen last spring.  Refinance borrowers, aiming for the lowest possible rate, are getting conventional loans. The strength in purchase applications comes from government loans, likely indicating that prospective buyers are drawn by the lower downpayment requirements.”

    Refinance activity accounted for nearly 80 percent of all mortgage applications last week, providing a temporary boon to mortgage bankers, brokers, and lenders.  According to Freddie Mac, the current average mortgage rate on a 30 year fixed rate mortgage is 4.57 percent, the lowest since Freddie Mac began keeping track in 1971.

    Extremely low mortgage rates are not helping home builders, however, as new home construction is dipping to some of the lowest levels in recent memory.

    Category: General

  5. Existing Home Sales Fall in February

    1 By Mike Battema on March 24, 2010

    In addition to new home sales dropping in February, the National Association of Realtors reported that existing home sales fell in February 2010 to a seasonally adjusted annual rate of 5.02 million units, down 0.6% from the 5.05 million units that were sold in January 2010. Despite this drop in sales volume, sales in February were nevertheless up 7% from the 4.69 million units sold in February 2009.

    While the snow, sleet and ice are major reasons to blame for keeping potential home buyers indoors, the lack of any soon expiring homebuyer tax credit did not produce the surge in home sales that was seen in the fall and is expected before the April 30 deadline, as homebuyers take advantage of low current mortgage rates to purchase or refinance.

    Existing Home Sales Fell in February thanks to snowy conditions and an extended homebuyer tax credit

    Existing Home Sales Fell in February thanks to snowy conditions and an extended homebuyer tax credit

    The national median existing home price was $165,100 in February 2010, down 1.8% from the February 2009 price as a result of distressed homes accounting for 35% of last month’s total sales. The Federal Housing Finance Agency (FHFA) index, which tracks the prices of houses that are sold or guaranteed by Fannie Mae, Freddie Mac or the Federal Home Loan Banks over time, is 13.2% below its April 2007 peak, indicating that low current mortgage rates and depressed home prices make it a strong buyer’s market.

    Despite total home sales dropping for the month, existing home sales in the Northeast were up 2.4% and 2.8% in the Midwest, as buyers took advantage of current mortgage rates in states such as Connecticut and Illinois. Despite low mortgage rates in Georgia and Virginia, however, home sales in the South fell 1.1% and 4.7% in the West in February 2010.

    The housing recovery is still fragile at the moment, however, now is a great time to capitalize on near record low mortgage rates before they start to rise later in the year. Total Mortgage Services offers some of the best current mortgage rates in the Country. Whether you are looking to refinance your home with a Jumbo loan in New York state or require an FHA loan to purchase your new home in Pennsylvania, call 877-868-2503 today to speak with one of our mortgage professionals.

    Category: Current Mortgage Rates, FHA, Jumbo Mortgage, Mortgage Rates, Purchase, Refinance

  6. Home Purchases Expected to Rise

    By Robert Hyder on March 5, 2010

    Home Purchases Expected to Rise

    Despite the Mortgage Bankers Associations’ report two weeks ago that purchase applications fell to a 13-year low, mortgage analysts now anticipate home sales to restart yet again as the deadline for the $8,000 first-time homebuyer tax credit and the $6,500 move-up homebuyer tax credit looms. Lawrence Yun, Chief Economist and Senior Vice President of Research for the National Association of Realtors, says the recent decline in purchase transactions is due in large part to the delay among homebuyers that have been searching for a home, then ultimately closing on it. Those homebuyers hoping to take advantage of the popular tax credits have until April 30, 2010 to find a home and sign a purchase agreement with the seller. Then, the purchase transaction must close by June 30, 2010 in order for the tax credits to be applied.

    In a statement, Yun said, “People who got into the market after the homebuyer tax credit was extended in November have only recently started to offer contracts, so it will take a couple months to close those sales.” In contrast, Yun also concedes the recent decline in home sales is not encouraging and that the expectation of a complete recovery would be premature. In support of Yun’s premise, a market analysis from Briefing.com indicated the decline in purchase applications did catch many housing analysts off guard.

    Even though there are concerns among industry analysts that the housing market remains fragile, Yun’s optimistic outlook for an increase in purchase transactions is strengthened with the historically low current mortgage rates the mortgage industry continues to enjoy. To further encourage the housing relief effort, the Federal Housing Finance Agency (FHFA) announced yesterday that the Home Affordable Refinance Program (HARP) has been extended for another year to June 30, 2011. The HARP program was created by the federal government to allow homeowners whose mortgage loans are owned by Fannie Mae or Freddie Mac, and the loan-to-value (LTV) of their home is less than is owed on an existing mortgage, to refinance and take advantage of the incredibly low current mortgage rates.

    Robert Hyder

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    Category: Mortgage Rate Trends and Analysis

  7. Fannie Mae Will Pay Your Closing Costs

    By Michael Kraus on February 9, 2010

    Closing Costs

    Despite the current economic climate, there are a myriad of reasons to become a homeowner right now.  Interest rates and mortgage rates are historically low.  Home values may have hit their low point, as St. Louis Federal Reserve President James Bullard recently noted housing prices have “by and large” stabilized.  There may never be a better opportunity to refinance or invest in a new home.

    In case you needed further motivation to explore the option of home-ownership, the government is offering many incentive programs to potential home buyers.  We have mentioned the $8000 First-Time Home Buyer Credit and the $6500 “move up” tax credits in this space before.

    One lesser known program is the Closing Cost Assistance and Appliance Incentive for Fannie Mae Homes.  Fannie Mae owns thousands of foreclosed and forfeited homes that are listed on Homepath.com.  In an effort to reduce their portfolio, any purchaser of a Homepath.com home is eligible to receive 3.5% of the final sales price to be applied to closing costs, the purchase of Whirlpool appliances through Fannie Mae, or a mix of closing costs and appliances.

    In order to be eligible for the program, the home buyer must be an owner-occupant, and the offer on the house must have been accepted after January 28, 2010, and closing on the house must occur prior to May 1, 2010.

    Fannie Mae also offers special financing for homes purchased from Homepath.com.  The required minimum down payment is only 3%.  Mortgages can be fixed or adjustable and typically no mortgage insurance is required.  Many people with imperfect credit will still be approved.

    If you are in the market for a fixer-upper or a house at a deep discount, now is a great time to take advantage of the many incentives Fannie Mae is offering.  Total Mortgage is a fully approved FHA lender and can handle all your mortgage needs.  Contact us today online or at 1-877-868-2503.

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    Category: Purchase, Stimulus

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