Mortgage Rates & Trends: Mortgage Blog

View the lowest rates we have to offer.
Read our RSS Feed Policy

  1. Mortgage Rates: More Jobs = Higher Mortgage Pricing

    By on February 3, 2012

    A blowout Non-Farm Payrolls (NFP) report this morning has mortgage rates heading higher.  After a week filled with data that was roughly in-line with expectations the NFP report blew away forecasts.  The expectations were for 150,000 new jobs to be created in January, yet when the counting was done 243,000 new jobs were documented.  This is certainly confirmation that the US economy has strengthened dramatically, yet the naysayers have already begun to spin why the jobs uptick may be limited.

    Two additional economic reports have the potential to accelerate the upward move in mortgage pricing today or to moderate it.  At 10 AM the ISM Services Index and Factory Orders report will be released.  The ISM Services Index is forecasted to increase from last month, which seems like a good bet given the number of service-sector jobs that were created according to the NFP report.  The Factory Orders report is forecasted to drop slightly which also seems likely given the weakness in the ISM Manufacturing Index earlier in the week.  If these reports come in as expected, I suspect that it will cause further losses in MBS and more upward momentum for mortgage pricing.

    On Monday Euro-Zone financial ministers are meeting and there is hope that approval of the second round of bailout funding will be approved at that time.  However, there is much still to be agreed to.  After reaching a deal with private creditors to cut their payouts from existing Greek debt by 70%, the burden is now on the Greek government to come up with additional savings from labor market and other reforms that will drop the country’s debt/GDP ratio to 120%.  This is a tall task as Greek politicians who must approve these reforms don’t want to be associated with these very unpopular reforms.  I would not be surprised to see Monday come and go with no deal and no bailout funds for Greece.

    After a week in which the attention was primarily on the state of the US economy, next week will see a return to the Euro-centric focus that has been so pervasive for over a year.

    Have a great weekend!

    Category: Current Mortgage Rates, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates, Purchase, Refinance

  2. Mortgage Rates: Change in Trend “Or Not”

    By on February 2, 2012

    As I discussed at the outset of this week, it was destined to be a very important week for mortgage rates.  With more data of significance announced this week as compared to almost any other week during the year, we could see a major change in the mortgage trend.  What has been a very favorable, downward trend for mortgage rates could continue with weak economic news. Or strong economic news could cause a reversal in the trend and send mortgage rates higher.  We could have seen this type of movement…or not.  What I did not count on, based on my experience with economic forecasts, was for the data this week to come in almost exactly as forecasted.

    Thus the result so far this week has been virtually no change in mortgage pricing at all since last Friday.  However—it’s only Thursday and the biggest economic report of all is still to come tomorrow.  The Non-Farm Payrolls Report still has the power to establish a trend for mortgage rates for the foreseeable future.  This time though, I will include the possibility that a result, “in-line with expectations”, could reinforce the current level of mortgage pricing.

    Today’s economic data that is moving mortgage pricing nowhere was Productivity and Weekly Jobless Claims.  Productivity was forecasted to increase by .8%–the actual result was an increase of .7%.  Weekly Jobless Claims were forecasted at 370,000—the actual result was 367,000.  Despite these reports offering no positive or negative surprise, I do see signs of improvement.  The drop in productivity signals that businesses are getting less from efficiency or technology changes and will soon need to increase labor in order to boost production.  Also, the slow drop in jobless claims signals a slow (painfully slow) improvement in the labor market.  These measures are connected and the drop in the first should lead to an accelerating drop in the second.

    Related to the European debt crisis, the biggest news of the day is a meeting between German Chancellor Angela Merkel and China’s Premier Wen Jiabao.  The Chinese leader did provide some positive news as he stated that China may “get more involved” with efforts to resolve the crisis.  With almost $4 trillion in reserves, China certainly has the ability to help.  This should provide another calming bit of news for world markets today.

    Today mortgage rates are likely to stay very close to current levels.  Tomorrow the Non-Farm Payrolls report could lead to a change in the mortgage rate trend…or not!

    Category: Current Mortgage Rates, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates, Purchase, Refinance

  3. Mortgage Rates: Obama to “Friend” Millions?

    By on February 1, 2012

    Today is the day that Facebook will file its initial public offering.  There are also rumors that today is the day that President Obama will announce his plan to enable millions of homeowners to refinance at current historically low interest rates.  In some ways, it’s as if he is sending a huge “friend request” to American homeowners.  Is this good economic policy or simply politics as usual and what effect will it have on mortgage rates?

    It appears from early trading in mortgage-backed securities (MBS) today that the markets are focused on the Facebook IPO and stocks are set to rise.  This will put pressure on MBS pricing today and could keep rates from falling any further.  Unless the stock market surges more than appears likely, mortgage rates will likely remain close to current levels throughout the day.

    Several economic reports are also in the mix today.  The ADP Employment Change report came in about at the point of expectations though newly created jobs were down significantly from December.  Analysts were encouraged however by the surge in new service sector jobs, explaining that a broad-based improvement in employment across all sectors is necessary for sustainable economic growth.

    At 10 AM both the Construction Spending report and the ISM Manufacturing Index will be released.  The ISM Index is a gauge of manufacturing industry activity and is a very important report.  If this report is at or above expected levels, mortgage pricing may feel more upward pressure.  If, however, we see a surprise to the downside, then mortgage pricing may improve.

    Let’s get back to the President’s refinance plan.  According to reports the plan will call for a tax on large banks to pay for the cost of allowing homeowners to refinance into Federal Housing Administration loans.  Having failed to get the conservator of the other two government-sponsored housing agencies to go along with a similar plan, the president has turned to the one agency he has direct control over.  That being said, the plan has virtually no chance to pass Congress as it has failed to even be acted on twice before.

    As to its public policy and economic implications my belief is that it is poor policy to allow refinancing into government (taxpayer) backed mortgages by homeowners that would not otherwise qualify for the loans.  Economically, it would provide substantial stimulus initially but it might also have the unintended consequence of causing mortgage rates to rise.  Banks unable to handle the onslaught of borrowers, and fearing repurchase risks from loans that go bad, may raise their interest rates to discourage borrowers.

    Category: Current Mortgage Rates, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates, Purchase, Refinance

  4. Mortgage Rates: Record Lows Daily?

    By on January 30, 2012

    Mortgage rates look to fall even lower today as a busy week for economic data gets underway.  On-going drama in Greece combine with the busy economic calendar to make this a crucial week for establishing the rate trend for 2012. So far, anyway, it looks like a positive trend for rates.

    The first big report of the week, the Personal Consumption and Expenditures report indicated that consumers pulled back on spending in December despite an increase in their income.  Most analysts are interpreting this as a sign of a slow-down ahead for early 2012. Once again I would urge caution in this interpretation.

    Annual consumer spending rose for 2011 by 4.7%, the largest margin in four years. A dip of .1% in the December expenditures portion of the PCE report, while breaking the string of three consecutive positive months, does not signal a trend reversal all by itself.  Particularly when you remember that the PCE report is adjusted for inflation.  According to the PCE’s own inflation component, prices increased by 2.0% rather than the 1.0% forecasted.  This largely accounts for the so-called “drop” in consumer spending.

    The never-ending Greek drama continues to play out.  Last week it was negotiations with private bond holders that dominated the scene.  After reaching an agreement with private bond holders to cut their payouts by 70% the attention now turns to how the remaining budget shortfall will be made up.  Will Greece be forced to cut spending further or will additional loans come from European nations and the ECB?

    Over the weekend the idea of installing a Eurozone budget overseer who would have the power to veto budget measures from Greece.  As you might imagine, that idea did not go over very well in Greece.  One official stated that such a measure would force Greece to choose between “financial assistance” and “national dignity”.

    The rest of the week will provide a great deal of additional economic data on the strength or lack thereof in the US economy. Chicago PMI (a gauge of manufacturing in the Chicago region) and consumer confidence reports will be released on Tuesday.  Wednesday provides the ADP Employment Change report along with construction spending and the ISM index (manufacturing).  Thursday’s key reports include the weekly jobless claims report and productivity report.  Finally, on Friday we will see the Non-Farm Payrolls report , Factory Orders and ISM Services.

    Current low mortgage rates are not justified by the economic data available to date.  Perhaps this week’s data will show developing weakness in the US economy and support the recent moves downward. Nevertheless, for the time-being consumers needing a mortgage for a refinance or purchase transaction can be comforted in knowing that rates have never been lower.

    Category: Current Mortgage Rates, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates, Purchase, Refinance

  5. Mortgage Rates: GDP Pushes Rates to Record Lows?

    By on January 27, 2012

    The first look at the US Gross Domestic Product for the 4th quarter of 2004 was the strongest in 1 ½ years.  And while news of economic strength usually sends mortgage rates higher today it appears to be sending them lower.  Why?  Because the expectations of economists prior to the report’s release was for even stronger growth.   Perhaps traders of stocks and mortgage-backed securities will realize that this data is hardly worth relying on for guiding their positions since this early look at GDP each quarter is often revised significantly before being finalized.  This report will be revised on February 29 and won’t be finalized until March 29.  According to the US Bureau of Economic Analysis, the group that produces the GDP reports the average change between the “Advance Estimate” and the “Final” is greater than 1.0%!  So despite the early improvement in mortgage rates this morning, consumers needing a mortgage for a refinance or purchase should not expect further moves down today.

    Reports out of Europe suggest that a deal between Greece and its private bond holders to reduce their payout is “very close”.  While I know we have heard this before—I actually believe it because these bond holders really have no viable alternatives.  Should they allow Greece to default in a disorderly manner it would put all their other European debt holdings at much greater risk as global investors would likely devalue all things European.

    At 10 AM ET today the January Consumer Sentiment report will be released.  Expectations for this report are for it to be flat—but flat at a very strong level.  Should this report surprise significantly it could move mortgage rates.  I do expect this report to come in close to expectations—or if there is a surprise for it to be to the high side.  If I am correct than the greater risk later today is for a slight uptick in mortgage costs rather further improvement.

    Have a great weekend!

    Category: Current Mortgage Rates, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates, Purchase, Refinance

  6. Freddie Mac Makes it Easier for Some Borrowers to Refinance

    By on January 6, 2012

    Quick update here:

    Freddie Mac has eliminated the minimum credit score requirements for borrowers with at least 20% equity in their homes, according to a news release yesterday. Previously, Freddie Mac required a minimum 620 credit score on Freddie Relief Refinances.  In order to be eligible for a Freddie Relief Refinances, your loan had to be purchased by Freddie Mac prior to May of 2009.

    I don’t know how many people this will impact, but if you have home equity but a marginal credit score, you may now be able to refinance at today’s record low rates.  I am sure there are at least a fair number of people who have built up home equity but whose credit scores were dinged as a result of job loss, medical bills, bankruptcy, or otherwise.

    Removing some of the barriers for refinancing makes sense in this case, as Freddie owns these loans already, and doesn’t really take much risk by offering a lower mortgage rate.  If it keeps some of these loans from potentially defaulting, it is a common sense move that costs very little.

    Category: Mortgage Rates

  7. FHFA to Overhaul Underwater Refinance Program – Will the Changes Help?

    2 By on October 24, 2011

    The Obama Administration, the Federal Housing Finance Agency, Fannie Mae, and Freddie Mac have announced a number of changes that are being made to the Home Affordable Refinance Program (HARP) that may increase the impact of a program that has to this point fallen woefully short of its goal of helping underwater homeowners refinance their mortgages.

    HARP was rolled out in 2009 with the purpose of allowing underwater homeowners to refinance their homes at current rates, which are substantially lower than rates were in 2005-7, which is when many underwater mortgages were originated.  Generally speaking, homeowners with high loan-to-value ratios are precluded from refinancing because lenders are reluctant to refinance the mortgage on a home where the homeowner has little equity (negative equity is the number one predictor of default).  The program was originally aimed at those with LTVs between 80-105%, and was later expanded to LTVs up to 125% (although many lenders only participate up to 105%).  According to the Wall Street Journal, 900,000 people have refinanced through HARP since the program started, and only 72,000 of these borrowers had LTVs between 105-125%.

    Some of the proposed changes to the program include:

    • Getting rid of some risk-based fees for borrowers who refi into shorter-term mortgages.  A variety of other fees would be eliminated.
    • The 125% LTV ceiling would be eliminated for fixed rate loans backed by Fannie or Freddie
    • The need for a new appraisal where there is a “reliable automated valuation model” would be eliminated.
    • The HARP program would be extended through December 31, 2013 for loans originated or sold to Fannie and Freddie before May 31, 2009.
    • Rules will be changed so that lenders will be shielded from the put back risk on HARP loans.  This may encourage more lenders to refi higher LTV loans.
    Category: Mortgage Rates

  8. Underwater Refinancing Plan Tied to Mortgage Settlement?

    4 By on October 18, 2011

    At first glance, it appears that efforts to create some sort of broad-based refinance program that would allow underwater homeowners to refinance are gaining steam.  People who are underwater on their mortgages are generally precluded from refinancing.

    There is an article in the Wall Street Journal today by Ruth Simon, Nick Timiraos, and Dan Fitzpatrick that says that some form of underwater refinancing is being discussed as part of any mortgage/foreclosure/securitization fraud settlement with the banks.  According to the article “discussions are still fluid and any final outcome is uncertain”.

    Supposedly the plan is intended to draw California Attorney General Kamala Harris back into the 50-state attorney general settlement.  AG Harris withdrew from talks two weeks ago amidst concerns that it would be “inadequate for California homeowners”.  In addition to Harris, the AGs for Nevada, Arizona, Illinois, Delaware, and Massachusetts have all indicated that they would be starting their own investigations into mortgage fraud. There are concerns that the settlement gives banks too broad a release from liability and that investigations into banking practices have been generally inadequate.

    Last week, a bipartisan group of sixteen Senators endorsed a plan that would allow those with negative home equity to refinance.  That plan would have done away with loan-to-value ratios, eliminated loan level pricing adjustments, and somehow ensured that second lien holders would not stand in the way of refinancing.  This plan did not appear to be tied to a settlement.

    Continue Reading…

    Category: Mortgage Rates

  9. Bipartisan Group of Senators Endorse Broad Refinance Program

    By on October 13, 2011

    Last Tuesday, a bipartisan group of sixteen Senators wrote a letter to federal regulators endorsing a broad refinance program in order to help the housing market.  The letter was addressed to the Department of Housing and Urban Development, The U.S. Treasury, The National Economic Council, and the Federal Housing Finance Agency.

    The Senators endorsed a plan that would allow homeowners with higher interest loans to refinance at today’s lower rates.  This would be achieved by:

    • Doing away with loan-to-value ratios
    • Eliminating loan level pricing adjustments (which are up-front, risk-based fees which increase rates for those with higher LTVs and lower credit scores)
    • “Ensuring that second lien holders do not stand in the way of a refinance”.  It is unclear how this would be accomplished.
    Back in August, the Obama Administration endorsed some sort of vague refinancing plan, which contained pretty much no specifics.  The nebulous plan may allow some unspecified number of people who have a mortgage that may or may not be owned or backed by Fannie Mae or Freddie Mac to possibly refinance.  Again, there are no specifics whatsoever, so it is unclear if the new program would allow those who are delinquent or underwater to refinance their mortgages (approximately 20-25% of homeowners with mortgages owe more on their mortgage than their home is worth).  Those who have no home equity typically cannot refinance.  Many who purchased homes at the peak of the market (2006-7) are underwater, and are stuck paying rates 2-3 points higher than current rates.

    While the plan endorsed by the Senators has a little more in the way of details than the Obama plan, I fear that it fails to address larger issues that are hurting the housing market right now (an overhang of supply caused by continued foreclosures, and a lack of demand owing to low consumer confidence and unemployment).

    After Obama floated his “plan”, Georgetown School of Law Prof. Adam Levitin wrote about the potential benefits (or lack thereof) of a mass refi program.  The professor contends that the plan would have a minimal impact because it ultimately has a limited benefit for those who are very far underwater, and those who are having trouble making home payments due to loss of income/unemployment.

    I am inclined to agree with the Professor.  I believe that any sort of proposal to help the housing market that doesn’t include some level of principal reduction will be of very limited impact.  My view is reinforced by witnessing the failures of HARP, FHA Short Refi, HAMP, etc.  This program would be of marginal benefit to the housing market, although it would help the mortgage industry for a period of time.  I maintain my view that the best way to help the housing market would be to focus on job creation.  If people start working again, the rest will take care of itself in time.

    The Senators “urge a speedy and comprehensive conclusion to this process”.  In senate-speak, “speedy and comprehensive” probably means that some action will be taken sometime between now and the end of this decade.

     

    Category: Mortgage Rates

  10. Obama Administration May or May Not Be Pondering Vague Broad Refinance Program

    1 By on August 25, 2011

    There is an article in this morning’s New York Times by Shaila Dewan and Louise Story that suggests that the Obama adminstration may be pondering some sort of blanket refinance plan that may allow millions of homeowners to refinance their mortgages at today’s record low rates.

    The article is very short on any specifics, which makes me dubious about the entire thing (not the veracity of the article, but the willingness of the administration to take any sort of action).

    Apparently the nebulous plan may allow some unspecified number of people who have a mortgage that may or may not be owned or backed by Fannie Mae or Freddie Mac to possibly refinance.  Again, there are no specifics whatsoever in the article, so it is unclear if the new program would allow those who are delinquent or underwater to refinance their mortgages (approximately 20-25% of homeowners with mortgages owe more on their mortgage than their home is worth).  Those who have no home equity typically cannot refinance.  Many who purchased homes at the peak of the market (2006-7) are underwater, and are stuck paying rates 2-3 points higher than current rates.

    Continue Reading…

    Category: Mortgage Rates

LOOKING TO BUY OR REFINANCE?

Or Call us at 877-868-2503