Mortgage Rates & Trends: Mortgage Blog

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  1. Home Sellers Slash Real Estate Listing Prices in May

    By Phil Tortora on June 14, 2010

    home-for-sale-sign

    According to data recently released by online real estate brokerage ZipRealty, more than 43 percent of people trying to sell their homes lowered their asking prices in May.

    This is likely an after-effect of the expiration of the first-time home buyer tax credit, as sellers realize they are now working with a much smaller pool of prospective home buyers. The tax credit expired back on April 30, and a flurry of buyers rushed to beat the deadline in order cash in on rebates of up to $8,000.

    Since then, mortgage applications have fallen off considerably.

    “Home sellers may be lowering their list price to help stimulate interest from home shoppers now that the first-time and repeat-home-buyer credits have expired,” said Leslie Tyler, vice president of marketing for ZipRealty, in a news release.

    The median asking prices of houses up for sale in May was $264,936, down almost $2,500 from the previous month. Since then, the vast majority of mortgage activity has revolved around current homeowners refinancing their existing mortgages with the near-historic low mortgage rates currently available.

    ZipRealty also reported last week that online searches for home are down considerably, with web traffic on real estate websites down almost 20 percent from this time in 2009.

    According to Ziprealty CEO Pat Lashinsky, the housing market does not appear to have bottomed out yet either with respect to falling list prices. In an interview last week with the PBS Nightly Business Report, Lashinsky suggested, “I don’t think that we can say that housing has hit its bottom right now. I think that we’re going to see that the data right now that we’re seeing coming out of May and into June shows that I think that we’re going to see a softening of volumes as a result of the tax credit going away. We’re also seeing prices not holding up as well as we expected given how low the mortgages are.”

    Lashinsky also stated in the interview that sellers who failed to get a deal prior to the tax credit expirations are not sitting in the most enviable of positions at this point in time.

    “The sellers who missed out on the tax credit in getting their home price range sold are a little more worried now. They’re not seeing as much activity and they’re not seeing as many multiple offers. And so sellers are feeling more pressure than they did even just 30 days ago.”

    Where do you think home prices are headed in the foreseeable future? When do you expect the real estate to bottom out? Let us know in the comments section below.

    Category: Mortgage Rates

  2. Mortgage Applications Drop to Lowest Volume in 13 Years

    By Phil Tortora on June 9, 2010

    mortgage-bankers-association-us

    The Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey that the volume of mortgage applications filed in the United States last week slipped 12.2 percent from the previous week. It was the fifth-straight week that applications fell, and was the lowest volume level since February 1997.

    This week’s results include an adjustment to account for the Memorial Day holiday.  On an unadjusted basis, the Index decreased 21.1 percent compared with the previous week.

    The decline of mortgage applications in the past month reinforces the notion that the first-time home buyer tax credit and repeat home buyer tax credit forced buyers to scramble before the April 30 expiration dates, subsequently depleting future sales as people rushed to take advantage of the rebates.

    “Purchase applications are now 35 percent below their level of four weeks ago, as homebuyers have not yet returned to the market following the expiration of the homebuyer tax credit at the end of April,” Michael Fratantoni, MBA’s vice president of research and economics, said in a statement.

    The seasonally-adjusted Purchase Index fell 5.7 percent last week and the Refinance Index fell off by 14.3 percent. The slowdown in refinance applications was the first time in a month that it went backwards, and Fratantoni suggest that the plunge implies many homeowners who qualify for refinancing have done so already.

    “Although rates remained essentially flat, refinance applications dropped this past week for the first time in a month.  Despite the historically low rates, many homeowners have already refinanced recently, remain underwater on their mortgages, have uncertain job situations, or have damaged credit following this downturn, and therefore may not qualify to refinance,” said Fratantoni.

    Of all the mortgage applications filed last week, 72.2 percent were for refinancing loans, down from 73.8 percent from the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.1 percent from 5.2 percent of total applications from the previous week, which is the third consecutive weekly decrease.

    Also from the MBA weekly report:

    The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.81 percent from 4.83 percent, with points decreasing to 1.02 from 1.05 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.  The effective rate also decreased from last week.

    The average contract interest rate for 15-year fixed-rate mortgages increased to 4.26 percent from 4.24 percent, with points decreasing to 0.95 from 1.11 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

    The average contract interest rate for one-year ARMs decreased to 6.94 percent from 6.96 percent, with points increasing to 0.30 from 0.27 (including the origination fee) for 80 percent LTV loans.

    Category: Mortgage Rates

  3. First Time Home Buyer Tax Credit Extended For Military Members

    By Michael Kraus on June 7, 2010

    military-first-time-home-buyer-tax-creditThe first-time home buyer and repeat tax credits expired on April 30, 2010, but if you have not taken advantage of the credit and you are a member of the military you may be in luck, as Congress has extended the credit for another year for some military personnel.  You may still be able to take advantage of historically low mortgage rates and low home prices.

    From IRS.gov, here are the guidelines for qualification for the tax credit.  For the complete rules, click here:

    • Members of the military and certain other federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the credit. Thus, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2011. If a binding contract is entered into by that date, the taxpayer has until June 30, 2011, to close on the purchase. Members of the uniformed services, members of the Foreign Service and employees of the intelligence community are eligible for this special rule. It applies to any individual (and, if married, the individual’s spouse) who serves on qualified official extended duty service outside of the United States for at least 90 days during the period beginning after Dec. 31, 2008, and ending before May 1, 2010.
    • In many cases, the credit repayment (recapture) requirement is waived for members of the uniformed services, members of the Foreign Service and employees of the intelligence community. This relief applies where a home is sold or stops being the taxpayer’s principal residence after Dec. 31, 2008, in connection with government orders received by the individual (or the individual’s spouse) for qualified official extended duty service. The credit is still allowable even if this happens during the year of purchase. Qualified official extended duty is any period of extended duty while serving at a place of duty at least 50 miles away from the taxpayer’s principal residence (whether inside or outside the U.S.) or while residing under government orders in government quarters. Extended duty is defined as any period of duty pursuant to a call or order to such duty for a period in excess of 90 days or for an indefinite period.

    So if you are returning home from serving abroad, or are currently abroad and have a spouse at home, you may still be able to save big on a new home purchase.  Demand for homes has tailed of substantially since the tax credit expired, so it is definitely a buyer’s market right now, and you have until April 30, 2011 to claim the tax credit.  For more information, call one of our mortgage experts at 877-868-2509.

    Category: Mortgage Rates

  4. Total Mortgage President John Walsh Quoted By The Wall Street Journal, MarketWatch

    By Staff on June 1, 2010
    John Walsh, President, Total Mortgage Services, LLC

    John Walsh, President, Total Mortgage Services, LLC

    An article published this past weekend by Amy Hoak of The Wall Street Journal and MarketWatch quotes a number of highly-respected mortgage-industry experts, including Total Mortgage Services, LLC president John Walsh.

    The analysis piece cautions home buyers whom are eligible for federal home-buyer tax credits that they need to close on their houses before the end of June, or risk losing thousands of dollars. The story heightens the urgency for home buyers to take all the necessary steps to ensure their loans close within the next month, and warns that due to the recent high volume of real estate sales and refinancing which is going on, that the potential for closing delays does exist.

    Borrowers who signed a purchase contract prior to April 30 may be eligible to receive a tax credit if they close prior to July 1.

    Also quoted in the article are Joseph W. Rand, Managing Partner and General Partner for Better Homes and Gardens Real Estate – Rand Realty, and Timothy M. Dwyer, president of title-insurance company Entitle Direct.

    To read The Wall Street Journal article, please visit this link.

    To read the article at MarketWatch, please visit this link.

    Category: Mortgage Rates

  5. April Home Sales Rise With Boost From First-Time Home Buyer Tax Credit

    1 By Staff on May 24, 2010

    People attempting to beat the first-time home buyer tax credit deadline of April 30 helped push existing-home sales up 7.6 percent last month to a seasonally-adjusted annual rate of 5.77 million units. That was an increase from the rate of 5.36 million units for March, according to the National Associate of Realtors.

    The first-time home buyer tax credit offered home buyers an $8,000 incentive if they had a deal signed prior to the end of last month.`

    Lawrence Yun, the chief economist for NAR, said the gain was widely anticipated. “The upswing in April existing-home sales was expected because of the tax credit inducement, and no doubt there will be some temporary fallback in the months immediately after it expires, but other factors are also supporting the market,” he said. “For people who were on the sidelines, there’s been a return of buyer confidence with stabilizing home prices, and improving economy and mortgage interest rates that remain historically low.”

    It’s also worth mentioning that the median existing-home price for all housing types was $173,100 in April – up 4 percent from the same time year ago, and that distressed home accounted for one-third of all the sales.

    Total Mortgage president John Walsh believes the tax credits had a positive impact on the U.S. housing market.

    “On the whole, the tax credit had a very positive effect on the housing market. It was a key factor, along with both mortgage rates and housing affordability being near record lows, that helped stabilize the housing market at a time when support was needed,” said Walsh. “Over the last few months, our company experienced a sharp increase in purchase loans that we attribute primarily to the tax credits.”

    Walsh has also surmised that it is now a good time for the housing market to function without any tax-credit support.

    “The credits had already been offered twice, and any time the government subsidizes a program for too long, there is a possibility to create market inefficiencies,” says Walsh. At some point, the housing market needs to stand on its own, and artificially supporting the market for too long may simply prolong the recovery process.”

    Home sale numbers will likely be robust through May and June as well, as people who had deals in place prior to the April 30 deadline have until June 30 to close on them.

    Home buying activity could slow down later in the summer, particularly if a tax credit isn’t reintroduced.

    Category: Mortgage Rates

  6. Mortgage Rates Still Down As Home Loan Demand Wanes

    By Staff on May 20, 2010

    Current mortgage rates continue to hover at 2010 low points today and the National Mortgage Bankers Association reports mortgage purchase applications fell to their lowest level in 13 years last week.

    The primary reason for the recent dearth of applications is the expiration of the first-time home buyer and repeat home buyer tax credit, which ended on April 30. Most people who have been in the market for a home purchase in recent months scrambled to beat the tax credit deadlines.

    Nonetheless, the low rates still make this an opportune time for home buyers who are still in the market to purchase a new home, or are considering refinancing their existing mortgage.

    Total Mortgage Services, LLC currently has the 30-year fixed conventional mortgage at 4.375 percent, the 20-year fixed at 4.250 and the 15-year fixed at 3.875 percent. The 30-year fixed FHA sits at 4.375 percent. These are the lowest rates of 2010.

    The 30-year fixed jumbo is at a 5.125 percent rate and the 5/1 ARM conforming mortgage is currently sitting at 3.000 percent.

    Total Mortgage is listing some of the lowest current rates on 30-year fixed-rate mortgages, FHA mortgages, jumbo mortgages and adjustable-rate mortgages in the industry and originates loans in over 20 states. Current mortgage rates are updated continuously on Total Mortgage’s website, in addition to daily insight and perspective on mortgage industry news and trends.

    As of 9:30 a.m. on May 20, 2010, the following rates were listed at Total Mortgage:

    30-Year Fixed Conventional 4.375% Rate 4.583% APR
    20-Year Fixed Conventional 4.250% Rate 4.535% APR
    15-Year Fixed Conventional 3.875% Rate 4.236% APR
    30-Year FHA 4.250% Rate, 5.178% APR 4.250% Rate 5.178% APR
    30-Year Fixed Jumbo Mortgage 5.125% Rate 5.336% APR
    15-Year Fixed Jumbo Mortgage 4.000% Rate 4.352% APR
    5/1 ARM Conforming Mortgage 3.000% Rate 3.367% APR
    5/1 ARM Jumbo Mortgage 3.500% Rate 3.291% APR

    For a full list of mortgage rates and mortgage products visit TotalMortgage.com for additional information.

    * 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.

    Category: Mortgage Rates

  7. Total Mortgage President John Walsh Analyzes Tax Credits And Housing Markets

    By Staff on May 18, 2010

    Total Mortgage Services, LLC president John Walsh was recently quoted in a question-and-answer piece about the effects of the first-time home buyer and repeat home buyer tax credits, and how the housing market is likely to respond now that the programs are over.

    Walsh’s insightful analysis is currently posted on the Mortgage Orb website.

    Among the highlights from the article, Walsh says, “the tax credit had a very positive effect on the housing market. It was a key factor, along with both mortgage rates and housing affordability being near record lows, that helped stabilize the housing market at a time when support was needed.”

    Walsh also surmises that it may have been a good time to let the tax credits expire. “The credits had already been offered twice, and any time the government subsidizes a program for too long, there is a possibility to create market inefficiencies. At some point the housing market needs to stand on its own, and artificially supporting the market for too long may simply prolong the recovery process.”

    Among other highlights of the article, Walsh delves into his outlook on where home prices are headed, and whether or not he believes the home credits will be reintroduced at a later point in time.  The entire article is available at MortgageOrb.com.

    About Total Mortgage Services

    Total Mortgage Services, LLC is an industry leading direct mortgage lender and mortgage broker, with over 25,000 satisfied customers, and having funded over $4 billion in mortgage loans since 1997. Licensed in over twenty states, Total Mortgage offers a variety of mortgage products and programs including fixed-rate loans, adjustable-rate loans (ARMs), jumbo loans, FHA mortgages, and more. Visit the company’s website for today’s current mortgage rates.

    Category: Mortgage Rates

  8. Fannie Mae Sees Increasing Mortgage Rates Through 2011

    By Michael Kraus on May 17, 2010

    mortgage-rates4Today Fannie Mae’s Economics and Mortgage Market Analysis Group published its May 2010 Economic Outlook, and the prognosis was mostly positive.  The report said that a strengthening labor market along with increases in consumer spending and manufacturing have set the scene for slow but steady economic improvement.  Their optimism was tempered by the uncertainty of the situation in Europe, a continued weak housing  market, and economic effects of the Gulf of Mexico oil spill.

    Fannie Mae reports a steady increase in mortgage rates, and that 30-year fixed rate mortgages will hit 5.4 percent by the end of 2010 and 5.8 percent by the end of 2011. They also predict the yield on 10 year treasury notes, the basis for interest rates in the United States to increase steadily and reach 4.2 percent by the end of 2011.

    The report stated: “we have revised up our projected economic growth for the rest of the year based on strong momentum coming out of the first quarter and an improving job market, but our expectations for continued softness in housing, following the expiration of home buyer tax incentives stay in place”.  Recent reports have indicated that despite low mortgage rates, mortgage purchase applications plummeted following the expiration of the tax credit on April 30th.  Consumers who signed a purchase contract prior to April 30th still have until June 30th to close on their home and qualify for the tax credit.  For this reason, home sales will likely increase in May and June.  The real test for the housing market will come in July when the effects of the tax credit have totally evaporated.

    The report predicts the economy to grow at 3.6 percent through 2010, however unemployment will stay north of 9.6 percent through the end of 2010, and the jobless rate will still be as high as 8.6 percent through 2011.

    Regarding the federal stimulus, the Fannie report said: “The boost to growth from inventories will continue to diminish in coming quarters and any impact of the federal fiscal stimulus will fade in the second half of 2010.  In order for the expansion to be durable, final sales must strengthen to replace waning contributions from inventories and fiscal stimulus”.

    The report also warned that the European debt crisis “poses significant risk to the forecast” and that “no estimate of the magnitude of the effect [of shadow inventory on home sales and prices] is available”.  The report cautions that these situations in addition to the oil spill in the Gulf of Mexico “increase downside risks to the base forecast”.

    Do you agree with Fannie’s assessment of the economy?  Let us know in the comments section below.


    Category: Mortgage Rates

  9. California Housing Market Shows Incremental Improvements

    By Michael Kraus on May 14, 2010

    california-housingAs our most populous state, changes in the California economy have a massive impact on the country’s economy as a whole.  During the housing bubble home prices in California escalated out of control, and during the ensuing market crash California got hammered.  There is some good news, however, as the California housing market is slowly recovering because low home prices, low current mortgage rates, and tax incentives are encouraging people to buy.

    According to a report from MDA DataQuick, year-over-year new home sales increased 17 percent in Southern California in the first quarter of 2010. This is still far below pre-recession numbers, as almost 17,000 new homes were sold in Southern California in the first quarter of 2006.

    Reports from the L.A. Times suggest that builders are no longer building homes on spec, and people are no longer looking to purchase homes to flip for a quick profit.  McMansions are out, and smaller, more conservative homes are in.  There is an increased emphasis on location, with people eskewing larger homes with elaborate  features in favor of smaller homes with shorter commutes.

    The California Association of Realtors reports that year-over-year home sales increased 2.5 percent in March, and the year-over-year median price of existing homes rose 20.8 percent in March, the largest increase in five years.

    Foreclosures continue to dog the California market.  Banks seized a record number of homes last month, but the number of houses entering the foreclosure process is starting to ebb.  California had nearly 70,000 foreclosure filings in April, which is extremely high, but down 25 percent month-over-month and 28 percent year-over-year.  Unemployment in California remains above the national average, and is the main hurdle to further recovery in the housing market.

    The amount of time that houses linger on the market is starting to fall as well.  The average amount of time it took to sell a house in April was 40 days, down from 49 days in April 2009.  Excess housing supply is beginning to come down as well, with the unsold inventory index fell to five months, down from 5.6 months the previous year.

    Nationwide, new home sales rose 24 percent in March (month-over-month) and 24 percent year over year.  The Price Shiller House Price Index showed annual price increases in both San Francisco and Los Angeles.  The Dow Jones Home Construction Index Fund, which measures the stocks of several large home builders is up over 25 percent since the beginning of the year, a favorable sign for the construction industry.

    New home sales were helped by the first-time home buyer tax credit, which expired at the end of April.  In order to stimulate further growth, California instituted a state tax credit of up to $10,000 in order to replace the federal credit and further stimulate home sales.

    What do you think about the prospects for recovery in California?  Let us know in the comments section below.

    Category: Mortgage Rates

  10. First-Time Home Buyer Tax Credit: Questions and Answers

    By Robert Hyder on March 11, 2010

    First Time Home Buyer Tax Credit: Questions and Answers

    There is no doubt that timing is of the essence if a prospective homeowner is looking to benefit from the first-time home buyer tax credit. With the deadline looming to have a purchase agreement signed by April 30 and the closing completed by June 30, if the ball is not moving yet, it will have to get moving rather quickly. If you’re on the fence, or simply need a better understanding of the $8,000 first-time home buyer tax credit, below are the more common questions that prospective home buyers have been asking.

    What is the definition of a first-time home buyer?
    The definition of a first-time home buyer is a buyer who has not owned an interest in a primary residence in the past three years. The timeline is based on the closing date. Therefore, if a borrower has not owned an interest in a primary residence since April 4, 2007, the buyer will be considered a first-time home buyer again on April 4, 2010. Using this scenario, the home buyer can begin the purchase process prior to April 4, 2010, but cannot close before that date without forfeiting the benefit of the $8,000 first-time home buyer tax credit.

    If a married couple is purchasing a home and one of the spouses has owned an interest in a primary residence in the past three years, both partners are ineligible for the first-time home buyer tax credit. Ownership of a second home or investment property does no exclude a buyer from benefiting from the first-time home buyer tax credit.

    What type of home can be used to qualify for the first-time home buyer tax credit?
    Regardless of the number of units in the home, as long as the buyer uses the property as a primary residence, they are eligible for the first time home buyer tax credit. A primary residence can be a single-family detached home, or an attached home such as a condominium, townhouse, manufactured home (mobile home) or houseboat.

    Buyers are not eligible for the first-time home buyer tax credit if the primary residence is part of a non-arms length transaction. A non-arms length transaction is one that involves a seller and a buyer who are related.

    Who is eligible for the first-time home buyer tax credit?
    As long as a buyer is considered a first-time home buyer (see definition above), they are eligible for the first-time home buyer tax credit. The regulations regarding the first-time home buyer tax credit indicate the purchase transaction must occur no earlier than January 1, 2009 and no later than June 30, 2010. Also, a purchase agreement must be signed no later than April 30, 2010 in order to qualify for the first time home buyer tax credit.

    What documentation is required to claim the first-time home buyer tax credit?
    In order to claim the first time home buyer tax credit, IRS Form 5405 must be completed when filing your income tax returns. If you’ve already filed your tax returns, but have not yet closed on your new home, you can simply amend your 2009 returns to claim the first-time home buyer tax credit. Buyers cannot claim the first time home buyer tax credit on an intended purchase. The purchase must be completed in order to claim the credit. A copy of the HUD-1 settlement form must accompany the IRS From 5405 as proof the home purchase has been completed.

    Can a home buyer access the tax credit sooner than having to wait to file their tax returns?
    If a prospective home buyer believes he/she qualifies for the first-time home buyer tax credit, then yes, he/she is permitted to reduce their income tax withholding. This will enable the home buyer to accumulate cash by increasing take home pay. The money can then be used to put toward the down payment.  However, because the purchase agreement must be signed by April 30, 2010 and the closing completed by June 30, 2010, it is more than likely too late in the process to accumulate enough money through reducing income tax withholdings to make a significant difference.

    Potential home buyers who adjust their withholdings on their W-4 in an attempt to accumulate a down payment should note that if the purchase of the home does not occur, repayment of the additional withholdings, plus potential interest charges and penalties, may be assessed. It is highly recommended that home buyers discuss this option with an accountant prior to implementing this course of action.

    If I bought my first home in 2008, do I still qualify for the first-time home buyer tax credit?
    Unfortunately, you cannot benefit from this first-time home buyer tax credit. However, all is not lost. If you purchased your first home between April 9, 208 and January 1, 2009, there is a separate tax credit that you may be eligible for.  Contact a tax advisor for more information.

    Will the first-time home buyer tax credit be extended again?
    Although it is very unlikely, there are rumors that President Obama is considering extending the first-time home buyer tax credit for a second time. The popular tax credit has certainly helped rejuvenate the housing industry, and another extension would only solidify further growth. If current mortgage rates can remain at or near historic lows, the better the likelihood of another extension to the first time home buyer tax credit.

    Robert Hyder

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    Category: First Time Home Buyer

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