Posts Tagged ‘ first mortgage loans ’

Home Values Start The Year Strong

May 2, 2012
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HPI 2007-2012

Home prices started the year on an upswing.

According to the Federal Home Finance Agency’s Home Price Index, home prices rose by a seasonally-adjusted 0.3 percent between January and February 2012. The index is up 0.4% over the past year, offering a counter-story to the Case-Shiller Index’s assertion that home values are sinking.

Last week, Standard & Poor’s Case-Shiller Index said home values had dropped more than 3 percent in the prior 12 months.

As a home buyer or sellers in Thurston County, Washington , data showing “rising home values” or “falling home values” may be of interest to you, but we can’t forget that most home valuation trackers — including both the government’s Home Price Index and the private sector Case-Shiller Index — have a severe, built-in flaw.

Both used “aged” data. Today, the calendar reads May. Yet, we’re still discussing February’s housing data.

Data that is two-plus months old is of little value to everyday buyers and sellers wanting to know the “right now” of housing. And, even then, characterizing the data as “two-plus months old” may be a stretch. This is because the home values used in the Home Price index and the Case-Shiller Index are collected from actual transactions, but at the time of closing.

Considering that most purchases require 45-60 days to close, we can know that when we look at the Home Price Index and Case-Shiller Index reports for February, what we’re really seeing is a snapshot of the housing market as it existed two-plus month plus 60 days ago.

Data that’s 5 months old is of little relevance to today’s buyers and sellers. Today’s market is driven by today’s economics.

The Home Price Index is a useful gauge for economists and law-makers. It highlights long-term trends in housing which can be helpful in allocating resources to a particular project or policy. For home buyers and seller throughout Washington State , though, it’s much less useful. Real-time data is what matters to you.

For that, talk to a real estate professional in Thurston County, Washington. For all your Thurston County, Washington mortgage needs contact William Tuning at CU Mortgage Division located in Olympia, WA at (360) 539-4687 for a free pre-approval or free consultation on your home loan options or just candid conversation.

What’s Ahead For Mortgage Rates This Week : April 9, 2012

April 9, 2012
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Spain mortgage ratesIn a week of up-and-down trading, mortgage markets improved for the second consecutive week last week. Weaker-than-expected jobs data plus evidence of a slumping Eurozone took mortgage bonds lower, capped by a furious Friday morning rally that dropped mortgage rates to near-record levels.

Once again, volatility ruled the bond pits.

Tuesday afternoon, after the release of the Fed March Minutes, mortgage rates spiked. Some products climbed as much as 0.250 percent. The surge stemmed from the Fed Minutes showing Federal Reserve members hesitant to begin new rounds of market stimulus without a demonstrated, national economic slowdown.

Wall Street hadn’t expected the Fed’s verbiage to be so well-defined. With little evidence that such a slowdown was underway — the economy has shown two straight seasons of consistent, steady growth, after all — equity markets rallied and bond markets sunk, causing mortgage rates to rise.

By Wednesday, however, rates had started to fall.

Civil unrest in Spain plus concern that the nation will fail to meet its debt obligations drew global investors away from equities and into the relative safety of U.S. government-backed bonds — including mortgage-backed bonds. This is a common investment pattern during times of economic uncertainty and one of the major reasons why mortgage rates have been so low, for so long.

If the scenario in Spain sounds similar to what transpired in Greece between mid-2010 and late-2011, that’s because it is. Mortgage rates in Washington State may benefit in the medium-term.

Also helping rates last week was the March jobs report.

The U.S. government reported 120,000 net new jobs created in March, well short of the 200,000 figure that analysts expected. Market sold off sharply on the news, giving rate shoppers another chance to capture low rates.

This week, with the economic calendar light, look for Europe to dictate market action. Mortgage rates may move lower but there’s more room for rates to rise than to fall. Rates remain near all-time lows.

For all your mortgage needs call CU Mortgage Division in Olympia, Washington at (360) 539-4687.

What’s Ahead For Mortgage Rates This Week : April 2, 2012

April 2, 2012
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Jobs growth can influence mortgage ratesMortgage markets improved last week on renewed concerns of a European debt default, and Federal Reserve rhetoric.

Conforming mortgage rates in Washington State dropped on the news, one week after posting a 5-month high.

A major strike in Spain and growing unrest in Italy, both in opposition to recent austerity measures, have re-ignited fears that the Eurozone may lapse into recession.

These are similar beginnings as with last year’s events in Greece. The difference is that Spain and Italy represent a larger share of the Eurozone’s overall economy, and a debt default could trigger faster contagion.

Mortgage markets gained on the news in a bid of safe haven buying.

Bonds also gained as Federal Reserve Chairman Ben Bernanke clarified his position on the economy with respect to Fed-led stimulus. Summarized, he said that the Federal Reserve is inclined to keep its accommodative policies in place until the labor market is more fully recovered.

In addition, Chairman Bernanke alluded to making direct mortgage market intervention if U.S. economic growth were to stall in the near future.

The news helped push mortgage rates back below 4.000 percent last week, according to Freddie Mac’s weekly Primary Mortgage Market Survey. The average 30-year fixed rate mortgage rate fell to 3.99% for applicants willing to pay an accompanying 0.7 discount plus closing costs.

1 discount point is equal to one percent of your loan size.

This week’s mortgage market activity will be holiday-shortened so expect volatility — especially surrounding Friday’s March Non-Farm Payrolls report.

More commonly called “the jobs report”, Non-Farm Payrolls details national employment rates and gains or losses in the workforce size. Lately, what’s been good for jobs has been good for the economy so if the actual number of jobs created exceeds the 200,000 projected by economists, or if the Unemployment Rate drops off its current 8.3% reading, look for mortgage rates to rise.

In general, economic expansion is bad for mortgage rates throughout Tumwater and the nation.

Other market-moving news this week includes Tuesday’s FOMC Minutes release and Thursday Jobless Claims data.

What is ahead for Mortgage Markets this week ? February 21, 2012

February 21, 2012
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Gas prices risingMortgage markets worsened last week as the Eurozone moved closer to a bailout agreement with Greece, and the U.S. economy displayed more signs of growth.

In response, mortgage rates climbed last week.

Rate shoppers should not be surprised that rates ticked north. Since mid-2011, weakness in Greece has helped keep mortgage rates low and the same is true for a weak U.S. economy. Wall Street has sought “safe assets” as protection from risk and that’s driven mortgage rates down.

Now, the safe haven buying that served to anchor low rates appears poised to reverse.

Last month, it was shown, consumer spending rose to record levels and the housing market surpassed analyst expectation again. Homebuilder confidence is now at a 4-year high and Single-Family Housing Starts topped one-half million units for the second straight month.

Conforming mortgage rates in Washington State rose for the first time in a month last week. Unfortunately, few shoppers knew because Freddie Mac’s weekly mortgage rate survey failed to capture the change. The survey deadline was Tuesday. Rates started rising Wednesday morning.

Freddie Mac’s weekly mortgage rate survey put the average 30-year fixed rate mortgage unchanged at 3.87% for borrowers willing to pay 0.8 discount points plus a full set of closing costs.

Rates are higher today.

Beyond Greece and the U.S. economy, inflation is another reason mortgage rates are up. Inflation is the enemy of mortgage rates and, an on annual basis, the core Consumer Price Index registered 2.3% — it’s highest reading since 2008. The Fed expects inflation to ease later this year but if gas prices stay high, the Fed’s forecast may be wrong.

This week is holiday-shortened. Look for Greece to dominate headlines (again) and watch for housing data toward the end of the week. Existing Home Sales is released Wednesday. New Home Sales is released Friday.

For now, mortgage rates remain low. It’s a safe time to lock a long-term rate.

What’s Ahead For Mortgage Rates This Week : February 13, 2012

February 13, 2012
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Retail Sales and mortgage ratesMortgage markets were mostly unchanged last week as Greece — once again — was front-of-mind for Wall Street investors. The nation-state is attempting to avoid a debt default, and has been attempting to avoid default since May 2010.

Early in the week, Greece reached a deal with European Union leaders to secure additional financial aid. By Friday, however, the deal was in doubt, as the EU leaders declared that the Greek Parliament would have pass new austerity measures before the aid would be released.

Austerity measures have been unpopular in Greece, giving rise to riots among citizens and resignations among politicians. Markets responded to the potential undoing of the debt deal by seeking safety in bonds — including U.S. mortgage-backed bonds.

The Greek debt default story has helped fuel low mortgage rates in Washington State. Once a final deal is reached, mortgage rates are likely to rise.

For now, though, mortgage rates remain at all-time lows.

According to Freddie Mac’s weekly mortgage rate survey, the average, conforming 30-year fixed mortgage rate held firm at 3.87% last week for mortgage borrowers willing to pay an accompanying 0.8 discount points plus applicable closing costs. 1 discount point is equal to one percent of your loan size.

For borrowers unwilling to pay discount points and/or closing costs, average mortgage rates are higher.

This week, data returns to the U.S. economic calendar.

Greece will still be in play, but the health of the U.S. economy will determine in which direction mortgage rates will go. There are two inflation reports due — the Consumer Price Index and the Producer Price Index.

The former is a “cost of living” indicator for U.S. households; the latter measures the same for business. Inflation is bad for mortgage rates so if either report comes in unexpectedly high, mortgage rates are likely to rise.

The same is true for Tuesday’s Retail Sales report.

Retail Sales account for close to 70% of total U.S. economic activity. An unexpectedly strong Retail Sales figure will suggest that the domestic economy is improving and that, too, would pressure mortgage rates up.

If you’re shopping for a mortgage, or floating one with your lender, consider locking in this week. Mortgage rates don’t have much room to fall and there’s much room to rise.

What’s Ahead For Mortgage Rates This Week : February 6, 2012

February 6, 2012
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Jobs growth pushes mortgage rates higherMortgage markets worsened last week as domestic job growth surprised Wall Street and the Eurozone moved yet one more step closer to reaching a lasting Greece sovereign debt solution.

Conforming mortgage rates in Washington State rose on the news, although you wouldn’t know it from looking at Freddie Mac’s weekly mortgage rate survey.

According to Freddie Mac, the average 30-year fixed rate mortgage rate fell to 3.87% last week with 0.8 discount points due at closing, plus closing costs. 1 discount point is a fee equal to one percent of your loan size.

3.87% for a 30-year fixed rate mortgage is the official, all-time low for the weekly Freddie Mac survey, conducted since the 1970s. However, because Freddie Mac gathers its results on Monday and Tuesday only, by the time the survey results were released Thursday morning, mortgage rates were already rising off their lows.

Then, Friday morning, after January’s Non-Farm Payrolls data was released, mortgage rates surged.

The January jobs report exceeded expectations in nearly every fashion possible :

  • Economists expected to see 135,000 jobs created in January. The actual number was 243,000.
  • Economists expected to see the Unemployment Rate at 8.5% in January. The actual number was 8.3%.
  • Revisions added an additional 180,000 net new jobs to the original 2011 tally.

As compared to one year ago, there are 2.1 million more people employed in the U.S. workforce. Figures like this hint at a stronger national economy, and that tends to drive mortgage rates up.

This week, with little economic data due for release, mortgage rates are expected to move on momentum. Right now, that momentum is causing rates to rise.

If you’re shopping for a mortgage rate in Olympia and want to know if the time is right to lock, consider that it’s impossible to time a market bottom, but simple to spot a “good deal”.

Mortgage rates remain near historical lows — it’s a good time to lock one in. Call your lender today.

Home Affordability Threatened By Friday’s Jobs Report

February 2, 2012
By

3-month rolling average NFP

This week, once more, we find mortgage rates are on a downward trajectory. Conforming mortgage rates have returned to near all-time lows. After Friday morning’s Non-Farm Payrolls report, however, those low rates may come to an end.

It’s a risky time for Washington State home buyers and would-be refinancers to be without a locked rate.

Each month, on the first Friday, the Bureau of Labor Statistics releases its Non-Farm Payrolls report for the month prior. More commonly called the “jobs report”, Non-Farm Payrolls provides a sector-by-sector employment breakdown, and the nation’s Unemployment Rate.

In December 2011, the government reported 200,000 net new jobs created, and an Unemployment Rate of 8.5%.

For January 2012, economists project 135,000 net new jobs with no change in the Unemployment Rate and, depending on how accurate those predictions are proved, FHA and conforming mortgage rates for homes in Thurston County are subject to change. The monthly jobs reports tends to have an out-sized influence on the direction of daily mortgage rates.

The connection between jobs and mortgage rates is fairly direct.

Job growth is a key cog in the economic growth engine and mortgage rates change daily based on short- and long-term economic expectation. As more people join the workforce, economic expectations change; the economy tends to expand, breeding optimism among investment. When this occurs, it often spurs investment in the stock market, which tends to leads mortgage rates up.

In short, in a recovering economy, when job growth is strong, all things equal, mortgage rates rise. Home affordability suffers.

So, for today’s rate shoppers, Friday’s job report represents a risk. The economy has added jobs over 15 straight months, a streak that’s added 2.1 million people to the workforce. Although the jobs market remains weak and well off its peaks from last decade, a 15-month streak is worth watching. More jobs means more more income earned nationwide, more money spent by households, and more taxes collected by governments.

This items build a foundation for economic growth and Wall Street is watching.

If tomorrow’s Non-Farm Payrolls shows more jobs created than the estimated 135,000, mortgage rates are expected to rise. If the jobs figures falls short, mortgage rates should fall.

The Non-Farm Payrolls report is released at 8:30 AM ET.

A Simple Explanation Of The Federal Reserve Statement (January 25, 2012)

January 25, 2012
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Putting the FOMC statement in plain EnglishWednesday, the Federal Reserve’s Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent.

The Fed Funds Rate has been near zero percent since December 2008.

For the third consecutive month, the Fed Funds Rate vote was nearly unanimous. Just one FOMC member dissented in the 9-1 vote, objecting only to the language used in the Fed’s official statement.

In its press release, the Federal Reserve noted that the the U.S. economy has “expanding moderately” since its last meeting in December 2011, adding that the growth is occurring despite “slowing in global growth” — a reference to ongoing economic uncertainty within the Eurozone.

The Federal Reserve expects moderate economic expansion through the next few quarters but is wary of “strains” from global financial markets, and these three threats to the U.S. economy :

  1. The housing sector remains “depressed”
  2. The unemployment rate remains “elevated”
  3. Fixed business investment has “slowed”

On the positive side, the FOMC said that household spending is rising and inflation remains in-check. The group also believes that employment will gradually improve nationwide going forward.

The Federal Reserve neither introduced new economic stimulus, nor discontinued existing market programs.

Immediately following the FOMC’s statement, mortgage markets rallied, pressuring mortgage rates to fall in and around Olympia.

Mortgage rates remain near all-time lows and, for homeowners willing to pay points plus closing costs, conventional, 30-year fixed rate mortgages can be locked at below 4 percent. If you’re in the process of buying or refinancing a home in Washington State , it’s a good time to lock a mortgage rate with your lender.

The FOMC’s next scheduled meeting is a one-day event slated for March 13, 2012.

Lock Your Mortgage Rate : New Loan Fees Expected Within Days

January 10, 2012
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Payroll tax fees for new loansStarting soon, nearly all home buyers and refinancing households throughout Washington State and nationwide will pay higher mortgage loan fees. Congress has made it law.

13 months ago, as part of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, Congress enacted a one-year cut to FICA payroll taxes.

FICA stands for Federal Insurance Contributions Act. Taxes collected under FICA fund such programs as Social Security and Medicare.

The stimulus plan temporarily lowered tax rates for salaried workers from 6.2% to 4.2%; and for self-employed persons from 12.4% to 10.4%. Effective January 1, 2012, “regular” tax rates were to return.

That is, until late-December 2011. In one of its last moves of the year, Congress passed a temporary, two-month extension to the payroll tax cut, extending it through February 29, 2012. The expected cost to the U.S. Treasury is $33 billion.

To recoup those costs, Congress has turned to Fannie Mae, Freddie Mac and the FHA.

Each entity has been ordered to collect news fees on each new mortgage is backs, and has been told to forward said fees to U.S. Treasury directly. There’s no “workaround” allowed or forgiveness applied — each new loan is subject to the payment.

The rules are listed on page 17 of the law’s final draft, in a section unambiguously titled “Title IV — Mortgage Fees and Premiums”.

According to the law :

  • Fannie Mae and Freddie Mac must collect an average fee of no less than 10 basis points (0.1%) per new loan
  • The FHA must raise its monthly mortgage insurance premiums 10 basis points for all new loans

The expected cost to consumers is no less than $10 monthly per $100,000 borrowed. Some analysts, however, expect Fannie Mae and Freddie Mac to collect more than is minimally required. This could add an additional $30-50 to your monthly mortgage payment per $100,000 borrowed.

Therefore, if you’ve been shopping for a home or for mortgage rates in Lacey , take advantage. Within days, lenders are expected to start collecting Payroll Tax Extension fees from mortgage applicants — a move that will cost you money.

Lock today to avoid the big fees. Save yourself money.

What’s Ahead For Mortgage Rates This Week : November 28, 2011

November 28, 2011
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Non-Farm Payrolls Nov 2009-Oct 2011Mortgage markets worsened slightly last week through a bouncy, holiday-shortened trading week. Markets were closed Thursday for Thanksgiving and re-opened only briefly Friday.

As in past weeks, though, economic, political, and financial news from the Eurozone dictated the direction of U.S. mortgage-backed bonds.

As Greece — and now Italy — have faltered, investors have sought to preserve their respective principal, moving money from unsafe assets to safe ones, a class which includes Fannie Mae- and Freddie Mac-backed mortgage bonds.

This investment pattern is known as “safe haven” buying and it’s why mortgage rates tend to improve when large economies grow unstable. Government mortgage bonds are considered among the safest securities available.

The average 30-year fixed rate mortgage is available for 3.98%, according to Freddie Mac, with borrowers expected to pay an accompanying 0.7 discount points. 1 “discount point” is a loan fee equal to 1 percent of your loan size.

“No-point loans” carry higher rates than the Freddie Mac-published figures, but come with lower closing costs.

This week, there are several reasons to expect mortgage rates to rise throughout Washington State.

First, markets are speculating that the IMF will lend Italy 600 billion euro to help avert financial crisis. This move would reverse the safe haven buying that’s characterized the last few weeks of trading, thereby leading mortgage rates higher.

A second reason is that they are early reports that Black Friday shoppers out-spent analyst estimates. Consumer spending is the largest part of the U.S. economy so, if spending is up, the economy should be up, too.

As before, this would reverse some of the safe haven buying that’s helped keep mortgage rates low.

Lastly, this week is stuffed with new data including Friday’s always-important Non-Farm Payrolls report. Wall Street expects 116,000 net new jobs created in November. If the actual figure is much higher, mortgage rates will rise.

Expect mortgage rates to be volatile this week. Your quoted mortgage rates could vary by as much as a quarter-percent from day-to-day. If you’re nervous about losing a low rate that’s been offered to you, consider locking in.