Mortgage Rates downward..,.

Mortgage rates wander downward for the first time in three weeks

• BY KATHY ORTON

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  December 12 at 10:29 am

Win McNamee/Getty Images

Fixed mortgage rates wandered downward for the first time in three weeks, according to the latest data released Thursday by Freddie Mac.

The 30-year fixed-rate average dropped to 4.42 percent with an average 0.7 point after climbing 24 basis points in the past two weeks. It was down from 4.46 percent a week ago but up from 3.32 percent a year ago. Since spiking to 4.58 percent in late August, the 30-year fixed rate has bounced around between 4.57 percent and 4.1 percent.

The 15-year fixed-rate average edged down to 3.43 percent with an average 0.7 point. It was 3.47 percent a week ago and 2.66 percent a year ago. The 15-year fixed rate has remained below 3.5 percent since late September.

Hybrid adjustable rate mortgages also fell. The five-year ARM average was 2.94 percent with an average 0.4 point. It was 2.99 percent a week ago and 2.7 percent a year ago.

The one-year ARM average was 2.51 percent with an average 0.4 point. It was 2.59 percent a week ago.

“Mortgage rates were little changed amid a light week of economic data releases,” Frank E. Nothaft, Freddie Mac vice president and chief economist, said in a statement.

“Of the few releases, total nonfarm payroll employment rose by 203,000 in November, and the unemployment rate declined to 7 percent. Also, single family mortgage debt outstanding increased for the first time since 2008. This is a positive sign, as it reflects that the pick-up in new purchase-money originations has offset loan paydowns and led to a net increase in principal outstanding.”

Meanwhile, mortgage applications showed a slight uptick last week, according to the latest data from the Mortgage Bankers Association.

The Market Composite Index, a measure of total loan application volume, edged up 1 percent. The Refinance index rose 2 percent, while the Purchase Index increased 1 percent.

The refinance share of mortgage activity accounted for 65 percent of all applications.

Best Regards, Chris Mesunas

 

Mortgage Rates Shoot Lower After Data

Mortgage Rates Shoot Lower After Housing Data

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Aug 23 2013, 5:25PM

Mortgage rates shot significantly lower today after the New Home Sales report showed far fewer executed purchases contracts than expected for the month of July.  The move came in phases with most lenders releasing at least 2 rate sheets.  Some offered bigger improvements, while others got back in line with the rest of the pack.  The net effect was nearly a full eighth of a point drop in average rates for ideal scenarios, bringing best-execution down to 4.625% in many cases while some notable lenders remain at 4.75%. 

In a weird way, rates fell today because rates moved so much higher over the past three months.  Actually, it's not very weird at all, but sad and logical.  Though there has been debate on the extent to which rising rates would hinder the purchase market, clues began emerging in late July.  Today's official government figures–despite their penchant for volatility–are so far away from the previous reading and the forecast as to leave little doubt that the rate spike has finally made its way to economic data.

This downbeat data helps interest rates today in two ways.  In the most traditional sense, negative economic data should always be a net positive for interest rates because a weaker economy supports lower growth, which in turn implies a decreased ability to sustain a rise in rates, all things being equal. 

The more direct reason is the data's relationship to the current hot button for financial markets: the Fed's impending reduction in bond buying.  The current consensus is that the reduction or 'tapering' will inevitably happen, but the timing is still debatable.  Most think September, but many believe it will or should be later.  If it is, then interest rates might catch their breath for a few weeks or months. 

Unfortunately, we don't know if tapering is delayed until the Fed has a chance to announce it (or not) on September 18th.  Before then, many market participants will firm up their conclusions based on the September 6th reading of the Employment Situation.  Between now and then, reports like today's New Home Sales help give a decided nudge back in a friendlier direction. 

While this doesn't signify a shift in the long term trend higher in rates, it does keep hope alive for some consolidation before the next major move.  If you attempt to capitalize on these pockets of consolidation, it's important to set limits on how high rates would need to go before you'd cut your losses and lock.  If you're waiting to lock right now for other reasons, this consolidation could continue if next week's economic data is even remotely as downbeat as today's data.

Loan Originator Perspectives

 

"Weaker than expected home sales was a great catalyst for today's bond bulls to enter and stop the bleeding of late. Floating into the weekend is usually a "no-no" however with today's aggressive move we feel next weeks lack of investors/traders, etc (end of summer exodus), should filter into next week.  Some important data to look for plus earnings will be important during the week but dont expect any firm commitment until the Jobs Report in early September.  The consensus is to lock at application, however we are testing the waters here. " -Constantine Floropoulos, Quontic Bank

"Solidly green color today in MBS Land as data confirmed what originators already knew: higher rates in July led to reduced home sales. Who would have guessed it? The miss on new home sales (and some Jackson Hole Fed chatter on MBS purchases) gave us across the board gains on MBS, and positive reprices were common. Unlike Tuesday's "green for little/no reason" gains, at least we can attribute verifiable data to these gains. While all eyes remain on the jobs report after Labor Day, at least we have data in our corner for a change!" –Ted Rood, Senior Originator, Wintrust Mortgage

Today's Best-Execution Rates

• 30YR FIXED – 4.625- 4.75%
• FHA/VA – 4.25% or 4.75%
• 15 YEAR FIXED –  3.75%-3.875%
• 5 YEAR ARMS –  3.0-3.50% depending on the lender

Ongoing Lock/Float Considerations

• After rising consistently from all-time lows in September and October 2012, rates challenged the long term trend higher, but failed to sustain a breakout
• Uncertainty over the Fed's bond-buying plans is causing immense volatility in rates markets and generally leading rates quickly higher 
• Fears about the Fed's bond-buying intentions were proven well-founded on May 22nd when rates rose to 1yr highs after the Fed indicated their intention to taper bond buying programs sooner vs later
• The June 19th FOMC Statement and Press Conference confirmed the suspicions.  Although tapering wasn't announced, the Fed made no move to counter the notion that they will decrease bond buying soon if the economic trajectory continues
• Rates Markets "broke down" following that, as traders realized just how much buy-in there was to the ongoing presence of QE.  These convulsions led to one of the fastest moves higher in the history of mortgage rates and market participants have not been eager to be the among the first explorers to head back into lower rate territory until they're sure they'll have some company.
• (As always, please keep in mind that our Best-Execution rate always pertains to a completely ideal scenario.  There are many reasons a quoted rate may differ from our average rates, and in those cases, assuming you're following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).

Hope you find this information handy.

Best Regards, Chris Mesunas

FHA assisting people with damaged credit…

BY MATTHEW GRAHAM

FHA Throws Lifeline to Those With Damaged Credit During Recession

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Aug 19 2013, 2:05PM

The financial crisis took its toll on Wall Street and Main Street alike.  Mistakes were made and bills went unpaid on both sides of the fence, but Main Street sees Wall Street bailouts and asks "where's my bailout?"  Specifically with respect to the housing market, borrowers who have had bankruptcies, foreclosures, deeds-in-lieu, short-sales, or other adverse credit have heretofore been unable to quickly reestablish themselves as worthy borrowers.  That's changing.

Late last week, The Department of Housing and Urban Development on Thursday unveiled a new set of guidelines under the FHA program specifically geared toward homeowners and prospective homeowners adversely impacted by the Great Recession.  The "Back to Work" program, as it's called, doesn't constitute a free pass for those who would otherwise be unable to qualify for financing, but it does reopen the housing market to a great many borrowers who would otherwise have been waiting for 3-7 years to tick off the clock–depending on their initial credit issue–before being able to qualify for a mortgage.  In FHA's words:

"As a result of the recent recession many borrowers who experienced unemployment or other severe reductions in income, were unable to make their monthly mortgage payments, and ultimately lost their homes to a pre-foreclosure sale, deed-in-lieu, or foreclosure. Some borrowers were forced to file for bankruptcy to discharge or restructure their debts. Because of these recent recession-related periods of financial difficulty, borrowers’ credit has been negatively affected. FHA recognizes the hardships faced by these borrowers, and realizes that their credit histories may not fully reflect their true ability or propensity to repay a mortgage."

The program will require prospective borrowers to thoroughly document the nature of the "Economic Event," that it resulted in derogatory credit, and that there has been a satisfactory recovery from the Event per the new guidelines. 

Lenders will consider the Economic Event to have caused the derogatory credit if:

• The prospective borrowers had satisfactory credit prior to the event onset
• The prospective borrowers' derogatory credit occurred after the onset of the event
• The prospective borrowers have reestablished satisfactory credit for at least 12 months since the the end of the event

Lenders will consider borrowers to have reestablished satisfactory credit if:

• The borrower has no late housing or installment debt payments for the past 12 months
• Open mortgage accounts are current and have been paid on time for the past 12 months
• Borrowers have adhered to the agreement of any open modification plan for the past 12 months
• Complete a course of Housing Counseling in person, via telephone, via internet, or other methods approved by HUD (who provides a list of Counseling agencies). 

For the purposes of this program, an "Economic Event" is defined as "any occurrence beyond the borrower’s control that results in loss of employment, loss of income, or a combination of both, which causes a reduction in the borrower’s household income of twenty (20) percent or more for a period of at least six (6) months.  The Onset of an Economic Event is the month of loss of employment/income."  Lenders will verify the reduction in income or loss of employment with at least one of the following:

• A written termination notice
• Other publicly available documentation of the business closure
• Documentation of the receipt of Unemployment Income

Additionally, lenders have to verify a 20 percent loss of income due to the Economic Event by documenting borrowers' income prior to the event.  This requirement can be satisfied either with a written "Verification of Employment" form with income details provided by the employer or signed tax returns (or W-2s).

Hope you find this information handy.

Best Regards, Chris Mesunas