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 Mortgage markets stalled last week in back-and-forth trading as Wall Street grappled with weak housing data, falling builder confidence, and worsening jobs numbers nationwide.
Because markets were volatile, rate shopping was challenging.
Conforming mortgage rates did managed to make a new all-time low last Thursday but quickly gave up those gains. Most of Friday afternoon was spent in the red and, as a result, for the second straight week, mortgage rates failed to fall overall.
But, although last week’s action puts a damper on this summer’s mortgage rate rally, the Refi Boom is still going strong.
According to Freddie Mac, as compared to April 8 when mortgage rates touched their recent high-point, pricing is hugely improved across 3 popular loan products.
- 30-year fixed : Then, 5.21%; Now, 4.42%
- 15-year fixed : Then, 4.52%; Now, 3.90%
- 5-year ARM : Then, 4.25%; Now, 3.56%
As an example of potential savings, a homeowner in California with a $250,000 30-year fixed rate mortgage would save $96 per month at today’s rates as compared to April’s.
Over the life of a loan, that’s a savings of $34,560.
This week, it’s unlikely that the Refi Boom will meet its end, but that doesn’t mean you should wait for rates to fall further. Mortgage rates tend to change quickly and without notice, and should rates rise, you may find that you’ve missed the market bottom.
If today’s rates appeal to your finances and budget, consider locking something in and moving forward.
Tags: Freddie Mac PMMS, Mortgage Rates
Another week, another new low for conforming mortgage rates. In fact, this week marks the 9th time in a row it’s happened.
Mortgage rates are (again) at their lowest levels in history.
The data comes from the Freddie Mac, a government group and major loan securitizer for the U.S. mortgage market. Freddie Mac’s weekly survey is among the most widely-cited reports on mortgage rates and is the data used in home affordability models, among other statistics.
The 30-year fixed rate is averaging 4.42% nationally with an accompanying cost of 0.7 points. 1 point is equal to 1 percent of the loan size. This week’s reported rate is lower by 0.02 percent from last week, and lower by 0.70 percent from one year ago.
On a region-by-region basis, though, “average” 30-year fixed mortgage rates are different.
- Northeast : 4.44 with 0.6 points
- Southeast : 4.44 with 0.8 points
- N. Central : 4.42 with 0.4 points
- Southeast : 4.46 with 0.5 points
- West : 4.35 with 0.8 points
But this isn’t to say that mortgage pricing is better in, say, California as compared to Florida. Note that the West Region — with the lowest average rate — has the highest required points. This is because mortgage rates and mortgage fees move in opposite directions. The type of low-rate/high fee structure common in the West may be right for some home buyers and would-be refinancers, but may not be right for others.
What’s important to remember is that, as a rate-shopper in California , it’s always your choice on how your loan is structured. Banks offer multiple set-ups — with or without points — to meet every applicant’s budget.
As mortgage rates continue to slide and touch new lows, it’s an excellent opportunity to see what your lender can do for you. Low rates won’t last forever.
Tags: Freddie Mac, PMMS
 Home builder confidence in the newly-built, single-family housing market is down for the third straight month this month.
After reaching a 3-year high just 90 days ago, the National Association of Homebuilders’ Housing Market Index is now at a multi-year low. It’s since dropped by almost half.
As an economic indicator, the HMI’s goal is to “take the pulse of the single-family housing market”. It surveys home builders across the country and asks them to report on 3 facets of their business:
- How are market conditions today?
- How do market conditions look 6 months from now?
- How is the prospective traffic of new buyers for new homes?
Responses are then collated, weighted, and presented as the Housing Market Index.
The August HMI reading of 13 is the lowest since March 2009.
Not surprisingly, the main reasons why HMI is down echo the main reasons why consumer confidence is down. Jobs growth continues to be weak; credit guidelines remain restrictive; and, home values are recovering slowly, pressured by distressed properties.
Builders report watching foot traffic stagnate and most likely won’t want to be stuck with excess inventory into the fall and winter months. For home buyers in San Diego , drops in builder confidence like this can be an excellent negotiation tool.
Builders may be more likely to offer incentives and/or price reductions into an uncertain economy, as compared to a strong one. Furthermore, weakness in home building indirectly drags mortgage rates lower.
This one-two combination can make for cheaper homes with cheaper monthly payments.
Tags: HMI, Housing Market Index, NAHB
 Mortgage markets worsened last week, putting a pause on the mortgage rate rally that dates to mid-April. Mortgage rates rose across California last week and home affordability suffered.
The Refi Boom remains in full effect, but rates are not as dazzling as they were a week ago.
It’s somewhat strange that mortgage rates rose last week given the heavy dose of negative-bending news.
Mortgage rates often to fall on such news, but last week, they rose. The biggest reason was weak demand on a new 30-year bond issuance from the government. In turn, that weakness spilled over into mortgage bonds, which pushed rates up.
This week, mortgage rates could rise or fall — it depends on how new data influences market sentiment.
- Monday : Home builder confidence survey
- Tuesday : Housing Starts and Building Permits; Producer Price Index
- Thursday : Jobless claims; 2 Fed members make speeches
Keep a close eye on the housing-related data early in the week. It’s widely believed that housing will lead the economy forward so a rebound in home builder confidence, or a jump in building permits, for example, should push rates even higher. Weakness
In the meanwhile, if you haven’t spoken with your loan officer about a refinance, consider reaching out this week. Rates are lower than they’ve ever been in history and more people are getting financing than the news would have you believe. You can’t know until you ask so make that call today.
Tags: Federal Reserve, Home Values, Mortgage Rates
 The Pending Home Sales Index failed to rebound from a cliff-dive in May, falling by another 3 percent more in June. The index remains at record-low levels.
A “pending home sale” is a home under contract to sell, but not yet closed. The data is culled from local real estate associations and large brokers and accounts for 20 percent of all purchase transactions in a given month nationwide.
The Pending Home Sales Index is a future indicator for the housing market; there is a high correlation between the PHSI and the monthly Existing Home Sales report. This is because of the relatively large sample set used for the PHSI, and because 80 percent of homes under contract close within 60 days, according to the National Association of Realtors.
June’s Pending Home Sales Index is weak by most measures, but if you’re a home buyer in Los Angeles , the headlines aren’t so bad. Fewer home sales can push negotiation leverage to the buy-side of a transaction.
Plus, there’s other positives in the market for today’s buyers:
- Home supplies are up, which creates competition among sellers
- Builder confidence is down, which leads to “free” upgrades and incentives
- Mortgage rates are low, which increases cash flow and disposable income
All things equal, the current home buying conditions haven’t been this favorable in years.
The falling figures in June’s Pending Home Sales Index hint that home sales will be down through the rest of the summer and into early-Fall. However, mortgage rates may not and higher mortgage rates can do more to change a monthly payment that a small reduction in home price.
If you’re planning to buy a home later this year, consider moving up your time frame.
It’s an excellent time to be a buyer in San Diego County.
Tags: Home Supply, Pending Home Sales
 The fiscal responsibility of a homeowner — in San Diego and everywhere else — extends beyond the mortgage’s basic principal and interest repayments. Homeowners are also responsible for the real estate taxes on the home and its insurance premiums, too.
Failure to pay taxes can lead to foreclosure, and failure to insure is breach of your mortgage contract.
As a homeowner, you have a choice about how you manage your real estate tax and insurance bills. You can choose to pay them from your own bank account when the bills come due, or you can choose to pay 1/12 of the annual bill to your mortgage servicer each month, and then let your servicer pay the bills on your behalf when they come due.
Not surprisingly, servicers prefer the latter method — it reduces two major lender risks:
- That the home’s real estate taxes go delinquent and are sold to a third-party
- That the home endures catastrophic damage during a lapse of insurance coverage
In theory, when the servicer is paying the bills, the home’s taxes are always current and the home’s insurance is always paid. This method of managing taxes and insurance is commonly called “escrowing”.
To calculate a home’s monthly escrow payment is simple. Just take the sum of the annual real estate tax bills and insurance bill, then divide it by 12 months in the year.
As a example, a $4,000 annual tax bill with a $800 insurance policy = $4,800 annually = $400 paid into escrow monthly. These monies are collected as part of the regular mortgage payment along with the mortgage’s scheduled principal + interest payment.
Homeowners choosing to escrow tend to get the lowest rate, lowest fee loans. This is because lenders often charge a premium to “waive escrow” (i.e. pay their own taxes and insurance). Escrow waiver fees vary between banks, but can range up to half-percent of the amount borrowed. The larger the loan, the stiffer the penalty in dollar terms.
Choosing to waive escrow can also raise your mortgage rate by up to 0.250 percent.
If you’re unsure whether escrowing is right for you, talk to your loan officer and/or financial planner. There’s good reason to go either route depending on your profile.
Tags: Escrows, Homeowners Insurance, Real Estate Taxes
 Mortgage markets improved last week, pushing mortgage rates lower for the 6th time in seven weeks.
Since April, rates in California have been on a downward path, spurring refinances in most markets and sparking the start of a Refi Boom.
Last week, 3 key stories played a role in falling rates:
- Demand was strong for U.S. government debt
- Emerging concerns of a Japan-style deflation in the U.S.
- Personal Spending since late-2007 was shown to be less than previously thought
Of the three, it’s the measured drop in Personal Spending for which rate shoppers and home buyers in Huntington Beach should watch. Drops in spending slow down the economy which, in turn, tends to pull mortgage rates lower.
Long-term, deflation could be a drag on rates, too. For now, though, it’s just a conversation among academics and economists.
This week, mortgage rates could move up or down — a lot hinges on the results on July’s Non-Farm Payrolls report.
More commonly called “the jobs report”, Non-Farm Payrolls hits the wires Friday at 8:30 AM ET. Markets are expecting a 75,000 net loss of jobs last month. If the actual number is higher, mortgage rates should rise. If the actual number is lower, mortgage rates should fall.
With the jobs numbers not due until Friday morning, expect choppy trading through Thursday’s market close. There’s a handful of economic data set for release including Personal Consumption Expenditures (Tuesday), Pending Home Sales (Tuesday) and Jobless Claims (Thursday). Each has the potential to move mortgage rates.
The Refi Boom is ongoing but when it ends, it will end in a hurry. If you’ve been thinking about a refinance, contact your loan officer about your options sooner rather than later.
Tags: Deflation, Mortgage Rates, Non-Farms Payroll
No doubt you’ve heard that mortgage rates are low. They’re lower than they’ve ever been in history. The news is everywhere.
Just check out some of these headlines from the last 24 hours:
- Mortgage rates set new lows for the 6th straight week (Reuters)
- Mortgage rates fall again; 30-year fixed at 4.54% (Wall Street Journal)
- Mortgage rates hit another low : 4.54% (NPR)
Fixed mortgage rates are now down more than 1/2 percent from the start of the year, and 3/4 percent from just 1 year ago. The drop has dramatically improved home affordability for home buyers in San Diego while creating refinance opportunities for existing homeowners.
From a payment perspective, a conforming, 30-year fixed rate mortgage is now cheaper by $41.94 per month per $100,000 borrowed versus July 2009.
A homeowner with a $300,000 mortgage, therefore, is saving $45,295.20 over 30 years.
Low mortgage rates rarely last long and rates appear to have troughed. After a big downhill between April and July, they’re now flat. This could mean rates have finished falling, or that they’re gearing up for another drop lower. Either way, if you haven’t talked to your real estate agent about home affordability, or your loan officer about refinancing, it may be time to make that call.
If today’s market marks the end of low rates, rates are expected to rise quickly.
Tags: Freddie Mac PMMS, Mortgage Rates
 For the second consecutive month, U.S. consumer confidence is plunging. July’s official reading is its lowest since July of last year and the figures run in stark contrast to just two months ago, when the index touched a multi-year high.
According to The Conference Board, July’s figures are reflective of a more pessimistic consumer; one concerned about “business conditions and the labor market”.
Falling confidence numbers are presumed to be poor for the economy. For homeowner and home buyers in Los Angeles , however, they can create opportunity. Low confidence can influence the mortgage market in a positive manner, driving mortgage rates down.
Mortgage rates are already at their lowest levels of all-time.
The link between consumer confidence and everyday mortgage rates roots in consumer spending.
Consumer spending accounts for close to 70% of the overall U.S. economy so, the thought goes that, a less confident consumer is less likely to spend money, thereby retarding economic growth. This harms the stock markets and drives cash to bonds, including mortgage-backed bonds.
More bond demand leads bond prices to rise which, in turn, pushes mortgage rates lower.
The other side of lagging confidence is that Americans may be less likely to take new financial risks when they’re feeling unsure, including buying a new home. This can then drag on the housing market, negatively impacting home prices across California.
Falling home values can help buyers, harm sellers, and stymie would-be refinancers.
It’s tough to predict how consumer confidence data will work its way through the economy, but in the near-term, it appears to be helping mortgage rates stay low. If you’re floating a mortgage rate with your lender, or contemplating a refinance, the time may be right to lock in a rate.
Low rates can’t last forever.
Tags: Conference Board, Confidence Index, Mortgage Rates
Standard & Poors released its Case-Shiller Index Tuesday. On a seasonally-adjusted basis, between April and May 2010, home prices rose in 19 of Case-Shiller’s 20 tracked markets. It’s the second straight month of strong Case-Shiller findings.
Also, May’s numbers are a mirror-image of February’s. In February, 19 of 20 markets lost value.
In its press release, the Case-Shiller staff resisted calling May’s data proof of a housing recovery, noting that home values remain flat as compared to October of last year. However, there are some noteworthy numbers in the Case-Shiller report.
- 13 of the 20 tracked cities are showing home price improvement year-over-year
- Foreclosure posterchlld San Diego has now shown 13 straight months of improvement
- San Diego, San Francisco and Minneapolis are showing double-digit annual growth
These are all good signs for the housing market, but the Case-Shiller Index is not without its flaws. Most notably, the data is limited to just 20 cities nationwide — and they’re not even the 20 largest ones.
Cities like Houston, Philadelphia, and San Jose are excluded from Case-Shiller, while cities like Tampa (#54) are not.
Another Case-Shiller flaw is that it reports on a 2-month delay.
Therefore, today is several days from the start of August but we’re now reflecting on data from May. Given the speed at which the Los Angeles real estate market can change, May’s data is almost ancient. Today’s values may be higher or lower than what Case-Shiller reports.
For home buyers, reports like the Case-Shiller Index may not be useful in making a “Buy or Not Buy” decision, but can aid in watching longer-term trends in housing. For real-time data, talk to a real estate agent with access to local figures instead.
Tags: Case-Shiller Index, Home Values
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