VA Mortgage Requirements

Interest rates continue to set all-time lows, as Zillow reported its Mortgage Marketplace showed the average rate for a 30-year, fixed mortgage is currently 4.25%. The real estate information firm said the rate if down seven basis points from 4.32% the week earlier and at the lowest level since the report launched in April 2008. Zillow said the rate was as high as 4.35% on Saturday and hovered near 4.33% before falling to the current level Monday. The firm bases its rates on thousands of quotes submitted daily to anonymous borrowers through its website.

Rates in many large states fell, including double-digit drops in basis points in some states led by New Jersey’s decline to 4.13% from 4.28% previously. The rates for a 30-year, fixed mortgage in Florida, New York and Pennsylvania each fell 12 bps to 4.24%, 4.31% and 4.27% respectively. Meanwhile, rates in Colorado (to 4.35% from 4.29%) and Washington (to 4.36% from 4.29%) rose from the prior week. For 15-year fixed-rate mortgages, Zillow’s data showed a current interest rate of 3.73%, and five-year adjustable-rate mortgages are available at 3.13%, according to Zillow.

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Mortgage Apps Up

The Mortgage Bankers Association’s (MBA) Market Composite Index, a measure of mortgage loan application volume, increased 2.7% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 2.3% compared with the previous week. The Refinance Index increased 2.8% from the previous week and is at its highest level since May 1, 2009. The seasonally adjusted Purchase Index increased 1.8% from one week earlier. The unadjusted Purchase Index decreased 0.4% compared with the previous week and was 37.0% lower than the same week one year ago. “Refinancing activity picked up again last week, reaching new 15-month highs, as borrowers took advantage of even lower mortgage rates.

The drop in mortgage rates was in line with Treasury rates as the latest data continue to show weak economic growth and an exceptionally weak housing market,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. “The sharp decline in MBA’s Purchase Application index in May had provided a clear leading indicator of the drops in new and existing home sales that were reported for June and July. Despite the slight increase in purchase activity in the past week, the continued low level of purchase applications indicates we are unlikely to see an increase in new home sales reported for August or existing home sales reported for September.” The four week moving average for the seasonally adjusted Market Index is up 5.2%.

The four week moving average is down 0.2% for the seasonally adjusted Purchase Index, while this average is up 6.3% for the Refinance Index. The refinance share of mortgage activity increased to 82.9% of total applications from 82.4% the previous week and is the highest refinance share observed since January 2009. The adjustable-rate mortgage (ARM) share of activity increased to 6.1% from 5.8% of total applications from the previous week.

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Mortgage Rates Hit Another Record Low

The national, 30-year fixed-mortgage rate (FRM) slightly decreased from a week earlier, setting a new record low average of 4.26%, according to the Zillow Mortgage Marketplace weekly update. This is down 0.03% from last week and 0.02% below the previous record low. Regionally, 30-year rates vary, but the majority of states witnessed a deflation. Most large states saw a decline in rates: California’s current rate of 4.28% is down from 4.3% last week; Texas’ at 4.23% is down from 4.28%, and Massachusetts’ at 4.26% is down from 4.27%.

Rates substantially decreased in New York to 4.24% from 4.31% and New Jersey to 4.19% from 4.27%. Rates increased in Washington to 4.33% from 4.29% as well as Colorado, up to 4.3% from 4.17%. Rates remained flat in Florida and Pennsylvania at 4.2% and 4.37%, respectively. Zillow reported the national average rate for 15-year fixed home loans remained flat at 3.82%, while the rate for a 5-1 adjustable-rate mortgage (ARM) is 3.29%. Zillow’s rates are based on real-time mortgage quotes from lenders registered with, but not exclusively bound to the company. The national average comes from thousands of daily quotes given to anonymous borrowers through their website. State averages are also available.

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MBA – refinances increase

The Mortgage Bankers Association’s (MBA) Market Composite Index, a measure of mortgage loan application volume, increased 4.9% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 4.5% compared with the previous week. The Refinance Index increased 5.7% from the previous week and is at its highest level since May 1, 2009. The seasonally adjusted Purchase Index increased 0.6% from one week earlier. The unadjusted Purchase Index decreased 1.1% compared with the previous week and was 38.8% lower than the same week one year ago. “The volume of refi applications last week was up 26% over their level four weeks ago. Mortgage rates dropped to their lowest level in the survey, going back to 1990, as incoming data continue to indicate that economic growth has slowed,” said Michael Fratantoni, MBA’s Vice President of Research and Economics.

“We are at a new 15 month high for the Refinance index. With rates this low, many borrowers who refinanced in the past two years may well have an incentive to refinance again, and this is likely increasing refi application activity.” The four week moving average for the seasonally adjusted Market Index is up 5.0%. The four week moving average is down 0.3% for the seasonally adjusted Purchase Index, while this average is up 6.2% for the Refinance Index. The refinance share of mortgage activity increased to 82.4% of total applications from 81.4% the previous week, which is the highest share observed since January 2009. The adjustable-rate mortgage (ARM) share of activity increased to 5.8% from 5.7% of total applications from the previous week.

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New record for 30 year mortgage rate

Here we go again setting new records. Freddie Mac’s weekly report said the 30-year fixed rate slipped to 4.44% for the week ended Thursday, the lowest since it began tracking the rate in 1971. Last week’s rates stood at 4.49%, and a year ago it was at 5.29%. The 15-year fixed rate fell to 3.92% this week, the lowest since Freddie Mac began tracking it 1991, down from 3.95% last week and from 4.68% a year ago. Adjustable-rate mortgages also declined, with the 5-year rate falling to 3.56% this week, the lowest since 2005 when the lender began tracking it.

Mortgage tracker Bankrate.com, which surveys large lenders across the country, said the average 30-year fixed loan sank to a record low for the fourth consecutive week, falling to 4.57% from 4.66% the previous week. The 15-year fixed rate, which is a popular option for refinancing, also fell to the lowest level in the history of Bankrate’s 25-year old survey, dipping to 4.06%, from 4.11% the week before. While the 1-year adjustable-rate mortgage held steady at 4.8% for a fourth week, the 5-year adjustable rate mortgage dropped to a record low of 3.92% from 3.95% the previous week.

Retail sales up

According to the Commerce Department, total retail sales rose 0.4% to $362.7 billion, compared with June’s 0.3% decrease. The June drop was revised from the originally reported 0.5%. The overall sales percentage gain was slightly lower than anticipated. Economists surveyed by Briefing.com had expected sales would rise by 0.5% during the month.

Consumer spending accounts for two-thirds of U.S. economic activity, so retail sales and related reports are closely monitored to gauge the health of the economy. Sales excluding autos and auto parts rose 0.2% last month, in line with economists’ forecasts. In June, sales on the same basis were down 0.1%. Motor vehicle and parts sales also rose 1.6% in the month, and gasoline store sales rose 2.3%. Overall, retail sales are up 5.5% over July last year.

Lower Jumbo rates

Low interest rates may not be helping out with regular mortgages, but the higher end of the housing market is getting a boost from lower jumbo rates—mortgages of $417,000 and above. Unlike conventional mortgages, jumbo loans by definition exceed the conforming loan limit of $417,000 set by Fannie Mae and Freddie Mac. Jumbo rates are loosely tied to long term treasuries but they are traditionally higher because of the risk involved for the banks in making a larger loan.

“Sales volume for homes worth more than $1 million across the country are up more than 35% from last year at this time,” says Walter Maloney, spokesman for the National Association of Realtors (NAR). “Homes between $700,000 and a million are also on the rise by some 29% over last year. There’s no question that’s because of the historic low jumbo rates.” Just how low are the current jumbo rates? Last year at this time, a 30-year fixed jumbo rate was averaging more than 6%. It’s now at an all time low average of 5.07%. And the re-finance rate for a 30 year jumbo is currently at 5.30%. A fifteen year jumbo is at the historic low average of 4.68%. The reason for the rate decline is simple, say the experts: banks, which have a part in setting jumbo rates, have money to lend and see the benefits in doing so at lower rates.

Inflation up

The Commerce Department announced today that the Consumer Price Index increased 0.3% last month after falling 0.1% in June.. Economists surveyed by Briefing.com were expecting prices to rise 0.2%. Energy prices rose for the first time since January, as commodity and gasoline prices spiked more than 4% during the month. Food prices, however, declined 0.1% as the cost of fruits and vegetables decreased. Core CPI, which is closely watched by economists because it strips out volatile food and energy prices, edged up 0.1% for the month, in line with economists’ forecast and down from the 0.2% increase in July.

Costs for housing, clothing, cars and tobacco continued to rise during the month while prices for medical care, airline fares and household furniture slipped. Prices also rose on an annual basis in July. Overall prices rose 1.2% over the past 12 months, driven by 5.2% spike in energy costs due to higher gasoline prices. In June, overall prices edged up 1.1% from the previous year. Core CPI rose 0.9% over the past year.

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Pending home sales increased again in March, affirming that a surge of home sales is unfolding for the spring home buying season, according to the National Association of Realtors®. The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing. This forward-looking indicator based on contracts signed in March, rose 5.3 percent to 102.9 from 97.7 in February, and is 21.1 percent above March 2009 when it was 85.0; this follows an 8.3 percent increase in February.

The data reflects contracts and not closings, which usually occur with a lag time of one or two months. Lawrence Yun, NAR chief economist, said favorable affordability conditions have been working with the tax credit. “Later in the second half of the year, and into 2011, home sales will likely become self-sustaining if the economy can add jobs at a respectable pace, and from a return of buyer demand as they see home values stabilizing. Another encouraging sign is the improvement in the availability for jumbo and second-home mortgages,” Yun said. The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

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The madness continues. Bank of America (BoA) is considering a special program for unemployed borrowers that would offer as many as nine months of no mortgage payments while they hunt for a new job. A spokesperson for BoA says that the program is still pending regulatory approval. Whether or not the payments are forgiven or just deferred has not been solidified yet, but according to the spokesperson, a likely option would be to capitalize the past due payments into the new permanent modification. If the borrower finds employment during the nine-month period, BoA would structure a loan modification using its own programs or the Home Affordable Modification Program (HAMP). BoA completed almost 32,900 HAMP permanent modifications through March, up from 20,666 in February.

BoA was the first to commit to the HAMP second-lien program from the Treasury and the first to offer principal write-downs as part of the servicing process. If the borrower cannot find a job after nine months, the borrower would enter into a previously agreed upon deed-in-lieu of foreclosure arrangement. BoA would offer a minimum $2,000 “cash-for-keys” check to the homeowner. “Sustained recessionary impacts and their effect on the unemployed, in particular, demand we consider creative solutions above and beyond what is currently available to put these customers in the best possible position to sustain homeownership,” the BoA spokesperson said. This month, 15 million people held no job, and the overall unemployment rate stayed at 9.7% in March – the same as February, according to the US Department of Labor.

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Below is a report that indicates that the mortgage rates are starting to move up. It is predicted that by the end of the year the rates will be close to 6%.

Freddie Mac’s weekly survey put the average rate for a 30-year fixed-rate mortgage (FRM) at 5.01% with a 0.7 origination point for the week ending February 4, up from last week’s average rate of 4.98%. It’s the first week-over-week increase in 2010. A year ago, the 30-year FRM was 5.25%. Bankrate.com’s weekly survey of large banks and thrifts put the 30-year FRM at 5.15%, up from 5.13% last week. Freddie put the 15-year FRM at 4.4%, up from last week’s average rate of 4.39%, but still down from last year’s rate of 4.92%. Bankrate.com put the 15-year FRM at 4.55%, up from 4.54% last week. Freddie Mac vice president and chief economist Frank Nothaft said despite the increase, rates remain relatively stable amid other positive developments, including recent increases in pending home sales and mortgage applications. “Even more encouraging news came from the Federal Reserve’s Senior Loan Officer Opinion Survey, which reported that banks have generally stopped tightening standards on most types of loans in the fourth quarter of 2009, with commercial real estate as the exception,” Nothaft said. “However, banks have yet to unwind the tightening that occurred over the last two years. Moreover, substantially fewer banks expected credit quality to deteriorate over the coming year,” he added. Freddie said the five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.27%, up from last week’s rate of 4.25%. Last year, the five-year ARM averaged 5.26%. Bankrate.com’s average rate for five-year ARMs was 4.56%, up from 4.54% last week. Freddie’s survey of the one-year Treasury-indexed ARM put the average rate of 4.22%, down from last week’s rate of 4.29% and last year’s 4.92%.

Now is the time to buy a home! The mortgage rates are still at an all time low and the home prices are at there best. You still have time to take advantage of the $8000 and $6500 tax credit available to home buyers. If you are looking to buy a home in the Bonney Lake, Lake Tapps, Sumner, Puyallup, Buckley, Enumclaw or any of the surrounding Puget Sound areas, call me at 253-209-9701 and chances are I will be able to help you.

Do it now before this once in a lifetime perfect storm passes by!

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Yesterday, I attended the Windermere Kick-Off breakfast. The highlight for me was listening to real estate economist, Matthew Gardner. This proved to be very valuable since I do a lot of business in the Bonney Lake, Lake Tapps, Buckley, Puyallup, Sumner and surrounding areas and I want to stay current with the real estate market trend and home values.

Matthew provided a substantial amount of information about the economy and housing, and he was quite entertaining. He predicts rates will be 6% by year end. I have run some figures on payments, equity position and qualifying income based on his prediction.

Using a loan amount of $300,000, the principle & interest payment at 5% would be $1610.46 per month. At 6% the payment would be $1798.65, a difference of $188 per month. At the end of five years the loan balance with the 5% loan would be $275,486, and $279,163 with the 6% loan. If you take into account the monthly savings over five years plus the additional equity, your clients can save close to $15,000 by taking advantage of the low interest rates.

The other issue that comes into play with higher rates is qualifying. Using the 5% rate plus taxes, insurance and MI, the qualifying income would be approximately $7023 per month. At 6%, the qualifying income goes up to $7650 per month. Another way to look at it is someone making $7023 per month can qualify for $300,000 at 5%, but only $268,500 at 6%. What a difference only one percentage point makes!

So if there was ever a good reason to get off the fence and start your home buying process, this is one of them. Not only are the mortgage rates at an all time low, so are the house prices. Contact me at 253-209-9701 and I will help find and negotiate a great home for you. As a marketing specialist I can help you sell your home fast and at market value.

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