Posted by John Martin on Mon, Mar 22, 2010 @ 10:58 AM
There are only 10 calendar days remaining in the Fed's MBS Purchase Program, as it is scheduled to end on March 31st. What does this mean for interest rates?
The program was implemented in January 2009 to help add some liquidity to the secondary lending market. The goal of the program was to provide support to mortgage and housing markets and to foster improved conditions in financial markets more generally. At the time, mortgage lending was risky and investers were hesitant to buy mortgage backed securities (MBS) and hold them in their portfolios. The Fed stepped in and agreed to buy/back $1.250 trillion of MBS, under the supervision of the FOMC. As a result, the secondary market received a much needed boost from the Fed and the refi-boom was again in full force as interest rates hit historical lows.
What happens now? Well, many investors and analysts are predicting that interest rates will start to trend upwards after the 31st, as anxiety will hit the marketplace. Interest rates are not expected to sky rocket, but some analyst have forecasted rates to hit 5.500% by early May 2010.
In the meantime, 30YR fixed interest rates remian at 4.875% to start the week of March 22, 2010. We at HomeQuest urge anyone seeking home financing needs to act now, while the interest rates remain at historical lows.
Posted by John Martin on Fri, Feb 26, 2010 @ 08:23 AM
Mortgage bond prices rose nicely on Thursday, pushing mortgage backed security yields to their lowest levels in nearly three weeks following soft economic data. As a result, 30YR Fixed interest rates remain at 4.875% to end the week. While Labor Department officials surmised that the rise in jobless claims was a result of delayed reporting from the prior week, the claims have definitely drifted higher following what now appears to have been an overstated plunge in December/January. This morning, bond prices are mixed and have shown little reaction to the second report of Q4 GDP. Growth was revised higher, to 5.9% from 5.7% for the quarter, but personal consumption was revised lower, to 1.7% from 2.0%. Later today, we will receive the U of M's final February consumer confidence index as well as January's existing home sales data. With existing home sales now representing about 90% of all sales, it's about the only housing data (other than valuations) that matters.
Posted by John Martin on Mon, Dec 07, 2009 @ 09:02 PM
Massachusetts mortgage rates closed the month of November at a near 52 week low, causing new loan originations at many brokerage firms to soar. Many homeowners decided to take advantage of the opportunity and were able to lock-in at historically low interest rates. On November 27th, mortgage backed securities (MBS: FNMA 30YR 4.50%) traded at their highest price since January 7, 2009, driving 30 Year Fixed rates down to 4.625%. The national 30 year fixed rate mortgage averaged 4.71% for the week ending Dec. 3rd...the lowest average since Freddie Mac began its weekly survey in 1971. To benchmark, Massachusetts mortgage rates are down from 4.78% last week and 5.53% a year ago. Those tracking rates may recall mortgage rates around 6.00% this past summer.
In general, bond prices and bond yields share an inverse relationship...when mortgage backed securities are in high demand, MBS prices increase and yields decline. When bond yields decline, mortgage rates typically decrease. Bonds are a safe-haven for financial investors looking for an alternative to the risky equity markets. Last week, Fed Chairman Ben Bernanke announced that the recovery would not be an easy one, inflation will remain low and that rates will remain low for an extended period of time. As a result, the mortgage backed securities experienced a substantial sell-off, causing prices to drop and mortgage rates to increase .125-.250% by week ending Friday December 4th.
In summary, I encourage anyone pondering the thought of refinancing to act now and take advantage of the all-time low rates...don't attempt to time the market! Many homeowners are hesitant to pull the trigger in hopes of obtaining a lower rate and end up missing the opportunity. Often times, the media/publications can confuse borrowers. Rate shoppers become frustrated when they call their mortgage broker inquiring about current rates to find out the rates are different then what they're reading online or in the newspaper. It's important that shoppers understand mortgage backed securities are indeed "securities" that trade in "real time" and are subject to change hourly due to market volatility. Many online advertising websites are updated 3-4 times daily, however it is too cumbersome a project to modify websites an a minute-by-minute basis. Newspaper rates are typically due the Wednesday before the Sunday publication, thus mortgage rates are nearly 4 days out-dated by the time shoppers are reading the mortgage grids.
Lastly, Fannie Mae announced it will be tightening their lending guidelines on December 12th...no doubt causing headaches for borrowers looking to obtain financing.
HomeQuest Mortgage offers a FREE Rate Alert program to assist our customers. Simply tell us what rate you desire and our team of analyst will contact you once your target rate is available. To learn more, visit www.HQWorksForMe.com.
Posted by Jason Evans on Fri, Nov 27, 2009 @ 09:26 AM
Mortgage interest rates are currently at the lowest levels of all time surpassing the best levels from January of this year. The new run lower in mortgage rates has been spurred on by tightening spreads between mortgage backed securities and US treasury debt. The Federal Reserve still has money left in their program to keep mortgage rates low but they have begun to wind it down.
Mortgage rates are at all time lows across the board from 30 year fixed rates to 20, 15 and 10 year fixed all the way to 5/1 and 7/1 adjustable rate loans.
Other good news in the mortgage market to go along with all time low interest rates is the announcement of the first time homebuyer tax credit being extended into next year. Also, the expanded conforming jumbo loan limits will also be carried over into next year. Both of these programs were originally going to expire in 2009. This helps open up the guidelines and allow more borrowers to take advantage of the low mortgage interest rates that are available.
The big current event that is impacting both the mortgage market and the equity markets today is news out of Dubai that Dubai World, the city-state's largest corporate entity, has asked it's creditors for a 6 month break on payments of $60 billion (60,000,000,000) in debts. This has caused concern that the worst of the financial crisis might not be over. Yields on US treasuries have moved lower this morning as stocks have been declining. US treasuries are used as a benchmark for Mortgage Backed Securities which have also seen their yields dropping (leads to lower mortgage rates) this morning.
Posted by John Martin on Thu, Mar 05, 2009 @ 09:39 AM
The Obama Administration unveiled the final details of its "Making Home Affordable Program," which is designed to help up to 9 million American families refinance or modify their loans to a payment that is affordable now and into the future. One of the initiatives in this program is aimed at helping responsible homeowners "refinance" their loans to take advantage of historically low interest rates. Here are some common Questions and Answers about the Refinancing Initiative in the program.
Am I required to pay PMI if I have less than 20% equity in my home? If your original loan had 20% equity and/or you do not currently pay PMI, then you are not required to obtain PMI under the new refinance initiative. In other words, you are eligible to refinance up to 105% of the value of your home and not be required to pay monthly PMI payments. If your current mortgage has PMI or was at 80% or greater than the value of the home, then you will still be required to pay PMI. This initiative provides a solution for borrowers with LTV's above 80% who currently may not be able to refinance because of mortgage insurance (PMI) requirements.
REFINANCING INITIATIVE Who is eligible? You may be eligible if: You own and currently occupy a one- to four-unit home. Your mortgage is owned or controlled by Fannie Mae or Freddie Mac. You are current on your mortgage payments. The amount you owe on your first mortgage is about the same or slightly less than the current value of your house. And, you have a stable income sufficient to support the new mortgage payments.
How do I know if my loan is owned or controlled by Fannie Mae or Freddie Mac? Simply call or email us. We'll help you determine if your mortgage is backed by Fannie Mae or Freddie Mac.
I owe more than my property is worth. Do I still qualify to refinance under the Making Home Affordable Program? Eligible loans will include those where the first mortgage will not exceed 105% of the current market value of the property. For example, if your property is worth $200,000 but you owe $210,000 or less, you may qualify. The current value of your property will be determined after you apply to refinance.
If I am delinquent on my mortgage, do I still qualify for the Refinance Initiative? No. But the good news is, you may qualify for the Modification Initiative. Contact us to discuss your situation and review your options.
I have both a first and a second mortgage. Do I still qualify to refinance under Making Home Affordable? As long as the amount due on the first mortgage is less than 105% of the value of the property, borrowers with more than one mortgage may be eligible for the Refinance Initiative.
Will refinancing lower my payments? That depends. If your interest rate is much higher than the current market rate, you would likely see an immediate reduction in your payment amount. However, if you are paying interest only on your mortgage, you may not see your payment go down. BUT... you will be able to avoid future mortgage payment increases and may save a great deal over the life of the loan.
Will refinancing reduce the amount that I owe on my loan? No. Refinancing will not reduce the principal amount you owe. However, refinancing should save you money by reducing the amount of interest that you repay over the life of the loan.
Can I get cash out to pay other debts? No. Only transaction costs, such as the cost of an appraisal or title report may be included in the refinanced amount.
How do I apply for the Refinance Initiative? Call or email us today to discuss your specific situation and to examine your options. If this plan is right for you, we can begin working on your refinance immediately. As part of the discussion, we may need to look at the following information: Recent pay stubs to help determine your gross (before tax) household income. Your most recent income tax return. Information about any second mortgage on your house. Account balances and minimum monthly payments due on all of your credit cards. Account balances and monthly payments on all other debts, such as student loans and car loans.
As always, if you have any questions or would like to discuss how this may specifically impact you, we'd be happy to sit down with you. Just call or email us to set up an appointment.
Posted by Jason Evans on Mon, Dec 22, 2008 @ 08:44 AM
Mortgage rates in Massachusetts look like they will begin the holiday shortened work week slightly higher after hovering around historic lows recently.
30 year fixed rates should still be available in the low 5% range this week. With so much uncertainty in the market it is hard to predict where rates will go on any given day. This is why it is important to lock an interest rate when one is available that makes sense for you to refinance at. There is no guarantee that rate will be available the next day.
There is not much news scheduled for this week that will have an impact on the mortgage market. We will update you though if any mortgage rate news comes out.
Posted by Jason Evans on Sat, Dec 20, 2008 @ 02:47 PM
As more and more borrowers realize that mortgage rates in Massachusetts and all of New England are at historic lows, they are inquiring about the possibility of refinancing into a lower interest rate. Once they find out they have the credit scores and income to qualify the next obstacle is home values. To get the lowest interest rate and avoid paying Private Mortgage Insurance (PMI) you need the loan amount to be 80% of the home appraised value. Given the current state of the housing market, many borrowers are discovering that they no longer have the required 20% equity, even if they did just a few months ago.
This is when PMI comes into play. A lot of people immediately think of PMI as a bad thing. It adds to the monthly mortgage payment without helping to pay down the balance of the mortgage. A lot of people don't realize that going from a loan with no PMI to a loan with PMI might still be a good move.
One reason having PMI on your new loan could be a good option is that in some cases it may be used as a tax deduction. You will have to consult a tax advisor to see if this deduction can be applied to your taxes. If it can, it will help reduce the actual cost of the PMI.
Another reason PMI is not as bad as it may initially seem is because it is not a permanent expense. On conforming loans the PMI may be eliminated once you have 20% equity in the home. Once it is removed you will be left with the original interest rate and no PMI payment.
Interest rates are at historic lows right now making it possible for many people to reduce their current mortgage payment, even if their new loan has PMI. For example, say you bought a home 3 years ago for $400,000 with a 20% down payment. You took out a loan for $320,000 and got a fixed at 6.375% with monthly principal and interest payments of $1,996.38. Now that rates have come down, you have the option to refinance into a 30 year fixed loan amount of $315,000 at 5.00% with monthly principal and interest of $1,690.99 per month. The only problem is that your home now appraises for $360,000 due to the weak housing market, leaving you with a little more than 10% equity in the home. PMI is now required on the loan in order to get the lowest rates. In this scenario you could expect to have to pay a PMI payment of about $130 per month.
Even with the new PMI on the loan, your total payment would still be $175.39 less than you were currently paying. And once you have 20% equity in the home again, the PMI would fall off and you would then be saving $305 per month compared to the loan you had with an interest rate of 6.375%. Once you factor in potential tax savings from the PMI it becomes clear that it is worth it to refinance even if you no longer have the 20% equity in your home.
To see if it makes sense for you to refinance given the historically low 30 year fixed rates that are currently available, give us a call at 508-839-1117 to talk with one of our loan officers.
Posted by Jason Evans on Mon, Dec 15, 2008 @ 08:42 AM
On Tuesday December 16
th the Federal Open Market Committee (FOMC or "The Fed") will release a statement after its scheduled meeting. Many economists are expecting the Prime rate to be lowered to 3.5% at this meeting. One important thing to remember is that a lower Prime rate does not translate into lower fixed mortgage rates. See our article from November 16
th http://www.hqworksforme.com/mortgage-blog/bid/6768/What-determines-mortgage-rates for more information on what determines mortgage rates.
There are a couple of other news items coming out this week that could have an impact on mortgage rates. The first piece of data will be released on Tuesday is the Consumer Price Index (CPI). The CPI will give investors an idea of what direction prices for goods and services in the economy are going. A higher than expected reading (more inflationary) will be bad for mortgage rates while a lower than expected number (less inflationary or even deflationary) could provide support.
On Thursday the Philadelphia Fed Index is released. This reports on the level of manufacturing activity in the Philadelphia region and is seen as a strong indicator for national manufacturing activities. If this number is worse than expected it should provide support to mortgage rates because generally a weak economy leads to increased investment in fixed income, like mortgage backed securities (MBS).
Current 30 year fixed mortgage rates remain at all time lows and depending on how things look this week in the economic reports, they could be sticking around into the new year.