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Category Archive: ‘Interest Rates/Loan Limits’

Inventory Watch

decrates

We survived the Fed hike.

Last Monday, the 30Y rate was 3.98%.  The Fed made it official on Wednesday, and the 30Y rate initially jumped about 20 basis points.  But by Friday afternoon we were back down to 4.02%.

This guy thinks the Fed move was a mistake:

http://www.mortgagenewsdaily.com/video/archive/2015/12/21.aspx#544910

The local NSDCC new listings keep coming; 51 in the last seven days which is about the same as in 2013.  With Christmas being so close, you might think that the bulk of those are just listings being ‘refreshed’.

But only 11 of the 51 had expired or cancelled within the last 30 days, and then relisted by the same agent over the last week.

We’ll see a boatload of ‘refreshings’ during the first week of 2016 – watch out.

Click on the link below for the complete NSDCC active-inventory data:

Read More

Posted by on Dec 21, 2015 in Interest Rates/Loan Limits, Inventory, Jim's Take on the Market, Listing Agent Practices | 0 comments

Mortgage Rates and the Fed

fed

The Fed made their move….finally!  Here’s a good explanation from MND:

Mortgage rates moved just slightly lower today, despite the long-awaited Fed rate hike.  Once again, that’s LOWER mortgage rates and a HIGHER Fed rate.  Here’s how that works:

The rate that moved higher today is the Federal Reserve’s Target Rate.  This is the rate banks charge other banks to borrow money overnight.  It’s called the Fed’s Target Rate, because the Fed doesn’t actually directly enforce the rate.  It merely “targets” the rate (or the range of rates, in this case) that it believes is in line with its policy goals.  The Fed can then employ several tools to influence the overnight rate and bring it in line with the target range.

If you’re not already well-versed in the reasons that banks borrow from other banks overnight, don’t worry about that.  All you need to know is that the Fed’s target rate is vastly important to the global financial system, and it has far-reaching effects on all manner of interest rates.

In other words, a Fed rate hike is a big deal, but bigger to some than others.  Mortgage rates are less directly connected to the Fed’s Target Rate, as could be easily seen in today’s modest move lower.  The Fed hiked its rate by a quarter of a point–an amount that would be unimaginably severe in the mortgage world.  Such a move has only happened a few times in history on a single day.

The caveat is that mortgage rate movement is given plenty of time to roam free, day in and day out.  Meanwhile, the Fed rate only moves when the Fed announces it, which is almost always at one of their meetings.  Those only happen 8 times a year.  In other words, mortgage rates have had time to do whatever they needed to do to get ready for today’s Fed rate hike.  The bottom line is that mortgage rates do, in fact, care about the Fed rate to some extent.  They’re simply not joined at the hip.

In terms of specifics, today’s mortgage rate movement was very small.  Most lenders continue to quote 4.0-4.125% on top tier conventional 30yr fixed scenarios.

Read more here for rate-lock advice:

http://www.mortgagenewsdaily.com/consumer_rates/543379.aspx

Posted by on Dec 17, 2015 in Interest Rates/Loan Limits, Jim's Take on the Market | 2 comments

Inventory Watch

rates

Lately, the number of weekly new pendings has been higher than last year, and a little under those in 2013 – I’ll take it.

All eyes will be on the Fed’s likely bump of the fed-funds rate on Wednesday, but it should already be priced into the current mortgage rates.  We might see mortgage rates drop later this week – current 30Y rate is 3.98%.

Click on the link below for the complete NSDCC active-inventory data:

Read More

Posted by on Dec 14, 2015 in Interest Rates/Loan Limits, Inventory, Jim's Take on the Market | 0 comments

Lowest Rates Since May

rates

Dropping mortgage rates are likely to keep buyers interested – and maybe pay a little more to get it done? Jumbo 30Y rates can be had in the mid-3s!

From MND:

http://www.mortgagenewsdaily.com/consumer_rates/515770.aspx

Mortgage rates had another great day, with most lenders maintaining or improving upon yesterday’s 4-month lows.  Given that we’d have to go back to May 8th, 2015 to see better rates, we’re very close to ‘5-month lows.’  In terms of top-tier conventional 30yr fixed rate quotes, 3.875% remains most prevalent.  A growing number of lenders are quoting 3.75% and only a few remain up at 4.0%.  Not all borrowers will see a change in their quoted rate over the past few days, but in those cases, the closing costs would be lower or the lender credit would be higher.

Although there was a reasonable chance that we’d see increased volatility in the markets that underlie mortgage rates today, trading remained calm and positive.  Stock prices and bond yields continued to diverge.  This could have something to do with the way investors approached the end of the month and quarter.  In other words, the volatility that was a risk today, could instead simply be waiting for the new month/quarter tomorrow.  In any event, Friday’s big jobs report always has the potential to send rates quickly in either direction.  While that does mean there could be further improvement for those willing to roll the dice on the economic data, it’s hard to argue against taking that risk off the table with rates near 5-month lows.

Posted by on Sep 30, 2015 in Interest Rates/Loan Limits, Jim's Take on the Market | 1 comment

National Housing Policy

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I saw these questions from Ed DeMarco on Twitter. My answers:

1. Have the M.I.D. apply towards primary residence only (not second homes), and lower from $1,000,000 to $500,000.  Those buying in hopes of a bigger write off will still buy a house, and take the partial benefit – and be in it for the appreciation and to raise a family (make wifey happy).

2.  Have the mortgage interest deduction be in effect for the first ten years of ownership only.  It would encourage borrowers to pay off mortgages in the ten years, and not refinance every year.

3.  Require that only the buyers can pay for mortgage insurance (sellers can pay in full now).

4.  Redirect the disadvantaged folks to subsidized rentals until they aren’t disadvantaged. Only stable, secure, affluent people should buy a house – it’s too late for the rest, unless they drive to the suburbs/outer edge of town.

5.  There are several loan programs available to help the disadvantaged already.  NACA is still around, helping buyers purchase with no down payment and no closing costs (H/T daytrip):

https://www.naca.com/naca/purchase/purchase.aspx

6.  Lower the capital-gains tax for 1-2 years to incentivize those reluctant-but-motivated possible sellers to unload a rental property or two.  Cut federal rate to 10% for the first year (currently 20%), and then back to 15% in the second year.  The crotchety old guys still won’t sell, so there won’t be a flood.  But more inventory = more sales while stabilizing prices.

7.  Keep Fannie/Freddie the way they are for now. If they can keep operating in the black, let’s allow the mortgage industry to enjoy the fluidity. I attended a seminar today on the new loan disclosures coming on October 3rd, and it is clear that Fannie/Freddie will be extremely strict on compliance. It doesn’t mean tougher credit, it means the mortgage industry needs to submit the cleanest loan packages ever – which is good for the taxpayers.

8.  The new compliance crunch will virtually eliminate mortgage brokers – wholesale lenders won’t want to take a chance on them. Yes, we still have room for you over here to be a realtor – there’s only 11,000 of us chasing 3,500 sales each month.

9.  Encourage a private jumbo-MBS market without subsidizing it.  Eventually, a private MBS marketplace could help shift the burden from Fannie/Freddie.

10. Run a tight ship.  We can handle it.

The powers-that-be have made some great moves to get us this far, now bow out gracefully and let free enterprise take care of the rest.

Posted by on Aug 20, 2015 in Bailout, Housing Tax Credit, Interest Rates/Loan Limits, Loan Mods, Local Government, Mortgage News, Mortgage Qualifying | 0 comments

Fed Move?

july 14 rates

The President of the Federal Reserve Bank of Kansas City thinks “it’s time” for the U.S. central bank to raise short-term interest rates to reflect solid improvements in the economy.

The current level of near zero short-term rates, set at emergency levels to deal with deep economic problems, “do not seem needed anymore,” Ms. George said. “We should now be beginning to think about a rise in interest rates,” the official told a gathering on agricultural matters held at her bank. “You have to have some dose of courage” in your forecast and be willing to act, even when the future is uncertain, Ms. George said.

Link to WSJ article here.

Austan isn’t so sure:

Posted by on Jul 15, 2015 in Interest Rates/Loan Limits, Jim's Take on the Market | 2 comments