Mortgage Rates Plunge to Record Lows
In response to the Federal Reserve’s cut in the federal funds rate to near zero, Freddie Mac reports that the 30-year fixed mortgage rate fell to 5.17 percent during the week ended Dec. 18–down from 5.47 percent last week and the lowest since the survey’s inception in 1971.
Interest on 15-year fixed loans slipped to 4.92 percent from 5.20 percent.
Meanwhile, the five-year hybrid adjustable mortgage rate dropped to 5.6 percent from 5.82 percent; and the one-year ARM dipped to 4.94 percent from 5.09 percent.
A year ago, the 30-year fixed rate stood at 6.14 percent, the 15-year fixed rate at 5.79 percent, the five-year hybrid ARM at 5.9 percent, and the one-year ARM at 5.51 percent.
Source: The Wall Street Journal, Steve Kerch (12/19/08)
Mortgage Applications Back on the Rise
Mortgage applications climbed last week in response to falling interest rates, according to the Mortgage Bankers Association weekly mortgage applications survey.
The index increased 2.9 percent to 841.4 from 817.7 the previous week on an adjusted basis. On an unadjusted basis, it also increased 2.9 percent and was up 37.3 percent compared with the same week a year ago.
Most of the activity was in refinances, which increased to 76.9 percent of the total.
“It doesn’t solve the problem for people who owe more than their home is worth, but for the significant majority who are able to refinance, it is quite a boon,” said Bob Walters, chief economist at Quicken Loans in Livonia, Mich.
Interest rates were down last week compared with the previous week, and are expected to decline still further in response to the Federal Reserve cutting its benchmark rate to a record low this week.
Last week’s already low rates continued to decline:
- 30-year fixed-rate mortgages decreased to 5.18 percent from 5.44 percent;
- 15-year fixed-rate mortgages decreased to 4.93 percent from 5.08 percent
- 1-year ARMs decreased to 6.63 percent from 6.76 percent.
Source: Mortgage Bankers Association and Reuters News, Lynn Adler (12/17/2008)
Ten Real Estate Predictions for 2009
2009 is likely to be a year of continuing adjustment to a changing real estate marketplace. Prepare yourself and your business with these predictions from HGTV’s FrontDoor.com Web site.
- Sellers will continue to face falling home values in the new year because they’ll be competing with banks and builders who are slashing prices to sell off the still-huge inventory of foreclosures and new homes.
- The Obama administration will act on its plan to crack down on abusive lending practices.
- Mortgage holders in danger of losing their homes will receive more assistance from a variety of programs since the Senate’s Joint Economic Committee has predicted two million foreclosures in 2009.
- Banks’ restructuring should bring increasing calm, making loan modifications and short sales easier to obtain. Eventually this will lead to a decrease in the number of bank-owned properties on the market.
- Mortgage applications will continue to receive a comprehensive review, requiring borrowers to provide extensive income and debt documentation. Those with the best credit will get the best rates.
- The foreclosure crisis has created wiser consumers, with a deeper understanding of real estate, mortgages, and credit enabling better decision-making going forward.
- Green is good with increasing numbers of buyers opting for smaller homes that are within walking distance of school and work.
- Buyers and sellers will be more and more tech savvy, relying on tools like video, webcasts, and mobile search. Consumers and practitioners will benefit from being ahead of the curve.
- Prices will be low as will interest rates, creating great buying opportunities, and likely, inspiring reluctant buyers to make their move.
- The recession will end and buyers will regain confidence in the market.
Source: Frontdoor.com (12/03/2008)
Low Prices, Low Rates Mean Opportunity
Housing prices have fallen dramatically all over the country and rates on 30-year fixed-rate mortgages are already close to 5.5 percent. Experts say it’s possible, with government encouragement, that rates will fall as low as 4.5 percent.
Now is the time for first-time to step up. Here are some things to consider:
- Prices have always softened in the winter. As temperatures fall, bargain hunters will have bigger then usual opportunities.
- New homes likely to become scarce. Ian Shepherdson, chief United States economist for the research firm High Frequency Economics, said he believes that a steep drop-off in inventory of new homes is coming soon, thanks to a rapid decrease in home builder activity.
- Location. Location. Location. Buying the best-priced house in a really good neighborhood is still smart.
- Will values go up? You may have to live in a house for 10 years, but over time, buyers will almost certainly make money.
Source: The New York Times, Ron Lieber (12/05/2008)
Obama Urges Action to Help Home Owners
President-elect Barack Obama on Sunday criticized the current administration for its failure to aggressively help home owners who are faced with foreclosure.
He called for immediate action and urged the Bush administration to find a way to encourage banks and mortgage holders to renegotiate the terms of existing mortgages in ways that would keep costs for borrowers down.
On “Meet the Press,” he told anchor Tom Brokaw that it was the wrong time to worry about whether or not undeserving homeowners will benefit from the plan.
“If my neighbor’s house is on fire, even if they were smoking in the bedroom or leaving the stove on, right now my main incentive is to put out that fire so that it doesn’t spread to my house,” Obama said.
Source: Washington Post, Anne E. Komblut (12/07/2008)
Mortgage Rates Take a Big Dip This Week
For the week ended Dec. 3, Freddie Mac reported the lowest interest on 30-year fixed home loans since late January.
The rate came in at an average of 5.53 percent, down from 5.97 percent the previous week and 5.96 percent a year ago; while 15-year fixed mortgages settled at 5.33 percent compared to 5.74 percent last week and 5.65 percent in the year-earlier period.
Borrowing costs for short-term loans also were lower, with one-year adjustable-rate mortgages dipping to 5.02 percent from 5.18 percent a week ago and 5.46 percent a year ago.
Five-year hybrid ARMs, meanwhile, fell to 5.77 percent from 5.86 percent last week and 5.75 percent during the same period of last year.
Source: Realty Times (12/05/08)
Housing Prices Fall Below Replacement Costs
Housing consultancy Global Insight reports that nationwide, housing prices are now 3.8 percent undervalued, based on total market value. It says values fell at a faster pace in the third quarter after stabilizing earlier in the year.
According to Global Insight’s calculations, prices are now 6.5 percent below their 2007 peak. They fell at a 6.9 percent annual pace affecting 241 of the 330 metropolitan areas analyzed by Global Insight. That’s up from 150 metro areas affected in the second quarter.
Contraction is most severe in the Southeast and Southwest with only the Pacific Northwest remaining overvalued, Global Insight says.
Home prices fell more than 10 percent in the third quarter in nine central California communities. The Central Valley communities of Merced, Stockton, and Modesto have seen property values fall to less than half their 2005 value.
Twenty-nine metro areas in California, Florida, and Nevada – at one time among the most overvalued – have seen price declines in excess of 30 percent. Similar steep price drops are occurring in Michigan, northeast Ohio, the southern metro areas from Charlotte to Atlanta, as well as in New England.
“Weak economic conditions and wary consumers continue to hold the housing market back,” says Jeannine Cataldi, senior economist and manager of Global Insight’s Regional Real Estate Service. “Although many areas are seeing home sales increase, it is largely due to foreclosure homes being snapped up at significantly discounted prices. As the inventory of these homes is removed from the market, prices will remain on a downward path.”
Source: Global Insight (12/03/08)
Fed, Treasury Announce Plan to Jumpstart Lending
The Federal Reserve and Treasury Department on Tuesday unveiled hundreds of billions more in money they are pumping into the struggling U.S. economy, trying to jumpstart lending by the nation’s banks for mortgages and consumer debt.
Together, the programs from the Federal Reserve and the New York Fed aim to dump $800 billion in additional funds into the struggling U.S. economy, more than Congress approved in October for a bailout of the nation’s banks and Wall Street firms.
The NATIONAL ASSOCIATION OF REALTORS® said the actions will free up money on main street and lower long-term interest rates, which in turn will boost home sales.
“This is great news for home buyers and sellers and we applaud the Fed for taking this historic step,” said NAR President Charles McMillan. “Housing recovery is the key to economic recovery in this country and it always has been.” (Read the full NAR statement.)
Under the plan, the Federal Reserve announced it will purchase up to $500 billion in mortgage-backed securities that have been backed by Fannie Mae, Freddie Mac, and closely held Ginnie Mae, the three government-sponsored mortgage finance firms set up to promote homeownership. It will also buy another $100 billion in direct debt issued by those firms.
“This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally,” said the statement from the Fed.
By putting money in the hands of holders of consumer and mortgage loan securities, the government hopes more money will flow to consumers than has occurred so far in previous bailout plans.
The moves came as the Commerce Department announced that gross domestic product, the broad measure of the nation’s economy, fell at an annual rate of 0.5% in the third quarter, the biggest drop in economic activity in seven years. Economists believe that the economy is likely to continue to contract in the current quarter and into early next year.
Source: Chris Isidore, CNNMoney.com (11/25/08), NAR
FHA, VA Loans Surge in October
The Mortgage Bankers Association reports that FHA, VA, and other government-insured loans accounted for about 33 percent of home loan applications in October, up from 10 percent a year ago.
Government-insured loans secured their biggest share of applications since February 1991 because they have lower down-payment criteria, more relaxed underwriting standards, and also had a higher loan limit for high-cost areas this year, the MBA notes.
Applications for government-insured loans surged 113.6 percent from a year ago in October, while applications for conventional loans fell 49.7 percent.
Refinancings from conventional loans to FHA-insured loans rocketed 144.3 percent from a year ago.
Cities Where Most Homes Are Mortgage-Free
Amid the subprime mortgage disaster, it’s easy to forget that a lot of people own their homes outright. In fact, a full one-third of U.S. homeowners don’t have a mortgage to worry about.
According to an analysis of census information by USA Today, there are 123 areas of the country where 40 percent or more of home owners don’t have a mortgage.
Many of those areas also never had any sort of boom in prices, either because they are in declining areas that have suffered job losses and dwindling population or because they are thriving retirement communities.
Cities with the highest percentage of owner-occupied properties that are mortgage free:
- Bluefield, W. Va.: 57 percent
- Sebring, Fla.: 56 percent
- Odessa, Texas: 54 percent
- McAllen-Edinburg-Mission, Texas: 54 percent
- Weirton, W.Va.-Steubenville, Ohio: 53 percent
Source: USA Today, Haya El Nasser and Paul Overberg (11/21/2008)
Read the article here.
Contact Us Today!
Please allow us the opportunity to be of assistance. You may feel free to contact us directly via this website or by the preferred method below. Thank you for visiting.
Highers Group Realty
5000 Eldorado PKWY #150
Frisco TX 75034
Phone: (214) 392-6400
Email: nancy@highersgrouprealty.com