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Mortgage Lenders Responding to Plunging Home Values

February 29th, 2008

The S & P Case/Schiller Home Price Index dropped by 9.1 percent at the end of 2007, which represents the largest drop in the index’s 20 year history. The index measures home prices in 20 key market areas throughout the US. Decreasing home prices can make it difficult, if not impossible, to sell a home or refinance home mortgage loans.

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Scenes from the Mortgage Roller Coaster

February 28th, 2008

A mixed bag of mortgage and housing news:

Clearly, the first item is bad news for home buyers, while the second is good news. It is the third item, however, that ought to be a reminder for home buyers to have a sense of urgency about finding a property.

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Decreasing Mortgage Applications Highlight Homeowners’ Difficulties

February 27th, 2008

Mortgage applications dropped for the 3rd consecutive week according to the Mortgage Bankers Association’s weekly survey of applications. Mortgage applications dropped by 19.2% during the week ending February 22. Refinance applications declined by 30%, which appears to highlight the difficulties homeowners are experiencing due to falling home prices and tighter mortgage lending standards.

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Falling Home Prices Provide Incentive for first-time Buyers

February 25th, 2008

The National Association of Realtors (NAR) reports that the median price of a single family home has fallen to $198,700. Real estate professionals estimate that there is approximately a 10 month supply of homes on the market. Lower home prices and a glut of available homes suggest a buyer’s market in many areas. This can provide homebuyers with more negotiating power.

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Time May Be Running Out For Super-Low Mortgage Rates

February 21st, 2008

To take a step back from week-to-week news for a moment before moving on to recent developments, a little historical perspective reveals just how low mortgage rates are these days. For a month-and-a-half now, thirty-year mortgage rates have been below 6.0%. How low is that? In thirty-six years of mortgage data, there have only been three years in which mortgage rates averaged below 6.0%. In none of those three years, did those rates stay below 6.0% for the entire year.

In other words, history is clear on two things:

  • Current mortgage rates are low
  • Low mortgage rates don’t stay around for long

This history lesson gives added power to some recent developments:

It all adds up to reinforce the importance of taking advantage of low interest rates as soon as they become available.

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Project Lifeline Gives Mortgage Borrowers a Time-Out

February 14th, 2008

Mortgage news this week was dominated by the announcement of Project Lifeline, a program to help mortgage borrowers who are on the brink of foreclosure.

To appreciate the context of Project Lifeline, it is important to also consider two other stories from this past week:

  • Figures from the first four months of this fiscal year show that the U.S. Government budget deficit is running at about twice the pace of last year’s
  • Morgan Stanley became the latest in a series of financial firms to bite the bullet because of the mortgage crisis, with the announcement that they would lay off 1,000 mortgage workers

Considering the circumstances, Project Lifeline might be the most pragmatic type of solution available.

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Cross-Currents Swirl Around Mortgages

February 7th, 2008

It was a mixed week for mortgage news. Here were some items of interest:

It’s these last two items which may turn out to be the best news of all for mortgage shoppers.

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