On Wednesday I talked about the benefits of re-engineering mortgages. It seems to me that individual borrowers need to experience a period of stability before they’re likely to feel confident enough to trade up to a better home. Read the rest of this entry »
Freddie Mac unveiled yet more good mortgage news for borrowers on Friday in its weekly survey of average rates. The figure for a 30-year loan was 5.19 percent, which the Wall Street Journal says is the lowest since records began in 1971, 37 years ago. New 15-year mortgages were averaging 4.92 percent.
The Journal also pointed out that mortgages generally closely track long-term government notes, and that these are also continuing to decline. This means that there’s every reason to expect mortgage rates to continue their downward trend.
All of this positivity is translating into a much larger volume of mortgage applications. The Mortgage Bankers Association reports that these are up 37.3 percent up on the same week last year. However, refinancing represents 76.9 percent of all activity, which may not be quite such good news.
More on that soon.
Late yesterday (Tuesday) afternoon, the Federal Reserve slashed its target for the overnight federal funds rate to a range of 0 to 0.25 percent. That may sound like meaningless gobbledygook, but it’s not. It’s an all-time record low. Read the rest of this entry »
It may only have confirmed what most people already suspected, but the biggest financial news of the week was the official announcement that the United States was already in a recession.
Two very different consequences of the slumping economy could be seen in other news of the week:
While the prospect of unemployment may be enough to give anybody pause, those low mortgage rates should be a green light for many borrowers.
As congress debated the Wall Street bailout, there seemed to be an underlying assumption that some kind of package was necessary to put liquidity back into the mortgage lending industry. The general impression is that tougher lending standards have made mortgages scarce, and indeed, the number of existing home sales continued to slip in August. Taken at face value, these stories might be enough to scare potential home buyers out of the market, at least long enough for the bailout package to kick in. However, before heading to the sidelines, those potential home buyers would do well to ask two key questions:
The past week saw more symptoms that the mortgage crisis is likely to drag on:
For prospective homebuyers, these symptoms of long-term consequences of the mortgage crisis signal that waiting for the storm to blow over may not be the best strategy.
Mortgage news was dominated by two items this week:
On the surface, the first would seem to be a highlight, and the second a lowlight, of the week’s mortgage and housing news. Reading between the lines, though, reveals that the first item may not be as good as it’s been reported, but the second item may not be as bad.
With all the mortgage news coming out these days, it is important for new home buyers to distinguish between stories which primarily affect existing home owners and borrowers, and those which will impact future buyers.
As an example of the range of stories over the past week:
New home buyers should have a different take on these stories than the angles widely reported by the media.
There were mixed messages for borrowers in this week’s mortgage news, but there was certainly no shortage of headline-worthy stories:
The message on balance was that potential mortgage borrowers may not want to delay exploring their options, as long as they make educated choices about their loans.
It was an ugly headline, even by the standards of the mortgage crisis:
Looking a little closer though, it turns out the numbers aren’t nearly as bad as that Associated Press headline would suggest. Another example of the media piling on with a negative spin was a story suggesting that loan modification programs were simply extending mortgage pain.
Meanwhile, there were two positive signs for the mortgage market:
In large part, the conclusion drawn from the above depends on whether one is taking a forward-looking or backward-looking view of the market.
30 Year Fixed 4.00% (APR 4.21%)
15 Year Fixed 3.75% (APR 3.99%)
30 Year FHA 0.00% (APR 0.00%)
15 Year FHA: 0.00% (APR 0.00%)
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