Archive for the 'Mortgage Rates' Category
Sacramento Mortgage Rates: Where Are Rates Headed?
This certainly is a confusing time for borrowers. The Fed keeps cutting short-term rates, the falling Prime rate has brought down rates on home equity lines, and desperate lenders continue to advertise loans that don’t exist. Add several price changes each day and a dash of well-earned industry distrust, and it’s no wonder consumers are skeptical. It just seems like 30 yr mortgage rates ought to be lower than they are.
There are some simple reasons for this, none of which you’ll find in within easy access. But if you dig a little, the simple truth emerges. The debt markets are in a state of panic. Investors who created liquidity by buying mortgage backed securities–the Norway Sovereign Wealth Fund, the Peoples Bank of China, and PERS, among others–believed the Wall Street alchemists and their talking-dummy rating agencies who claimed that the toxic waste was potable. Now, after vomiting up $200 billion in losses and “write-downs” (keep in mind that the CDO market is about $2 trillion in size), they’re not exactly storming the punchbowl. So, the banks have to juice the rates to lure investors back. So far, it’s not working all that well.
So while the rate confusion reins, if you want to know where conforming mortgage rates are, Freddie Mac offers their Primary Mortgage Market Survey. It’s published every Thursday and shows average regional and national rates for popular loans. Depending on your qualifications–credit score, employment history, debt ratios, and reserves–your mileage may vary.
If what you’re hearing on the radio, reading in the newspaper, or being told by your neighbor about rates varies significantly from Freddie Mac’s figures, poor out the kool-aid, place your hand over your wallet, and walk calmly toward the nearest exit.
Need advice or a quote? Give me a shout.
Got an opinion or comment, leave it below. Yes, I’d love to have your thoughts, and you’d love to see your words in print, wouldn’t you?
read comments (0)Sacramento Mortgage Rates: The Local Market Heats Up
Today’s jobs report continued the 3-month trend of losses. In a rather ominous sign, the service sector– responsible for 80% of the economy’s job growth–failed to produce any increase. To make things more dreary, January and February’s losses were revised lower still by a combined 68,000 jobs, for a total of 232,000 jobs lost year to date. Unemployment edged up to 5.1% to no one’s surprise, but on the on the heels of further banking losses and home foreclosures, expectations rose slightly for a 50 basis point Fed cut on the 29th.
Yesterday, Freddie Mac reported a weekly average 30 year fixed rate of 5.88% with one-half point, although we’re getting a bit more improvement today. Inflation worries have been sidelined this week by further concerns about the economy. The debate still wages between those who think the economy can weather the financial and housing crisis and those who think we will have a full blown recession before it gets better.
Sacramento Real Estate Heats Up
In an odd sort of paradox, the Sacramento housing market has heated up. Although activity is highly concentrated around bank-owned properties, multiple offers and competitive bidding has replaced the near absence of buyer traffic. I have several all-cash buyer clients who have had offered on numerous properties only to be outbid buy investors and first time buyers. While lending guidelines tighten and change every day, the trophies will go to those who are still well enough qualified to snake through the lending gauntlet.
Prices are still in decline according to my appraisers, but they have obviously reached a threshold of affordability, and buyers are coming out to check out the merchandise.
Sacramento Mortgage Rates: Below 6% Again
Freddie Mac reported that 30 yr fixed rates had dropped to an average 5.875% with one-half point last week. Today was a fairly quiet day devoid of economic news that would sway the markets. The big news of the week comes Friday with March’s employment numbers. Economists surveyed expect a net loss of 70,000 jobs, exceeding February’s 63,000 loss.
CalHFA Pulls Back Max LTV
CalHFA has cut back its maximum loan-to-value in “declining markets” from 100% to 95%, following a long processional of lenders and programs that have recently said goodbye to 100% finanincing. FHA (97% LTV) is all that is left, but if you add a twist of Nehemiah you can get to 103% of the purchase price. Again, there are no income limits for FHA or Nehemiah, and the maximum FHA loan limit has been increased to $580,000 for the Sacramento MSA.
Need help with an FHA loan? Don’t trust your future to someone who has only just started doing these. Call me.
Other than a brief rise in February’s existing home sales that sparked Monday’s stock rally the rest of the economic news has been bad. New home sales fell in February, and remember that new homes are considered “sold” at Contract, not at close. Cancellations are never acknowledged in the numbers; they are simply left to sort themselves out in the long run. This leads to a short-term overstatement of sales and and understatement of inventory. As Credit Union National Association’s Mike Schenk so aptly put it, “We have two problems: supply and demand.”
Sliding consumer confidence, no decline in the inventory levels of homes, and today’s drop in durable goods all point the same direction. Monday’s stock market rally has turned sour, and money is flowing into bonds. Treasuries are up this morning, and the Fannie Mae MBS 5.5% coupon is up 8/32nd’s, indicating a possible slight improvement in mortgage rates today. We’ll see how stingy and cautious the banks are about passing that along to the consumer.
Sacramento Mortgage Rates: Another Wild Week
So mortgage rates fell a bit this week. Freddie Mac says the average 30 yr fixed was around 5.875% with 1/2 point and the 5/1 ARM around 5.5% with 1 point. The new conforming jumbo rates–between $417k and $580k in the Sacramento MSA–were about 1% higher, and regular jumbo rates about 1% higher than that. Jumbo rates have gotten even uglier in the recent crisis of confidence surrounded the Bear Stearns collapse and the stampede for the exits of MBS investors.
What’s Next for Mortgage Rates?
Well, we’ll get a look at the inflation factor this next week. Expect the bond market to be hypersensitive to any signs that the recent Fed easing is igniting inflation again. Bernanke is clearly in a pickle now, having had to bail out the investment banks to prevent a bank run that would have rivaled the 1930’s. If inflation fears catch fire, the Fed will have a tough choice to make. This may be bottom for mortgage rates, and by summer the Fed may have to begin the painful process of tightening. It sucks being Ben right now.
Buying Activity Picks Up
It might be premature to call it a trend just yet, but I’ve seen an increasing level of purchase activity the past two weeks across all price ranges. Investors and home owners alike seem to feel like the bottom is near and don’t want to wait for the competition to drive up prices. If I’m right and rates are as low as they’re going to get, this is the time.
Anyway, I hope you have a Happy Easter!
Technorati Tags: Sacramento Mortgage, real estate, conforming loan limits
Lenders have finally begun pricing the new Jumbo Conforming Loans. So far, Fannie Mae will only be accepting delivery of the 30 year fixed on April 1, with the 5/1 ARM on May 1. Here is a comparison of the a) normal conforming 30 yr fixed, b) the new jumbo conforming 30 yr fixed, and c) the regular jumbo 30 year fixed, all from the same lender’s rate sheet today at 3pm.
a) 5.5% at 1 point / 5.875% at zero points
b) 6.5% at 1 point / 6.875% at zero points
c) 7.5% at 1 point / 8.000% at zero points
Similarly, here are the d) traditional FHA and e) new Jumbo FHA 30 yr fixed rates:
d) 5.750% at 1 point
e) 6.625% at 1 point
Sacramento Mortgage Rates: Was That the Bottom?
A few weeks ago, the Fed made an emergency rate cut of 75 basis points followed by another 50 basis point cut at their Jan 29th meeting. Mortgage rates plunged briefly but then turned and exploded higher in a climb that lasted several weeks and carried the 30 year fixed back up into the 6.25% range. Consumers were confused, and many lost out as they waited and hoped for rates to fall even further.
The 30 year fixed stands at 5.875% once again this morning as Bernanke’s testimony yesterday and the stream of economic data point to economy with the brake pedal mashed against the floorboard. With oil brushing up against $102 a barrel and the specter of inflation dancing gleefully on the horizon, the Fed still seems more concerned on balance about the recession that “we’re not in”, which tells you something about how bad things look to them.
Mortgage Rate Forecast
Rates are improving this morning, but don’t wait for them to plunge. This is just part of the weekly cycle of volatility that consumers will have to watch carefully in order to lock in a good rate. The driver for mortgage rates isn’t the Fed action, not the recession, not even liquidity; it’s all about risk.
Forget about watching the 10 year Treasury for clues about mortgage rates. The correlation that existed was due to the fact that investors thought mortgage back securities and the U.S. Treasury 10 yr Note held about the same amount of risk. Guess what they think now.