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Mortgage Rates May Be Low, But They’re Tough To Pin Down — Especially This Week

August 31, 2010 By Leave a Comment

Vacation days contribute to jumpy mortgage rates

Mortgage rates are low right now but pinning them down this week could be a challenge. As Labor Day Weekend nears and Wall Streeters take their head-start on the holiday, trading volume will fall, which will cause mortgage rates in Maine to get jumpy.

As mortgage rates change, so does the long-term cost of owning a home. Every 1/8 percent adjustment changes a household budget.

Meanwhile, the relationship between “vacation days” and mortgage rate volatility is an interesting one; based more in scarcity than market fundamentals.

Rates tend to get volatile near holidays because of two inter-related facts:

  1. Conforming mortgage rates are based on the price of mortgage-backed bonds
  2. Mortgage-backed bonds can’t trade without a buyer and a seller at a specific price

So, as the week progresses and more traders leave for their respective “extended” 3-day weekends, there’s fewer buyers and sellers left on Wall Street to connect for a trade.  As a result, mortgage bond prices move across larger gaps than on a “normal” day which, in turn, translates into faster, larger changes in rates.

This phenomenon can be exaggerated during periods of economic uncertainty — like what we’re in now — and, furthermore, there’s a bevy of important data set for release this week including the FOMC Minutes, inflation data, and August jobs figures.

In other words, rates would have been volatile without the vacation week. The presence of Labor Day just piles on.

Mortgage rates may rise this week, or they may fall.  Either way, if you have a chance to lock something favorable and within your budget, consider doing it.  Rates are at all-time lows and likely won’t last.

Filed Under: Mortgage & Finance Tagged With: ,

Candlelight

August 30, 2010 By Leave a Comment

“Some people ask the secret of our long marriage.  We take time to go to a restaurant two times a week.  A little candlelight, dinner, soft music and dancing.  She goes Tuesdays.  I go Fridays.” Henny Youngman

Perhaps your idea of romance is a candlelight dinner at home.  All is well until you discover that the breeze from an open window, a fan, or a draft has caused a candle to drip wax all over your tablecloth. Do you know the secret for removing candle wax drippings? Here it is. Place a towel or a brown paper bag over the spot and put a hot iron over the blotter. After a few minutes, the wax will be absorbed!  Repeat if necessary.

If you want to look at homes for sale, or have a question about buying or selling real estate, please visit my web site at www.JustinCartier.com. You can study the market, request an appointment to see a home, or send me an email.  I’ll get back to you right away!

If you want to know the secrets of how to remove the sticking points in a real estate transactions or how to get settled in your new home without hassles, let’s talk.

Justin Cartier

RE/MAX ADVANTAGE REALTY GROUP
(866) 942-8100

Filed Under: Home Buying

What’s Ahead For Mortgage Rates This Week : August 30, 2010

August 30, 2010 By Leave a Comment

Existing Home Supply (July 2009 - July 2010)Mortgage markets improved last week despite a major mortgage bond sell-off Friday afternoon. Prior to the jump, conforming mortgage rates had cut new, all-time lows by Thursday, only to lose up to 0.250 percent on the last day of the week.

Meanwhile, the same type of news that drove rates lower Monday through Thursday also contributed to rates rising Friday — revised projections for the U.S. economy.

Early in the week, “bad” news piled on which, in turn, lowered expectations for the economy and pushed mortgage rates down:

Then, on Friday, two events revised the market’s expectations back higher:

When Chairman Bernanke talks, markets listen. His comments about the U.S. economy helped fuel that late-Friday surge in mortgage rates last week.

This week, the momentum could continue — depending on the data. 

There’s a lot for markets to digest this week including key inflation figures from the government; home value data from Case-Shiller; Fed Minutes from the Federal Reserve; and, the always-important jobs report due Friday.

Since April, mortgage rates have been on a downward trajectory and that may continue this week.  Or, it may not. If you own a home and haven’t talked to your loan officer about a refinance, now is as good a time as any — rates are at historic lows and could rebound at any time.

Last June, mortgage rates rose 1.125% in 10 days. Under the right circumstances, it could happen again.

Filed Under: Mortgage & Finance Tagged With: , ,

Home Affordability Rankings For 225 Metropolitan Statistical Areas

August 27, 2010 By Leave a Comment

Home Affordability - Top and Bottom 5 markets 2010 Q2

With home prices holding firm and mortgage rates still dropping, home affordability is reaching new heights.

According to the quarterly Home Opportunity Index as published by the National Association of Home Builders, more than 72 percent of all new and existing homes sold between April-June 2010 were affordable to families earning the national median income.

It’s a slightly higher reading as compared to last quarter, and the second highest reading in the survey’s history.

As with all aspects of real estate, however, home affordability varies by locale. 

For example, 97.2% of homes sold in Syracuse were affordable for families making the area’s median income, earning the New York city its first “Most Affordable Major City” designation.  Indianapolis was the first quarter winner.

On the opposite end of the spectrum, the “Least Affordable Major City” title went to the New York-White Plains, NY-Wayne, NJ area for the 9th consecutive quarter.  Just 19.9% of homes are affordable to families earning the local median income, down 1 percent from last quarter.

The rankings for all 225 metro areas are viewable on the NAHB website but regardless of where you live, buying a home is as affordable as it’s ever been in history. Furthermore, because home values are in recovery and mortgage rates may rise, the market is ripe for home buyers.

All things equal, buying a home may never be this inexpensive again. If you were planning to purchase later this year, you may want to move up your time frame.

Filed Under: Mortgage & Finance Tagged With: ,

Read Past the Headline

August 26, 2010 By Leave a Comment

MAINE HOME SALES DECREASE 30% IN JULY:  In a press release today, MREIS reports Maine home sales decreased 30.07% in July 2010 compared with July 2009.  The decrease was anticipated, reflective of the end of the federal tax credit which had created an accelerated demand to go under contract by a specific date.  National home sales figures show a 25.6% decrease in that same time period, and the Northeast a 30.03% decrease. 

However, Maine median home sales prices are still increasing.  The median sales price rose 4.23% to $172,500 in July 2010, compared with July 2009.  Median indicates half sold for more and half for less.

Hancock county up 1.9%

Penobscot county down -12.59%

The numbers are not as discouraging as the headline reads considering this is the first month after the expiration of the tax credit.  Prices are low, rates are AMAZING.  What a great time to be a buyer!!


Filed Under: Uncategorized

New Home Sales Drop In July — Just Like Existing Home Sales

August 26, 2010 By Leave a Comment

New Home Supply July 2009 - July 2010One day after the National Association of Realtors released the softest Existing Home Sales report since 1995, the U.S. Census Bureau released a similarly-weak New Home Sales report.

Americans bought just 276,000 newly-built homes in July. That marks the fewest units sold since the government started keeping records in 1963.

In addition, although new home inventory actually dropped 2,000 units in July, the slowing sales pace still managed to push the national supply higher by 1.1 months.  At July’s rate of sales, the nation’s new home inventory would be exhausted in just about 9 months.

None of this news should surprise you, though. It’s all been foreshadowed for weeks.

First, Single-Family Housing Starts have dropped in every month since April.  A “housing start” is a when a home starts construction and, because fewer homes are under construction, we should expect fewer homes to be sold.

Second, Building Permits are down.  The number of new permits peaked in March and have fallen 23 percent since.

And, lastly, home builder confidence ranks at its lowest levels since early-2009. A contributing factor in that pessimism is dwindling buyer foot traffic.

Regardless, there’s two sides to the story. Although the New Home Sales data looks bad for builders, it can be terrific  for you. This is because new homes are more likely to be discounted when the sales cycle favors buyers.

Coupled with ultra-low mortgage rates, the cost of buying a newly-built home in Houlton may have just become cheaper.

Filed Under: Mortgage & Finance Tagged With: , ,

Existing Home Sales Plummet In July; Home Buyers Gain Leverage

August 25, 2010 By Leave a Comment

Existing Home Sales July 2009 - July 2010The number of home resales plunged by 1.4 million units in July, according to the National Association of Realtors®’ Existing Home Sales report.

It’s a drop of 27 percent from June; single-family home resales are at the report’s lowest levels since May 1999.

Furthermore, because of the sharp drop in sales volume, home inventories are spiking.

Homes for sale nationwide fell just short of 4 million units in July and, at the current sales paces, it would take 12.5 months for the existing inventory to be absorbed.

Home supply was just 8.9 months in June.

For home sellers in Belfast , the Existing Home Sales report is a bit of bad news.  Fewer sales and larger inventories put negotiation leverage in the hands of the buyers which, in turn, creates downward pressure on home prices.  It may also increase time-on-market.

For home buyers, however, the data is decidedly welcome. After a stimulus-driven spring buying season that favored sellers, the summer and early-fall market seem to favor buyers. More choices and more leverage is a positive.

It helps that home affordability is up, too. 

Although there’s reports that home values are rising, their modest gains are more than countered by the ongoing rally in mortgage rates. Freddie Mac says that 30-year fixed rate mortgage rates are at their lowest levels in history and, at today’s rates, every one-eighth drop in mortgage rates roughly offsets a 1.5% increase to home price.

Mortgage rates are down 0.75 percent since mid-April.

Filed Under: Mortgage & Finance Tagged With: , ,

Bank Mortgage Lending Policies Appear To be Easing

August 24, 2010 By Leave a Comment

Senior Loan Officer Opinion Survey on Bank Lending PracticesThe tightening in mortgage-lending policies that characterized the last 3 years appears to be slowing.

According to the Federal Reserve’s quarterly survey of senior bank loan officers, roughly 1 in 10 lenders added mortgage qualification hurdles between April and June. It’s a huge departure from just 2 years ago when the mortgage industry was facing its first wave of challenges. 

During that period, eight in 10 lenders added hurdles.

For mortgage applicants in Belfast , this quarter’s Fed survey results signals that mortgage lending may have reached its limits of restriction.

Since 2007, mortgage guidelines have become increasingly restrictive. There’s extra scrutiny on assets and tax returns; employment history is given more weight; loan purpose matters.  There’s a bevy of traits that can stand between you and an approval that didn’t exist a few years ago.

That said, lots of homeowners are still getting loans.

 

Verifiable income, good credit scores and equity are the “magic formula” and banks want to lend to good credit risks. And the best news for those that qualify is that mortgage rates are fantastic right now.

According to Freddie Mac, mortgage rates are as low as they’ve been in history.

So, if you’re among the many wondering if now is the right time to buy a home — or refinance one — remember that, although mortgage guidelines likely won’t get worse, mortgage rates probably will.

Filed Under: Mortgage & Finance Tagged With: ,

What’s Ahead For Mortgage Rates This Week : August 23, 2010

August 23, 2010 By Leave a Comment

Refi Boom stretches household dollarsMortgage markets stalled last week in back-and-forth trading as Wall Street grappled with weak housing data, falling builder confidence, and worsening jobs numbers nationwide.

Because markets were volatile, rate shopping was challenging.

Conforming mortgage rates did managed to make a new all-time low last Thursday but quickly gave up those gains. Most of Friday afternoon was spent in the red and, as a result, for the second straight week, mortgage rates failed to fall overall.

But, although last week’s action puts a damper on this summer’s mortgage rate rally, the Refi Boom is still going strong.

According to Freddie Mac, as compared to April 8 when mortgage rates touched their recent high-point, pricing is hugely improved across 3 popular loan products.

  • 30-year fixed : Then, 5.21%; Now, 4.42%
  • 15-year fixed : Then, 4.52%; Now, 3.90%
  • 5-year ARM : Then, 4.25%; Now, 3.56%

As an example of potential savings, a homeowner in Maine with a $250,000 30-year fixed rate mortgage would save $96 per month at today’s rates as compared to April’s. 

Over the life of a loan, that’s a savings of $34,560.

This week, it’s unlikely that the Refi Boom will meet its end, but that doesn’t mean you should wait for rates to fall further. Mortgage rates tend to change quickly and without notice, and should rates rise, you may find that you’ve missed the market bottom.

If today’s rates appeal to your finances and budget, consider locking something in and moving forward.

Filed Under: Mortgage & Finance Tagged With: ,

Be Prepared

August 20, 2010 By Leave a Comment

“It is important to familiarize yourself with the use of fire extinguishers in your vicinity, as improper or untimely use may be counterproductive.”  Wikipedia (encyclopedia)

“FIRE!” The words, or a fire itself, can create panic in a theater, danger in an automobile, or destruction on a boat. However, it can do the same thing at your home. So get a fire extinguisher and keep it handy. It’s more essential to your comfort and safety than any piece of furniture.

Experts suggest that you get a fire extinguisher rated “ABC,” indicating that it can handle most common types of fires: wood and paper, flammable liquid and electrical. Locate it in a visible, accessible place, preferably near an exit. Check the equipment periodically to make sure it’s fully charged. Your smoke detectors will alert you to a problem, and your fire extinguisher will give you peace of mind and a tool for an emergency, if and when you need it.

This information is provided in order to keep your family and your home safe.  Whenever you need to familiarize yourself with real estate values, homes for sale, schools, or demographics, reach out to my web site at www.JustinCartier.com.  It’s easy. 

My goal is to help you avoid any problems or emergencies in your real estate transactions.  I can help you with information about your home’s value, a possible move, or any other real estate matter. If you or a friend has a real estate problem or emergency, sound the alarm!  I’ll be alert for your call, anytime you need me.

Filed Under: Uncategorized
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