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mortgage market: A Few Reasons Why Now May Be The Least Expensive And Easiest Time To "Go FHA" - 04/15/09 01:13 AM
Shopping for low mortgage rates is a game of luck.
Some days, mortgage rates are favorable. Other days, they're not. And while you can sometimes make an educated guess about where rates might be headed, you're not always going to guess right.
Even the experts get it wrong more often than they'd like.
But some parts of the rate shopping process can be predicted and one of them is the future of mortgage guidelines.
In general, the more often homeowners default on their respective mortgages, the harder it is for future mortgage applicants to be approved.
This is why "now" may … (1 comments)
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mortgage market: What's Ahead For Mortgage Rates This Week : April 13, 2009 - 04/13/09 03:52 PM
For the second week in a row, mortgage markets started the week strong and then ended with a fizzle. In the holiday-shortened week, rates were exactly flat overall.
There wasn't much economic data to move rates last week, incidentally. The market's up-and-down action was largely based on two events:
A reputable analyst said banking-sector optimism may be premature Wells Fargo reported a record $3 billion in first quarter earnings It was the first item that dropped rates Monday and Tuesday; the second item, in part, led them back up.
This week, data returns.
Tuesday, we'll get a look at Retail Sales. Because consumer spending accounts for … (0 comments)
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mortgage market: How To Know If Your Adjustable Rate Mortgage Will Adjust Lower - 04/09/09 10:31 AM
When conforming mortgages adjust, they're often tied to an interest rate index called LIBOR.
LIBOR is an acronym for London Interbank Offered Rate. But what LIBOR stands for isn't as important as the role it plays.
LIBOR is an interest rate at which banks borrow money from each other. Therefore, when banks feel the banking system as a whole is unsafe, LIBOR rises to compensate.
It's why LIBOR spiked last October after Lehman Brothers failed. Financial institutions wondered what other institutions would fail and that added risk to the system.
Since October, however, and because of massive government interventions worldwide, … (0 comments)
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mortgage market: What's Ahead For Mortgage Rates This Week : March 2, 2009 - 03/02/09 01:50 PM
Mortgage markets worsened last week, taking interest rates with them.
A steady drip of sour economic news plus concerns about the banking system outmuscled Fed Chairman Ben Bernanke's congressional testimony in which he said the recession would likely end later this year.
Overall, mortgage rates have risen in 9 of the last 12 trading days.
This week, it's unclear in what direction mortgage rates will go. However, it won't be because of a lack of action.
The week starts with the 8:30 A.M. ET release of the Personal Spending report, a closely-monitored report that should make a broad market impact. Economists expect … (0 comments)
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mortgage market: You've Been Pre-Approved -- Now Get RE-Approved - 12/19/07 10:21 AM
Even if you've been recently pre-qualified (or pre-approved) for a mortgage, it may be prudent to get "re-approved". The mortgage industry is changing quickly; being prepared beats the alternative.
Recently, mortgage lenders have made adjustments in what they will lend, and to whom. This shrinks the pool of eligible mortgage borrowers.
Some of these guideline changes include:
Low or no downpayment loans may require more income and/or assetsNo income verification (i.e. stated) loans may not be availableHigher credit scores may be necessary to qualify In addition to tighter guidelines, many mortgage lenders are now required to pass higher fees and/or mortgage … (3 comments)
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mortgage market: Why Credit Card Holders May Benefit from The Fed's Actions Today - 12/11/07 12:28 PM
The Federal Open Market Committee meets today and will release a public statement at 2:15 P.M. ET.
It is widely expected that the FOMC will lower the Fed Funds Rate by at least 0.250%.
When the FOMC lowers the Fed Funds Rate, it is trying to "loosen" credit for American businesses and consumers. When credit is "looser", it is cheaper, and easier to procure.
Looser credit promotes spending and propels the U.S. economy forward.
By contrast, when the FOMC raises the Fed Funds Rate, it is trying to "tighten" credit which, in turn, slows down the U.S. economy.
The … (2 comments)
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mortgage market: The Week in Review (December 10, 2007): What to Watch For - 12/10/07 02:13 PM
Among lingering doubts about housing and credit markets, and a general uncertainty about the U.S. economy, the mortgage bond market tanked towards the latter part of last week.
As investors moved away from mortgage bonds, mortgage rates forcefully bounced off their two-year lows.
A major factor behind last week's run-up in rates is the market expectation for Tuesday's Federal Open Market Committee meeting.
Those expectations sharply shifted after Friday's strong employment report from the Census Bureau and dragged rates along with them.
Prior to the jobs report, markets were expecting that the FOMC would lower the Fed Funds Rate … (1 comments)
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mortgage market: How the Stock Market is Directing Traffic for Mortgage Rates - 10/24/07 02:22 AM
As we talked about Monday, the stock market appears to be directing traffic for the bond market.
Monday was a flat day for stocks, and it was a flat day for bonds, too. Mortgage rates idled.
Tuesday, with no economic data hitting the wires, market participants looked for direction elsewhere.
Some likely candidates include:
The price of oil. If oil prices continue to rise, it will place inflationary pressure on businesses and consumers. That is bad for mortgage rates.The value of the dollar. A recent rally in the dollar should attract foreign investors to the U.S. markets. That is … (1 comments)
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mortgage market: The Week in Review (October 22, 2007) : What to Watch For - 10/23/07 06:23 AM
Rising oil prices, weak housing data, and ongoing credit concerns pushed mortgage rates lower last week as investors sought safety for their dollars. Stock markets took losses and bond markets -- including mortgage bonds -- booked gains. Remember, when mortgage bonds go up in price, mortgage rates come down. To understand why mortgage rates tend to drop when stock markets have a sell-off, we should look at the situation from an investor's perspective.
When lots of investors are selling stock positions, stock markets fall. The investors get cash in return for their sold securities. But cash doesn't offer much of … (2 comments)
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mortgage market: How Japan and China Can Impact the Mortgage Rate on Your Home - 10/17/07 09:33 AM
Mortgage rates are determined by the prices of mortgage bonds; this, we've covered before. As bonds prices go up, bond rates come down.
And the price of a mortgage bond is a matter of Supply and Demand.
The greater the demand for a bond, the higher its price. High demand for bonds is one reason why mortgage rates remained relatively low for the period spanning the last few years.
That period may be ending soon.
In August 2007, for the first time since 1998, foreign nations sold more long-term U.S. securities in a month than they bought, thereby increasing the market … (3 comments)
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mortgage market: The Week in Review (October 15, 2007) : What to Watch For - 10/16/07 10:35 PM
The economy appears to have shrugged off August's credit market turmoil and is continuing to expand. This pushed mortgage rates higher last week as market players move money into stocks and hope to capitalize on the Dow Jones rally.
After the Fed's last meeting, the central bank lowered the Fed Funds Rate by 50 basis points, or 0.50%.
At the time, the economy was widely viewed to be in, or entering, a recession.
The August jobs report showed a net loss of jobsBillions of dollars in value were wiped each day in the credit marketsGeneral economic indicators showed weakness … (2 comments)
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mortgage market: Jumbo Mortgage Rates Shed Some of Their Risk, Rates Fall - 10/10/07 11:41 AM
As a sign that some normalcy is returning to mortgage markets, the premium attached to jumbo mortgage rates is getting smaller.
A "jumbo"-sized loan is one that exceeds $417,000 on a single-family residence, among other criteria.
Conforming 30-year fixed rate mortgages and jumbo 30-year fixed rate mortgages tend to move in the same direction over time. You can see that illustrated on the left-side of the graph.
But, as we move towards the right, we can see how, beginning in mid-August of this year, the general direction of mortgage rates for these two products diverged.
In mid-August, you'll remember, is … (11 comments)
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mortgage market: The Week In Review (October 9, 2007) : What to Watch For - 10/09/07 03:58 PM
As expected, the big news last week was the Non-Farms Payroll report. What wasn't expected, though, was the strength of the report. Mortgage rates ended the week on a large up-tick.
110,000 jobs were created in September, according to the Bureau of Labor Statistics. This exceeded Wall Street expectations by 10% and -- in isolation -- shows that the economy may be stronger than economists think.
But the monthly jobs report also included a major revision to August's data, too.
Originally, the government had reported that 4,000 jobs were lost in August. In Friday's report, though, that figure was revised … (1 comments)
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mortgage market: How Today's Employment Data is Hurting Mortgage Rates - 10/05/07 09:32 AM
On the first Friday of each month, the Bureau of Labor Statistics releases its employment report for the United States.
Last month, the jobs report showed that the economy actually lost jobs for the first time since 2003. The total loss of jobs equaled 4,000 and contributed to the Federal Reserve's decision to lower the Fed Funds Rate for the first time since that same year.
Of course, today is the first Friday, so a new employment report hit the wires earlier this morning. The news was good for the economy, but not so good for people in the market … (6 comments)
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mortgage market: The Week in Review (October 1, 2007) : What to Watch For - 10/01/07 11:30 AM
Even as home sales fall nationwide, the economy continues to move forward.
Year-over-year inflation as measured by Personal Consumption Expenditures registered 1.8%, well within the Fed's tolerance levels of 1-2% and suggesting that the economy is in "Goldilocks" mode -- not too hot and not too cold.
Many economists had predicted that weaker home values across the country would create a chain reaction, starting with fewer equity withdrawals and ending with fewer dollars spent in retail stores.
So far, that hasn't happened.
Personal Spending was up 0.6% in August over July's levels. This suggests that the American Consumer … (2 comments)
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mortgage market: Americans Will Spend $179 Million More on Gasoline Today than One Year Ago - 09/27/07 03:37 PM
Economists worry about rising oil prices because it tends to generate higher pump prices for Americans. With more money spent on gasoline, there's (theoretically) less money available to spend on goods and services.
Today, GasBuddy.com says that the average price for a gallon of unleaded gasoline is $2.792, up from $2.344 last year at this time.
Now, as a country, it is estimated that we consume 146,000,000,000 gallons of gasoline annually. That converts to 400 million gallons each day.
Therefore, the 44.8-cent difference between today and last year at this time, costs Americans an additional $179,000,000 in fuel … (16 comments)
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mortgage market: The Week In Review (September 24, 2007) : What To Watch For - 09/24/07 04:18 PM
In a semi-surprise move last week, the Federal Reserve lowered the Fed Funds Rate by 0.500%.
The Fed wants to prevent a dramatic economic slowdown that started in the housing sector and appears to be spilling over into other sectors now, too.
According to some pundits, the half-point FFR drop was exactly what the markets needed -- it restored confidence and promoted liquidity.
According to others, though, the Fed bailed out risk-takers and may have re-ignited the flames of inflation.
It's hard to tell which side is correct, so we'll have to believe that both sides have valid points worth considering.
And, like … (2 comments)
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mortgage market: Want More Proof that the Fed Doesn't Control Mortgage Rates? - 09/21/07 09:08 AM
For more proof that the Fed does not control mortgage rates, consider this:
In the immediate aftermath of the Fed's decision to lower the Fed Funds Rate by 0.50%, mortgage rates improved by about 0.25% on average.
But, in the two days since, mortgage rates have not only given back those gains, but have climbed to their highest levels of the month.
This is because post-rate cut, the U.S. dollar is trading at all-time lows against the Euro and other currencies. Therefore, buyers of dollar-denominated securities such as mortgage bonds are getting less return for their investment.
When an investment loses … (8 comments)
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mortgage market: How Prime Rate Relates to the Fed Funds Rate - 09/20/07 09:07 AM
Prime Rate is currently 7.750%.
Prime Rate is the "shorthand" name for the Wall Street Journal Prime Rate, a variable interest rate that is used in pricing many types of consumer loans.
These loans include:
Home equity lines of creditCredit card loansAuto loans Prime Rate's variable nature is tied to the Fed Funds Rate. Prime Rate moves in tandem with the FFR and is always three percentage points higher.
So, after the FFR's 0.500% drop Tuesday, consumer loans tied to Prime Rate dropped by 0.500%, too.
Prime Rate was 4.000% in June 2004 before the Federal Reserve started a string of … (7 comments)
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mortgage market: Making English out of Fed-Speak (September) - 09/19/07 09:11 AM
The Fed lowered the Fed Funds Rate by 0.50% yesterday. A rate decrease was expected by most market participants, but the 50 basis points movement seemed to catch some players off-guard.
Mortgage rates dipped in the wake of the announcement, but the real winners are homeowners with balances on their home equity lines of credit and holders of credit card debt.
Each saw their respective borrowing rates drop 0.50% yesterday because the interest rates for HELOCs and credit cards are based on Prime Rate.
Prime Rate moves in lock-step with the Fed Funds Rate.
In the statement above -- as explained … (0 comments)
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Ilyce N. Powell, CMPS™ - Certified Mortgage Planning Specialist
Baltimore,
MD
More about me…
AmeriSave Mortgage Corp./ United First Financial
Address: Lending in All 50 States + DC, Eliminating Debt and Building Wealth in United States and Canada
Office Phone: (866) 814-2153 x 7103
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