Kevin Wallace's Blog

NH Home Buyers - The Week Ahead Feb 16 2010

Merrimack Mortgage Company — Tue, 16 Feb 2010 08:01:26 -0800

Mortgage markets worsened last week on general profit-taking in the U.S. bond market, combined with talk of a coordinated rescue effort for Greece and its debt burden. Mortgage-backed bonds sold off, causing conventional and FHA mortgage rates to rise.

There wasn't much hard data on which to trade last week, either, so momentum took markets farther than they otherwise might have moved on their own. It marked the first time in 5 weeks that rates rose for NH rate shoppers.

This week, data returns. Expect mortgage market movement.

Some of the week's more important releases include:

Housing Starts and Building Permits (Wednesday)
The release of the last month's FOMC Minutes (Wednesday)
Business and consumer inflation figures (Thursday and Friday)

Inclement weather may have impacted last month's Housing Starts reading so pay closer attention to Building Permits. Permits precede actual construction and can be more indicative of economic optimism. If permit readings are strong, it should be a negative for mortgage rates.

The same is true for the FOMC Minutes.

Last month's FOMC post-meeting press-release was decidedly middle-of-the-road, but the statement is just a summary of the Fed's 2-day meeting, boiled down to a few paragraphs. Wednesday's release of the FOMC Minutes will reveal the deeper discussions among members of the Fed. Wall Street will mine it for clues about the future of the economy.

If Wall Street senses optimism coming from the Fed -- again -- mortgage rates should rise.

And, lastly, keep an eye on Thursday and Friday's inflation data. Inflation is bad for mortgage rates so a higher-than-expected reading should spark a bond market sell-off.

Since mid-December, mortgage rates have moved within a tight range and there's little reason for rates will break this range this week. However, we are near the top of the channel. If you know you're going to need a rate locked soon, it's probably best to do early in the week.

for more info, check out our NH Mortgage Blog or fill out our secure, online NH mortgage application!

NH Home Buyers Seperating FHA Fact from Fiction

Merrimack Mortgage Company — Wed, 10 Feb 2010 08:19:26 -0800

The mortgage lending landscape changes a lot. Rates and guidelines are in constant flux, and it creates preparedness challenges for buyers in Raymond that aren't paying in cash.

The loan you get today won't always be the loan you get tomorrow.

Because of how frequently bank rules are changing, it can be hard for laypersons to distinguish between mortgage fact and fiction of "what's coming next".

Recently, we saw this with respect to FHA home loans.

January 20, 2010, the FHA issued a press release with new lending guidelines. Specifically, it announced 3 changes that will be effective starting April 5, 2010:

Upfront mortgage insurance premiums increase from 1.75% to 2.25%
Allowable seller concession reduced from 6% to 3%
FICO scores of 580 or lower are subject to a minimum 10% downpayment

But, also in its official statement, the FHA announced it would ask Congress for permission to raise monthly mortgage insurance premiums. This is where the rumors started.

Nestled on page 348 of the Budget of the United States Government, Fiscal Year 2011, in a section titled Special Topics, there is a 1-paragraph notation that details the FHA's petition.

Raise monthly premiums by roughly 0.30%, or $25 per $100,000 borrowed per month
Lower upfront mortgage insurance premiums by 1.25%, or $1,250 per $100,000 borrowed at closing

For now, the request is neither approved nor acknowledged by Congress. It's merely a request. And in the event that Congress does approves it, that doesn't mean that FHA has to stand by its initial projections.

Truth is, about the only thing we know about the future of FHA lending is that, come April 5, 2010, borrowing money is going to be tougher, and mortgage expensive. These are the facts as we know them today.

Homebuyers should plan accordingly.

For more info, check out our NH Mortgage Blog or complete our secure online mortgage application!

NH Mortgage Approvals Are Getting More Scarce

Merrimack Mortgage Company — Tue, 09 Feb 2010 13:32:30 -0800

The economy's improving but lending standards are not. Nationally, banks are making mortgage approvals harder to come by.

Underwriting guidelines are tightening.

The data comes from the Federal Reserve's quarterly survey to its member banks. The Fed asks senior bank loan officers around the country to report on "prime" residential mortgage guidelines over the most recent 3 months and whether they've tightened.

For the period October-December 2009:

Roughly 1 in 4 banks said guidelines tightened
Roughly 3 in 4 banks said guidelines were "basically unchanged"

Just 2 of 53 banks said its guidelines had loosened.

Combine the Fed's survey with recent underwriting updates from the FHA and generally tougher standards for conventional loans and it's clear that lenders are much more cautious about their loans than they were, say, in 2007.

Today's Raymond home buyers and would-be refinancers face a bevy of new borrowing hurdles including:

Higher minimum FICO scores
Larger downpayment requirements for purchases
Larger equity positions for refinances
Lower debt-to-income ratios

So, if you're on the fence about whether now is a good time to buy a home, or make that refi, consider acting sooner rather than later. It doesn't necessarily matter that mortgage rates are low, or that there's an up-to-$8,000 home purchase tax credit for households that qualify. With each passing quarter, fewer and fewer applicants are eligible to take advantage.

For more info, check out our NH mortgage blog or complete our NH online mortgage application!

NH Home Buyers and Sellers - What's Ahead This Week

Merrimack Mortgage Company — Mon, 08 Feb 2010 13:23:55 -0800

Mortgage markets improved last week on domestic jobs data and international banking concerns. The news triggered buying in the bond market and, as a result, conventional, FHA and VA mortgage rates in NH improved for the 4th consecutive week.

Mortgage rates are now at a 6-week low but probably shouldn't be. It underscores just how important global events can be to U.S. mortgage markets.

For example, corporate earnings continue to improve and key elements of the economy are strengthening. Even the Federal Reserve acknowledges this. In most circumstances, that would be a boon for the stock markets and bond markets would suffer, including mortgage bonds.

Last week, that wasn't the case.

Early in the week, as (1) China tightened its monetary policy, (2) Greece did little to quell lingering default fears, and (3) Spain raised its deficit forecasts, global investors sought to reduce their collective risk exposure. For safety of principal, many sold some of their more aggressive positions and moved the cash proceeds into the U.S. bond market -- which includes mortgage bonds.

On Wall Street, this type of trading pattern is called a "flight-to-quality". Because mortgage bonds are backed by U.S. government entities, the debt is considered to be ultra-safe. Last week's extra demand for bonds helped to push prices up and mortgage rates down.

And that was before Friday's weak jobs report. Although the Unemployment Rate fell to 9.7%, the government reported a net loss of 98,000 jobs last month and this, too, helped mortgage rates tick lower.

This week, we'll hope for momentum to continue.

There's very little domestic news to move rates this week so keep an eye on the global market for similar stories like what we saw last week. Or, if you're not sure what to look for, just give me a call or send me an email and I'll be happy to watch the markets and mortgage rates for you.

For more info, check out our NH Mortgage Blog or fill out our NH Mortgage online application and let's work together towards your goals!

NH Mortgage Rates and NH Home Values May move Higher with the Jan 2010 Jobs Report

Merrimack Mortgage Company — Thu, 04 Feb 2010 10:17:53 -0800

On the first Friday of every month, the U.S. government releases its Non-Farm Payrolls data from the month prior. The data is more commonly known as "the jobs report" and it swings a big stick on Wall Street. Especially now -- many analysts believe job growth is tightly linked to the future of the U.S. economy. Therefore, when January's jobs report hits the wires at 8:45 AM ET tomorrow, Manchester home buyers would do well to pay attention. A net job reading that is much higher (or lower) than Wall Street's expectations can make a serious change in home affordability. Wall Street expects that the economy added 13,000 jobs last month. It would mark the second time in 3 months that the jobs report showed a net monthly gain. In November 2008, the economy added 4,000. Jobs matter to the economy for a lot of reasons, but one of the biggest is that when Americans are working, Americans are buying and consumer spending accounts for 70 percent of the economy. Job growth spurs the economy and draws money to the stock market. Unfortunately for rate shoppers, that kind of stock market growth happens at the expense of the bond market which is where mortgage rates are made. Good jobs data usually means higher mortgage rates. Also, job growth can lead to higher home prices. This is because working homeowners are less likely to default on a mortgage versus non-working homeowners. In this way, job growth helps hold foreclosures to a minimum which, in turn, suppresses the housing supply. Less supply means higher prices for home buyers. Mortgage rates are idling this morning in advance of tomorrow's data. If you're shopping for a mortgage rate, the prudent play may be to lock your rate before the jobs data is released. A jobs figure that's higher than the 13,000 expected could cause rate to rise sharply.

For timely information, check out our NH mortgage blog or fill out a NH mortgage application online!

NH Home Buyers and Sellers - Pending Home Sales Predicts A Stronger Spring Market

Merrimack Mortgage Company — Wed, 03 Feb 2010 08:10:21 -0800

The Pending Home Sales Index rose slightly in December, climbing 1 percent from November. A Pending Home Sale is a home that is under contract to sell, but not yet sold. It's a figure compiled by the National Association of Realtors® using sales data from over 100 regional listing services and more than 60 large brokerages around the country. Because each pending sale is a true measure of sales activity, the Pending Home Sales Index is purported to be the most reliable forward-looking indicator for housing. Recent data supports this hypothesis. After Pending Home Sales plunged 16 percent in November, Existing Home Sales fell by 17 percent in December. Based on the most recent Pending Sales Index, therefore, we can expect January's closed sales to be similarly level. For home buyers in Manchester , this is all a bit of good news. Home prices are based on the supply-and-demand balance that exists between buyers and sellers. When buyers outnumber sellers, like they did through most of 2009, home supplies dip and, in fact, the national home inventory nearly halved during the 12 months ending November 2009. With fewer homes for sale, multiple-offer situations were almost commonplace and home values rose as result. Activity has since slowed, however, and fewer buyers are in today's market. The supply-and-demand equation has shifted back some. In December, home supplies rose for the first time in 7 months and January will likely show the same. The net result: Home buyers have more homes from which to choose and that can create negotiation leverage for better prices and better concessions. With mortgage rates still low and a looming deadline on the homebuyer's tax credit, market activity should be strong between now and April. Take your time and bid right. And when you're ready, be ready. The best deals likely won't last.

For more great NH home buying info, check out our NH Mortgage Blog or for fast, peronal service apply now for a NH mortgage loan!

NH Loan Info - What's Ahead This Week

Merrimack Mortgage Company — Mon, 01 Feb 2010 08:04:18 -0800

In a news-heavy week, mortgage markets improved last week, adding to a 3-week rally. But, given last week's data and domestic story lines, it's surprising that rates actually fell.

The Federal Reserve said the economy continues to strengthen
Consumer Confidence pushed to a 2-year high
4th Quarter domestic output exceeded Wall Street's expectations

Usually, events like these draw money away from the bond markets and into the stock markets and Wall Street preps for better corporate earnings. The movement pressures mortgage rates to rise. Last week, however, different stories trumped the headlines including a report from Standard & Poor's that said U.K. banks are no longer counted among the world's most stable. This research, in particular, triggered a flight-to-quality among investors that pumped the U.S. dollar and sparked new demand for mortgage bonds. It's one reason why we ended the week on a rally and it just goes to show how unpredictable mortgage rates can be. This week figures to be a challenge, too. First, we start the week with key inflation data. When inflation runs hot, it's usually bad for mortgage rates. Inflation is expected to be tame, however -- a point the Fed made several times in its press release last week. That said, inflation data is closely watched by markets and can make a big impact on rates. Then, on Wednesday, ADP releases its private sector job report. The ADP data is a precursor to the government's own Non-Farm Payrolls report which is due to hit Friday. ADP is expected to show a net loss of roughly 85,000 jobs. Depending on where the actual numbers comes in, mortgage rates could wiggle a bit. If the ADP report shows much fewer than 85,000 jobs lost, expect mortgage rates to rise. The same is true for Friday's job report. A miss on expectations will cause mortgage to ratchet higher. Since peaking on the last day of December, mortgage rates took a slow, steady descent through January. They've have taken back close to two-thirds of December's overall losses. This week, rates could fall some more, or they could bounce back up. The most prudent time to lock would be prior to Tuesday's closing. After that, the respective jobs reports will take over and rates could go either way with force.

For more great NH mortgage news and info, check out our NH Mortgage Blog!

NH mortgage shoppers: The Fed Announcement's Out!

Merrimack Mortgage Company — Wed, 27 Jan 2010 15:00:01 -0800

The Federal Open Market Committee voted to leave the Fed Funds Rate within its target range of 0.000-0.250 percent.

In its press release, the FOMC noted that the U.S. economy “has continued to strengthen”, that the jobs markets is getting better, and that financial markets are supportive of growth.

There was no mention of the housing market's strength. The last 3 statements from the Fed included that specific verbiage.

It’s the fifth straight statement in which the Fed spoke about the economy with optimism. This should signal to markets that 2008-2009 recession is over and that economic growth is returning to U.S. economy.

The economy isn’t without threats, however, and the Fed identified several in its press release, including:

Credit remains tight for consumers
Businesses are reluctant to hire new workers
Housing wealth is down

The message’s overall tone, however, remained positive and inflation appears is still within tolerance.

Also in its statement, the Fed confirmed its plan to hold the Fed Funds Rate near zero percent “for an extended period” and to wind down its $1.25 trillion commitment to the mortgage market by March 31, 2010. This is noteworthy because Fed insiders estimate that the bond-buying program suppressed mortgage rates by 1 percent through 2009.

Mortgage market reaction to the Fed press release is, in general, negative. Mortgage rates in Bedford are rising this afternoon.

The FOMC’s next scheduled meeting is March 16, 2010.

For more updated info, check out our NH Mortgage Blog!

NH Mortgage Shoppers - Here's Today's Rate Lock Strategy

Merrimack Mortgage Company — Wed, 27 Jan 2010 08:27:59 -0800

The Federal Open Market Committee ends a scheduled, 2-day meeting today in Washington. It's the first of 8 scheduled meetings for the policy-setting group in 2010. The group adjourns at 2:15 PM ET. As is customary, upon adjournment, the Fed will issue a press release to the markets recapping its views of the country's current economic condition, and the outlook for the near-term future. The post-meeting statements from the Fed are brief but comprehensive. And Wall Street eats them up. Every word, sentence and phrase is carefully disected in the hope of gaining an investment edge over other active traders. It's for this reason that mortgage rates tend to be jittery on days the FOMC adjourns. Wall Street is frantically rebalancing its bets. Today should be no different. The FOMC is expected to leave the Fed Funds Rate within its target range of 0.000-0.250 percent — the lowest it's been in history. However, it's what the Fed says Wednesday that will matter more than what it does. After the Fed's last meeting in December, it made several observations:

The jobs market is getting "less worse"
The housing sector is making improvements
Financial markets are stabilizing further

The economy is gradually improving, the Fed told us, but there are still risks to the economy ahead. Furthermore, inflation remains in check. As compared to December's press release, today’s FOMC statement will be closely watched. If the Fed changes its verbiage in any way that alludes to strong growth and/or inflation in 2010, expect mortgage rates in Manchester to rise as Wall Street moves its money from bonds to stocks. Conversely, reference to slower growth in 2010 should lead rates lower. We can't know what the Fed will say so if you’re floating a mortgage rate right now or wondering whether the time is right to lock, the safe approach would be to lock prior to 2:15 PM ET Wednesday. After that, what happens to rates is anyone's guess.

For more timely and accurate NH mortgage info, check out our NH Mortgage Blog!

NH Refinancing in the Age of Bailouts

Merrimack Mortgage Company — Wed, 15 Apr 2009 03:10:38 -0700

NH home owners should take note,

this past week we marked the official start of the Making Home Affordable Refinance Program. We expect that this may help thousands of NH homeowners! The Making Home Affordable program turns a blind eye with respect to falling home values, approving mortgage applications based on borrower payment history and benefit to the NH homeowner. NH mortgage applicants have to meet a few basic qualifications to take advantage of the Making Home Affordable refinance program.

First, your existing NH mortgage must be with either Freddie Mac (Freddie) or Fannie Mae (Fannie). Fortunately, both of these agencies provide a way to check online. It's best to start with Fannie since she's the bigger sister (has more of our NH loans) and because Freddie's online tool requires your ss # (It's okay to enter, I've checked it out and site is secure!).

Next, you must have a perfect mortgage payment history over the last 12 months. Even one payment made 30 days late disqualifies you from participating in the Making Home Affordable program. It is okay, however, if you were 20 days late on your payment and incurred late fees.

And lastly, the balance on your mortgage cannot exceed your home's value by more than 5%. The math formula is (Mortgage Balance) / (Home Value). If the quotient is greater than 1.05 then your loan-to-value exceeds 105% and you are not eligible for Making Home Affordable.

Now, assuming you meet the criteria, there are some noteworthy details of the Making Home Affordable program:

If your current NH mortgage doesn't have mortgage insurance, you won't have to pay it after refinancing -- even if your new loan-to-value is greater than 80%. If you do have mortgage insurance presenlty on your loan, there's a plan for that, too ... we're just not sure yet what that plan is! That part of the plan is still in the works but we expect more details shortly. For the most current info on this program head over to our NH mortgage blog and subscribe to our newsletter!
All NH mortgage refinances under this program (and pretty much every other program available) require income verification -- even if the original mortgage was a stated income loan.
Second mortgages cannot be paid off through this program. They have to be subordinated. That can be some heavy lifting so make sure that, if you've come this far, you're working with someone who knows what they're doing!

Fannie and Freddie each of other guidelines that need to be followed as well. (Links to their sites can be found at www.NHLoanInfo.com)And, of course, their guidelines are different from each other! Like most government programs, their guidleines are created by the pound and all of us are learning as we go.

My recommendation would be to give their guidelines a brief review before talking with a local NH mortgage lender (like me!) so that you have a general understanding. If you have a NH mortgage and you have specific questions about the Making Home Affordable program and your own eligibility, first check to see if Fannie or Freddie is backing your loan. If they are, pick up the phone and call me to plan the next steps. While, the program doesn't end until June 10, 2010 , low NH mortgage rates probably won't last that long.

NH House Ready to Be A First Home

Merrimack Mortgage Company — Mon, 19 Jan 2009 17:06:26 -0800

Found this home and did a bit of calculating on the payment side and, sure enogh, home values are definately in the affordable range again. With "right pricing" of homes, interest rates at historic lows and everybody and their brother Senator lined up to make the housing market right again, I think we may be in for a bit of competition this Spring. Get a jump and take a look at this property, our latest "Featured Home".

If you're a home buyer interested in specific, current and plain English help in reviewing financing options on this or other affordable homes, let me know. I'd love to help.

If you're selling your home or represent a Seller and would like to be a featured home on our sites, please contact Judy@BestNHLoan.com and she'll take it from there!

NH Real Estate Values Discussed

Merrimack Mortgage Company — Wed, 31 Dec 2008 09:49:39 -0800

I have posted a great interview I recorded with Brian Larrabee of Estate of Mind, Inc. We discussed NH home vales and NH mortgage financing but the points raised are applicable in most parts of the country.

To hear the interview head over to our NH real estate and mortgage blog.

If you would like to hear more of our interviews, or would like to be featurd in our 2009 interview series, just drop me a line through our NH mortgage site and Happy New Year to one and all!

NH Home Values: What It Means When More Than Half Of The Delinquent Homeowners Go Delinquent Again

Merrimack Mortgage Company — Tue, 23 Dec 2008 11:01:53 -0800

Earlier this year and under pressure from the government, mortgage lenders made more than 200,000 loan modifications to delinquent homeowners.

The modifications came in one of three forms, or a combination:

Interest rate reduction
Loan term extension
Principal forgiveness

But despite the modifications, as of October 1, more than half of the homeowners that received assistance were already two months behind on their modified monthly payments.

This late-pay statistic was a focal point on Capitol Hill yesterday as the government admitted delinquencies "were larger than [they] thought they'd be". Loan modifications are proving inadequate at slowing foreclosures and yesterday's session opened the door to more effective foreclosure prevention measures.

However, of all of the statistics published, there was one of particular interest.

Based on its loan modifications to-date, the FDIC has found that modified borrowers default far less when new monthly payments are less than 38 percent of monthly household income. This is important because Freddie Mac guidelines for ordinary mortgage applicants currently cap that rate at 45 percent.

If the 38 percent figure holds up long-term, it may lead mortgage lenders to permenantly reduce maximum debt-to-income allowances. Already, mortgage insurers have taken this step so it's not out of the question for lenders. Tighter guidelines mean fewer mortgage approvals.

If you're unsure of whether now is a good time to buy a home, consider that mortgage rates are low, mortgage guidelines are tightening, and foreclosure prevention efforts reduce the supply of available homes.

Prices may not have bottomed, but the market is giving everyone a lot of reasons to consider buying now.

(Image courtesy: The Wall Street Journal)

Visit my site to find out all the current info on NH mortgage rates and programs and for post attributions visit my NH Mortgage Blog.

NH Mortgage Markets In Review : December 22, 2008

Merrimack Mortgage Company — Mon, 22 Dec 2008 11:28:37 -0800

Mortgage markets improved last week for the second week in row. After the Federal Reserve said it would use "all available tools" to stimulate the economy, traders responded by driving mortgage rates to 50-year lows.

It didn't last long, however.

After bottoming out early-Wednesday morning, mortgage rates trended higher all the way into Friday's closing. It was the third time in 2008 that a sharp mortgage rate drop lasted less than one full day of trading.

Many Americans took advantage of the historically-low mortgage rates, locking in new home loans below 5 percent. And, in general, these homeowners shared 4 characteristics:

Credit scores of at least 720
At least 20 percent equity
Relatively low debt versus household income
Ongoing relationship with a loan officer

Now, the first 3 bullet points are easy-to-understand but it's the fourth one that really mattered -- it's the trait that got people "real-time access" to low rates the moment they published.

After all, it wasn't until Thursday morning that the press ran its stories about "4.5 percent mortgage rates" and, by that time, mortgage rates had already retreated -- by as much as a full percentage point in some cases. Thursday morning's news was a half-day too late.

Still, mortgage rates do remain low.

This week is trade-shortened and thick with data. In addition to two pieces of housing news and a consumer sentiment survey, we'll get a look at the Federal Reserve's preferred Cost of Living index. All four data points are expected to validate the recession, so don't expect mortgage rates to move much.

Instead, the biggest threat to mortgage rates this week is momentum. If mortgage rates tick higher Monday and Tuesday, expect that to continue Wednesday into the 2:00 P.M. market close and then to resume again Friday.

Markets are closed Thursday for the federal holiday.

(Image courtesy: The Wall Street Journal Online)

Visit my site to find our more about NH mortgage rates and programs and for post attributions visit my NH mortgage blog!

You'll Get The Best Mortgage Rates If You Watch Certain Patterns

Merrimack Mortgage Company — Thu, 18 Dec 2008 11:33:14 -0800

When it comes to mortgage rates, sometimes it's better to "act now".

On Tuesday, mortgage rates fell to their lowest levels in 4 years. It happened because the Fed said it would "employ all available tools" to resuscitate the economy.

On Wednesday, however, the markets had second thoughts.

After considering the long-term implications of a near-zero percent Fed Funds Rate and the cumulative cost of government intervention to-date, suddenly, traders grew fearful that U.S. government action would devalue the dollar and lead to inflation -- the enemy of low mortgage rates.

As a result, mortgage markets unwound.

At first, the exit was a slow and orderly. Then, without warning, investors began a full-on sprint for the exits. By the end of the day, mortgage rates were higher by as much as a half-percent. Nearly all of Tuesday's big gains were erased.

In hindsight, the reversal Wednesday wasn't all that surprising -- it's the same trading pattern we've seen twice already this year. The first time was after the Fed's "surprise" rate cut in January, and the second time was after the federal takeover of Fannie Mae and Freddie Mac in September.

Sharp rate drops tend to be followed by immediate bounce-backs, it seems.

But, unfortunately, not every would-be refinancing homeowner saw the increase coming. While those that locked at the first opportunity to save money are sitting pretty today, the rest that "waited for rates to go lower" are likely kicking themselves about it.

Going forward, mortgage rates may fall, or they may not. We can't possibly know. But we've now seen the pattern 3 times now -- when mortgage rates plunge like they did Tuesday, they rarely stay that low for long. When you find a rate you like, get in and get locked as soon as possible.

Sleeping on it for even one night may end up costing you dearly.

For more information on this post or mortgage financing in general, check us out at NH Mortgage Experts

(Image courtesy: The New York Times)

Why Home Values May Rise When Home Building Falls To A 17-Year Low

Merrimack Mortgage Company — Wed, 18 Jun 2008 12:55:56 -0700

A "Housing Start" is a new home on which construction has commenced and in May, Housing Starts fell to a 17-year low nationally.

At first glance, this may seem like a negative for the already-battered U.S. housing market.

It's not.

Falling Housing Starts reflects the broader real estate market and shows us that builders are working hard to get their already-built homes "off the books".

It would be foolish for them to build new homes now -- each new unit makes selling the existing ones tougher.

So, when we look at the figure objectively, we can see that Housing Starts reaching a 17-year low is actually good news -- real estate prices are based on Supply and Demand, after all.

With Housing Starts touching new lows, we can infer that there will be fewer new homes coming on the market in the coming months and that should help support higher home values nationwide for everyone.

(Image courtesy: The Wall Street Journal Online)

To read more of my blog entries and find out more about the financial world around us, visit our NH Mortgage Blog!

Looking Back And Looking Ahead : June 9, 2008

Merrimack Mortgage Company — Mon, 09 Jun 2008 11:29:54 -0700

There was no rest for the mortgage-rate weary last week.

As mortgage bonds sold off early in the week, sharp rate hikes followed. A steady stream of better-than-expected economic reports had re-ignited inflation fears, drawing money from the bond market.

On Friday, however, the money flow reversed on a triple threat to the U.S. economy:

The Unemployment Rate took its biggest one-month jump in 22 years
Oil made its biggest one-day gain
The U.S. dollar lost a lot of value

By themselves, each of these events normally would be bad for mortgage rates but the Friday combination of all three led to a huge stock sell-off and renewed demand for bonds -- including the mortgage-backed kind.

Despite Friday's reversal, mortgage rates were higher on the week, overall.

This week, there won't be much economic data this week but there will be six Federal Reserve members making speeches to the public.

The most anticipated of the set is Fed Chairman Ben Bernanke's address Monday evening on the topic of "inflation". Markets will be closed when Bernanke speaks so expect a delayed market reaction Tuesday morning.

Throughout the week, markets should continue their long-standing battle between the fears of inflation and the fear of recession. It's the same back-and-forth that we've seen since late-2007.

It's also the primary reason why mortgage rates rarely stay still anymore.

(Image courtesy: The Wall Street Journal Online)

To read more of my blog entries and find out more about the financial world around us, visit our NH Mortgage Blog!

What Happens When Bernanke Says "Inflation" 55 Times In 5 Pages Of Text

Merrimack Mortgage Company — Thu, 05 Jun 2008 09:52:16 -0700

Mortgage rates are a big deal when you're buying a home.

With even the slighest uptick in rates, 30 years of mortgage payments can get substantially more expensive and one of the most substantial threats to mortgage rates is an economic event called inflation.

Inflation's influence on mortgage rates is so large that markets can get jarred on just the mention of it and that's exactly what happened Wednesday when Fed Chairman Ben Bernanke uttered "inflation" 55 times in a 5-page speech at Harvard.

The speech started at 2:45 P.M. ET and by 2:53 P.M., the damage was done.

Market players interpreted Bernanke's remarks to mean that inflation may be worse that previously expected and mortgage rates moved up by 0.125 percent, or $8 per $100,000 borrowed.

This equates to $2,880 in extra payments over 30 years.

If you're actively shopping for a home loan and rapid rate movements make you nervous, consider locking in your mortgage rate today; rates have been especially jumpy all year and don't look to smooth out anytime soon.

(Image courtesy: ABC News)

To read more of my blog entries and find out more about the financial world around us, visit our NH Mortgage Blog!

Agents Share with Your Buying Clients: Why It Will Be Easier To Get A Mortgage Approval Today Than Monday

Merrimack Mortgage Company — Thu, 29 May 2008 12:10:43 -0700

If you are a potential home buyer or an agent working with buyers, please take note:

Mortgage financier Fannie Mae is toughening its mortgage application decision-making process effective Monday, June 2, 2008.

The new guidelines will force many Americans to face higher mortgage rates, higher loan fees, or to be shut out from "prime" mortgage rates altogether.

The new "mortgage rules" include the following changes:

Higher income levels required for basic approvals
Interest only loans are now considered high-risk
Condos are now considered high-risk
60-day mortgage lates within 6 months are a major red flag

Not all of the changes are for the worse, though.

In the new guidelines, self-employed borrowers will no longer be viewed as more risky than a W-2 employee. This will help small business owners and commission salespeople get more mortgage approvals than in the past.

Fannie Mae agreed to honor all mortgage approvals granted prior to its changes, so if you've been putting off that pre-approval, consider talking to your loan officer before the weekend starts.

Your mortgage approval will be much more lenient today than if you wait until Monday.

To read more of my blog entries and find out more about the financial world around us, visit my NH Mortgage Blog!

18 of 20 Real Estate Markets Show Signs Of Improvement

Merrimack Mortgage Company — Wed, 28 May 2008 09:31:11 -0700

The monthly S&P/Case-Shiller Housing Price Index is a popular and often-quoted measurement of the housing market's health. The chart above is sourced from its report published yesterday.

In 18 of the 20 largest metropolitan areas, home values declined at a slower pace than in the previously measured month. The report also showed that national home prices are down 14.4 percent from March 2007.

Unfortunately, it's the more sensation "14.4" figure that newspapers chose to report this morning. If you never went further than the headline, you'd miss a key piece of analysis.

Comparing today's market to last year's market is a lot less valuable than comparing it to last month's market. That's a better way to analyze the market's health.

If we look beyond the headline and examine the data behind it, we see that housing may still be sagging in some areas, but it's not sagging nearly as much as it used to. And, of course, next month could reverse this. The bottom line is that if you're considering a home purchase you need to ask yourself "How long will I be living here?" before you make the move.

(Image courtesy: Standard & Poor's)

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Looking Back And Looking Ahead : May 27, 2008

Merrimack Mortgage Company — Tue, 27 May 2008 14:25:08 -0700

The market optimism that had pushed mortgage rates lower since late-March reversed last week on ever-rising oil prices and a bleak outlook from the Federal Reserve.

When gas prices reached $3.93 Friday, it re-ignited inflation concerns and inflation, you'll remember, is the enemy of mortgage rates.

As expected, mortgage rates spiked into Friday's market close.

Markets were closed for Memorial Day but re-open this morning with traders feeling apprehensive about mortgage market investments. There are many reasons to park money elsewhere, after all.

The U.S. dollar is trolling near all-time lows against the Euro
Oil markets are returning incredibly high rates of return
Big banks are still writing off large mortgage losses

All three of these reasons reduce demand for mortgage bonds and -- because mortgage rates move in the opposite direction of mortgage bond prices -- mortgage rates rise.

This week, a few inflation-related data points will cross the wires including the Fed's preferred inflation gauge -- PCE.

PCE stands for Personal Consumption Expenditures and it measures the cost of living for ordinary people. It's the Fed's preferred measurement because PCE accounts for Americans buying more chicken when meat gets expensive, or buying more fruits when vegetables get expensive, et cetera.

PCE is different from the Consumer Price Index because CPI is a "fixed" basket of products.

If PCE is running high, expect the exodus from mortgage bonds to continue and rates to run higher. If PCE is flat or lower, mortgage rates should fall.

(Image courtesy: Gasbuddy.com)

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How Spiking Oil Prices Have Mortgage Rates In Tow

Merrimack Mortgage Company — Fri, 23 May 2008 12:15:58 -0700

High oil prices are derailing the mortgage market this week, taking an almost-vertical path higher.

Since mid-February, prices are up by 50 percent.

Rising oil prices can be a threat the U.S. economy because with every extra dollar that Americans pay to energy companies, there is less money available for every other company that makes up our national economy.

Strangely, it comes at a time when the "other" companies need it the most -- their costs of operating are rising, too.

So, businesses are faced with a tough choice and both option prove poor for mortgage rates.

Keep prices level and suffer smaller margins (and profits)
Pass higher costs onto consumers in the form of higher prices

If profits suffer, job cuts and a weak corporate spending can undermine an economic recovery. If higher costs are passed on, it leads to inflation and that devalues the U.S. dollar and mortgage bonds.

This is why mortgage rates have spiked along with oil prices this week. And, when oil prices level off a bit, we can expect that mortgage rates will, too.

Crude oil is up 1.8 percent this morning.

(Image courtesy: Wall Street Journal Online)

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You're Not Immune -- No Matter What Your Credit Profile Looks Like

Merrimack Mortgage Company — Wed, 21 May 2008 15:47:46 -0700

Four times annually, the Federal Reserve surveys 84 different banks about general banking conditions.

One of the survey questions asks about current mortgage lending standards and whether they are loosening or tightening.

The chart at right is from the April 2008 survey and it illustrates what we already know: It's getting tougher and tougher to get approved for a home loan.

Some of the areas in which mortgage guidelines are tightening are well-known:

More thorough income documentation
Higher credit score requirements
More "money in the bank" post-closing

Some areas are less well-known:

More scrutiny of prior delinquencies
Strict review of appraised values

Overall, getting a mortgage approval from a bank is more difficult than in months past and the tightening trend is expected to continue throughout the rest of the credit cycle.

No "class" of buyers is immune, either -- not even the "prime" ones.

Home prices may fall going forward but stricter mortgage guidelines means that fewer home buyers will be able to take advantage. If you're unsure about your credit profile, check with your loan officer to see how additional restrictions could impact your ability to purchase (and finance!) a home.

(Image courtesy: Federal Reserve)

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Did You Ask: "Has There Been A Mortgage Rate Reprice In The Last Hour?"

Merrimack Mortgage Company — Tue, 20 May 2008 11:30:32 -0700

Yesterday, several mortgage lenders issued three separate "rate sheets" in response to the changing mortgage market.

It was the fourth time in the last 6 trading days that mortgage lenders issued multiple rate sheets in a day, and continued the trend that started in mid-January.

The yo-yo nature of mortgage rates underscores the importance of making mortgage rate comparisons within a limited time frame.

Multiple quotes should be gathered with an hour of each other and, even then, it's prudent to ask your lender: "Has there been a mortgage rate reprice in the last hour?"

The current market volatility is in contrast to the "normal" environment of one-rate-sheet-per-day to which mortgage rate shoppers have been accustomed. But with the changing economy, we all have to adapt.

Mortgage rate quotes from this morning won't necessarily be valid this afternoon so if you're in the market for a home loan, be sure to do your shopping in a limited timeframe and don't forget to ask about the reprice.

(Image courtesy: City of Peterborough)

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Looking Back And Looking Ahead : May 19, 2008

Merrimack Mortgage Company — Mon, 19 May 2008 11:44:16 -0700

Optimism ruled the markets last week -- optimism about employment, optimism about housing, and optimism about inflation.

Mortgage rates edged lower overall.

Despite the positive sentiment from Wall Street, consumer confidence in the economy reached a 28-year low.

This is a normal divergence because investors live in the "future" of markets while Americans live in the "right now" of life where food prices are high, gas prices are still rising, and job prospects are somewhat weak.

Consumer confidence surveys have to be taken at face value, though. Yes, Americans are nervous about the economy and their household budgets, but that rarely deters them from spending.

In April, for example, Retail Sales (excluded autos) were up 0.5 percent -- more than double analyst expectations. And this was before economic stimulus checks showed up in tax-filers' mailboxes.

Perhaps this is one more reason why markets were so pleased last week.

This week, there isn't much economic information to sway markets. On Tuesday, we'll see the Producer Price Index which is like a Cost of Living for Business measurement and on Friday we'll see the Existing Home Sales report.

Strength in either will be good for economy and should benefit both stocks and bonds, and should lower mortgage rates. Weakness will have the opposite impact.

(Image courtesy: The Wall Street Journal Online)

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