Aug 19, 2011 | Buying Real Estate, Mortgage Lenders, Mortgage Rates, News
Last week, at its 5th scheduled meeting of the year, the Federal Open Market Committee voted to leave the Fed Funds Rate in its target range near zero percent.
The Fed Funds Rate has been near zero percent since December 2008 and, in its official statement, the FOMC pledged to leave the Fed Funds Rate untouched for at least another 2 years.
This doesn’t mean mortgage rates will be untouched for 2 years, though.
Mortgage rates and the Fed Funds Rate are two different interest rates; completely disconnected. If mortgage rates and the Fed Funds Rate moved in tandem, the chart at right would be a straight line.
Instead, it’s jagged.
To make the point more strongly, let’s use real-life examples from the past decade.
- June 2004, 529 basis points separated the Fed Funds Rate and the 30-year fixed mortgage rate
- June 2006, 168 basis points separated the Fed Funds Rate and the 30-year fixed mortgage rate
Today, the separation between the two benchmark rates is 407 basis points.
1 basis point is equal to 0.01%. (more…)
Aug 16, 2011 | Buying Real Estate, Mortgage Rates
In the second quarter of 2011, fixed-rate loans accounted for about 95 percent of refinance loans, based on the Freddie Mac Quarterly Product Transition Report. Refinancing borrowers preferred fixed-rate loans, regardless of whether their original loan was an adjustable-rate mortgage (ARM) or a fixed-rate, the report concluded.
An increasing share of refinancing borrowers chose to shorten their loan terms during the second quarter, according to Freddie Mac. Of borrowers who paid off a 30-year fixed-rate loan, 37 percent chose a 15- or 20-year loan, the highest such share since the third quarter of 2003. (more…)
Jul 28, 2011 | Buying Real Estate, Housing Analysis, Interesting Stuff, Selling Real Estate
Standard & Poors released its May 2011 Case-Shiller Index this week. The index measures change in home prices from month-to-month, and year-to-year, in select U.S. cities.
May’s Case-Shiller Index showed a 1 percent increase from April 2011. Home values rose in 16 of the Case-Shiller Index’s 20 tracked markets. Only Detroit, Las Vegas and Tampa fell. Phoenix was flat.
Don’t look too far into the findings, though. Like the FHFA’s Home Price Index, the Case-Shiller Index is rife with flaws.
The first flaw of the Case-Shiller Index is its limited geography. Despite being positioned as a national housing index, Case-Schiller Index is sourced from just 20 cities nationwide. There are more than 3,100 municipalities nationwide.
The Case Shiller Index’s second flaw is that it ignores all home types excepts for single-family, detached homes in its findings. Condominiums, multi-family homes, and new construction are not included in the Case-Shiller Index.
In some markets, these excluded home types outnumber the included ones. (more…)
Jul 27, 2011 | Buying Real Estate, Housing Analysis, News
Home builders are slowly reducing inventory.
According to Census Bureau data, the number of new homes slid 1 percent from May. On a seasonally-adjusted, annualized basis, home buyers bought 312,000 newly-built homes last month.
It’s the third straight month of falling sales and the headline data casts the Fitchburg housing market in a negative light.
Upon closer inspection, however, the numbers appear quite strong.
First, sales are down marginally. Total units sold have dropped just 2 percent from the highs of the year. And, second, the number of newly-built homes for sale is down markedly from last year
There are 22% fewer new homes for sale today as compared to June 2010
At today’s sales pace, the complete new home inventory would be sold in 6.3 months — the quickest sell-out window since the expiration of the 2010 federal home buyer tax credit.
Builders are feeling better about their business, too. (more…)
Jul 26, 2011 | Buying Real Estate, Mortgage Guidelines, Mortgage Lenders
The FHA is insuring a greater percentage of loans than during any time in recent history. In 2006, it insured roughly 5 percent of the purchase mortgage market. Today, it insures one-quarter. “Going FHA” is more common than ever before — but is it better?
The answer — like most things in mortgage — depends on your circumstance.
Like its conforming counterpart, an FHA-insured mortgage is available as a fixed-rate loan and as an adjustable-rate one. Payments are made monthly and come without prepayment penalties.
That’s where the similarities end, however, and decision-making begins. For homeowners and buyers across Worcester , FHA mortgages carry a different set rules as compared to conforming loans through Fannie Mae or Freddie Mac that can render them more — or less — attractive for financing. (more…)
Jul 17, 2011 | Buying Real Estate, News, Selling Real Estate, Short Sales
Remember a short sale is a desperate measure in desperate times. Desperate people do desperate things. If you are involved in a short sale transaction in ANY capacity cross your t’s and dot your i’s. If the terms sound remotely shady to you, it probably is and the repercussions can be terrible. Make certain that you have good counsel.
http://money.cnn.com/2011/06/28/real_estate/short_sale_fraud_rising/
