Oct 11, 2012 | Personal Finance
With mortgage rates at all-time lows, purchase and refinance activity is climbing.
Home sales are at their highest levels since May 2010 as home buyers take advantage of favorable economic conditions. Home prices are low, household income is rising, and rents are up in many U.S. cities.
Low rates have stoked mortgage refinance applications throughout Worcester County area , too.
Last week, with 30-year fixed rate mortgage rates slipping to 3.36% nationwide, on average, more U.S. homeowners were in search of a refinance than during any one-week period since April 2009.
With loan volume high, banks are nearing their respective capacities for underwriting and approving home loans. As a mortgage applicant, therefore, you’ll want to make sure that you’re taking whatever steps necessary to ensure that your home loan closes on-time, and without hassle.
You most important responsibility? Be responsive to your lender.
When asked for paperwork and/or supporting documentation, providing a 24-hour turnaround can keep your loan “top of mind” with your underwriter. This is important because underwriters are people and, sometimes, people “forget”. The fewer times that an underwriter has to “relearn” your file and its nuances, the better your chances for a speedy approval.
A secondary benefit to being responsive to your lender is that you’ll be less likely to miss your rate lock deadline which, too often, is a costly proposition for a borrower. Even if the mortgage market has improved since your original lock date, your lender may assess rate-lock extension fees equal to up to one-half percent of your loan size.
Other tips to ensure an on-time closing include :
- Disclose everything upfront. Your lender will find out anyway, so don’t under-disclose important facts.
- Be accessible. Your lender will often want to contact you by phone or email. Don’t lose days playing “phone tag”.
- When required, schedule your appraisal for as soon as possible. It’s easy to lose days to this part of the process.
And, lastly, don’t challenge an underwriter’s request for “more paperwork”. Lenders want to see as little paper as possible. They don’t ask for information that’s not required to approve your loan.
Mortgage volume is expected to remain high through the end of 2012 and into 2013. Follow these steps to help close your loan on time, and with few headaches.
Oct 10, 2012 | Housing Analysis
It’s not just the housing market that’s improving nationwide — it’s the economy overall.
The number of U.S. metropolitan areas showing “measurable and sustained growth” climbed to 103 this month. The data is measured by the Improving Markets Index, a monthly metric from the National Association of Homebuilders.
The Improving Market Index is meant to identify which U.S. markets are experiencing broad economic growth — not just growth in terms of housing.
The index’s conclusions are based on three data series — each collected separately; each from a different division of the U.S. government; and, each tied to specific local economic conditions.
Those three data series are :
- Employment Statistics (from the Bureau of Labor Statistics)
- Home Price Growth (from Freddie Mac)
- Single-Family Housing Growth (from the Census Bureau)
After collating the data, the National Association of Homebuilders evaluates the reports as a group for each specific major metropolitan area.
A metropolitan area can be cited as “improving” only if the following two conditions are met. One, all three data series show expansion and/or growth as compared to 30 days prior; and, two, none of the data series have “bottomed” within the last six months.
As a result of its methodology, the Improving Market Index specifically passes over short-term growth bursts in a market, isolating for areas with long-term, sustainable growth instead.
Furthermore, “improving” cities may be more apt to outperform other U.S. cities in the months and years ahead, rendering them ideal for relocating buyers from Massachusetts in search of long-term employment and income opportunities, as well as real estate investors in want of healthy, stable markets.
33 states are represented in the October Improving Market Index, plus the District of Columbia. 11 new areas were added to the list as compared to September and just 7 dropped off.
The newly-added areas include State College, Pennsylvania and Raleigh, North Carolina. Cities falling off the list for October include Lakeland, Florida.
The complete Improving Markets Index is available for download at the NAHB website.
Oct 9, 2012 | Mortgage Rates
Mortgage markets worsened last week for the first time in a month as the U.S. economy showed signs of improvement, and the Eurozone stepped closer to launching its $500 billion euro rescue fund.
Conforming mortgage rates in Massachusetts rose last week on the whole — even though Freddie Mac’s Primary Mortgage Market Survey proclaimed that they fell.
This occurred because Freddie Mac’s weekly mortgage rate survey is conducted between Monday and Tuesday each week and, last week, mortgage rates were lower when the week began. Through Wednesday, Thursday and Friday, however, they rose.
According to the Freddie Mac survey, the average 30-year fixed rate mortgage slipped to 3.36 percent nationwide last week, while the 15-year fixed rate mortgage fell to 2.69 percent. Both rates required 0.6 discount points and both marked all-time lows.
As this week begins, to gain access to the same 3.36% and 2.69% mortgage rates from last week, Massachusetts mortgage applicants should expect to pay more closing costs and/or higher discount points.
Improving U.S. employment data is partially to blame.
Friday morning, the Bureau of Labor Statistics released its September Non-Farm Payrolls report. More commonly called “the jobs report”, the monthly issuance details changes in U.S. employment by sector and reports on the national Unemployment Rate.
In September, accounting for upward revisions to data from July and August, 200,000 net new jobs were created — far exceeding Wall Street’s estimates for 120,000 net new jobs created. Furthermore, the Unemployment Rate unexpectedly dropped to 7.8%.
Jobs are considered a keystone in the U.S. economic recovery. As a result, when the jobs numbers hit Friday, mortgage rates worsened, building on momentum built earlier in the week as Greece moved steps closer to accepting aid from the Eurozone.
In general, since 2010, weakness in the Eurozone has helped push U.S. mortgage rates lower. As Europe regains its footing, therefore, domestic mortgage rates are expected to rise.
This week, in a holiday-shortened week, there will be little new data to move mortgage rates. The Federal Reserve’s Beige Book is released Wednesday and some key inflation data is due for Friday release. Beyond that, mortgage rates will continue to take cues from the Eurozone.
Mortgage rates remain near all-time lows.
Oct 5, 2012 | Federal Reserve
The minutes from the Federal Reserve’s September Federal Open Market Committee meeting were released Thursday.
The Fed Minutes detail the discussions and debates which shaped the central banker’s launch of its third round of qualitative easing since 2008. The minutes also give Wall Street insight into future monetary policy.
At 6,987 words, the Fed Minutes provides a level of detail that was unavailable via the FOMC’s post-meeting press release, a documen that, by contrast, ran 562 words.
Despite its large word count, there was very little that was new or surprising in the Fed Minutes, though. This is because, since the Fed’s last meeting, Federal Reserve Chairman Ben Bernanke has publicly clarified and re-iterated the Fed’s positions on employment, housing and inflation.
The minutes provide a strong backdrop to his comments, however.
For example, with respect to the jobs market, Fed members deemed employment “disappointing”, noting that growth in payrolls has been slower in 2012 as compared to 2011, and that the expansion rate of today’s job market is too slow to make significant progress against the national unemployment rate.
The Fed Minutes also included the following notes :
- On housing : Further improvement is occurring, albeit from a “depressed level”
- On inflation : Risks appear “tilted to the downside”, but energy costs pose risks
- On Europe : A “slight improvement”, but still a risk to global economic activity
Of greatest interest to home buyers in Massachusetts and rate-shopping refinancers, though, was the Fed’s discussion of its QE3 program. The program was introduced to help suppress mortgage rates nationwide which, the Fed believes, will make “broader financial conditions” more accommodative.
The Fed plans to purchase $40 billion in mortgage-backed bonds monthly for a “considerable” period of time after the U.S. economy has already shown signs of full recovery and, since the launch of QE3, 30-year fixed rate mortgage rates are down 19 basis points to 3.36% nationwide, on average.
The next Federal Open Market Committee meeting is scheduled for October 23-24, 2012.
Oct 4, 2012 | The Economy
It’s a dangerous time for home buyers in Worcester County area to be without a locked mortgage rate.
Friday morning, at 8:30 AM ET, the government releases its Non-Farm Payrolls report for September. More well-known as “the jobs report”, Non-Farm Payrolls data has the power to move mortgage rates up or down.
Unfortunately, ahead of the release, we can’t know which.
Last year, job growth more than doubled between August and September. If this year shows that same growth, Worcester County area mortgage rates are expected to rocket higher.
The connection between rising jobs and rising rates is a chain reaction-type link, and is often quite tight.
Jobs are a growth engine for the U.S. economy and mortgage rates are “made” based on future expectations for the U.S. economy. In general, when the economy is improving, it draws Wall Street into “risky” investments and away from “safe” ones.
Meanwhile, mortgage-backed bonds — especially those from Fannie Mae and Freddie Mac — are considered to be among the safest investment assets available. Therefore, as the size of the U.S. workforce swells, and economic projections increase, Wall Street tends to divest itself of its mortgage bond holdings which, in turn, increases the supply of mortgage-backed bonds for sale.
With more supply, all things equal, mortgage bond prices fall and this causes mortgage rates to rise.
This is why the September jobs report is important to today’s home buyers and mortgage rate shoppers. A better-than-expected tally will result in higher mortgage rates.
In August 2012, the government reported 96,000 net new jobs created — a sharp decrease from the month prior and a figure just shy of the metric’s six-month moving average. The Unemployment Rate fell one-tenth of one percent in August to 8.1%.
For September, economists expect to see 120,000 net new jobs created, and no change in the national Unemployment Rate.
