Jul 13, 2012 | The Economy
When the calendar flips to a new year, analysts and economists like to make predictions for the year ahead.
So, today, with the year half-complete, it’s an opportune time to check back to see how the experts’ predictions are faring (so far).
If you’ll remember, when 2011 closed, the housing market was showing its first signs of a reboot. Home sales were strong, home supplies were nearing bull market levels, and buyer activity was strong.
Homebuilder confidence was at its highest point in 2 years and single-family housing starts had made its biggest one-month gain since 2009.
In addition, 30-year fixed rate mortgage rates had just broke below the 4 percent barrier and looked poised to stay there. (more…)
Jul 12, 2012 | Federal Reserve
The Federal Reserve released the minutes from its June Federal Open Market Committee meeting, revealing a Fed divided on the future of the U.S. economy. Mortgage rates are higher after the release of the minutes.
The Fed Minutes is the detailed recap of an FOMC meeting. It is the companion piece to the more brief, more well-known post-meeting FOMC press release.
For a comparison, whereas the Fed’s June 20, 2012 press release contained 5 paragraphs and 490 words, the same meeting’s minutes contain 62 paragraphs and 7,508 words. The extra detail afforded by the extra words Wall Street gives insight into the nation’s central banker.
The June Fed Minutes, for example, suggest that the Fed may soon add new economic stimulus.
Recent data suggests that the U.S. economy is expanding, but more slowly that it was at the start of the year. The Fed acknowledged that this, in part, is the result of “below-trend” growth in Euro-area economies, (more…)
Jul 11, 2012 | Housing Analysis
Where economic growth goes, housing growth often follows.
That’s why it’s good news for homeowners that 84 U.S. metropolitan areas are showing “measurable and sustained growth” this month, according to the National Association of Homebuilders’ Improving Market Index.
The Improving Market Index is a derivative report, based on the results of three separate data series which examine a city’s local economy.
The data series used in the IMI are :
- Employment data from the Bureau of Labor Statistics
- Home price data from Freddie Mac
- One-unit building permits from the Census Bureau
The NAHB compiles this data monthly, assigning a given metropolitan area the label “improving” if the following two conditions are met. First, all three data series above must show growth (more…)
Jul 10, 2012 | Personal Finance
With mortgage rates down to all-time lows, you can buy a lot more home for your money. Home affordability is at an all-time high.
According to last week’s Freddie Mac mortgage rate survey, the average 30-year fixed rate mortgage has dropped to 3.62% nationwide. This is down from 4.08% in March, and down from 4.60% from one year ago.
Mortgage rates are “on sale”.
Falling mortgage rates can make one of two changes to the way a Worcester County area home buyer looks at properties. They can either make a given home’s monthly housing payment that much more affordable to a buyer, or they can expand that buyer’s home purchasing power to a higher, maximum price point.
Since July 2011, that maximum price point increase has been significant. (more…)
Jul 6, 2012 | Mortgage Rates
30-year fixed rate mortgage rates made new, all-time lows once again this week.
According to Freddie Mac’s weekly mortgage rate survey of more than 125 banks nationwide, the average 30-year fixed rate mortgage rate fell 4 basis point to 3.62% nationwide.
The rate is available to conforming, prime borrowers willing to pay an accompanying 0.8 discount points plus a full set of closing costs. A “prime” mortgage applicant typically has excellent credit, verifiable income, and at least 25% equity in their home.
And, it’s not just the 30-year fixed rate mortgage that made new lows in this holiday-shortened week, either. The 15-year fixed rate mortgage did, too, falling 5 basis points to 2.89%, on average.
The 15-year fixed rate mortgage requires 0.7 discount points plus closing costs.
Discount points are a one-time, up-front closing cost, based on loan size. If your loan requires 1 discount point, that means that your loan has a closing cost equal to 1 percent of your loan size. If your loan requires two discount points, the fee would be equal to two percent of your loan size; and so on.
So, based on this week’s Freddie Mac survey, a home buyer in Worcester County area opening a $200,000 mortgage and paying 0.8 discount points would face to a one-time $1,600 fee to be paid at closing.
The good news is that discount points are optional.
To avoid paying discount points, simply ask your lender for a “zero points” loan. You’ll get a higher mortgage rate than what Freddie Mac shows in its survey, but you’ll pay fewer closing costs.
Today’s low rates are terrific for both home buyers throughout Worcester County area and existing homeowners looking to make a refinance. As compared last year at this time, mortgage rates are down by 98 basis points — nearly one full percentage point.
Mortgage payments are much lower today as compared to July 2011 :
- July 2011 : $512.64 principal + interest per $100,000 borrowed
- July 2012 : $455.77 principal + interest per $100,000 borrowed
Today’s rates yield an 11 percent payment discount as compared to last year.
Mortgage rates are unpredictable so there’s no guarantee that low rates will last forever, much less through the summer. If today’s rates meet your household budget, consider locking something in.
