Archives for 2016

Mortgage Interest Rate News 06-07-2016

Mortgage interest rates remain low post May jobs report as the market was not expecting such a weak report.  30 year fixed rates were in the mid 3% range and 15 year fixed were below 3.00% on your best case scenario loans with zero points.  California refinance volume is moderate as lenders are a bit surprised the volume is not up considering how aggressive mortgage rates are right now.  What is the Fed going to do now that the May jobs report was such a bust?  No one really knows and there are valid arguments for raising and not raising.  Mortgage rates will continue to remain low provided there is liquidity in the market in which bonds are rallying despite a possible rate hike.  Other factors such as oil, the dollar and European bonds all play a factor in the Mortgage Backed Securities (MBS) market.

Home Price Gains Over 6% Year-Over-Year

With generally low mortgage rates and 30 day underwriting times home sales have been strong; especially in the first quarter of 2016.  In some markets you are seeing far greater demand than current supply and lenders have been eager to build a robust new purchase loan portfolio.  In the first quarter of 2016 home prices jumped by 1.3 percent compared to the fourth quarter of 2015. The Federal Housing Finance Agency said this was the 19th straight quarter its Housing Price Index had posted a gain. The index was almost 6% higher than the first quarter of 2015.

The month over month change in the HPI was 0.7% (February to March), 0.2% points higher than the consensus estimate.  On an annual basis prices were up 6.1% over the most recent 12-month period.  Home price estimates are calculated using sales information from purchase only mortgages sold to or guaranteed by Fannie Mae and Freddie Mac.   Wells Fargo and Fannie Mae have received some criticism lately a new product called “YourFirst Mortgage”.  The problem; with a 620 credit score you can by home with only a 3% down payment AND that down payment can be a gift from someone.  So if your parents have money you too can by home with no money down…..just like 2006.  Wells Fargo is defending the new mortgage program saying only people that manage debt responsibly will qualify.  But if you have a 620 or 680 credit score….how is that managing debt responsibly?

FHA Mortgage Insurance versus Private Mortgage Insurance

Which is better; FHA mortgage insurance (MI) or private mortgage insurance (PMI)?  A lot depends on the borrower but generally speaking MI is more expensive than PMI and the only way to get rid of MI is to refinance or sell the home.  However not everyone qualifies for the best terms with MI so in those cases PMI is clearly a better choice.  Like mortgage rates, private mortgage insurance (PMI) is higher with lower credit scores.  However FHA mortgage insurance (MI) is the same for low or high credit scores.

For more information here is an article from Brian O’Connell from TheStreet:

Money matters when deciding between a U.S. Federal Housing Administration (FHA) mortgage loan and a conventional loan with private mortgage insurance.

Job one for mortgage buyers is to understand the differences between the two options. Here’s how one industry expert breaks it down.

“FHA requires upfront mortgage insurance and monthly mortgage insurance for the life of the loan,” explained Mark Ferguson, a realtor, real estate investor, author and the creator of Investfourmore.com. “That means you will have to pay the insurance when you buy the home — it can be financed into the loan — and every month as long as you have that mortgage.”

Yet conventional loans with less than 20% down require private mortgage insurance (PMI), Ferguson added. “Different loans have different programs, but usually the cost is from 0.5% to 1% of the loan amount per year With some conventional loans the PMI can be removed after two or three years,” he said. “For that to happen, the home’s value must have increased or the loan paid off enough, for the loan to value ration to be 80% or lower. That means the loan amount needs to be 80% of the value of the home.”

According to WalletHub in its 2016 Mortgage Insurance Report, consumers can save thousands on their decision between an FHA loan and a conventional loan with private mortgage insurance.

Brian O’Connell TheStreet – continue reading

March 2016 Foreclosures

Per Jann Swanson at Mortgage News Daily:

Completed foreclosures were up in March, with a substantial increase compared to February, but continued to fall on an annual basis. CoreLogic said that there were 36,000 foreclosures during the month, an increase of 9.3 percent from the 33,000 recorded during the previous month. However, foreclosures were down by 14.9 percent compared with March 2015 when there were 42,000. Despite the March bounce the 36,000 total is nearly a 70 percent decrease from the peak of the housing crisis (September 2010) when there were 117,782 homes lost, however the total remains significantly higher than the average of 21,000 foreclosures per month between 2000 and 2006.

The foreclosure inventory, homes officially in the process of foreclosure, was at its lowest level since October 2007. The inventory included approximately 427,000 homes or 1.1 percent of all homes with a mortgage. This was a decline of 23.2 percent from March 2015 when there were 556,000 homes in active foreclosure, a 1.4 percent rate. The inventory also declined by 2.2 percent from on a month-over-month basis from February.

Since the financial crisis began in September 2008, there have been approximately 6.2 million completed foreclosures nationally, and since homeownership rates peaked in the second quarter of 2004, there have been approximately 8.2 million homes lost to foreclosure.

CoreLogic’s March 2016 National Foreclosure Report said that the number of mortgages in serious delinquency (defined as 90 days or more past due including loans in foreclosure or REO) declined by 19.1 percent from March 2015 to March 2016, with 1.2 million mortgages, or 3.1 percent, in this category. The March 2016 serious delinquency rate is the lowest since November 2007.

Mortgage News Daily

Mortgage Interest Rate News 05-10-2016

The month of May has been good for mortgage rates as bond yields have declined the first week of May.  Mortgage rates have followed and some lenders are offering rates below 2015 levels and a few are offering rates we’ve not seen in 3 years.  Why?  After a move up in mortgage rates during the month of April; the bond market has reversed course.  The 10 year yield topped 1.90% and since then has fallen back near the 1.75% level.  Also mortgage volume has only been average or a tad bit above average for most lenders and because of this lenders are being more aggressive with their rates to try and increase volume.

Mortgage rates should continue to be aggressive through out May provided that bond yields stay within their recent range.  15 year fixed rates are are below 3.00% and 30 year fixed rates are below 3.625%.  Mortgage rates will play an important part during the summer buying season as homeowners can typically afford a higher price tag with low rates.