Mortgage rates moved higher today, bringing them to their worst levels since the morning of September 18th.  The average 30yr fixed rate for the most ideally qualified borrowers was already on the move up at the end of last week, but today's weakness solidifies the move up from 4.375 to 4.5% (best-execution).

Before September 18th, rates were higher still, in anticipation of the FOMC (the "Fed") policy announcement that afternoon.  A clear majority of market participants expected the Fed to announce a reduction in asset purchases (QE).  When that didn't happen, rates moved swiftly lower and have held in that range ever since. 

Even with today's losses, we're still not back up to the pre-September FOMC levels (though we're getting closer).  It's an important consideration at the moment given that this week ends with the Employment Situation Report.  If any one report could be a lynchpin for Fed policy, this would be it, and the next FOMC Announcement is coming up just a week and a half later.

In other words, Treasuries and MBS (the "mortgage backed securities" that most directly affect rates) are once again getting in position for a potential change in Fed policy.  This greatly raises the stakes for economic data this week.  Rates can continue to move higher as long as the economic data stays strong

Loan Originator Perspectives

"The trend is not our friend. I was highly hopeful that after the lightly staffed desks leading into Thanksgiving, volume would come back and be in our favor. It came back, but not in our favor. Pick you position and lock your loan. 2.8 on the 10 year is holding. If we see a bounce back closer to 2.75 before the always important jobs data on Friday, take the small gains and lock. Too much to risk going into Friday and with the "taper" cloud looming overhead, strong numbers late this week could be a nail in the coffin for rates. " -Steve Chizmadia, Mortgage Consultant, American Capital Home Loans.

"With the way things are going, we'll be seeing highs for the year in rates. Locking is the definite call in my opinion as it appears the pain is not going away anytime soon. NFP this Friday could make is real ugly unless there is a big miss and then we might get back to recent lows." -Mike Owens, VP of Mortgage Lending Guaranteed Rate, Inc.

"Monday, Monday--- If you can manage a lock that works for your particular situation, lock. Although Christmas is coming, the rate goose may not end up so "fat" (as in lower rates). Take what works for you and be thankful!" -Bob Van Gilder, Finance One Mortgage

"Shaky start to a potentially market moving week today. MBS lost over 1/2%, meaning higher rates or costs for borrowers. Strong manufacturing data further indicated the economy is recovering. There's lots of data upcoming, concluding with the November NFP jobs report on Friday. Floating borrowers risk sudden rate movements on NFP weeks, if you choose to float, do so cautiously." -Ted Rood, Senior Originator, Wintrust Mortgage

read more: http://www.mortgagenewsdaily.com/consumer_rates/334037.aspx

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WJBK) - January 2014 is bringing some significant changes to the housing industry.

Here today to tell us what's going on and how these changes are going to impact homebuyers is Hale Walker, the co-founder and senior vice president of Port Huron-based Michigan Mutual, Inc.

1. What are the looming changes that could impact the mortgage environment?

    The Consumer Financial Protection Bureau (CFPB), the regulatory agency that was established in 2010 by the Dodd-Frank Act after the housing crisis, is implementing new rules on January 10, 2014 that are designed to protect homebuyers from risky mortgages and ensure they are getting the best, most fair mortgage loans.
    While these changes overall are a huge step in the right direction, there will be some shifts on the horizon for both lenders and homebuyers.

2. The new rules:

    The major new regulation is the Qualified Mortgage rule.
    In order for Freddie Mac or Fannie Mae to purchase the mortgage from a bank or lender, it must be a Qualified Mortgage.
    In order to be deemed a Qualified Mortgage, the loan has to meet a rigorous set of standards set forth by the Bureau, and must not include risky or harmful features that have been built into loans in years past.
        There will be no excessive upfront points and fees during the processing and closing time periods.
        For most loans, the points and fees charged will not be allowed to exceed 3% of the total loan amount.
        There will also be no toxic loan features, such as interest-only payments, no balloon loans and no terms greater than 30 years.
    This is all designed to protect the homebuyer and ensure they are getting safe, responsible and transparent mortgage loans.

3. Lenders will also need to take a close look at a homebuyer's ability to repay the mortgage loan.

    Under homebuyer to determine whether the loan they are applying for is the right fit for them. These include:
        Income and assets
        Employment history
        Credit history
        Debt obligations, including things like alimony or child support if applicable.
    These are all standard items that lenders have already been closely examining, but there is a new part of this rule that will change the process and impact what loans homebuyers qualify for.
        Debt-to-income ratio, the amount of money you make each month in relation to the amount of debts you must pay off each month, will pay a large role in the process.
            Under the new rule, a homebuyer's total debt cannot exceed 43% of their total income.
            This is designed to prevent homebuyers from taking on mortgage loans they cannot afford.

4. What does this all mean for consumers?

    It's going to have a major impact on homebuyers.
    For some income brackets, or for those with unstable employment history, qualifying for a mortgage may become a little trickier in 2014.
    This is why homebuyers should seek out a certified, trusted mortgage partner to help navigate them through the process. It will be something that individuals will need to be educated about to ensure they are making the right decision for their goals.
        Lenders have been preparing for these new rules for nearly a year, and are well-versed in all of the complexities, and what it takes to help homebuyers qualify for the loan they want and get them into their dream home.
        A great mortgage partner will work with you to get your records in order and get you the best loan possible.

Source: http://www.myfoxdetroit.com/story/23996900/money-monday-new-tough-rules-for-mortgages-begin-in-jan-2014

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WASHINGTON (AP) — Average U.S. rates on fixed mortgages rose slightly last week but remained near historically low levels.

Mortgage buyer Freddie Mac says the average rate on the 30-year loan increased to 4.16% from 4.10% last week, which was the lowest level in four months. The average on the 15-year fixed mortgage rose to 3.27% from 3.20%.

Rates have been falling since September when the Federal Reserve surprised investors by continuing to buy $85 billion a month in bonds. The purchases are intended to keep long-term interest rates low.

Slower hiring in recent months has many analysts predicting that the Fed will maintain the current pace of the bond purchases into early next year, which should keep mortgage rates low for the time being.

The recent drop in mortgage rates could help boost home sales, which slowed in September after rates reached their highest averages in two years.

The decline in sales has also affected price gains. Real estate data provider CoreLogic said Tuesday that a measure of U.S. home prices rose only slightly in September from August, a sign that prices are leveling off after big gains earlier this year.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage rose to 0.8 point from 0.7 point. The fee for a 15-year loan was unchanged at 0.7 point.

The average rate on a one-year adjustable-rate mortgage fell to 2.61 percent from to 2.64 percent. The fee remained at 0.5 point.

The average rate on a five-year adjustable mortgage was steady at 2.96 percent. The fee edged up to 0.5 point from 0.4 point

Source:  http://www.usatoday.com/story/money/personalfinance/2013/11/07/mortgage-rates/3465703/

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Rich homebuyers can now get mortgages cheaper than pretty much everyone else.

In an unusual twist, lenders are offering rates on jumbo mortgages that are more than a quarter of a percentage point lower than those on the conforming loans backed by Fannie Mae and Freddie Mac. The government-run agencies require conforming loans to be below $417,000, unless they are for homes in high-cost areas like New York or Los Angeles,where the limit is $625,500.

Jumbo loans exceed those dollar limits and, historically, banks charge higher rates on them -- about 0.25 percentage points more -- than they do for conforming loans, according to the Mortgage Bankers Association. But over the past couple of months, the tables have turned.

This week, Wells Fargo (WFC, Fortune 500) advertised a 30-year jumbo mortgage at a rate of 4.125%, significantly lower than the 4.5% rate it is offering for a 30-year, fixed-rate conforming loan. US Bank (USB, Fortune 500) is offering a jumbo for 3.875% this week compared with 4.25% for a conforming loan. And Chase's (JPM, Fortune 500) jumbos have been running a quarter of a percentage point below conventional mortgages, as have TD Bank's (TD).

"Never in my memory have jumbos been such a bargain," said Peter Grabel, a loan officer at Luxury Mortgage Corp. in Stamford, Ct., with 13 years on the job.

One big reason jumbo rates are so low is because lenders want to attract wealthy clients and hang on to them, said Malcolm Hollensteiner, head of consumer lending for TD Bank. Once clients sign up for a mortgage, the bank can "cross sell them other products, like brokerage services," he said.

That works especially well in these days of strict underwriting standards, according to Keith Gumbinger, a mortgage expert with HSH.com.

"Borrowers have to open up their whole financial picture to lenders," he said. "They can see where there's value, which they might be able to sell against."

Once a wealthy client takes out one of these low-rate loans, they are likely to stick around. "With rates as low as they are, borrowers are never going to refinance the loans. Those affluent clients will stay on the bank's books forever," said Gumbinger.

Jumbo loans have also gotten comparatively cheaper. As the Federal Housing Finance Agency (FHFA), which regulates Fannie and Freddie, seeks to boost the two agencies' reserves against losses from mortgage defaults, it has raised fees and other costs for borrowers, according to Terry Francisco, a Bank of America spokesman.

Since Fannie and Freddie don't back jumbo mortgages, those fees don't apply and therefore aren't passed on to borrowers. 

Read More: http://money.cnn.com/2013/11/12/real_estate/jumbo-mortgages/
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Good news for homebuyers who don't have a lot of cash on hand: Banks are offering loans with down payments of just 5%.

After the housing bubble burst, buyers needed to come to the table with as much as 20% down or they had to turn to the Federal Housing Administration for a low down-payment loan.

But now banks like TD Bank, Bank of America (BAC, Fortune 500), and Well Fargo (WFC, Fortune 500) are loosening the purse strings, offering loans with down payments that are as low as 5%.

TD Bank's "Right Step" mortgage, for example, allows borrowers to secure a loan with a 5% down payment. It also allows them to receive as much as 2% of the sale price as a gift from a relative or other third party, so they would really only need 3% down.

Related: Money 101 Tips for buying a home

Why the change of heart? Market opportunity for one thing.

FHA dominated the market for low down payment loans during the housing bust. Taking on all those risky loans, however, depleted the agency's reserves and has forced it to increase costs.

Over the past couple of years, the FHA has been raising premiums. And this year, it started requiring borrowers to buy private mortgage insurance for the life of the loan -- an expensive proposition that has sent many prospective borrowers looking elsewhere.

While the loans were far too risky for private lenders to take on before, rising home prices have made them less of a gamble. Plus, the banks think they can offer a better deal than FHA.

"As the FHA selectively reduced market share by increasing premiums, we introduced a substitute for FHA loans," said Malcom Hollensteiner, the director of retail lending sales for TD Bank.

While the private lenders that are offering the 5%-down loans are also requiring borrowers to buy private mortgage insurance, they are only requiring them to do so until they build up 20% equity in the home. 

 The difference can really add up. Paying an insurance premium over the life of a $200,000, 30-year fixed-rate loan from FHA that carries an effective mortgage rate of 4.4% (5.75% when you tack on the insurance premium), can add up to nearly $60,000 over the life of the loan.

Of course, homeowners can always refinance to end their FHA insurance, but rates are so low that by the time an FHA borrower is able to refinance to a lower rate, it may not be worth it. 

Source: http://money.cnn.com/2013/11/05/real_estate/down-payment-mortgages/
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WASHINGTON — Average U.S. rates on fixed mortgages fell for the third straight week to their lowest point in three months, as a decline in consumer confidence and the onset of the government shutdown forced rates down.

Mortgage buyer Freddie Mac said Thursday that the average rate on the 30-year loan dropped to 4.22 percent from 4.32 percent last week. The average on the 15-year fixed loan declined to 3.29 percent from 3.37 percent.

Both are the lowest averages since early July.

Rates began to fall last month after the Federal Reserve held off slowing its $85-billion-a-month in bond buys, which have kept rates low. They fell further this week as the shutdown prompted investors to sell stocks and buy Treasury bonds. Mortgage rates tend to follow the yield on the 10-year Treasury note.

The 10-year note traded at 2.63 percent Thursday morning, down from 2.71 percent on Sept. 23.

The Federal Housing Administration, which guarantees about 30 percent of U.S. home mortgages, says that if the partial shutdown continues for an extended period and the agency’s funding runs out, it wouldn’t be able to continue approving loans.

In that case, “We do expect that potential homeowners will be impacted, as well as home sellers and the entire housing market,” the FHA said in a contingency plan.

Buyers wouldn’t disappear. But some would linger in limbo until the government reopened and a backlog of applications cleared.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was steady at 0.7 point. The fee for a 15-year loan also was unchanged at 0.7 point.

The average rate on a one-year adjustable-rate mortgage was unchanged at 2.63 percent and the fee held at 0.4 point.

The average rate on a five-year adjustable mortgage dipped to 3.03 percent from 3.07 percent. The fee rose to 0.6 point from 0.5 point.

Source: http://www.poughkeepsiejournal.com/viewart/20131006/LIFE07/310060037/Average-fixed-mortgage-rates-down-3-month-low

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As the hours before a midnight deadline ticked away Monday (Sept. 30), the possibility of a federal government shutdown was creating uncertainty in the recovering U.S. home mortgage market. 

The extent to which home buyers could feel the pain, real estate professionals said, depends largely on how long the budget impasse on Capitol Hill goes on.

New Orleans area real estate and mortgage professionals said the potential impact will be minimal as long as the hiatus doesn't drag on for weeks, but buyers could see delays in getting their loans processed.

Mike Anderson, president of Essential Mortgage, a company of real estate firm Latter and Blum, said his staff was working furiously Monday to request income and Social Security number verifications from the IRS and Social Security Administration, which will cease issuing the records in the event of a shutdown.

Anderson said loans can't close without the income tax transcripts, a requirement put in place after the mortgage crisis in an effort to fight fraud.

"I think if we go two weeks or longer, I think it's going to have an impact," Anderson said.

The Federal Housing Administration, part of the U.S. Department of Housing and Urban Development, insures home loans for low- and middle-income and first-time home buyers.

HUD said in a contingency plan this week that the agency would continue to endorse new home loans in the event of a hiatus, although with a drastically reduced staff of 68 on-duty employees in the housing office.

Anderson said loan officers can use FHA's computer-automated system to get a case number, the first step in the agency's process. But with a limited staff, FHA won't be available to answer questions as the loan moves forward, he said.

Borrowers seeking loans guaranteed by Fannie Mae and Freddie Mac, which together own or guarantee nearly half of all U.S. mortgages, will see business as usual. 

The U.S. Department of Veterans Affairs said it would continue to administer its loan guarantee program.

FHA-backed and VA-backed loans accounted for more than a third of new home loan lending last year, according to the Federal Reserve.

The Department of Agriculture's Rural Development will put on hold on its loan program, Anderson said.

Much depends on where buyers are in the timeline of buying a house and when sales are scheduled to close, said Ross Miller of Miller Home Mortgage in Metairie.

Miller said he hopes sellers "understand that it's not a buyer or mortgage company's fault that this is happening and that they would be accommodating in doing extensions appropriately."

The picture painted by local real estate agents, though, wasn't dire in the short-term.

Claudette Reuther, president of the New Orleans Metropolitan Association of Realtors, agreed. She said she believed lawmakers would reach a last-minute resolution before the industry feels any impact. "It's just one of these things; we just sit back and wait and see what happens," Reuther said.

Terry Roff, a Gardner Realtors managing broker in New Orleans, said he has more long-term concerns that political wrangling in Washington could indicate a protracted freeze.

That would hurt not only borrowers and real estate agents, but also title attorneys, moving companies and others in the industry, he said.

"It has quite a ripple effect," Roff said. "Hopefully, whatever happens will be a non-event or short-lived and we'll get on with business."
Source: http://www.nola.com/business/index.ssf/2013/09/federal_goverment_shut_down_lo.html

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 Average U.S. rates for fixed mortgages declined this week but stayed close to their highest levels in two years.

Mortgage buyer Freddie Mac said Thursday that the average rate on the 30-year loan fell to 4.51 percent. That's down from 4.58 percent last week, the highest since July 2011.

The average on the 15-year fixed mortgage dipped to 3.54 percent from 3.60 percent, also the highest since July 2011.

Rates have risen more than a full percentage point since May when Chairman Ben Bernanke first signaled that the Federal Reserve might reduce its bond purchases later this year. The purchases have helped keep long-term interest rates low.

Mortgage rates remain low by historical standards. But the sudden spike in rates could slow the housing recovery's momentum.

U.S. sales of newly built homes dropped 13.4 percent in July to a seasonally adjusted annual rate of 394,000, the government said last week. That's the lowest level in nine months.

Also in July, fewer Americans signed contracts to buy homes for the second straight month, according to the National Association of Realtors. Still, the decline has been modest and the level of pending homes sales remains close to a 6 ½ -year high reached in May.

Mortgage rates have been rising because they tend to follow the yield on the 10-year Treasury note. The yield also has surged on speculation that the Fed's stimulus will slow. But the rate on the 10-year note declined this week to 2.78 percent from 2.90 percent last week.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage declined to 0.7 point from 0.8 point. The fee for a 15-year loan was unchanged at 0.7 point.

The average rate on a one-year adjustable-rate mortgage fell to 2.64 percent from 2.67 percent. The fee slipped to 0.4 point from 0.5 point.

The average rate on a five-year adjustable mortgage rose to 3.24 percent from 3.21 percent. The fee held at 0.5 point.

source: http://abcnews.go.com/Business/wireStory/average-us-rate-30-year-mortgage-451-pct-20107166