Climbing mortgage rates in 2013 corresponded with declines in home buying, a trend that could to some extent continue in coming months as interest rates adjust to shifts in the Federal Reserve’s monetary stimulus effort.

The average of 30-year fixed-rate mortgage interest rates so far this year compared against new-home sales illustrates that inversely proportional relationship: When interest rates go up, demand from would-be homeowners drops. 

When rates as measured by Freddie Mac started rising in May and averaged 3.54% for the month, the seasonally adjusted annual rate of new home sales dropped by 4% from the prior month, according to the most recent housing data from the Commerce Department. Meanwhile, in October, mortgage rates dropped by three-tenths of a percentage point just as new home sales surged 18%.

The trend could continue in 2014, experts said, especially if rates change significantly.

“Particularly if we see a pretty quick rise – maybe a half a percentage point to percentage point rise — it’ll make for some bumpy demand in 2014,” said Ellen Haberle, an economist at Redfin, an online real-estate firm.

 Mortgage rates first spiked in May after the Fed signaled it was considering pulling back its bond-buying program meant to keep a lid on long-term interest rates. The housing market initially stumbled, but started to recover once the central bank decided against any changes to the stimulus effort throughout the summer and into the fall.

 Mortgage rates are still at historical lows, but they are already starting to creep upward once again. Freddie Mac said Thursday the average 30-year fixed rate mortgage was at 4.48%, its highest level since mid-September.

 The interest rate on U.S. Treasurys is also going up. On Thursday, the yield on 10-year notes hit 3%, its highest level since September and the second time this year it has reached that mark. That threshold could signal higher interest rates ahead because it is used as a reference point for the cost of borrowed money for U.S. consumers and businesses. A higher yield can push up mortgage rates.

 While rising interest rates could continue to drag on the housing market, it could also encourage those people waiting on the fence to make a decision to buy.

 Even with rising rates, homes data is starting to show underlying strength in the market. The Commerce Department’s new-home sales reports for October and November marked the two strongest months of new-home sales since mid-2008, and sales in November alone were up nearly 17% from a year earlier, the report said.

 New home sales data are a leading indicator in housing trends because  sales are tallied at the signing of a contract rather than the closing. But they are an imperfect gauge because homebuilders are sometimes willing to buy down interest rate for buyers.

 Data for pending-home sales in November, which is a similar measure for previously owned homes, will be released on Monday by the National Association of Realtors

source: http://blogs.wsj.com/economics/2013/12/27/mortgage-rate-swings-may-mean-bumpy-2014-housing-market/
Follow me:

• James Clooney WS
• James Clooney S
• James Clooney Site
• James Clooney on Gather
• James Clooney - Listal
• James Clooney Blog
• James Clooney | WordPress
• James Clooney on Quora
• Jim Clooney Twitter Page
• James Clooney Mortgage
• Jim Clooney Mortgages
• James Clooney White Pages

 Mortgage rates have been rising since late spring, when Federal Reserve Chairman Ben Bernanke first announced the possibility of a reduction in the $85-billion-a-month bond-buying program. The Fed has been the primary purchaser of mortgage-backed securities since late 2008, creating constant demand for these products, which helped push mortgage rates to record lows. Mortgage rates spiked at the end of June when the Fed signaled that paring back of bond-buying could begin in September. And rates have remained elevated since then, but the Fed’s unexpected decision to not scale back on its program will likely result in a break from rising mortgage rates. Instead, rates are likely to drop at least for the next month, says Keith Gumbinger, vice president at mortgage-info website HSH.com.




For home buyers who are about to get a mortgage, the announcement should result in lower rates. The average rate on 30-year fixed-rate mortgages fell slightly to 4.64% by end of day Wednesday, down from 4.68% for the week ended Sept. 13, according to HSH.com. Gumbinger says rates could drop by as much as 10 basis points, the equivalent of 0.10 percentage point, in total by the end of the week, which would bring average rates to 4.58% and they could drop to as low as 4.48% on average by mid-October, especially if the economic reports released during this period are weaker than expected. At 4.48%, rates would be back to where they were in the beginning of July.




A break in rising rates is unlikely to last long though. It’s unknown whether the Federal Reserve will change course at its meeting in late October, and mortgage analysts say it’s possible that rates could rise in the days leading up to the Fed’s next announcement. It also remains to be seen what will happen when the Fed starts to exit the market. More private investors could step in to purchase mortgage-backed securities, but they might not buy as much as the Fed currently is. Less demand could result in higher rates. If economic data remains weak and if the Fed presses on with its bond-buying program into November, 30-year mortgage rates could drop by as much as 20 basis points, or 0.20 percentage points, falling to 4.28% on average, says Gumbinger. 




 Of course, the prediction of lower rates to come is based on many assumptions. Rather than trying to time the market, mortgage applicants who want to proceed with their home purchase over the next few weeks should find out if their lender offers any options that would allow them to tap into lower rates—if such rates materialize. Lenders often offer what’s called a float-down option: If home buyers get to closing and rates have dropped below the rate they were quoted, a float down allows them to get that lower rate instead. Most float downs kick in if rates drop anywhere from one-eighth to a quarter of a percentage point. In most cases, borrowers will have to pay a nonrefundable fee of roughly a quarter-percentage point of the total dollar amount of the mortgage.




Beyond mortgage rates, it remains to be seen if a delay in tapering will impact home sales. Home sales have been rising for much of this year as buyers rushed to lock in mortgage rates before they climbed further. But as mortgage rates have increased, home sales have started to stall. New home sales, which are tallied at the signing of the contract, tumbled 13.4% in July from a month prior—the steepest drop in three years, according to the Commerce Department’s latest data. Existing-home sales, which are a lagging indicator that tally transactions that went to closing, also suggest a drop in the pace of home buying as rates have risen. Existing-home sales increased 1.7% in August from a month prior, according to data released Thursday by the National Association of Realtors. In contrast, July sales rose 6.5% from a month prior




Source: http://www.marketwatch.com/story/bernanke-gives-home-buyers-a-breather-2013-09-20




Total Solutions Advisors Jim Clooney Site

Average interest rates on the popular 30-year, fixed-rate mortgage held steady this week, giving a respite to potential homebuyers who have seen rates creep up for much of the year.

The average rate of 4.57 percent was unchanged from last week, Freddie Mac reported in its weekly survey Thursday. A year ago, the average interest rate was 3.55 percent.

Also unchanged this week was the 3.59 percent average interest rate on a 15-year, fixed-rate mortgage. A year ago, average rate was 2.85 percent.
 
Despite the pause, most economists expect home loan rates to edge closer to 5 percent by year's end, affecting affordability. Only four months ago, in early May, the average rate on a 30-year, fixed-rate mortgage was 3.35 percent.

Applications to refinance existing mortgages fell 20 percent last week from the previous week, to its lowest level since June 2009, according to the Mortgage Bankers Association. Meanwhile, home-purchase mortgage applications last week were down 3 percent from the previous week.

The slowdown in mortgage activity, particularly the refinancings that drove the industry when rates were low but few were buying homes, has triggered unemployment in the housing industry. Several of the largest lenders, including Bank of America, Wells Fargo and JPMorgan Chase, have laid off thousands of employees from their home mortgage businesses.


source: http://www.chicagotribune.com/business/breaking/chi-mortgage-rates-20130912,0,497939.story

check out Jim Clooney

WASHINGTON – Average fixed rates on U.S. long-term mortgages neared their highs for the year this week amid signs of further strength in the economy.




Mortgage buyer Freddie Mac said Thursday that the average rate on the 30-year loan was 4.57 percent, up from 4.51 percent last week and close to this year’s high of 4.58 percent Aug. 22.




The average on the 15-year fixed mortgage rose from 3.54 percent to 3.59 percent, near the year’s high of 3.6 percent.




Long-term mortgage rates have risen more than a full percentage point since May, when Federal Reserve Chairman Ben Bernanke first signaled that the Fed could reduce its bond purchases later this year if the economy continued to strengthen. The bond purchases were intended to keep long-term loan rates ultra-low.




Among the indicators the Fed will consider in deciding whether to slow its bond buying is the government’s estimate that the economy grew at a 2.5 percent annualized rate from April through June – much faster than estimated. Economists expect growth to stay at an annual rate of around 2.5 percent in the second half of the year.




The Fed will meet Sept. 17-18, after which analysts expect it to announce a scaling back of its bond purchases.




Mortgage rates remain low by historical standards. But the recent rate increases could slow the housing recovery. The increases spurred some homebuyers to close deals quickly.




U.S. sales of newly built homes dropped 13.4 percent in July to a seasonally adjusted annual rate of 394,000, the lowest level in nine months.




But spending on construction projects rose in July to its highest level since June 2009, the Commerce Department said Tuesday.




Mortgage rates have been rising because they tend to track the yield on the 10-year Treasury note. The yield has climbed 1.3 percentage points in the past four months as bond traders have anticipated that the Fed will slow its bond buying. The 10-year note’s rate rose to 2.89 percent Wednesday from 2.86 percent Tuesday. It jumped to 2.96 percent Thursday morning.




To calculate average mortgage rates, Freddie Mac surveys lenders across the country 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 unchanged at 0.7 point. The fee for a 15-year loan held at 0.7 point.




The average rate on a one-year adjustable-rate mortgage increased to 2.71 percent from 2.64 percent. The fee rose to 0.5 point from 0.4 point.




The average rate on a five-year adjustable mortgage rose to 3.28 percent from 3.24 percent. The fee was unchanged at 0.5 point.


source: http://www.buffalonews.com/business/average-30-year-mortgage-rate-nears-years-high-20130905

James Clooney WS

Mortgage rates moved closer to their high points for the year this week, buoyed by continued reports of a strengthening economy.

The average interest rate on a 30-year, fixed-rate loan was 4.57 percent, up from 4.51 percent last week and 3.55 percent in the same week a year ago, Freddie Mac said Thursday in its weekly survey.

 The average rate on a 15-year, fixed-rate loan was 3.59 percent. That compared with 3.54 percent last week and 2.86 percent a year ago.

Among the positive economic reports credited for pushing rates higher were those of real gross domestic product and the ninth consecutive monthly increase in residential construction spending.

The run-up in rates has dampened interest in refinacing existing mortgages but when there is a slight decline in rate, homeowners are moving on them.

For instance, last week, applications to refinance existing mortgages rose 2 percent from the previous week, bringing the refinance share of applications to 61 percent, the Mortgage Bankers Association reported Wednesday. According to its own survey of mortgage rates, the average contract rate for a home loan fell to 4.73 percent, from 4.80 percent a week earlier.

Home purchase mortgage applications decreased 0.4 percent from a week earlier.

Longer term, though, the general trend of rising rates is affecting activity. In March, the average rate on a 30-year, fixed-rate loan was 3.57 percent, according to the Federal Housing Finance Agency. By June, it was 4.07 percent, the highest rate for that popular mortgage  product since September 2011.

As a result, refinancing of mortgages backed by Fannie Mae and Freddie Mac fell during the second quarter. Almost 1.3 million mortgages were refinanced in the three months that ended in June, compared with 1.4 million in the year's first quarter. However, that first-quarter number was hard to beat, as it was the highest volume for Fannie- and Freddie-backed mortgage refinancings in at least three years.

Of that second-quarter volume, 22 percent were refinancings connected to the government's Home Affordable Refinance Program, designed to assist owners who owe more on their mortgage than the home is worth.

Source: http://articles.chicagotribune.com/2013-09-05/business/chi-mortgage-rates-20130905_1_4-73-percent-refinancings-average-rate

As the U.S. housing market recovers, FHA home loans remain popular among today's first-time and repeat home buyers. This is because of the loan traits that the FHA will allow.

FHA loans can be ideal for buyers with less than 5% to put down; with credit scores below 720; who've recently gone back to work; or, for a combination of these reasons. They're especially good for buyers getting cash gifts for downpayment.

FHA mortgages offer low rates and flexible guidelines. This article explains how to apply.

What Is The FHA Mortgage Program?

The FHA mortgage program is technically an insurance program. This is because the FHA is not a mortgage lender -- it's an agency which provides insurance to lenders for defaults or loan foreclosures.

In order for a loan to be insurable, the lender must be FHA-approved and the specific loan must be underwritten to the standards set forth in the official FHA mortgage guidelines.

FHA mortgage guidelines are among the most forgiving of all mortgage loan types. There is no minimum credit score requirement. Downpayments can be as little as 3.5% on a home. The waiting period after a bankruptcy, short sale or foreclosure can be as little as 12 months.

There are other benefits, too.

All FHA-insured loans get access to the FHA Streamline Refinance program -- one of the simplest ways to lower your annual mortgage rate -- and homeowners with FHA financing can actually sell their homes with the loan attached. This is because FHA loans are assumable.   

How To Get An FHA Mortgage

So, how can you get an FHA loan? Here’s a step-by-step guide to what you’ll need to do.
1. Discuss Your Ideas With A Lender

It's easy to research loans on your own, and that's a terrific way to begin educating yourself about mortgages. However, most information on the internet is general in nature and does not apply to your situation specifically. For example, you may earn non-standard income or show abnormal activity in your bank statements.

You can't know for certain whether you'll qualify for an FHA loan until you talk to a lender.

When you speak with a lender, he will review your financial situation with you and alert you to any ideas which may need to be addressed prior to closing. This can include talking through collection items on your credit report and judgments. During this stage, the more information that you share with your lender, the closer you'll be to getting FHA loan approval later on.

Note that you do not have to select your lender at this stage. It's just important that you speak to somebody who can assist,
2. Get Pre-Approved For An FHA Loan

After you've spoken with a lender, you'l want to begin the pre-approval process. As part of your pre-approval, the lender will tell you the maximum amount you can borrow with an FHA loan given your income, your debts and the expected monthly escrow of homes in the area.

Once pre-approved, your lender will provide you with an official pre-approval letter. Use this letter to prove that you can purchase homes up to a certain purchase price. Keep your pre-approval letter handy for your real estate agent and potential home sellers.

Pre-approvals are often provided at no cost, and asking for one does not obligate you to go ahead with the loan, or the lender.
3. Shop For A Home

There are many ways to shop for a home. You can work through a REALTOR®; you can search via the popular online real estate portals; you can use your local newspaper's real estate section; or, you can use a combination of all three. The good news is that you're pre-approved and  know exactly what you can afford.

When you find a home and make a purchase offer, be sure your contract includes a "financing contingency". Financing contingencies allow you to cancel the contract in the event you are unable to secure a loan. Hopefully, your financing contingency won't need to be invoked but it's important to always have that protection.
4. Select Your FHA-Approved Mortgage Lender

Once you're under contract, it's time to turn your pre-approval into an actual approval.

First, shop for FHA mortgage rates. This is an important step because the FHA does not set mortgage rates -- lenders do. There can be a big difference in rates between lenders, too, so get at least two rate quotes. Get one of your rate quotes here.

After you've selected a lender, provide whatever paperwork that lender requests then let the lender do his job of preparing your loan for closing. During this time, an appraisal of your home will be ordered. This is not the same as a home inspection, though. You should still arrange to have the home inspected on your own. Home inspections can reveal physical defects in a home which you may not have noticed otherwise.

Your real estate agent can refer an inspector, if you need one.
5. Closing Your FHA Loan

Once your loan is approved, you'll be issued a "cleared-to-close" by your lender, and you'll be ready to go to settlement. Often called "closing", your settlement may occur at a title company near your home or office, or in an attorney's office, or in your current home -- each closing can be different.

After closing is complete, you will receive copies of your signed loan documents, which will include directions on where to send your payments and how to establish an auto-pay for your mortgage, if that's your preferred method of payment.

You will also receive keys to your new home.
Take Your First FHA Loan Step

FHA loans account for a significant share of the U.S. housing market and it's easy to understand why. The forgiving nature of the FHA mortgage guidelines, combined with the low rates available via the program, can make it a compelling mortgage option. 

Source: http://themortgagereports.com/13412/how-to-apply-and-get-approved-for-an-fha-mortgage-plus-live-mortgage-rates

Mortgage rates in the U.S. jumped to a two-year high, increasing borrowing costs for homebuyers as sales accelerate.

The average rate for a 30-year fixed mortgage rose to 4.58 percent last week from 4.4 percent, Freddie Mac said in a statement. The average 15-year rate climbed to 3.6 percent from 3.44 percent, the mortgage-finance company said. Both were the highest since July 2011.

Homebuyers are rushing to take advantage of historically low borrowing costs before they increase even more.

Existing-home sales in July jumped 6.5 percent to the second-highest level in six years, the National Association of Realtors reported on Aug. 21. Those transactions largely reflect closings of contracts signed a month or two earlier, when mortgage rates were just beginning to edge up.

“If you were considering buying, rates aren’t going to get much better any time soon,” said Erin Lantz, director of mortgages at Seattle-based Zillow. “So buying sooner rather than later makes sense.”

The 30-year fixed mortgage rate has climbed from 3.35 percent in early May as the Federal Reserve signaled it may begin scaling back its bond-buying program aimed at lowering borrowing costs.

Policy makers were “broadly comfortable” with Chairman Ben Bernanke’s plan to start reducing purchases later this year if the economy improves, according to the minutes of the Federal Open Market Committee’s (FOMC) July meeting, released last week.

The FOMC will probably reduce its $85 billion in monthly purchases at its Sept. 17-18 meeting, according to 65 percent of 48 economists in a Bloomberg survey. The median estimate called for a cut to $75 billion each month.

Rising mortgage rates have had the biggest effect on refinancing. The Mortgage Bankers Association’s index of applications to lower monthly payments fell 7.7 percent in the week ended Aug. 16, the 10th straight decline. A measure of purchases rose 1.2 percent, the trade group said.

The 30-year fixed mortgage rate is well below its average of about 6.3 percent for the past 20 years, according to data compiled by Bloomberg. The 20-year average for a 15-year loan is about 5.83 percent.

Lowe’s, the second-largest U.S. home improvement retailer, isn’t “overly concerned” about the rise in rates as long as the 30-year average stays below 6 percent, chief executive Robert Niblock said on a conference call Aug. 21. The company and larger competitor Home Depot last week reported earnings that beat analysts’ estimates and raised their profit forecasts for 2013, buoyed by the housing recovery.

“The rate increases will likely take some steam out of the recent housing market rebound but shouldn’t derail it as long as job gains persist, homes continue to appreciate and rates rise more gradually going forward,” Niblock said.

source: http://kpbj.com/business_daily/2013-08-26/mortgage_rates_jump_to_two_year_high_refinancing_hit