Battered Housing Market Is Recovering

Filed under Case-Shiller Index by on February 24, 2010 at 7:47 am {no comments}

The was released on Tuesday.  It revealed only a 2.5% drop in , significantly better than the 8.7% drop reported after 2009 Q3.

According to Case-Shiller representatives, we’re seeing a healthier market than one year ago.  We’re also seeing that the market is returning to a normal healthy rate of recovery after last summer’s incredibly hot market.

Of note, 5 markets didn’t decline:  Detroit, Los Angeles, Las Vegas, Phoenix and San Diego.

They were the hardest hit in the beginning and are now showing the first signs of strength as the market returns.

The Case-Shiller Index isn’t without flaws.  For example:

  1. The data is two months old
  2. It is only 20 cities
  3. Real estate is local, not national

Still, the index carries weight as the broadest private-sector index out there.  Housing is key to the economic recovery and we’re seeing good signs in housing.

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This Week’s FHA Mortgage Rate Predictions

Filed under Weekly Review by on February 22, 2010 at 7:46 am {no comments}

Last week was brutal.  The was under heavy selling pressure all week and lost ground for the second week in a row.   The primary causes were inflation figures that came in higher than expected and then two pieces of news from the Federal Reserve.

It was the single worst sell-off in any week since late last year.

The Federal Reserve played two big parts in the rates jumping.  First, the January meeting minutes from the Fed meeting revealed a significantly more optimistic Fed than we saw in the brief press release that followed the meeting.  Second, and largely unexpected, the Fed raised the Discount Rate to 0.75%.   do okay in times of economic troubles.  These statements and ensuing actions by the Fed indicate that better times, and higher , are coming.

The , and the Prime Rate, should remain the same for the near future, but the Fed clearly drew a line in the sand:  The economy is healthy enough where the loose monetary policy is coming to an end.

News for This Week’s Predictions

This is a big news week:

  • Tuesday : Case-Shiller Home Price Index, Consumer Confidence
  • Wednesday : New Home Sales
  • Thursday : FHFA Home Price Index, Initial Jobless Claims
  • Friday : Existing Home Sales, Personal Consumption Expenditures

Even after last week’s big sell-off, mortgage rates still have enough room to jump an extra .25% without very much work at all.

If you’ve been trying to perfectly time the bottom of mortgage rates, you missed it.   At this point, the best time to get an FHA mortgage is now, not later.  We still have a .5% increase to the UFMIP hitting in just 40-ish days.  No matter how you look at it, unless mortgage rates dip significantly, an FHA looks to be more expensive after April 5th.

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FHA Loan Rates Jump On Fed Minutes

Filed under FOMC Minutes by on February 18, 2010 at 7:46 am {no comments}

The is now at its highest level of the year.

Yesterday’s release of the Federal Reserve Minutes from the January meeting sent higher.

The release is a very detailed follow-up document that expands greatly on what was stated in the brief post-meeting press release.  The Fed Minutes outline the debates and dissenting opinions which is a more thorough view than just the summary statements of the press release.  Yesterday, Wall Street took a look at the debates and didn’t like what they were seeing.

Specifically, they reacted to:

  1. Confirmation that the purchase program will end March 31, 2010
  2. To tighten monetary policy, the Fed intends to raise the
  3. Consumer spending is improving

These are all great economic signs.  They are not good for mortgage rates.  The last part of the Fed’s comments is what really hurt the bond market:  “higher medium-term inflation.”  Inflation hurts bonds which in turns hurts mortgage rates.

This growing Fed optimism is great except for two things:  the FHA interest rate is rising and so too will .   Stronger economies push both of those figures higher.

If you are looking at a home purchase or refinance, it might be wise to push your time frame up.   Rates are likely to continue to rise after March 31st and will likely rise in these next 40 days as well.

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The Best And Worst Cities For Commuters (2010 Edition)

Filed under Statistics by on February 17, 2010 at 7:47 am {no comments}

According to the Census Bureau, 2.8 million people commute to work 90 minutes or more each day, in each direction.

Now, your daily may not be as long, but time spent in cars, trains and buses is time away from work and from family. Drive-time can affect a person’s Quality of Life and it’s one reason why Magazine’s Best and Worst Commutes is worth reviewing.

Measuring travel time, and travel delays in the 60 largest metropolitan areas, Forbes ranks city commutes from best-to-worst with Salt Lake City topping the list and Tampa-St. Petersburg finishing it.

The Top 5 Commutes, as compiled by Forbes:

  1. Salt Lake City, Utah
  2. Buffalo-Niagara Falls, New York
  3. Rochester, New York
  4. Milwaukee-Waukesha-West Allis, Wisconsin
  5. Albany-Schenectady-Troy, New York

The bottom 5 are Tampa-St. Petersburg, Detroit, Atlanta, Orlando, and Dallas-Forth Worth.

Long commutes shouldn’t deter you from moving to a particular city, but the potential commute should be consideration. Before making an offer on your next home, make a rush-hour commute to work from your potential new neighborhood.  Then imagine doing it every day.

You can read the complete Forbes list of Best and Worst Cities for Commuters on its website.

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FHA Interest Rate Predictions – Feb. 16, 2010 Edition

Filed under Weekly Review by on February 16, 2010 at 7:47 am {no comments}

ticked higher last week, although they didn’t jump as much as they could have.   It was the first time in five weeks that rates ticked higher.

Mortgage bonds had rallied so much in the past few weeks that some natural profit-taking was to blame and the Greece issue appears to have some potential rescue efforts in the works.

This week’s predictions are back to basics:  domestic news.   The calendar is loaded starting on Wednesday.

We’ll see:

  1. Housing Starts and (Wednesday)
  2. The release of the last month’s (Wednesday)
  3. Business and figures (Thursday and Friday)

Housing starts could be soft as weather was brutal across the country last month.  Keep an eye on permits.  Weather delays a start, but builder optimism is what triggers the permit.

The Minutes are significantly more involved than the simple press release after the meeting.  Wall Street acts on what it thinks that the Fed is thinking.  That guessing game resumes when the minutes hit later this week.

Inflation could move on Thursday and Friday.  Bonds hate inflation and a hotter-than-expected reading could cause interest rates to jump.

If you know you are likely to need to lock an FHA mortgage this week, the odds favor locking before the landslide of data hits.  Rates have a little room to go lower and a lot of room to go higher.

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Mortgage Approvals Are Getting More And More Scarce

Filed under Mortgage Guidelines by on February 9, 2010 at 7:46 am {no comments}

Federal Reserve Quarterly Lending Survey 2007-2009

The economy’s improving but lending standards are not. Nationally, banks are making mortgage approvals harder to come by.

Underwriting guidelines are tightening.

The data comes from the Federal Reserve’s quarterly survey to its member banks.  The Fed asks senior bank loan officers around the country to report on “prime” residential over the most recent 3 months and whether they’ve tightened.

For the period October-December 2009:

  • Roughly 1 in 4 banks said guidelines tightened
  • Roughly 3 in 4 banks said guidelines were “basically unchanged”

Just 2 of 53 banks said its guidelines had loosened.

Combine the Fed’s survey with recent underwriting updates from the FHA and generally tougher standards for and it’s clear that lenders are much more cautious about their loans than they were, say, in 2007.

Today’s Oak Park home buyers and would-be refinancers face a bevy of new borrowing hurdles including:

  • Higher minimum FICO scores
  • Larger downpayment requirements for purchases
  • Larger equity positions for refinances
  • Lower debt-to-income ratios

So, if you’re on the fence about whether now is a good time to buy a home, or make that refi, consider acting sooner rather than later.  It doesn’t necessarily matter that are low, or that there’s an up-to-$8,000 home purchase for households that qualify.  With each passing quarter, fewer and fewer applicants are eligible to take advantage.

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2010 FHA Mortgage Rate Predictions? Try Guesses.

Filed under Weekly Review by on February 8, 2010 at 7:46 am {no comments}

All bets are off.  There are some things that “always” increase rates.  Last week, we saw strong corporate earnings, housing appears stable, and the Federal Reserve continues their upbeat tone.

Those things all cause rates to go up.  Yet, the dipped for a 4th consecutive week.

Why?  Because every other economy in the globe appears worse off than ours right now.  Bad news kept filtering in, starting with the UK banks the week prior, China tightened its money supply, and pick an EU country, it’s in trouble.

The is strongly tied to where global investors wish to park their money.  For the past two weeks, the U.S. has seemed much safer than anywhere else.  When investors park their money here, our go down.

Looking forward to this week’s predictions, there is almost no economic data.  If foreign investors deem the U.S. safer than elsewhere, FHA rates stay low.  If foreign investors think someone else offers a risk/reward they like, the sound will be their money sucking out of the bond market and the consequence will be a significant jump in mortgage rates.

If you are currently considering whether to lock or float a laon, the trend continues to point towards higher rates down the road.

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FHA Interest Rates Rally Back

Filed under FHA Interest Rate by on February 5, 2010 at 12:48 pm {no comments}

Just a quick mid-day update: Since opening significantly lower after the jobs report, mortgage bonds have rallied. The have recovered all of the losses from opening bell and are now up 18 basis points.

We are now overbought according to every technical signal so the market could move quickly if it reverses.

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FHA Loan Rate Recovers

Filed under FHA Loan Rate by on February 5, 2010 at 10:01 am {no comments}

What a wild day already.  At the opening today, the government’s Non-Farm Payrolls report came out.

Expectations were for job creation of about 15k.  We lost 20k jobs on the month.  On this negative , the should have normally improved, but nothing is normal these days.

The market plunged at open and it looked like were headed higher.  Now, 2.5 hours after all of the opening-bell fireworks, we’re back to exactly flat on the day.

There is absolutely no good reason for the to still be at 5%, but it is.  If you’re looking at a purchase or refinance anytime soon, there is almost no room for rates to go lower and plenty of room for rates to go up.

Use our quick form and we’ll get quotes from the four best FHA lenders sent to you immediately.

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FHA Interest Rates Drop Today

Filed under FHA Interest Rate by on February 4, 2010 at 7:24 pm {no comments}

Our mortgage rate predictions aren’t looking so good this week.  We really thought that yesterday’s ADP report and tomorrow’s Non-Farm Payrolls account would be the market movers.  They weren’t.  Global fear turned out to be the main story, so far, this week.

Investors have pulled out of the stock market with the Dow now below 10,000 and at a 3-month low.

The is back to 5% after ticking up yesterday, but many lenders did not re-price rates late in the day.  Below 5% is a possibility when the market opens tomorrow.

However, the Non-Farm Payrolls report hits first thing.  We’ll have an update tomorrow, but this report has the potential to help this rally challenge all-time lows or it could push rates back up significantly with a strong reading.

How’s that for a prediction?  The market is so uncertain that we’ll try and report on it, not predict it.

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