MORTGAGE TIME
12/19/2008 Improved Conditions to Begin 2009 Conforming mortgage rates ended 2008 at the lowest levels in decades. One reason is that inflation is not a concern right now due to the current economic weakness and the decline in energy prices. In addition, the Fed has begun to purchase mortgage-backed securities (MBS), increasing the demand. Mortgage rates are generally determined by the price of MBS. On November 25, the Fed announced a plan to purchase as much as $500 billion in MBS, and mortgage rates have dropped significantly since the announcement. Low inflation and Fed purchases of MBS are expected to continue in coming months.
Along with low mortgage rates, homes have reached their best level of affordability in many years, according to the National Association of Home Builders (NAHB). The NAHB index compares the cost of paying for a home, based on average home prices and mortgage rates, to the median household income. Increased affordability allows more people to participate in the housing market, which should boost demand for new and existing homes.
The consensus outlook is that the economy will begin to improve during 2009. In addition, both the Mortgage Bankers Association (MBA) and the National Association of Realtors (NAR) expect the housing market to improve next year. The NAR predicts that both the number of existing home sales and home prices will increase in 2009. The combination of a rebounding economy, low mortgage rates, and affordable home prices provides good reason to expect an improved housing market in 2009. 12/19/2008 Fed Statement Helps Mortgage Rates
Thanks largely to Tuesday's Federal Reserve statement, the historic drop in mortgage rates over the last few weeks continued a little further this week. Lower than expected inflation data from the November Consumer Price Index (CPI) report also was favorable for mortgage rates. According to Freddie Mac's weekly survey, average 30-year fixed conforming mortgage rates fell to the lowest level in 37 years. Mortgage rates turned slightly higher late in the week, however, raising the question of whether the downward trend will continue. In a unanimous vote, the Fed cut the target Fed Funds rate from 1.00% to a range between 0.00% and 0.25%. The 75 basis point cut was larger than the consensus forecast for a 50 basis point cut. According to the statement, the Fed will employ "all available tools" to stimulate economic growth. Most notable for the mortgage industry, the Fed mentioned the option of expanding the purchase of large quantities of mortgage-backed securities. Mortgage rates generally move based on changing levels of demand for mortgage investments. Immediately following the release of the statement, mortgage rates dropped due to this expected increase in demand. In the housing sector, November Housing Starts fell -19% to a record low. Building Permits, a leading indicator, showed a similar decline. The slowdown in the building of new homes will help reduce the inventory of unsold homes on the market. - Report provided by MBSQuoteline.com
12/12/08 Rates Approach Record Lows
Since the Fed announced a plan to purchase $500 billion of mortgage-backed securities on November 25, mortgage rates have moved progressively lower, and the trend continued this week. Conforming fixed-rate mortgage rates dropped to levels last seen in 2003. Weak Retail Sales data and low inflation figures released during the week also supported the move lower. As the government strives to offset the current weakness in the economy, its actions have exerted a much stronger than usual influence on mortgage rates. Programs to purchase mortgage-backed securities and to provide capital to financial institutions have been favorable for mortgage rates, while a bill introduced in Congress this week could have the opposite effect if passed. The bill would permit bankruptcy judges to modify troubled mortgages by reducing the principal and payments. The goal would be to help prevent foreclosures, which is a worthy objective. However, opponents of the plan are concerned that investors may require higher mortgage rates to compensate for the increased risk that loan contract terms may be changed. At this point, it's not certain when the bill will come up for a vote.
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 | | Average 30 yr fixed rate: | | Last week: | -0.08% | | This week: | -0.32% |
| | Stocks (weekly): | | Dow: | 8,500 | +300 | | NASDAQ: | 1,500 | +80 |
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| | Week Ahead
The big news next week will be Tuesday's Fed meeting. Expectations are for a 50 or 75 basis point rate cut, and the accompanying statement will provide the Fed's latest views on the state of the economy and the financial system. The Consumer Price Index (CPI), the most closely watched monthly inflation report, will also come out on Tuesday. CPI looks at the price change for those finished goods which are sold to consumers. Industrial Production, an important indicator of economic activity, will be released on Monday. Housing Starts is scheduled for Tuesday. The regional manufacturing indexes will also be released next week. |
- Information provided by MBSQuoteline.com
12/9/2008
Attention 1st Time Home Buyers! 2009 is presenting a once in a lifetime opportunity for first time home buyers to jump into the market! Without having a home of your own to sell, you can take full advantage of the declined prices, historically low interest rates and 1st time home buyer tax credit incentives up to $7,500! There’s never been a better time to buy at the bottom of the market with such attractive financing! For more information, and to learn more about how home ownership could benefit you, please call Ryan Zimmerman.
909.447.7707
Ryan@RRZimmerman.com
www.RRZimmerman.com
Market Update Mortgage Market News for the week ending November 7, 2008
Economic Weakness Improves Rates With few surprises in the election results, investors focused on the prospects for the economy. The outlook for economic growth moved progressively lower during the week, and Friday's weak Employment data reinforced this view. The reports on manufacturing, construction, and factory orders released this week showed declines as well. A sluggish economy is generally consistent with reduced inflationary pressures and is favorable for mortgage rates, and rates moved lower each day from Monday through Thursday.
Friday's mortgage market reaction to the weaker than expected Employment report appeared to be counterintuitive, as mortgage rates rose a little after the news, offsetting some of the rate improvement seen earlier in the week. The explanation is that the jobs data was so bad that investors now expect that another economic stimulus package will be implemented soon. The government will need to issue even more debt to pay for a stimulus package, and mortgage investors pushed rates higher on Friday on concerns about the added supply of debt.
As expected, the Employment report reflected weakness in the labor market. The economy lost -240K jobs in October, and the figures for August and September were revised lower as well. This marked ten straight months of job losses in 2008, bringing the total decline in jobs to 1.18 million so far this year. The manufacturing and construction sectors continued to show weakness.
- Report provided by MBSQuoteline.com
Loan limits to Drop in 2009
It has officially been decided, that loan limits are going to drop come 2009. Currently the conforming loan limits for Fannie & Freddi in LA county are $729,750, and $500,000 for San Bernadino County. However, starting Jan 1st, 2009, they will be dropping to $625,500 & $417,000 respectively.
What this means for buyers: Buyers for higher price ranged homes who will be needing higher loan amounts should be quick to act and close a deal before 2009 to avoid jumbo rates on higher loan amounts
What this means for sellers: Sellers of higher priced homes that have been sitting on the market for a longer than normal period of time should be looking to discount the prices of their homes to move the property quickly before 2009, when buyers will have an even tougher time to purchase high end homes. |
