Mortgage markets worsened last week on general profit-taking in the U.S. bond market, combined with talk of a coordinated rescue effort for Greece and its debt burden. Mortgage-backed bonds sold off, causing conventional and FHA mortgage rates to rise. There wasn't much hard data on which to trade last week, either, so momentum took markets farther than they otherwise might have moved on their own. It marked the first time in 5 weeks that rates rose for rate shoppers. This week, data returns. Expect mortgage market movement. Some of the week's more important releases include: Housing Starts and Building Permits (Wednesday)The release of the last month's FOMC Minutes (Wednesday)Business and consumer inflation figures (Thursday and Friday) Inclement weather may have impacted last month's ... 02/16/2010

Here’s a current article written by a friend of mine, dispelling much of the myth of the alleged “shadow inventory” Written by: Blanche Evans – Feb 12, 2010 4:30:00 AM The housing crash will resume early this year, according to a Bloomberg.com story published recently. Quoting analysts at Amherst Securities, the reporter wrote that 7 million properties “likely to be seized by lenders have yet to hit the market” creating a “huge shadow inventory” of homes. That could have a disastrous effect on inventories, 1.35 years worth, if not another home was added to the market. High inventories would collapse prices, knocking another 8% off homeowner equity, with a domino effect on the struggling economy. The analysts told Bloomberg that the shadow inventory is likely to only be reduced by about ... 02/14/2010

Consumer Sentiment has been on the rise since last February and it's something to which home buyers should pay attention.  The affordability of your next home may hinge on consumer confidence. As the economy recovers from a near-the-brink recession, many of the elements of a full recovery are in place.  Business investment is returning, household spending is expanding, and financial systems are gaining strength.  Consumer confidence is at a 2-year high. What's missing from the recovery, though, is jobs growth.  Another net 20,000 jobs were lost in January. Data like that hinders economic growth. That said, twenty-thousand jobs lost is a much better figure than the several hundred thousand that were shed per month throughout early-2009, but it's still a net negative number.  Not only doe... 02/13/2010

Foreclosures stories dominate the national housing news. It seems at least one foreclosure-related story makes its way to the front page or the nightly news every week. But for as much as the foreclosure filing statistics can be astounding -- over 300,000 homes were served last month alone -- the prevalence of foreclosures depends on where you live. As reported by RealtyTrac, just 4 states accounted for more than half of the country's foreclosure-related activity last month. California : 22.7 percent of all activity Florida : 14.9 percent of all activity Arizona : 6.7 percent of all activity Illinois : 5.7 percent of all activity The other 46 states (and Washington D.C.) claimed the remaining 49.9%. However, just because foreclosures are concentrated geographically, that doesn't make th... 02/11/2010

The mortgage lending landscape changes a lot. Rates and guidelines are in constant flux, and it creates preparedness challenges for buyers that aren't paying in cash. The loan you get today won't always be the loan you get tomorrow. Because of how frequently bank rules are changing, it can be hard for laypersons to distinguish between mortgage fact and fiction of "what's coming next". Recently, we saw this with respect to FHA home loans. January 20, 2010, the FHA issued a press release with new lending guidelines. Specifically, it announced 3 changes that will be effective starting April 5, 2010: Upfront mortgage insurance premiums increase from 1.75% to 2.25% Allowable seller concession reduced from 6% to 3% FICO scores of 580 or lower are subject to a minimum 10% downpayment But, also... 02/10/2010

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 mortgage guidelines 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 conventional loans and it's clear that lenders are much more cautious abo... 02/09/2010

Mortgage markets improved last week on domestic jobs data and international banking concerns. The news triggered buying in the bond market and, as a result, conventional, FHA and VA mortgage rates improved for the 4th consecutive week. Mortgage rates are now at a 6-week low but probably shouldn't be. It underscores just how important global events can be to U.S. mortgage markets. For example, corporate earnings continue to improve and key elements of the economy are strengthening. Even the Federal Reserve acknowledges this. In most circumstances, that would be a boon for the stock markets and bond markets would suffer, including mortgage bonds. Last week, that wasn't the case. Early in the week, as (1) China tightened its monetary policy, (2) Greece did little to quell lingering default... 02/08/2010

Here's an article from today's Rismedia.com: By Jim Gallagher RISMEDIA, ( Rismedia.com ) February 6, 2010—(MCT)—If you have a good job and good credit, the next few months might be a good time to go house hunting. Fence-sitters take the risk that Congress may let a rich tax credit expire, and that interest rates may rise. Buyers and sellers should consider the following factors as they consider jumping into the housing market. First, mortgage rates are blissfully low, and that may not last. The rate on a 30-year mortgage averaged 5% last week, according to Freddie Mac. Rates are low in part because the Federal Reserve has been buying up about $3 trillion in mortgage-backed securities and mortgage agency debt. The aim is to hold down interest rates and keep mortgages available. But the F... 02/06/2010

As mortgage lenders tighten approval standards nationwide, the importance of a good credit score is rising. Credit scores not only make the difference between a mortgage approval and mortgage turn-down, but they also play a large role in determining your actual mortgage note rate. In this 3-minute video, the NBC Today Show talks about 7 ways that homebuyers ruin their credit — often by accident. Some of the highlighted mistakes include: * Closing open credit cards * Making appliance buys on credit prior to closing * Asking creditors to lower credit balances prior to closing. In general, a 740 FICO will insulate a borrower from the higher costs and/or rates associated with low credit scores. Below 740, though, every 20 points adds to the damage. Watch the video and apply what you can to ... 02/05/2010

In a news-heavy week, mortgage markets improved last week, adding to a 3-week rally. But, given last week's data and domestic story lines, it's surprising that rates actually fell. The Federal Reserve said the economy continues to strengthen Consumer Confidence pushed to a 2-year high 4th Quarter domestic output exceeded Wall Street's expectations Usually, events like these draw money away from the bond markets and into the stock markets and Wall Street preps for better corporate earnings. The movement pressures mortgage rates to rise. Last week, however, different stories trumped the headlines including a report from Standard & Poor's that said U.K. banks are no longer counted among the world's most stable.  This research, in particular, triggered a flight-to-quality among investors th... 02/01/2010

The Federal Open Market Committee voted to leave the Fed Funds Rate within its target range of 0.000-0.250 percent. In its press release, the FOMC noted that the U.S. economy “has continued to strengthen”, that the jobs markets is getting better, and that financial markets are supportive of growth. There was no mention of the housing market's strength.  The last 3 statements from the Fed included that specific verbiage. It’s the fifth straight statement in which the Fed spoke about the economy with optimism.  This should signal to markets that 2008-2009 recession is over and that economic growth is returning to U.S. economy. The economy isn’t without threats, however, and the Fed identified several in its press release, including: Credit remains tight for consumers Businesses are reluct... 01/27/2010

A "Housing Start" is a privately-owned home on which construction has started. It's an important gauge of housing health because it tracks new housing stock nationwide. In December 2009, starts fell by nearly 7 percent. The news is mildly disappointing but not too bad. The likely cause for the Housing Starts drop is December's rough weather conditions. It's tough to break ground when Mother Nature won't coordinate and last month was especially hazardous in a lot of parts of the country. More cheery, however, is that for the second straight month, Housing Permits exploded.  A housing permit is an certification from local government that authorizes construction. After posting a 7 percent gain in November, permits rose by another 8 percent in December. It's a signal that housing is, indeed... 01/25/2010

Conforming and FHA mortgage rates improved last week on the combination of weaker-than-expected economic data and new anti-banking rhetoric from the White House. The S&P 500 shed nearly 4 percent in its worst weekly showing since October 2009 as all 10 sectors fell. As the money left stock markets, it made its way to bonds -- including the mortgage-backed variety. As a result, mortgage rates fell for the third straight week. Since shedding 300 basis points in December, mortgage bond pricing has recovered a bit more than half of those losses.  It's helping with home affordability and opening new refinance opportunities around the country. This week, though, mortgage rates could rise back up.  There's a lot going on. First, on Monday, the December Existing Homes Sales report will be relea... 01/25/2010

Securing an FHA mortgage is about to get more expensive. In a statement issued Wednesday, the Federal Housing Authority outlined policy changes to its mortgage assistance program. The shift is meant to both reduce the government group's portfolio risk while strengthening its overall financials. For consumers, the changes mean higher costs. As listed in the official announcement, there are 3 major guideline updates for the FHA: Upfront mortgage insurance premiums are increasing to 2.25% from 1.75% Minimum downpayments for applicants with sub-580 FICOs are rising to 10 percent Seller concessions are being limited to 3%, down from today's allowable 6% Furthermore, the FHA has appealed to Congress to raise an FHA borrowers' monthly mortgage insurance premiums. To read the FHA's statement, i... 01/24/2010

November 6, 2009, Congress voted to extend and expand the First-Time Home Buyer Tax Credit program.  There's 100 days left to claim it. The expiration date of the up-to-$8,000 tax credit has been pushed forward to spring, requiring homebuyers to be under contract for a home no later than April 30, 2010, and to be closed no later than June 30, 2010. In addition, "move-up" buyers were also added to the program's eligibility list meaning you don't have to be a first-time home buyer to be eligible for the tax credit.  If you've lived in your home for 5 of the last 8 years, you meet the IRS requirements. Move-up buyers are capped at a total tax credit of $6,500. The tax credit's basic eligibility requirements remain the same: You can't purchase the home from a parent, spouse, or child You ca... 01/23/2010

Mortgage markets showed little conviction last week, carving out just a narrow trading channel. There was very little data on which for markets to move, leaving mortgage rates momentum-bound. Luckily for rate shoppers, mortgage rate momentum was favorable. Rates were slightly lower Monday through Thursday before breaking downward Friday afternoon. Home shoppers this past weekend caught a nice break. Last week marked the second straight week in which mortgage rates fell. This week, in holiday-shortened trading and with little economic data set for release, expect mortgage rates to again move on momentum. The biggest report of the week is Wednesday's Producer Price Index. Producer Price Index is important to mortgage rates because of its role in inflation.  PPI is akin to a Cost of Living... 01/19/2010

Like real estate, it appears that foreclosure activity is a local phenomenon, too. As reported by RealtyTrac.com, more than half of all foreclosure-related activity in 2009 came from just 4 states: California Florida Arizona Illinois More than 1.4 million filings made in 2009 are attributed to the above states. Furthermore, each ranks in the Top 10 for 2009 Foreclosures Per Capita. The other states are Nevada, Utah, Georgia, Idaho, Michigan and Colorado. Versus 2008, foreclosures are up 21 percent nationwide and that's a big number, but a deeper look at RealtyTrac's annual reports reveals a more positive undertone on the housing market. 40 states fell below the national Foreclosures Per Capita average in 2009 Foreclosure activity fell on an annual basis in 10 states as compared to 2008... 01/14/2010

Mortgage rates are dropping this morning on weaker-than-expected Retail Sales data from December. Lower rates means more bang for your home-buying buck. Excluding motor vehicles and parts, December's "ex-auto" sales receipts were down roughly $500 million from November. Analysts had expected receipts to grow. The relevance of Retail Sales to home affordability isn't obvious, but it's definitely logical. Retail Sales is directly related to consumer spending and consumer spending accounts for the majority of the U.S. economy. When consumer spending slows, the economy often does, too. It leads investors to seek out "safe" investments. It's the reason why stock markets often drop on weak economic data -- stocks are among the riskiest investment classes available. Conversely, the best place... 01/14/2010

As the housing market improves across the country, certain cities are emerging as relative bargains.  Some areas, like Miami, were hit hard by the recession, and other areas are buoyed by good school systems and strong labor markets. In this 5-minute video from The Today Show, 10 cities are highlighted for their home prices.  And they're not "small towns", either.  Among the featured cities: Miami, Florida Akron, Ohio Tuscon, Arizona Minneapolis, Minnesota Trenton, New Jersey Now, this piece is about finding gems on a national scale.  They exist locally, here in Orange County, as well.  You just need to know what to look for. With mortgage rates still low and tax credits still available, it's not likely that bargains will last. Give me a call, or shoot me an email, and let's discuss th... 01/13/2010

Despite the headlines, it's important to remember that December's jobs report wasn't all bad news.  Sure, the economy shed 85,000 jobs last month and the Unemployment Rate failed to dip below 10%, but for home buyers and rate shoppers , the news was just fine. The soft employment data led mortgage rates lower, making homes more affordable for buyers. There are two sides to every economic coin. Since early-2008, the U.S workforce has been closely tied to home financing. As the economy slowed and jobs were lost, Wall Streeters pulled money from the risky stock markets and moved it to of the relative safety of bond markets, instead. Safe haven buying led mortgage bond prices higher which, in turn, caused rates to fall. Mortgage rates fell to 6 all-time lows in 2009. In a related statistic,... 01/11/2010