Mortgage markets worsened for a second consecutive week last week amid debt default concerns and stronger-than-expected economic data. Dollars left the bond market and mortgage rates suffered. After re-reaching an all-time low December 1, mortgage rates have since rolled back to mid-November levels. Rates are still low right now. Just not as low. And meanwhile, last week's big story -- the one that should concern mortgage applicants between now and early-2010 -- is the story of Retail Sales. Last week, a government report showed that American consumers are spending more this holiday season than was expected.  The Retail Sales data implies that consumers are feeling more confident in themselves, and in the economy overall. This is one of the last remaining pieces in the economic recovery... 12/13/2009

If you wonder what mortgage rates and home affordability will look like next year, today's Retail Sales data may hold your answer. Versus October, November's ex-auto sales were up by more than 1 percent. Analysts expected the increase, but not an increase of this magnitude. "Ex-auto" means that motor vehicles and parts are excluded from the data. Home values are increasing in many parts of the country and household net worths are rising, too. Therefore, we can infer from the Retail Sales report that U.S. consumers are starting to feel better about their individual finances, and about the economy overall.  To homebuyers and rate shoppers, strong Retail Sales data may foreshadow higher mortgages ahead.  This is because sales data is a by-product of consumer spending and consumer spending ... 12/11/2009

Since peaking in July 2009, national foreclosure activity has dropped through 4 consecutive months.  On a month-to-month basis, November's foreclosure activity fell another 8 percent.  However, national foreclosure activity continues to be dominated by a minority of states. As reported by RealtyTrac.com, more than half of November's foreclosure-related activity sourced from just 4 states: California Florida Illinois Michigan These are the same 4 states that topped October's foreclosure activity despite three of them posting month-to-month declines last month. The remaining Top 10 states in terms of total foreclosure activity include Arizona, Texas, Ohio, Georgia, Nevada and New Jersey. If you've been actively looking at REO lately, you've likely noticed that true bargains are harder to ... 12/10/2009

The average family spends $2,200 per year in electric bills and the average home is responsible for twice the amount of greenhouse gases than the average automobile. Whether you want to save money or save the environment, this 5-minute piece from the NBC Today Show is for you. In it, you'll learn that just by being aware of your energy consumption, you can reduce it by up to 15 percent.  The piece centers on a device called a Power Monitor which retails from $30 to $100, depending on the model. It measures the actual cost of using an appliance, or using a light, or charging a laptop, or any other household energy use. Among the cost findings: A plugged-in phone charger no phone attached costs $0.10 per hour Cooking with a microwave costs $0.88 per hour Big screen TVs cost $0.06 per hou... 12/08/2009

For many American homeowners, interest paid on a mortgage is tax-deductible in the year in which it was paid. Knowing that, eligible homeowners can increase their 2009 tax deductions just by making their January 2010 mortgage payment before the end of the year. By paying in 2009, the mortgage interest paid can be applied against 2009's itemized tax deductions even though the payment isn't technically due until 2010. It can reduce your tax burden come Thursday, April 15, 2010. And lest you think you're paying the mortgage "in advance", remember that mortgage interest is paid in arrears; a payment due January 1 accounts for interest that accumulated in December 2009 anyway.  Tax planning is a complicated issue and not all homeowners qualify for mortgage interest tax deductions. Check with... 12/08/2009

Mortgage markets finally reversed course last week, selling off with fury and causing prices to plummet.  When bonds prices fall, rates rise. The action broke a multi-week winning streak, much to the disappointment of rate shoppers everywhere. Rate hikes came in stages. First, early in the week, mortgage bonds fell out of favor as traders booked profits ahead of the November jobs report and as concerns over a Dubai Default waned. Then, on Friday, when the jobs report was ultimately released, it showed a net loss of just 11,000 jobs in November and dip in the Unemployment Rate to 10.0 percent. Mortgage markets got hit again. Now, since bottoming last Monday, mortgage pricing is worse by more than 100 basis points. As that figure relates to rates, it's a jump of anywhere from a quarter- t... 12/07/2009

This morning's jobs report is causing mortgage rates to rise, capping a week during which rates have already jumped 3/8 percent off all-time lows. The government's November Non-Farm Payrolls report reinforced the notion that the recession is nearly over, if not over already. Just 11,000 jobs were lost last month -- much fewer than analysts had expected -- as the Unemployment Rate fell to 10.0%. If it seems strange to be talking economic recovery while Americans are still losing jobs -- 7.2 million since 2008 --  remember that data always needs context. See, analysts view employment figures as a lagging indicator for the economy.  This is because business owners tend to make hiring decisions based on how business has been -- not on how it will be at some point in the future. The jobs rep... 12/04/2009

'Tis the season to do shopping -- and get bombarded with offers to open credit cards. The deals are tempting, too. "Open a charge card today" and save up to 20% on your purchase. Considering that the average Black Friday ticket was $343, that's $68 saved per store. For big-ticket items like televisions, the savings are even bigger. But for people in the market for a new home -- or looking to refinance -- taking advantage of in-store savings could be a long-term money loser. Every time you apply for a credit card, your credit score drops. According to myFICO.com, "new credit" accounts for 85 out of 850 possible credit scoring points.  New credit is defined by such traits as: Number of recently opened accounts Number of recent credit inquiries Time since credit inquiry(s) Proportion of ac... 12/02/2009

When a home seller accepts a contract on an MLS-listed property, the property's status changes from "Active" to "Pending". This means the home is scheduled to sell, but not yet sold. Each month, the National Association of Realtors® tallies the number of pending homes and publishes the data as the Pending Homes Sales Index report. In October, for the 9th straight month, the index gained. It's the longest such streak in Pending Home Sales history. Because a "pending" home sale is just a contract between buyer and seller, it's not as important to the economy as actual home sales.  However, the Pending Home Sales Index can be a fine predictor of future activity. Historically, 80 percent of homes under contract "close" within 60 days, and most others close within 120 days. Recent Existing H... 12/02/2009

Here's an article by Carrie Bay, from today's DSNews.com Many critics argue that the pace of modifications under the federal Making Home Affordable (MHA) program isn't keeping stride with the nation's raging foreclosure problem, so the Obama administration announced Monday that it is taking a new approach to pressure servicers into converting more trial modifications to "permanent" status.   The government says that from now on, servicers failing to meet performance obligations under the federal program will face punishment, "subject to consequences which could include monetary penalties and sanctions." The Treasury is also instituting new procedures and additional paperwork that will allow for closer monitoring of mortgage companies' foreclosure prevention efforts. Major servicers wil... 12/01/2009

The supply of newly-built homes fell to its lowest levels since 2006, offering additional proof of a housing market in recovery. Home supply is defined as the amount of time it would take to sell the current inventory of homes at the current pace of sales. In October, for the 8th consecutive month, home supplies fell. Since peaking in January 2009, it's now down by almost half. Lower supply leads to higher prices.  This is Economics 101. Furthermore, supply is expected fall into 2010. According to the government, builders are breaking ground on new homes at a declining pace, even as sales ramp up. Builders are cheering the October New Home Sales report, but its the everyday sellers of "existing homes" that have real reason to celebrate. See, as builders clear out their respective inven... 12/01/2009

Mortgage markets improved last week on stronger-than-expected economic data and safe haven buying. The holiday-shortened trading week amplified what should have been modest gains into large ones. Conforming mortgage rates dropped by about a quarter-percent last week, dropping them near their best levels of the year -- and of all-time. Oddly, mortgage rates are falling as the U.S. dollar weakens. This is atypical because mortgage bonds are repaid in U.S. dollars.  When the value of the dollar is falling, therefore, the value of holding mortgage bonds become less over time.  Investors are snapping up bonds with fury, however. Partially because of lingering concerns related to Dubai, and partially because of faith in the U.S. economy's long-term health. This week, those beliefs could be sh... 11/30/2009

For today's home buyers and homeowners that can manage the higher monthly payments, 15-year fixed rate mortgage rates look attractive as compared to comparable 30-year products. The 15-year/30-year interest rate spread is near its 5-year high. Despite lower rates, however, homeowners opting for a 15-year fixed mortgage should be prepared for its higher monthly payments.  This is because the principal balance of a 15-year fixed is repaid in half the years as with a standard, 30-year amortizing product. As compared to 30-year terms, 15-year products repay 3 times as much principal each month. Versus a 30-year, 15-year fixed mortgages have a few downsides worth noting.  The first is that, because 15-year mortgages are heavy on principal and light on interest, homeowners who itemize tax re... 11/29/2009

Hello again – I hope your Thanksgiving Day ( And Black Friday.) went beautifully! In our local housing market, the number of available houses is now the lowest in at least a few years.  In Coto de Caza, for example, it went from a previous low of 131 houses, back in mid January, to hovering around 150 in the Spring, but has since steadily declined, to now being less than 115. Correspondingly, the number of houses in escrow has followed a slightly different path over that time, from a low of 9 in January,  up to a high in mid-summer close to 40, but recently staying in the high 20’s to the low 30’s.  Prices in the lowest ranges have nudged up from their low levels over the first half of the year, while the higher price ranges have continued to slightly decline. ( This is still the most n... 11/28/2009

Home affordability improved this week after the Federal Reserve released its November 3-4, 2009 meeting minutes. The FOMC Minutes is a companion to the Federal Reserve's post-meeting press release. It's released 3 weeks after the Fed adjourns and details the internal debates that shape our nation's monetary policy.  As compared to the press release, the minutes can be rather lengthy. November's press release featured 428 words, the minutes offered 6531. However, this extra level of detail shapes markets and mortgage rates.  With Wall Street unsure about the economy's path, investors look to our nation's central bankers for guidance. The Fed has made several points clear: The economy shows tell-tale signs of improvement Unemployment threatens the recovery Inflation pressures are low, for... 11/27/2009

Another month, another piece of evidence that the housing market is in recovery. Existing Home Sales surged in October as the nation's homebuyers took advantage of low mortgage rates, low list prices, and, for some, a generous tax credit. Home resales are 23 percent higher versus a year ago and home supply is down to 7 months nationwide. Inventory hasn't been this low since February 2007. The news shouldn't be surprising, however.  The same real estate trade group that produces the Existing Home Sales report also publishes a monthly report meant to predict future home sales called the Pending Home Sales Index. Pending Home Sales have been through the roof since mid-May. So, with pending home sales showing no signs of slowing and 80% of pendings turning into actual, closed sales, we can... 11/24/2009

Mortgage markets worsened last week on a mixed bag of economic data.  Inflation data came in soft, but so did the start of the holiday shopping season. For the first time in a month, mortgage rates worsened last week, adding roughly 0.125 percent on conforming fixed-rate products, and a little bit more on ARMs. Despite rates worsening, there was still some good news for home buyers and would-be refinancers. Mortgage rate volatility was markedly lower than in recent weeks.  You could shop for mortgage rate last week and actually take your time about it. This is in stark contrast to the last month or so over which mortgage rates changed every few hours, on average. This week, though, because a heavy data calendar is combining with a holiday-shortened trading week, rates aren't likely to s... 11/23/2009

A "Housing Start" is a home on which construction has started and, for the 4th straight month, national single-family housing starts held steady last month.  When the demand for homes grows faster than the number of homes for sale, prices increase.  As recent home sales data confirms, buyers currently outpace sellers and one consequence of this is an increase in multiple-offer situations this year.  It's no wonder home prices are up across so many neighborhoods. October's Housing Starts report is yet another piece of housing data foreshadowing rising home prices into 2010. Building Permits were also down in October, a potential demand-to-supply imbalance magnifier. Without permits, there's no future construction. This drains supply. Meanwhile, tax breaks and low rates tend to stimulate... 11/19/2009

Here is the latest Orange County, California, Housing Report from my friend Steven Thomas, the President of Altera Real Estate. Monday, November 16, 2009 Have you ever pedaled up a steep hill on your bicycle as a kid only to wonder if you were going to ever make it? That's the same feeling that some buyers, sellers and agents get in trying to arrive at a successful close date. Short sales are homes where the asking price is less than the outstanding loan amounts. These are subject to the lender's approval. This approval takes anywhere from weeks to months. There is nothing short about a short sale. About a year ago, it was just about impossible for agents to show a short sale to a prospective buyer. Nine times out of ten, the short sale already had at least one offer on the home, which ... 11/18/2009

A conforming mortgage is one that, quite literally, conforms to the mortgage guidelines set forth by Fannie Mae or Freddie Mac. Each year, the government sets the maximum allowable loan size for a conforming mortgage, based on "typical" housing costs nationwide.  Loans in excess of this amount are typically called "jumbo". While home prices increased from 1980 to 2006, so did conforming loan limits.  Since then, however, as home prices have dipped, the conforming loan limit has held. Now, in 2010, for the 5th consecutive year, the government set $417,000 as the nation's conforming mortgage loan limit. The 2010 conforming loan limits, as released by the government, are: 1-unit properties : $417,000 2-unit properties : $533,850 3-unit properties : $645,300 4-unit properties : $801,950 Bu... 11/17/2009