Mortgage applications surged last week as borrowers moved refinance their loans to take advantage of lower interest rates, which continued to fall this week as turmoil in financial markets prompted investors to seek safer investments.
Mortgage loan applications were up a seasonally adjusted 33.4 percent from a week ago for the week ending Sept. 12, the Mortgage Bankers Association said, driven by an 88.1 percent surge in refinance applications. An index tracking purchase loans rose a more modest 2.4 percent, driven by a 5.3 percent increase in applications for conventional purchase loans. Applications for government backed purchase loans, largely FHA, fell 4.5 percent.
From Inman News it would appear there is no better time to get that home refinanced, perhaps even get rid of a credit card or a car loan.
Freddie Mac: 30 Year Fixed Mortgage Rate Drops to 5.78%
From MarketWatch: Freddie Mac: 30-year fixed-rate mortgage average drops Freddie Mac said Thursday the 30-year fixed-rate mortgage average ... was 5.78% with an average 0.6 point for the week ending Sept. 18, compared with 5.93% last week. Last year at this time, the average rate was 6.34%.
Update: It's time to buy, even negative talking Calculated Risk shows that the housing recovery is beginning now, don't miss the bottom and complain next month. Call me if you want a quick pre-qual before you head out to look for homes this week.
A rundown on what mortgage experts are saying about the market this morning:
"As most know, the Feds came in last week and rescued mortgage giants, Fannie and Freddie. Prior to this takeover, there was a cushion within the rates because investors did not have much confidence in mortgage backed securities. When the Feds came in and rescued these two companies, confidence improved, thus reducing the cushion and rates significantly last Monday. In fact rates improved by .5%.
On top of this, most economic indicators recently released are not good. Concerns about the banking industry and unemployment numbers just aren't good. With this news, most expect the Fed to cut rates to be cut by the Feds by .25-.5% tomorrow when the Feds meet.
Every indicator shows rates will remain low and may even go lower through the remainder of the year. What more could you ask for? Supply is enormous, prices are low, and rates are really low.
So why aren't people buying? The media sells doom and gloom. If the media were covering some of the positive things, it would stimulate buyers. Most of this bad news is a backlash from bad lending from 2003-2007. However, there are a number of solid financial institutions out there today, including Fannie and Freddie, that can weather the storm." From What about interest rates Bob Lowery
First Financial Opinion: I have to agree, sadly, that all this negative news on the employment front and Lehman and Fannie news means that the Fed will have to cut again and that rates will stay low. One point I make often is that rates go down in anticipation of a Fed cut, but then as soon as the Fed cuts they typically jump a bit the same day. If you are looking to lock your rate, you may as well do so today.
"For those of you with your head in the sand last weekend, or recovering from a Hurricane Party………..the Gov’t has announced it will be taking over Fannie Mae and Freddie Mac which allows the US Treasury to back the bonds offered by these companies. This added strength to the bonds and the price of the Mortgage Backed Securities jumped higher based on this news. Barring this past February, this puts these bonds at near the highest level they have seen in over 2 years!!
Rates have improved and are continue to add to their gains. Currently the bond pricing is up over 150 bps since its close on Friday (9/6/08). This is good news for Mortgage Rates as we anticipate improved pricing in the future!!" From Good News for Current Market Freddy Bristow
If you are in NW Indiana (Valparaiso, Portage, Hebron, Hobart, Crown Point, Chesterton) and you are ready to refinance, this is the best time in three years ... thinking you may want to buy your first house? Do it. Call me or email today to set an appointement for a free home mortgage analysis.
I kinda like this one, need to do some research:
Perhaps you've heard of Sir. Richard Branson's most recent venture, Virgin Money. It's a concept my grandfather employed in the 1960' and 1970's when he owner financed homes that he owned for employees. Virgin says:
"A Family Mortgage is a private loan from someone you know that is typically used toward the purchase of a home, or to refinance an existing bank mortgage. Imagine: Aunt Sarah as your mortgage lender!"
There's another Social Lending Company that might offer help for folks who are trying to scrape up the cash for a purchase, or need help getting on with life via a short sale. Zopa, says it's "FaceBook meets Lending." It's a new concept that would, for instance, allow me to help pay for my nephew's college tuition, $20.00 a month. If I sign up for $20 a month, and my folks agree to $20.00 and another aunt and uncle agree... well, pretty soon that student loan payment is almost nothing. These unsecured loans are for $25,000 or less, and you must have a 640 credit score.
From Active Rain:
Government Bailout: Impact on Rates
According to Tom Millon of the Capital Markets Cooperative, in his article entitled The Week Ahead in the Capital Markets--September 8. 2008, mortgage rates are positioned to possibly drop in the coming future. We have already seen an impact as of today in rates, despite the increase in the Treasury Bond Yield. This is because the spread in yield between mortgage rates/MBS rates and the 10 Year Treasury Bond has been at an unprecedented high. The expectation is that the spread between tresury yields and mortgage yields will be reduced by approximately 1/2 percent, which is significant. Treasury yields may rise in the meantime, lessening this impact. But rates should drop in the near future.
Secondly, the government is enacting the GSE Mortgage Backed Securities Purchase Program, which will aloow the government to purchase MBS'. How much and how much this will help is too early to tell.
This will be an interesting upcoming month in the secondary mortgage market.
Michael Byrne
From
Rates this Week : September 2, 2008
Tiffany Taylor
For the first time in 4 weeks, mortgage rates closing a week lower than where they opened it
Markets shrugged off uncertainty about Hurricane Gustav and chose to rally on the backs of strong economic data.
Overall, rates were down by about 0.125 percent, or $96 per year per $100,000 borrowed.
Markets were influenced by a handful of positive news last week -- two pieces of housing data gave markets reason to celebrate, as did an upbeat consumer confidence survey.
- Sales of "new" homes is reducing the glut of builder homes
- Sales of "used" homes is showing stability
- Americans, in general, are feeling better about the economy
In addition, equally-important-but-less-well-known data from last week points to similar conclusions -- the U.S. economy may be on more solid footing than many people had believed.
This week, markets re-open Tuesday after being closed for Labor Day. Early in the week, there isn't much data for markets to digest so expect oil markets to take center stage.
Support New Bill (H.R. 6694) to Reform and Save DPA!
Dear Gerardo,
As we mentioned earlier this week, the President signed H.R. 3221, Housing and Economic Recovery Act of 2008, into law. The bill contains a provision (SEC. 2113) that forbids FHA from insuring mortgages in which the downpayment comes directly or indirectly from an interested third party (such as the seller), beginning October 1, 2008. As of this date, the minimum downpayment will be increased from 3% to 3.5%.
We are pleased to announce that a new bill, The FHA Seller-Financed Downpayment Reform and Risk-Based Pricing Authorization Act of 2008 (H.R. 6694) was introduced by several members of Congress on Thursday, July 31, 2008. Representatives Maxine Waters, Gary Miller, Al Green and Christopher Shays sponsored this bill that if passed and signed into law will allow downpayment assistance to continue indefinitely.
Scott Syphax, President and CEO of Nehemiah Corporation of America praised this group earlier today.
"Maxine Waters, Gary Miller, Al Green and Christopher Shays have demonstrated the willingness to understand all sides of this issue and the courage and leadership to follow their conscience. All those who understand the importance of working class American's having their shot at homeownership, need to work together to encourage our elected officials to pass this bill."
"There are dire consequences to America waking up on October 1st without downpayment assistance. In fact, 300,000 working class families will be locked out of homeownership in the next year alone."
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