Even with the home buying season behind us, housing data continues to show the influence of low mortgage rates. The National Association of Realtors reported that existing home sales increased 2.1% on a seasonally adjusted basis in October. This increase is 10.9% higher than the rate in October of 2011.
Single family homes increased 9.6% above a year ago while condo and co-ops rose 21.3% higher than the same time last year. Total existing home sales represent single family homes, townhouses, condominiums and co-ops. In addition, the National Association of Builders (NAHB) reported that builder confidence rose to the highest level since May of 2006.
For the seventh consecutive monthly gain, the NAHB/Wells Fargo Housing Market Index jumped 5 points to 46. Even mortgage applications showed improvements for the week ending November 9th. According to the Mortgage Bankers Association's Weekly Mortgage Applications Survey, volume increased 12.6% on a seasonally adjusted basis. The Refinance Index rose 13% and the seasonally adjusted Purchase Index rose 11%. The share of total mortgage application volume for refinancing rose to 81%.
The availability of low mortgage rates is helping the recovery taking place in the housing market as borrowing continues to be affordable. According to FreeRateUpdate.com's survey of wholesale and direct lenders, mortgage rates increased slightly this past week leaving 30 year fixed mortgage rates as low as 3.10%, 15 year fixed mortgage rates as low as 2.375% and 5/1 adjustable mortgage rates as low as 2.250%. These lowest mortgage rates require that borrowers have good credit and the qualifications that are necessary for loan approval. Conventional mortgages for home purchase loans and traditional mortgage refinances require that borrowers submit documentation for employment, income and assets.
This information is examined and verified further by the lender. On the other hand, HARP 2.0 is the non-traditional mortgage refinance program for borrowers who have loans that were sold to Fannie Mae or Freddie Mac prior to June 1, 2009. This program does not require an appraisal in most cases and documentation is kept to a minimum. HARP 2.0 has helped many underwater borrowers, especially those with more than 125% loan to value, refinance to historically low mortgage rates, thus, saving them a substantial amount of money and eventually giving them back equity at a faster pace. This whole process is helping not only the housing market, but the overall economic recovery. With many borrowers still eligible for HARP 2.0, the online form is available for submission without the need of a social security number. A response with more information is returned almost instantly.
This week, FHA announced that the annual mortgage insurance premium will be increasing by 10 basis points or 0.1% which will add approximately $13 per month to the monthly mortgage payment for the average borrower. In addition, premium payments will no longer be able to be canceled as has been the case since 2001.
These changes are being made in order to shore up the agency's insurance fund which has taken a serious hit since the housing crisis began. Throughout this time FHA has kept mortgage rates both low and competitive with conforming mortgage rates, even sometimes lower. This past week, FHA mortgage rates also increased slightly. Current FHA 30 year fixed mortgage rates are as low as 3.00%, FHA 15 year fixed mortgage rates are as low as 2.625% and FHA 5/1 adjustable mortgage rates are as low as 2.250%.
FHA closing costs (APR) are high due to various FHA fees and the upfront mortgage insurance premium, but these can often be added to the loan amount or paid with seller concessions as allowed by FHA guidelines. The FHA streamline with no cash out and drastically reduced upfront and annual mortgage insurance premiums is available until the end of 2013. This program is for existing borrowers who have loans that were endorsed prior to June 1, 2009. While an appraisal or other documentation is not required for the FHA streamline, borrowers must have a clean mortgage payment record with no late payments for the most recent twelve months.
The FHA streamline refinance has helped many borrowers trade in to lower mortgage rates which, in effect, frees up some needed cash by reducing monthly mortgage payments. In some cases, borrowers have chosen to reduce the length of the loan in order to end the mortgage in a shorter period of time. There is more information available about the FHA streamline or any other FHA mortgage program by submitting the online form which will return a response almost immediately.
Jumbo mortgage rates actually decreased this past week. Current jumbo 30 year fixed mortgage interest rates are as low as 3.125%, jumbo 15 year fixed mortgage rates are as low as 2.625% and jumbo 5/1 adjustable mortgage rates are as low as 2.250%. Jumbo mortgage volume have been on the increase as more borrowers see the opportunity of purchasing a home at this time when prices are still low and jumbo borrowing costs are the lowest in history.
This market is becoming more competitive as lenders look to increase their portfolio loans with good performing loans from well qualified borrowers. As this continues to happen, jumbo mortgage borrowers may see flexibility with guidelines as lenders move to gain their share of good performing loans. Due to this, borrowers must be prepared to shop around for the best jumbo mortgage rates and guidelines available. The online form is available for borrowers to obtain more information about jumbo mortgages, rates and requirements.
MBS prices have an affect on mortgage rates which move in the opposite direction. It is not unusual for stocks to go up when MBS prices are going down. This usually happens in response to economic data that is released, although this is not always the case. Last week, data released showed CPI rose 0.1% and was 2.2% higher than a year ago.
Core CPI, which excluded food and energy, rose 0.2% which is 2.0% higher than one year ago. The NY Empire State Index was -5.2 which was stronger than expected. Industrial Production for October fell 0.4% which was below predictions of an increase of 0.2%. Core PPI fell 0.2% from August and was 2.1% higher than a year ago. Retail Sales for October dropped 0.3% from September. Jobless claims came in much higher than expected with an increased of 78,000 claims for the week ending November 10th and is most likely a result of Hurricane Sandy.
FreeRateUpdate.com surveys more than two dozen wholesale and direct lenders? rate sheets to determine the most accurate mortgage rates available to well qualified consumers at about a 1 point origination fee.
Published: November 21, 2012
Use of this article without permission is a violation of federal copyright laws.
 Edward James Ferrara?III spent 8 years?(2001-2008) brokering and banking home loans in Orange County, CA to the tune of some 500 million dollars in mortgages funded by May of 2008, when?he founded?the rate research website FreeRateUpdate.com. Ed is not only the founder of FreeRateUpdate.com, he?is also a lead contributor to the site,?whose roster includes?over a dozen writers and of which receives over 50,000 page views per month. Ed's passion for helping consumers to avoid falling victim to?banks dishing out higher rates?for bigger profits has helped FreeRateUpdate.com to become?a unique?authority on mortgage rates. Ed recently married Cheyne Aki Gantt and became a first time father to Edward James Ferrara IV, born August 31st 2009. Ed and FreeRateUpdate.com have recently been cited in numerous media outlets including the Los Angeles Times, Yahoo Finance, and Marketwatch. |
Source: http://realtytimes.com/rtpages/20121121_ratewatch.htm
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