Mortgage rates drop to a new low
January 30, 2012
Fixed mortgage rates declined to a record low recently for those that can afford to refinance or purchase homes. However, few families are financially able to take advantage of the rates.
Last week, Freddie Mac stated the average rate on a 30 year fixed mortgage declined to 3.89%, which is a bit below the prior record of 3.91% seen only three weeks ago.
Mortgage rate records were started in the 1950’s.
Not only did the rate decline for a 30 year fixed mortgage but also for a 15 year fixed mortgage to 3.16% which is down from the percentage seen three weeks ago of 3.21%.
The reason the rates are lower is they track the yield on the 10 year Treasury not that fell under 2%. They may fall even farther in 2012 if the Fed starts up bond purchases as a few economists believe.
Average fixed mortgage rates were still around 4% at the end of last year. However, most Americans do not have the ability to take advantage of the historic low rates or they would have done so before this time.
The main reasons Americans are not taking advantage of the low interest rates are low wages and high unemployment. Most do not want to put their money into a home that may lose value over time instead of building equity.
Mortgage applications are down on a seasonally adjusted basis this last month as reported by the Mortgage Bankers Association. Freddie Mac’s chief economist, Frank Nothaft, stated that until companies start hiring and unemployment drops considerably, the lower mortgage rates will remain low key. Occupied homes are selling a bit better than figures seen in 2010. New home sales in 2011 will probably go down in history as the worst year on the books dating back a century.
Homebuilders have hopes that these low interest rates will help stir sales in the coming year. The National Association of Home Builders sentiment rose in the month of December due to the low interest rates to the highest level seen in over a year. However, these interest rates have not helped the housing industry.
The average fee dropped from 0.8 to 0.7 for a 30-year loan while a 15 year fixed mortgage stayed the same at 0.8.
2011 ended with Record low fixed mortgage rates
December 27, 2011
There was a slight rise in the fixed mortgage rates just off a bit from the record lows. However, the end of 2011 was similar to the beginning with a few individuals taking advantage of the best interest rates in our history.
Freddie Mac stated on Thursday that the average interest rate on a 30-year home loan rose from 3.95% to 3.91%. Last weeks interest rate was the lowest average seen on records dating back to the 1950’s.
The interest rate on a 15 year fixed mortgage loan increased from 3.21% to 3.24%, which was at a record low.
Throughout 2011, interest rates have stayed below 5% except for two weeks. With that said, this past year is still going to be one of the worst ever for home sales.
Occupied homes in 2011 were selling just a bit ahead of the previously year. New homes sales for 2011 may go down in history as the worst year seen in the past 50 years.
The good news is that this coming year may be better. Over 5% of families stated they plan to purchase within the next 6 months as reported by the Conference Board.
Homebuilders are optimistic that these low interest rates could help boost home sales in the upcoming year. Low mortgage rates was one of the reasons noted on a survey of builder sentiment which increased during the month of December to the highest seen in over a year.
At this time, the low mortgage rates are not having much of an impact. Applications for mortgages fell just a bit over the last few weeks as reported by the Mortgage Bankers Association.
Only a small increase in wages and unemployment at record highs has made it harder for many individuals and families to qualify for home loans.
High unemployment and scant wage gains have made it harder for many people to qualify for loans.
A Look at the Markets
April 4, 2011
The economic news was reflected stronger as rates were up quite a bit. Freddie Mac reported that the week that ended on February 1 the 30 year fixed rates were on average 5.05 percent, which is up from 4.81 percent for the week prior. The average for a 15 year fixed rose to 4.29 percent. Adjustables were also up with one-year adjustables average rising to 3.35 percent and five-year adjustables increasing to 3.92 percent. Last year at this time 30 year fixed rates were seen at 4.97 percent.
Frank Nothaft, vice president and chief economist for Freddie Mac stated, “Long-term bond yields jumped on positive economic data reports, which placed upward pressure on rates of home loans this week. For all of 2010, nonfarm productivity rose 3.6 percent, the most since 2002, while January’s unemployment rate unexpectedly fell from 9.4 percent to 9.0 percent. Moreover, the service industry expanded in January at the fastest pace since August 2005. As a result, rates on a 30-year fixed-rate loans rose to the highest level since the last week in April 2010.”
These rates do not include points and fees and are only provided to use as references for trends. These rates should not be used for any type of comparison purposes.
Indices For Adjustable Rate Mortgages as updated on February 11, 2011
Index February 10 January
6-month Treasury Security 0.18% 0.18%
1-year Treasury Security 0.29% 0.27%
3-year Treasury Security 1.19% 1.03%
5-year Treasury Security 2.18% 1.99%
10-year Treasury Security 3.58% 3.39%
12-month LIBOR 0.782% (Jan)
12-month MTA 0.312% (Jan)
11th District Cost of Funds 1.508% (Dec)
Prime Rate 3.250%
Fannie Mae, Freddie Mac, and Ginnie Mae
February 18, 2011
In 1938, President Franklin Roosevelt’s New Deal created the Federal National Mortgage Association known as Fannie Mae as a federal agency during the Great Depression. The purpose of Fannie Mae was to bring stability, affordability, and stability to the United States housing and mortgage markets. In 1968, Fannie Mae was converted by Congress to a publicly held corporation that would balance the federal budget.
Fannie Mae dominated the secondary market and lowered housing costs. To compete against Fannie Mae’s dominance, Congress chartered the Federal Home Loan Mortgage Corporation known as Freddie Mac in 1970 as a public corporation.
Both of these corporations have close to the same Congressional charters, regulatory structures and mandates. Both buy mortgages from lenders and package them into mortgage-backed securities that are then sold to investors with a guarantee against default. This generates a secondary market, which allows mortgage lenders to use the freed-up funds to make more home loans.
In 1968, Congress established the Government National Mortgage Association known as Ginnie Mae. Ginnie Mae unlike Fannie Mae and Freddie Mac does not buy loans, but only guarantees investors the payment of the principal and interest on mortgage-backed securities that are federally insured loans with the emphasis on VA and FHA loans.
Fannie Mae and Freddie Mac both were rescued in September of 2008 from economic failure and then placed them into conservatorship with the Federal Housing Finance Agency (FHFA). A few members of Congress had called for the elimination of both Fannie and Freddie slowly and to leave mortgage finance with the private sector. A report from the Treasury Department on the future of Fannie Mae and Freddie Mac will be presented to Congress in February of 2011.
Fannie Mae And Freddie Mac Use New Program
June 4, 2010
A new initiative that will encourage lending companies to submit appraisals and loan delivery information electronically has been started by federal regulators in charge of Fannie Mae and Freddie Mac. The new program will require both Fannie and Freddie to use the same data standards, data collection processes, and file formats.
This new standard will improve the consistency as well as the quality of information for not only appraisals but also other loan data. The will improve the power of collateral, borrower and loan data submitted to both companies.
The Uniform Mortgage Data Program is a long-term, joint effort to generate improved and consistent data standards and collection processes. Fannie and Freddie have worked with industry members in order to develop the uniform standards.
Edward J. De Marco the FHFA Acting Director stated, “FHFA directed the Enterprises to undertake the development of the standards to provide greater uniformity in the data they collect, and” …“This initiative is a major step toward meeting industry requests for uniformity in appraisal and loan data. Improvements in data quality will benefit all mortgage market participants and strengthen the housing finance system.”
The new framework will help to increase efficiency for lending companies while at the same time allow Fannie and Freddie to be better able to manage risk in a more effective manner. The data standards will give uniformity for appraisers, mortgage lenders, and services along with other information providers in their data submissions to both Fannie and Freddie. This data standards program will be launched in phases through a consistent platform and does provide stakeholder input.
Under the new standards, data submitted to Fannie Mae and Freddie Mac on loans sold to or guaranteed by either will include more complete and consistent data including “loan characteristics; borrower information; the property securing the loans; and, the identity of the parties creating the transaction.”
DeMarco explained, “Fannie Mae and Freddie Mac will continue their own proprietary reviews of appraisal and loan information, using their own unique business models and policies,”…”However, we asked the Enterprises (Fannie Mae & Freddie Mac) to work together to implement a common data protocol that will ultimately benefit borrowers, lenders and other market participants. Common data definitions, electronic data capture, and standardized data protocols will improve efficiency, lower costs and enhance risk monitoring. The uniform system includes protocols for incorporating new technologies and to meet new legal requirements
Understanding Housing Economic Indicators
February 26, 2010
Economic indicators that kept track of the housing market condition are constantly being monitored by analysts, investors, and policy makers. To understand the indicators you must understand the indicators, which include the following.
Housing Starts
Housing starts is nothing more than the start up purchases that buyers purchase to furnish their new home. This report is more than likely the most important report found on the housing sector as it causes a very large ripple effect in the economy when the items such as furniture and appliances are purchased. Eighty-five percent of the housing industry is seen in the construction of single-family homes. Multi-family properties make up the rest of the housing market, which is considered to be highly volatile.
Home Sales
Homes sales are ten percent of the housing market and are only put into the table after the contract on the new home is signed. New home sales are completely different than the way that existing homes sales are computed. Existing home sales are computed at the time of the closing, which reveals contracts that were signed a month or two before the report was created. When you look at the housing market, more than eighty percent is due to existing home sales. Within this category of home sales you must not forget homes sales that are pending which is known as the pending homes sales index. This indicator is one that relates to existing home sales and not new homes. A pending sale is one in which the buyer and seller have agreed and signed a contract but the deal has not been closed. Since it takes up to six weeks for a home sale to close, it is one of the leading indicators that are watched closely.
Housing Price Indices
The Federal Housing Finance Agency Index and the S&P/Case-Shiller home-price index are the two housing price indices.
The Federal Housing Finance Agency Index is one that follows houses that are purchased with mortgages through Freddie Mac or Fannie Mae. This index leaves out many of the foreclosure sales as well as any properties that were purchased with non-conventional mortgage loans. These home loans symbolize a more stable pricing index as they did not see the rise and decline in prices that was seen in other markets over the last decade. On the other hand, the S&P/Case-Shiller report is centered on the larger metropolitan areas and does include distraught properties. The report also includes non-conventional loans, but prices of these homes are usually quite a bit more volatile.
For more information regarding Tulsa news, articles and commentary on homes sales, farms and commercial property in the Tulsa Real Estate market please re-visit or subscribe to our RSS Feed on our Tulsa Real Estate Mall Blog.
Flat Mortgage Rates
October 12, 2009
Freddie Mac reported the results of the Primary Mortgage Market Survey, which showed that the 30-year fixed-rate mortgage averaged 5.03% with an average 0.7 point for the week ending October 29, 2009. This figure is up from last week when it averaged 5.00%. The same time period of 2008 had the figure at 6.46% for a 30-year fixed-rate mortgage.
The 15-year fixed-rate mortgage averaged 4.46% with an average 0.6 point, which is up from last week when it averaged 4.43%. A year ago at this time the 15-year fixed-rate mortgage averaged 6.19%.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.42% with an average 0.6 point, which is up from 4.40%. A year ago, the 5-year adjustable-rate mortgage averaged 6.36%.
The one-year Treasury-indexed adjustable-rate mortgage averaged 4.57% with an average 0.6 point, which is up from 4.54%. At this time last year, the 1-year adjustable-rate mortgage averaged 5.38%.
Frank Nothaft, vice president and chief economist for Freddie Mac stated, “Interest rates for 30-year fixed mortgages have averaged just below 5 percent this year, which is the lowest 10-month average since the survey began in 1971,”… “As a result, refinance activity has accounted for almost seven out of 10 mortgage applications on average this year,” according to Freddie Mac’s survey.”
Economic data releases this week offered mixed signals as to the current state of the housing market. For example, total existing home sales jumped 9.4 percent to an annualized rate of 5.57 million homes in September, the strongest pace since July 2007, according to the National Association of Realtors®. However, new home sales unexpectedly fell 3.6 percent to 402,000 houses, the weakest since June of this year, based on figures from the Department of Commerce. Nonetheless, stronger housing demand has lowered the inventory of unsold existing homes in September to the lowest since January of this year and for new homes the lowest since November 1982, which should help stabilize falling house prices.”
All of these signs are good for the housing market. Consumers as well as REALTORS need to be on the lookout for more good news in the coming months.
To learn more contact a Tulsa Homes Expert by calling RE/MAX for more information at 877-738-8572.
Fannie Mae & Freddie Mac’s Appraisal Rules
August 26, 2009
Congress is taking a break until after Labor Day, but things are boiling over the Fannie Mae and Freddie Mac’s appraisal rules. The rules of course are very controversial or we would not be talking about Capital Hill.
If it were up to Bipartisan legislation, the Home Valuation Code of Conduct would be put on a shelf and left for 18 months and this idea is actually getting new sponsors, which is not at 54.
The National Association of Realtors is pushing for the Home Valuation Code of Conduct bill in the key congressional representatives’ home district during the recess. The National Association of Realtors is very critical of the Home Valuation Code of Conduct rules with their side stating the rules “produce deal-killing lowball appraisals, encourage the use of low-paid appraisers unfamiliar with local conditions, and have raised the cost of valuations for consumers.”
Along with the National Association of Realtors, appraisers, mortgage brokers, and home builders are also against the rules. The Home Valuation Code of Conduct took effect on May 1.
David Stevens the FHA commissioner recently presented the first public comment from HUD, which was, the FHA account for close to 1/3 of mortgage market volume and does not have any plans to adopt the Home Valuation Code of Conduct. He went on to explain that FHA has its own guidelines and standards that cover appraisers and appraisals. A few weeks later, Stevens did comment that some of the core principles of the guideline were good.
Stevens stated, “We do like the HVCC’s separation of influence in ordering the appraisal from those who financially benefit from the outcome.” He did say that FHA will not use the Home Valuation Code of Conduct but may incorporate some of the principles.
The goal of FHA as stated by Stevens “is to get changes into the marketplace in the near future.” This is a hint that FHA may soon be presently new guidelines on home valuations, which will of course affect realty agents, appraisers, consumers, and lending companies. No details of any of the changes are available at this time.
Labor Day is fast approaching and Capital Hill will be a buzz before long. The bill only has 54 supporters and with all the discord among the politicians, REALTORS, home owners, and lending companies, I doubt if we will see any changes yet, as they will more than likely more on to more pressing issues such as health care.
Bush announces Fannie Mae and Freddie Mac Takeover
September 8, 2008
The Bush administration announced on Sunday, September 07, 2008 that the federal government was taking control of Fannie Mae and Freddie Mac in a hard line move to aid the distraught United States housing market and thus the economy.
Both executives at Freddie Mac and Fannie Mae were replaced in this aggressive move. Herb Allison is now the head of Fannie Mae whereas David Moffett will head Freddie Mac. Allison was the former chairman of Merrill Lynch and Moffett was the former vice chairman of US Bancorp.
Fannie Mae and Freddie Mac have a combined total of $1.6 trillion in outstanding debt. The decision for the takeover and placing both companies into a conservatorship under government regulator might possibly be the largest financial bailout in the history of the United States. The Treasury Department is taking the equity of both firms, explaining that the taxpayers of the US should not have to bear the burden.
Between Fannie Mae and Freddie Mac, they have lost close to $14 billion over the last four quarters. The investors, including overseas banks are now starting to show signs of worries over their finances.
Treasury Secretary Henry Paulson stated, “Our economy and our markets will not recover until the bulk of this housing correction is behind us,”… “Fannie Mae and Freddie Mac are critical to turning the corner on housing.” During the interview, Paulson stated, “Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets here at home and around the globe.”
The main reason the takeover occurred as explained by Paulson is that if these two companies failed it would ultimately be more serious and could end up costing taxpayers tens of billions of dollars. “A failure would affect the ability of Americans to get home loans, auto loans and other consumer credit and business finance.”
The Federal Reserve along with other federal banking regulators stated today that a few smaller institutions have holdings of common or preferred stock share in both Fannie Mae and Freddie Mac and that regulators were “prepared to work with these institutions to develop capital-restoration plans.”
The plan will entail FHFA operating the companies until they are stable. During this time, the Treasury will finance loans until December 31, 2009.
Along with the takeover, the Treasury will start a program to buy mortgage-backed securities that are held by Fannie Mae and Freddie Mac to add much-needed funds in the mortgage market.
The failure of either Fannie Mae or Freddie Mac would be so large that it would not only be felt in the United States but around the world. The government takeover was necessary to save the housing market and boost the economy.
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