What’s Ahead For Mortgage Rates This Week : January 11, 2010

By Todd Abelson NMLS #180858 on .

Retail Sales data shapes mortgage ratesData was sparse through 2010’s first trading week last week, setting the stage for a week of momentum trading.

In up-and-down trading, mortgage pricing improved overall but the best rates of the week didn’t last long.

Rates improved Monday and Tuesday as an oversold market corrected itself to better price points.  Then, in anticipation of the December jobs report, rates worsened Wednesday and Thursday.  Friday, after the jobs report was released, pricing proceeded to carve out a huge range before settling unchanged.

On average, lenders issued new rate sheets every few hours last week. It was a difficult week to shop for mortgages in Arizona and elsewhere.

Unfortunately, this week doesn’t figure to be much better.

For the second straight week, the economic calendar is bare.  Traders — like last week — will be forced to rely on “gut feel” to make their trades.  That rarely bodes well for shoppers.  Especially because traders are facing a mortgage market in the midst of a terrible losing streak.

Since reaching an all-time low December 1, 2009, 30-year fixed rate mortgages have worsened by 300 basis points, or 3 percent.

To a homeowner or rate shopper in Tucson , the math of 300 basis points looks like this:

  • 5 weeks ago, a 4.625 percent mortgage rate required 0 points
  • Today, the same 4.625 percent mortgage rate requires 3 points

1 point is equal to 1 percent of your loan size.

Last month’s worsening is the worst 1-month deterioration in consumer mortgage rates from all of 2009.

If you’re hoping for rates to fall back to early-December levels, know that it is possible. For this week, here’s some things that could push rates in the right direction:

  1. 3 Fed members are speaking. Each mention of economic under-performance in 2010 will be good for rates.
  2. Retail Sales data is released Thursday. If the numbers are weak, mortgage rates should improve.
  3. Consumer confidence surveys are released Friday. Lower confidence levels should help rates fall.

Be ready to lock at a moment’s notice this week.  Rates may rise or fall, but markets are positioned toward the former.That’s where momentum is pointing as of the Market Open today.

Keep an eye on rates and put Todd Abelson and Tyler Ford’s phone # on speed dail 520-331-LEND. Once the mortgage market starts breaking, it’s expected to break quickly.

2010 FHA Loan Limits Released

By Todd Abelson NMLS #180858 on .

2010 FHA Loan LimitsFHA home loans are federal assistance mortgages made by lenders, and backed by the government. The FHA doesn’t make loans to Arizona homeowners — it insures loans made to homeowners by federally-qualified lenders.

By all accounts, FHA home loans are surging in popularity.

  • 2006, FHA insured 3.3% of all mortgages made
  • Q2 2009, FHA insured 19.2% of all mortgages made

A major reason for the increase can be tied to guidelines.

As compared to its conforming mortgage cousins Fannie Mae and Freddie Mac, FHA home loans have lower downpayment requirements and looser credit standards. The FHA allows downpayments of 3.5 percent for homes in Tucson and Fannie Mae and Freddie Mac do not, as an example.

Another reason is that FHA home loans aren’t subject to credit score fees the way that conforming mortgages are. Through Fannie or Freddie, a home buyer with a 650 FICO and 20% down is subject to 3% in risk fees.  Via the FHA, the fee is zero, making FHA the better “deal”.

The FHA published its 2010 loan limits. There’s no change from 2009.

The base 2010 FHA loan limits are:

  • 1-unit : $271,050
  • 2-unit : $347,000
  • 3-unit : $419,400
  • 4-unit : $521,250

We say “base” because these loan limits don’t apply to all areas equally.  Higher-cost regions get higher loan limits, based on typical home values. Homes in Los Angeles County, for example, can be FHA-insured up to $729,750 in 2010, and there are special exceptions made for Alaska and Hawaii.

The official FHA announcement included a complete, county-by-county FHA loan limit list. The first spreadsheet shows each county at or above the $729,750 maximum; the second list is everyone else.

If your home’s county is on neither list, use the “base” numbers above.

Upon Closer Inspection, The Federal Reserve Isn’t 100% Positive About The Future Of The Economy

By Todd Abelson NMLS #180858 on .

FOMC December 2009 MinutesBoth mortgage rates and home affordability took a turn for the better in Tucson Wednesday after the Federal Reserve released its December 15-16, 2009 meeting minutes.

The Fed Minutes is a follow-up piece to the post-FOMC meeting press release. But whereas the press release is succinct and to-the-point, the minutes are lengthy and often meandering.

As a comparison, December’s press release contained 535 words. December’s minutes had 6,260.

But these “extra words” aren’t superfluous. They’re actually very important to homeowners. Because the Federal Reserve’s internal debates help to shape Wall Street expectations, it doesn’t take much for those conversations to have a trickle-down effect on Main Street.

For example, after the December meeting, the Fed said that economic growth is steady, inflation is in check, and an orderly wind-down of mortgage market support was underway. A look at the minutes, though, showed some disconnect.

Some Fed members believe rising commodity prices could lead to stronger-than-expected, and others think that improvement is housing could be “undercut” by a pull-back in government stimulus.

Overall, the Fed appears optimistic about the economy, but not as optimistic as on December 16. Mortgage markets responded favorably to the minutes and mortgage pricing improved.

Although rates remain higher as compared to early-December, pricing has been on a good run this week. If you’re under contract for a home in Arizona or just looking to refinance, now may be a good time to lock.

Tucson homes are a bargain!

By Todd Abelson NMLS #180858 on .

tucson home
What does Tucson have in common with Akron, Topeka, New Haven, Minneapolis, Portland, Miami, Kingston, South Bend and Trenton? It’s being called one of the “top 10 cities for bargain homes”.

Barbara Corcoran, a self-proclaimed real estate mogul and business consultant used points including but not limited to home size, city job status, and year-over-year home prices to rank her findings.

More noteworthy to me, she foresee’s that the foreclosure process as being more than half over, that “…the city is reinventing itself” with growing population and “It’s a great city to live in.” I think she’s right on!.

As we’ve been saying – high inventory with low rates, coupled with the First Time & Move-up Homebuyer credits,  make this what could be the BEST TIME EVER to buy a home!

Call Todd Abelson and Tyler Ford at Sunstreet Mortgage in Tucson, Arizona for all your mortgage needs.

Home Buyers Get A Green Light : Pending Home Sales Plunge In November

By Todd Abelson NMLS #180858 on .

Pending Home Sales November 2009

Just one month after touching a 3-year high, the National Association of Realtors® Pending Home Sales index plunged in November.  A “pending” home sale is a home that is under contract to sell, but has yet to close.

The 16 percent drop marks the first retreat in Pending Home Sales since January of last year.

The weak Pending Home Sales data is an indication that Existing Home Sales data will be soft this month. This is because, historically, 80 percent of Pending Home Sales convert to “closed sales” within 60 days, and most of the rest close within 120.

With Pending Home Sales down, the Tucson housing market should lose some of its momentum.  For today’s home buyers, this kind of slack can represent a terrific opportunity.

Home prices are a function of supply and demand; of buyers and sellers. When buyers outnumber sellers, competition leads to bidding wars, ultimately, and higher home prices overall.  The imbalance can also create a sense of urgency that results in over-paying for a home.

When buyers are sparse, on the other hand, the psychology of real estate shifts.

Home sellers are keenly aware of foot traffic and requests for second and third showings. Without buyers, their homes can’t sell.  They also note a lack of general feedback from the market.

It’s at this point that seller fear can creep in and it becomes a buyer’s best time to buy.

Based on November’s Pending Home Sales data, it’s clear that home sellers are in abundance right now.  Home buyers have leverage.

It may not last.

With mortgage rates easing lower this week, the federal home buyer tax credit still in effect, and the Holiday Season officially over, buyers are getting back to business in Tucson and everywhere.

Plus, with the tax credit deadline of April 30, 2010 fast approaching, buyer activity should increase over the next 4-6 weeks.

The market looks ripe for a buy but don’t rush it.  Take your time and bid right. But when you’re ready, be ready — once the market momentum shifts back to sellers, you might lose all that leverage you built up through the winter.

Looking At The 2010 Predictions For Housing Markets And Mortgage Rates

By Todd Abelson NMLS #180858 on .

2010 housing and mortgage predictions are guesses2010 is just a few days old and already the “experts” are making predictions for the year.

Housing calls and mortgage rate predictions run the gamut:

Given how varied their outlooks, it’s clear that the professionals have no better view of the future than the amateurs. An expert can make an educated guess, but it’s a guess nonetheless.

Last year, Wall Streeters predicted a 25% pullback in home prices. 12 months later, we know prices didn’t fall.  Wall Street also predicted higher mortgage rates for 2009. That prediction was fulfilled.

There’s a lot of talk on CNBC and elsewhere about what’s coming in 2010. Before you take those predictions to the bank, just remember that analysts do a much better job interpreting data from the past than projecting it into the future.

The only thing that’s certain right now is that mortgage rates are historically low, the government is giving tax credits to qualified buyers, and there’s a lot of good “deals” in housing. Make the most of what’s out there today because it will take 12 months for us to look back and know which predictions were right and which were wrong.

Until then, predictions are just opinions and guesses.

Let Todd Abelson and Tyler Ford of Sunstreet Mortgage in Tucson, Arizona  guide you through 2010 predictions.

What’s Ahead For Mortgage Rates This Week : January 4, 2010

By Todd Abelson NMLS #180858 on .

Mortgage markets were relatively flat last week during holiday-shortened trading.  After starting the week with a Monday surge higher, mortgage rates settled down thorough Tuesday and remained somewhat flat into the early-close for New Year’s Eve.

However, as compared to the 4-month low posted post-Thanksgiving, conforming mortgage pricing has now worsened by more than 300 basis points.  In English, that means that a December 1 mortgage rate quoted with zero points is available today at a cost of 3 points.

1 “point” is equal to 1 percent of how much you borrow.

If you were shopping for homes or rates last month, you no doubt noticed that pricing zoomed higher to close out 2009. How 2010 starts is anyone’s guess. This week will hold the answer.

It’s a week light with data, but heavy on importance.  The biggest news comes Friday in the form of the December employment report.

Last month, the Unemployment Rate fell for just the second time in 2 years and net job gains nearly turned positive.  Both points were bad for mortgage rates because a weak economy has helped keep rates down.  Evidence of improvement, therefore — at least according to Wall Street — is reason for reversal.

This month, analysts expect a net job gain of zero.  If they get it, the psychological effect of the data should cause stock markets to rise and mortgage markets to sink.

A worsening market is bad for rates.

Other data to watch this week is Tuesday’s Pending Home Sales report and Wednesday’s FOMC November Minutes release. Both can forcefully impact markets and rates.

Today is January 4 — there’s a lot of 2010 to go.  However, that won’t stop Wall Street from trying to figure it out. As the stock market rises and falls this week, the bond market will likely be in tow.  Abrupt movements mean changing mortgage rates and we’ll see more of our fair share of it over the next few weeks.

If you’re quoted a mortgage rate this week that fits your budget, consider locking it in.  Rates may fall in 2010, or they may not.  It’s a gamble on which you don’t want on the wrong side because when rates do rise, they’re likely to rise quickly.

Markets can’t sustain rates like this in an expanding economy.