How You Can Get The Most Accurate, Real-Time Mortgage Rate Quotes Available

February 23rd, 2010

Mortgage rates are expired before they hit the papers

You can’t get your mortgage rates from the newspaper. Last week proved it.  Again.

Friday morning, headlines in new york and around the country read that mortgage rates were down 0.04 percent, on average, since the week prior.

A sampling of said headlines includes:

  • US Mortgage Rates Drop For 2nd Straight Week (Reuters)
  • Mortgage Rates On 30-year US Loans Fall To 4.93% (Business Week)
  • 30-Year Fixed Mortgage Rate Falls Farther Below 5% (Marketwatch)

The story behind the headline was sourced from the Freddie Mac Primary Mortgage Market Survey, am industry-wide mortgage rate poll of more than 100 lenders.  The PMMS has reported mortgage rate data to markets since 1971 and is the largest of its kind.

Unfortunately, chicago rate shoppers can’t rely on it.

See, unlike governments and private-sector firms, when consumers are in need mortgage rate information, they need the information delivered in real-time; for making decisions on-the-spot.  Consumers need to know what rates are doing right now.

The Freddie Mac survey can’t offer that.

According to Freddie Mac, the survey’s methodology is to collect mortgage rates from lenders between Monday and Wednesday and to publish that data Thursday morning.  The survey results are an average of all reported mortgage rates. The problem is that mortgage rates change all day, every day.  The PMMS results are skewed, therefore, by methodology.

And, meanwhile, the issue was compounded last week because mortgage rates shot higher Wednesday afternoon — after the survey had “closed”.  The market deterioration ran into Thursday, too — again, unable to be captured by Freddie Mac’s PMMS.

Although the newspapers reported mortgage rates down last week, they weren’t.  Conforming mortgage rates were higher by at least 1/8 percent, or roughly $11 per $100,000 borrowed per month.  In some cases, rates were up by even more.

Newspapers and websites can give a lot of good information, but pricing is far too fluid to rely on a reporter. When you need to know what mortgage rates are doing in real-time, make sure you’re talking to a loan officer.  Otherwise, you may just be getting yesterday’s news.

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What’s Ahead For Mortgage Rates This Week : February 22, 2010

February 22nd, 2010

New Home Sales Dec 2008-Dec 2009Mortgage markets had a terrible, holiday-shortened week last week as Wall Street responded to worse-than-expected inflation data and action from the Federal Reserve.  Mortgage bonds sold off with force, causing mortgage rates to rise for the second week in a row.

Last week was a bad week to float a mortgage, to say the least. Rates in los angeles rose by the largest margin in any week since late-2009.

The two biggest stories from last week both came from the Federal Reserve.  The first was the release of the FOMC January meeting minutes which showed more confidence in the U.S. economy than Wall Street expected, and the second was the Fed’s surprise announcement to raise the nation’s Discount Rate to 0.75%. Both sparked risk-taking on Wall Street and bonds sold-off as a result. 

Now, the Fed Funds Rate won’t climb anytime soon and neither will Prime Rate, but the Fed has sent a clear message to the markets — The Era of Loose Monetary Policy is over.

This week, there’s a lot of economic data set for release.

  • Tuesday : Case-Shiller Home Price Index, Consumer Confidence
  • Wednesday : New Home Sales
  • Thursday : FHFA Home Price Index, Initial Jobless Claims
  • Friday : Existing Home Sales, Personal Consumption Expenditures

With markets already on edge, any better-than-expected results should be bad for mortgage rates.

After last week’s performance, conforming mortgage rates for residents of illinois have now unwound most their January gains.  If you’re waiting for the right time to lock, it may have been 2 weeks ago. Consider locking in this week to protect against any further deterioration in price.

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Housing Starts Soar To 6-Month High In January… Or Do They?

February 19th, 2010

Housing Starts Feb 2008-Jan 2010

Sometimes, headlines for housing can be misleading and this week gave us a terrific example.

On Wednesday, the Commerce Department released its Housing Starts data for January 2010. The data showed starts at a 6-month high.

A “Housing Start” is a privately-owned home on which construction has started.

Headlines on the Housing Starts story included:

  • U.S. Housing Starts Hit 6-Month High (Reuters)
  • U.S. Economy Receives Home Building Boost (Shepparton)
  • Housing Starts Post Sharp Rebound (ABC)

Based to the headlines, the housing market looks poised for rapid growth through the Spring Market.

The real story, though, is that although Housing Starts increased by close to 3 percent last month, the growth is mostly attributed to buildings with 5 or more units.  This includes apartments and condominiums — a sector of the housing market that’s notoriously volatile.

If we isolate Housing Starts for single-family homes only, we see that starts grew by just 7,000 units last month and have failed to break a range since June 2009.  January’s tally is slightly below the 8-month average.

Perhaps more interesting than the Housing Starts, though, is the Commerce Department’s accompanying data for Housing Permits. After a 5-month plateau that ended in November, Housing Permits posted multi-year highs for the second straight month.

According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance.

One reason permits are up is that home builders want to capitalize on the federal homebuyer tax credit’s dwindling time frame.  Sales are expected to spike in March and April and more homes will come online to deal with that demand.  Home buyers in chicago should shop carefully, but with an eye on the clock.

As the tax credit’s April 30, 2010 deadline approaches, competition for homes may be fierce.

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Mortgage Rates Spike On The Federal Reserve’s January 2010 Meeting Minutes

February 18th, 2010

FOMC January 2010 MinutesMortgage markets reeled Wednesday after the Federal Reserve released the minutes from its January 26-27, 2010 meeting. Mortgage rates in california are now at their highest levels since the start of the year.

The Fed Minutes is a follow-up document, delivered 3 weeks after an official FOMC meeting. It’s a companion piece to the post-meeting press release, detailing the debates and discussions that shaped our central bankers’ policy decisions.

The Minutes is a terrific look into the Fed’s collective mind and, yesterday, Wall Street didn’t like what it saw.  Specifically, the report disclosed that:

  1. The Fed plans to break support for mortgage markets after March 31, 2010
  2. Raising the Fed Funds Rate will be a key part of the Fed’s strategy to tighten monetary policy
  3. The fundamentals behind consumer spending strengthened modestly

Furthermore, the Fed Minutes said that there is a growing risk of “higher medium-term inflation”. Inflation, of course, is awful for mortgage rates.

Overall, the Fed’s economic optimism appeared stronger after its January meeting as compared to its December one.  A stronger economy should lead to better job growth and higher home prices throughout 2010.

Mortgage rates were up yesterday but they remain historically low. And many analysts think that after March 31, 2010, rates will rise even more.  Therefore, if you’re buying a home in the near-term, or know you’ll need a new mortgage, consider moving up your time frame. 

Every 1/8 percent makes a difference in your household budget.

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The Best And Worst Cities For Commuters (2010 Edition)

February 17th, 2010

The Best and Worst Work Commutes 2010According to the Census Bureau, 2.8 million people commute to work 90 minutes or more each day, in each direction.

Now, your daily commute may not be as long, but time spent in cars, trains and buses is time away from work and from family. Drive-time can affect a person’s Quality of Life and it’s one reason why Forbes Magazine’s Best and Worst Commutes is worth reviewing.

Measuring travel time, road congestion and travel delays in the 60 largest metropolitan areas, Forbes ranks city commutes from best-to-worst with Salt Lake City topping the list and Tampa-St. Petersburg finishing it.

The Top 5 Commutes, as compiled by Forbes:

  1. Salt Lake City, Utah
  2. Buffalo-Niagara Falls, New York
  3. Rochester, New York
  4. Milwaukee-Waukesha-West Allis, Wisconsin
  5. Albany-Schenectady-Troy, New York

The bottom 5 are Tampa-St. Petersburg, Detroit, Atlanta, Orlando, and Dallas-Forth Worth.

Long commutes shouldn’t deter you from moving to a particular city, but the potential commute should be consideration. Before making an offer on your next home, make a rush-hour commute to work from your potential new neighborhood.  Then imagine doing it every day.

You can read the complete Forbes list of Best and Worst Cities for Commuters on its website.

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What’s Ahead For Mortgage Rates This Week : February 16, 2010

February 16th, 2010

Housing Starts Jan 2008-Dec 2009Mortgage markets worsened last week on general profit-taking in the U.S. bond market, combined with talk of a coordinated rescue effort for Greece and its debt burden. Mortgage-backed bonds sold off, causing conventional and FHA mortgage rates to rise.

There wasn’t much hard data on which to trade last week, either, so momentum took markets farther than they otherwise might have moved on their own.  It marked the first time in 5 weeks that rates rose for california rate shoppers.

This week, data returns. Expect mortgage market movement.

Some of the week’s more important releases include:

  1. Housing Starts and Building Permits (Wednesday)
  2. The release of the last month’s FOMC Minutes (Wednesday)
  3. Business and consumer inflation figures (Thursday and Friday)

Inclement weather may have impacted last month’s Housing Starts reading so pay closer attention to Building Permits.  Permits precede actual construction and can be more indicative of economic optimism. If permit readings are strong, it should be a negative for mortgage rates.

The same is true for the FOMC Minutes. 

Last month’s FOMC post-meeting press-release was decidedly middle-of-the-road, but the statement is just a summary of the Fed’s 2-day meeting, boiled down to a few paragraphs.  Wednesday’s release of the FOMC Minutes will reveal the deeper discussions among members of the Fed.  Wall Street will mine it for clues about the future of the economy.

If Wall Street senses optimism coming from the Fed — again — mortgage rates should rise.

And, lastly, keep an eye on Thursday and Friday’s inflation data.  Inflation is bad for mortgage rates so a higher-than-expected reading should spark a bond market sell-off.

Since mid-December, mortgage rates have moved within a tight range and there’s little reason for rates will break this range this week. However, we are near the top of the channel. If you know you’re going to need a rate locked soon, it’s probably best to do early in the week.

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How Rising Consumer Sentiment Is Linked To Higher Home Prices

February 12th, 2010

University of Michigan Consumer Sentiment Aug 2008-Jan 2010Consumer Sentiment has been on the rise since last February and it’s something to which los angeles home buyers should pay attention. 

The affordability of your next home may hinge on consumer confidence.

As the economy recovers from a near-the-brink recession, many of the elements of a full recovery are in place.  Business investment is returning, household spending is expanding, and financial systems are gaining strength. 

Consumer confidence is at a 2-year high.

What’s missing from the recovery, though, is jobs growth.  Another net 20,000 jobs were lost in January. Data like that hinders economic growth.

That said, twenty-thousand jobs lost is a much better figure than the several hundred thousand that were shed per month throughout early-2009, but it’s still a net negative number.  Not only does household income drop when Americans lose jobs but so does the average American’s confidence in his or her own economic future.

This is one reason why jobs growth is so closely watched by Wall Street — jobs are linked to higher confidence levels which, in turn, is believed to spur consumer spending.

Consumer spending represents 70% of the U.S. economy.

As confidence rises, it could be good news for the economy, but bad news for home buyers. More spending expands the economy and, all things equal, that leads mortgage rates higher. 

Same for home prices. More confidence means more buyers which, in turn, squeezes the supply-and-demand curve in favor of sellers.

Later this morning, the University of Michigan will release its February Consumer Sentiment survey. If the reading is higher-than-expected, prepare for mortgage rates to rise and home affordability to worsen.

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In Pictures: The Severity Of The Foreclosure Crisis Depends On Where You Live

February 11th, 2010

Foreclosures concentrate on 4 statesForeclosures stories dominate the national housing news. It seems at least one foreclosure-related story makes its way to the front page or the nightly news every week.

But for as much as the foreclosure filing statistics can be astounding — over 300,000 homes were served last month alone — the prevalence of foreclosures depends on where you live.

As reported by RealtyTrac, just 4 states accounted for more than half of the country’s foreclosure-related activity last month.

  • California : 22.7 percent of all activity
  • Florida : 14.9 percent of all activity
  • Arizona : 6.7 percent of all activity
  • Illinois : 5.7 percent of all activity

The other 46 states (and Washington D.C.) claimed the remaining 49.9%.

However, just because foreclosures are concentrated geographically, that doesn’t make them less important to homebuyers in new york and around the country.  There’s been more than 1.4 million foreclosure filings in the last 12 months and that’s a figure that can’t be ignored.

Distressed properties now play a role in one-third of all home resales.

Therefore, if you’re in the market for a foreclosed home, here’s a few things to keep in mind.

  1. Properties are usually sold “as-is” and may not be up to living standards. Be sure to physically inspect the home before buying it.
  2. Buying a home from a bank is rarely as streamlined as buying from an individual homeowner. Be prepared for delays and long closings.
  3. Foreclosures aren’t always listed for sale publicly. Ask your real estate agent how to access the complete foreclosure inventory.

 

In order to use the federal homebuyer tax credit, you must be under contract for a home by April 30, 2010 and closed by June 30, 2010.  That doesn’t leave much time to find a bank-owned home and make it to closing.  If you’re serious about buying foreclosures, it’s probably best to start your search soon.

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Separating FHA Fact From Fiction : Mortgage Insurance Premiums

February 10th, 2010

FHA asks Congress to raise Monthly MIPThe mortgage lending landscape changes a lot.  Rates and guidelines are in constant flux, and it creates preparedness challenges for buyers in new york that aren’t paying in cash.

The loan you get today won’t always be the loan you get tomorrow.

Because of how frequently bank rules are changing, it can be hard for laypersons to distinguish between mortgage fact and fiction of “what’s coming next”.

Recently, we saw this with respect to FHA home loans.

January 20, 2010, the FHA issued a press release with new lending guidelines.  Specifically, it announced 3 changes that will be effective starting April 5, 2010:

  1. Upfront mortgage insurance premiums increase from 1.75% to 2.25%
  2. Allowable seller concession reduced from 6% to 3%
  3. FICO scores of 580 or lower are subject to a minimum 10% downpayment

But, also in its official statement, the FHA announced it would ask Congress for permission to raise monthly mortgage insurance premiums.  This is where the rumors started.

Nestled on page 348 of the Budget of the United States Government, Fiscal Year 2011, in a section titled Special Topics, there is a 1-paragraph notation that details the FHA’s petition. 

  1. Raise monthly premiums by roughly 0.30%, or $25 per $100,000 borrowed per month
  2. Lower upfront mortgage insurance premiums by 1.25%, or $1,250 per $100,000 borrowed at closing

For now, the request is neither approved nor acknowledged by Congress. It’s merely a request. And in the event that Congress does approves it, that doesn’t mean that FHA has to stand by its initial projections.

Truth is, about the only thing we know about the future of FHA lending is that, come April 5, 2010, borrowing money is going to be tougher, and mortgage expensive. These are the facts as we know them today.

Homebuyers should plan accordingly.

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Separating FHA Fact From Fiction : Mortgage Insurance Premiums

February 10th, 2010

FHA asks Congress to raise Monthly MIPThe mortgage lending landscape changes a lot.  Rates and guidelines are in constant flux, and it creates preparedness challenges for buyers in new york that aren’t paying in cash.

The loan you get today won’t always be the loan you get tomorrow.

Because of how frequently bank rules are changing, it can be hard for laypersons to distinguish between mortgage fact and fiction of “what’s coming next”.

Recently, we saw this with respect to FHA home loans.

January 20, 2010, the FHA issued a press release with new lending guidelines.  Specifically, it announced 3 changes that will be effective starting April 5, 2010:

  1. Upfront mortgage insurance premiums increase from 1.75% to 2.25%
  2. Allowable seller concession reduced from 6% to 3%
  3. FICO scores of 580 or lower are subject to a minimum 10% downpayment

But, also in its official statement, the FHA announced it would ask Congress for permission to raise monthly mortgage insurance premiums.  This is where the rumors started.

Nestled on page 348 of the Budget of the United States Government, Fiscal Year 2011, in a section titled Special Topics, there is a 1-paragraph notation that details the FHA’s petition. 

  1. Raise monthly premiums by roughly 0.30%, or $25 per $100,000 borrowed per month
  2. Lower upfront mortgage insurance premiums by 1.25%, or $1,250 per $100,000 borrowed at closing

For now, the request is neither approved nor acknowledged by Congress. It’s merely a request. And in the event that Congress does approves it, that doesn’t mean that FHA has to stand by its initial projections.

 

Truth is, about the only thing we know about the future of FHA lending is that, come April 5, 2010, borrowing money is going to be tougher, and more expensive. These are the facts as we know them today.

Homebuyers should plan accordingly.

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