Interest Rate Freeze on Adjustable Rate Mortgages

More to follow, but today's news, and it should be good news for many people, is that rates for loans initiated January 1, 2005 through July 30, 2007 will stay put. If your rates were scheduled for a "reset" between January 1, 2008 and July 31, 2010, the preliminary information, to be announced tomorrow, is that your present rates will not go up per your original schedule on your loan documents, but will remain where they are. If there is also a .5% drop in long term rates on the 11th by the Federal Reserve, this should indeed be good news for borrowers. There are specific terms to this agreement, of course, and two of them are most likely going to be that this agreement between the Bush Administration and the lending industry applies to those who are current on their loan payments and those who have owner-occupied loans. Click here for more information.


Long Beach long beach real estate 'Voice this!

10 Biggest Buyer Mistakes

If thoughts about buying are holding you back, take a look at my presentation by clicking on the title (you can even leave your comments there if you want), then ask yourself what would it take for you to take that step. Would saving money do the trick? Most people are saying, "Yes, but the asking prices are still too high, and I'm waiting for them to come down."

But what if your monthly payment was lower? There is a way to negotiate pre-paid interest up front which can be paid by the buyer or the seller, that "buys down" the buyer's loan rate from the 30-year fixed rate and may save the buyer as much as $250 a month.

Don't wait for prices to come down if you can negotiate the same lower monthly payment now!



Long Beach long beach real estate 'Voice this!

Buyers: There's No Time Like Right Now

Real estate supply and demand goes in cycles, it always has. Sales are down, inventory is up past the 6 month level, but what else is happening? Interest rates are creeping up, and there are no predictions for any decreases by the Federal Reserve on the horizon. Don't be one of those people who, two years after the fact, comes back and wants something from today's market that's not around any more, i.e., more inventory to choose from, lower rates, or even a lower price. Did you know that so far this year, the median home price in Los Angeles County is higher than last year? In fact, it is in the top 10 areas of median price increases in the state. If you want more information about loans or real estate, contact me by phone or e-mail. See my site at www.juliahuntsman.com for more information or a property search that is updated throughout the day.

Long Beach

Rear View Mirror is Always Clearer Than the Windshield

Among the ten biggest homebuying mistakes: Waiting for a better market and interest rates.

You only have the market you're living in right now, and that market is also tied to whatever the economy around you is doing. Think about how long you plan to live in that property, and find the best loan for it. In the past, 30-year mortgages were just about the only choice. But the national average shows that most people move again in about 7 years, whether it's due to job choices or a growing family. Getting a good interest rate is tied to your debt and to your FICO score, and as long as you have lower debt and a good credit score, you will probably be able to pick out a 5 or 7-year fixed rate which could save you money on your payment. Even if you have to pick a more costly loan to buy a property in the naer term, you always have the choice of refinancing when the market becomes more advantageous. Remember, real estate happens in cycles, and you can't predict the future. The opportunities you see before you right now may actually work out the best for you in the long run. That is why waiting for a better market is only waiting. People typically look backward later on and see what it was they missed, and then find it all too easy to live in the past. Take a careful look now and do the work that is necessary to make the best choice possible.

Southern California, Homebuying

Why Are Interest Rates Staying Low?

In a word, more or less, it's foreign investors in bonds. Mainly from Japan and Hong Kong, who comprise about 52% of all Treasury values. The demand for U.S. Treasury bonds has kept their prices up, and mortgage interest rates down (the first affects the second). Foreign investors find stability here they don't find in their own countries, and for you the buyer, that means your 30-year interest rate is about 30 percent lower than it might be otherwise. Read the article for more on this relationship, and remember that it's giving you still a very great opportunity to buy as mortgage interest rates stay much lower than predicted for the last few years.
See a property search at my other website.

The Housing Market Slump

Long and short term mortgage rates went down last week on average of .5 point. When buyers understand they're getting more breaks on their rates, they'll decide now is a good time to act. More housing inventory has taken pressure off, but at some point, in the not-too-distant future, buyers will suddenly come alive and if they do it all at once, they may be wondering what happened to a certain property. The answer will be, somebody already bought it. Don't get fooled by the slow times, they won't last forever in a strong economy.

Mortgage Rates Move Up

Employment figures, or news about it, usually are a confidence measure that has immediate impact on interest rates. While the construction industry has had problems selling its houses and has lost some jobs, other job figures for the last 3 months went upward. In the meantime, California shoppers report that in spite of high gas prices and a drop in house prices, they're going Christmas shopping anyway. With the basic "upbeatness" of the economy, National Association of Realtors' economist David Lereah today predicted 2007 homes sales will continue at about the same rate as 2006, but homes prices may have a "modest gain" on the national level. Low mortgage rates allowed a huge wave of first time buyers into the market, which took up the slack in the last 2-3 years. The rate of sales is now at a more "normal" level, while mortgage rates are still low overall.

No Change in Rates

The Federal Reserve maintained its hold on rates today, noting the cooling housing market, but still "feels the economy will expand." Because of this cooling market, some lenders are softening requirements for certain loans, which is the best opportunity for buyers with uncertain FICO scores in the low 600s. If qualified at a higher rate a while back due to that problem, take another look now, you may be qualified for a lower rate.

Break for Borrowers

The Federal Reserve has once again left the rates alone, and "judges that some inflation risks remain." The prime lending rate remains at 8.25 percent, breaking the string of 17 rate hikes that has driven the funds rate to its highest level in more than five years. Mortgage rates have actually fallen this year from it's high of 6.8 percent on a 30-year fixed: so it's still a great time to refinance or purchase!

Change in Rates Not Expected

Investors do not expect the Federal Reserve to change rates this week, or before the end of the year. Rates could be cut eventually, but not as long as the economy shows no signs of deterioration. Still, a good time to buy. See www.juliahuntsman.com for properties on the market in the Long Beach area.

Federal Reserve May Leave Rates Alone This Week

Waning inflation may cause the Fed to leave rates alone, but investors do not expect a decrease unless the economy shows signs of deterioration.

When Refinancing Makes Sense, to say the least

"Hell is probably pretty crowded right now, but I hope there's a special circle reserved for lenders who make low-interest, adjustable-rate mortgages without adequately explaining how they work and what their drawbacks are. And I don't mean just handing you a written form along with the mountains of other paperwork you receive when you apply for a loan. I mean talking to you about what could happen under worst-case scenarios -- until you understand your risks clearly. Low-interest, interest-only loans and so-called 'option' adjustable-rate mortgages (ARMs) that allow buyers to make only minimum payments evolved over the last few years to deal with the 'sticker shock' buyers felt when they saw how much home prices were ballooning every month.

Now home prices have stabilized, while rising interest rates are causing sticker shock. In fact, the non-partisan Center for Responsible Lending says 97.5% of borrowers who have teaser rates expiring on loans this year could face 'payment shocks' of at least 25%, while three-quarters could face increases of 50% or more.

Incomes can't possibly keep up with these bump-ups. According to recent government statistics, real median household income has remained almost flat -- rising only 1.1% last year, to $46,326, from the year before."
If you need refinance information or a quote, contact me at my website.

What Caused This Market Anyway?

If you're looking for a fresh explanation for your buyers who are afraid they're buying at the wrong time and you're looking for solved real estate mysteries late at night, like how did the subprime mortgage market and our technologically driven society affect real estate, this 44 page article by two economists might have some answers: ..."the housing boom has not been driven by unusually loose monetary policy [i.e., not the Federal Reserve's low interest rates for the last several years]. This is not to say the monetary policy has not been unusually loose, but that to the extent it has been loose, this is not what has been driving spending on housing. Second, the current levels of spending on new housing are largely explained by technology-driven wealth creation over the previous decade. Third, changes in the demographic, income, educational, and regional structure of the population account for about one-half of the increase in homeownership. That is, without any other developments, the homeownership rate is likely to have gone up anyway, but not by as much as it has done. The last finding is that substitution away from rental housing made possible by developments in the mortgage market, such as subprime lending, could account for a significant fraction of the increase in residential investment and homeownership." --From "The great turn-of-the-century housing boom" by Jonas D. M. Fisher and Saad Quayyum.

Federal Reserve: No Changes for Now

After 24 increases in the federal funds interest rate, the Federal Reserve holds off on further increases this week. There may be more increases in the future, but the cooling in the housing market and moderated economic growth are the current reasons cited for no further hikes at this time.

Drop in Interest Rates

The average 30-year fixed mortgage rate fell from 6.79% to 6.74% over the seven-day period ended July 13, the first time in five weeks the rate has declined, according to Freddie Mac's Primary Mortgage Market Survey. The average 15-year fixed mortgage rate fell from 6.44% to 6.37%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages declined from 6.39% to 6.33%, and the average rate for one-year Treasury-indexed ARMs decreased from 5.82% to 5.75%, Freddie Mac reported.
Fees and points averaged 0.6 of a point for 30-year fixed-rate mortgages and one-year ARMs, 0.4 of a point for 15-year fixed-rate mortgages, and 0.5 of a point for hybrid ARMs. 'June's employment report caught financial markets off guard,' said Frank Nothaft, Freddie Mac's chief economist. 'In response, long-term bond yields eased a bit this week.' A year ago, the average 30-year and 15-year fixed rates were 5.66% and 5.25%, respectively, and the average one-year ARM rate was 4.39%, Freddie Mac said. "

Inman News reports that the Federal Reserve's recent tone hinting at possibly no further rate increases may have changed after its June 29 statement. 10-year Treasury note rates declined, so did mortgage rates which closely follow the Treasury notes and yields on long-term government bonds. Later positive predictions of June job growth may have the effect, though, of another increase in August by the Federal Reserve, which will ultimately impact the mortgage rates. Be prepared.

Federal Reserve Increases Rate

Fed raises key interest rate to 5.25% in 17th consecutive increase on fears of inflation risks. The recent increases in bank mortgage rates areprobably a reflection of this anticipated increase, following pastpatterns."Recent indicators suggest that economic growth is moderating from itsquite strong pace earlier this year, partly reflecting a gradual coolingof the housing market and the lagged effects of increases in interestrates and energy prices," according to a committee statement."Readings on core inflation have been elevated in recent months," thecommittee stated. "Ongoing productivity gains have held down the rise inunit labor costs, and inflation expectations remain contained. However,the high levels of resource utilization and of the prices of energy andother commodities have the potential to sustain inflation pressures."In a related action, the Federal Reserve Board of Governors unanimouslyapproved a 25-basis-point increase in the discount rate to 6.25 percent. See my site at http://www.juliahuntsman.com.

Compare Interest Rate Trends

If you're a buyer or a seller looking for a buyer, the graphs on various interest rates should be of interest to you. Look at the trends since 2000/2001 to the present, and the trend is easily seen. the LIBOR and 11th District COFI are used in mortgage lending, but they all reveal the same story. By looking at the tables, it's easy to see specific interest rates and specific times. What is most noticeable is the steady upward trend over 2005-2o06.

What a Rate Increase Does to Your Mortgage Payment

More mortgage rate increases are still on the horizon; don't wait if you have the opportunity to act in the near future. This time last year (see linked article) the overal 30-year fixed rate was at 5.63 percent, this time a year later, it's 6.62% with .5 point, meaning it would be a little higher if you paid no points. The difference to you the borrower on a $350,000 loan amount is over $200/month. At 5.63 percent, your monthly principal/interest payment last year was approximately $2015.90, and at 6.62 percent this year, your payment is approximately $2239.93. See my website at http://www.juliahuntsman.com for a property search on our local MLS, and more financial information.

30-year fixed-rate mortgage averages 6.58 percent this week

Mortgage rates have risen for the fifth consecutive week, the highest rates since 2002. "Consumer confidence and existing home sales unexpectedly rose. Much of this strength is attributed to a healthy labor market, which translates into greater consumer spending. This should support an active housing market over the next few months," according to Frank Nothaft, Freddie Mac vice president. We expect mortgage rates to gradually rise throughout the year," said Nothaft. "A stronger labor market, coupled with moderation in house price growth, means our outlook for overall housing conditions remains upbeat." Click here for the story.