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23 Jul 09 Fed Chief Talks Mortgage Rates and More

Today on Capitol Hill, Fed Chairman Ben Bernanke continued his testimony before Congress and is taking a lot of heart from many of the Senators are questioning some of his past action and future plans.  The Fed chief reiterated his stance that mortgage rates would remain low for the near future in an effort to stimulate the struggling housing sectors across the nation.

Many Senators, both Democrats and Republicans alike are questioning his prior handling of the subprime mortgage debacle, the financial crisis and his failure to act in a timely manner to avert this crisis, his balking at independent audits of his actions and his apparent belief that the Feds should have even more power than they have now.  Congress and the Obama Administration are not subject to home foreclosures, charge offs or bankruptcies.

When Wall Street gets nervous, mortgage interest rates tend to benefit and that is the case today. As investors sell off stocks and buy bonds, mortgage rates do well. There is very little change from the close of business, as regards mortgage rates today, but no news is good news. We saw rates drop substantially yesterday, close to the lows we saw earlier this year. 

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20 Jul 09 Current Mortgage Rates

Current mortgage interest rates are up this past week brought on by higher Treasury rates, 10-year U.S. Treasury rates rose from about 3.30 % to 3.65 % this week. Today’s mortgage interest rates remain historically low.  The low rates home mortgages are slowly starting to resurrect the home purchase market.  Home-buyers are being lured back to the housing market slowly, but surly with the Federal Reserve looking to end the nationwide housing crisis. Low rate mortgage loans are also igniting home refinancing activity. Last week, the Mortgage Bankers Association reported that the Refinance Index rose 17.7% from the previous week on a seasonally adjusted basis.

Another index released this past week further supports the fading of housing and subprime mortgage crisis. The National Association of Realtors released their Pending Home Sales Index which showed a slight increase in May 2009. The increase was only 0.1% but it was the fourth consecutive monthly increase which hasn’t happened since October 2004.  Mortgage Related News continues to refer visitors to mortgage brokers and lenders offering free mortgage rate tables based on your state and neighborhood lending postings.

Adjustable Mortgage Rates
Adjustable mortgage rates were mixed this week. The average rate for a one-year conforming ARM decreased to 4.51 % from 4.55 % the prior week. Jumbo one-year ARMs increased to 5.24%, up from the prior week’s average rate of 5.20 %.

Three-year ARM mortgage rates (conforming) decreased to 4.64% this week, down from last week’s average rate of 4.66%. The average mortgage loan rate for a jumbo three-year ARM is at 5.32%, up from the prior week’s average home mortgage loan rate of 5.30%.

Five-year Adjustable Rate Home Loans (conforming) were all over the map this week from several lending sources like Freddie Mac, MBA, Bank Rate and Bloomberg. Five-year ARMs are averaging 4.53%, down from last week’s rate of 4.57%. The average (jumbo) 5-year mortgage rate rose to 5.42% from the previous week’s average rate of 5.34%.

The average interest rate on a seven-year adjustable rate mortgages rose. Conforming seven-year ARMs are averaging 5.14 %, up from 5.00% the prior week. Jumbo seven-year adjustable mortgage rates increased to 5.95, up from last week’s rate of 5.90%.

10-year adjustable rate home mortgages were mixed. Conforming 10-year ARMs are at 5.47 % this week, up from the prior week’s average mortgage rate of 5.30%. Jumbo 10-year ARMs averaged 6.26%, down slightly from 6.28%.

Smart Home Equity reported interest rates for home equity loans and home equity lines of credit remain unchanged.  Slight increases and decreases were reported from Lenders offering HELOC’s and fixed rate equity mortgages.

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18 May 09 Low Mortgage Rates Continue

Mortgage rates were lowered slightly today for conventional and fixed rate FHA mortgage loans.  Mortgage interest rates continued their trend with 30-year fixed rate home loans being reported under 5%.

Average mortgage rates on 7/1 conforming adjustable rate mortgages is now at 4.84 % down from 4.95 %. The average rate on 7/1 jumbo ARMs is at 6.14 % from 6.17%. Average rates on 5/1 conforming ARMs is now under 4.50% at 4.39%, a big drop from 4.52%. Average interest rates for jumbo 5/1 ARMs is 5.38 % down from 5.43%. Conforming 1-year ARMs averaged 4.82% down from 4.88%. Average jumbo mortgage rates for 1-year ARMs is now at 5.74% up from 5.70%.

Interest only adjustable rate home mortgages were also down this past week. The average rate on 5/1 conforming interest only ARMs is now under 4.50 % at 4.45 %.  Average rates on Jumbo interest only 5/1 ARMs are still a lot higher at 5.70 %. Average rates on 3/1 interest only conforming loans is at 4.81% down from 4.92%. Jumbo 3/1 interest only loans now average 5.64% down from 5.70%.

Watch the Analysis and discussion reported by Bloomberg News with Mahesh Swaminathan of Credit Suisse talking about the mortgage interest rates, home loans, loan modifications and mortgage market in general.

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17 Mar 09 Federal Open Market Committee Striving to Free Credit

The Federal Reserve is likely to hold off on using one of its last weapons to get credit flowing buying back Treasury securities from the open market because it has already made progress driving mortgage interest rates down in markets that would benefit from such a step, investors and strategists say.

When the Federal Open Market Committee releases in a statement on interest-rate policy Wednesday afternoon, culminating a two-day meeting, members may hew closely to January’s statement saying, namely, that the Fed retains the option of purchasing Treasuries if conditions warrant.  For the last four months, the Fed has discussed buying Treasuries to exert pressure designed to lower rates on the many corporate, home mortgage and consumer loans linked to benchmark government debt. But at the same time, mortgage rates have fallen by a half percentage point, probably thanks to the Fed’s purchases of mortgage-related assets.

That drop, according to observers, has had the effect of reducing any sense of urgency about proceeding with Treasury purchases. “I don’t think they will buy Treasuries,” said Andrew Harding, chief investment officer in fixed income at Allegiant Asset Management.  “I think they’re doing pretty darn well buying mortgages directly,” he said. Keeping their Treasury plans vague would also give Fed officials time to see if similar plans announced last week by the Bank of England and the Swiss National Bank bear fruit, and how markets respond to earlier programs and the swelling issuance of government debt. It has good reason to tread carefully: Buying Treasuries on the open market could lead to higher inflation — the enemy of Fed and bondholders alike. For now, the Fed may not feel pressure to tamper with Treasuries because yields are still historically low.

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03 Mar 09 Mortgage Loan Rescued

U.S. President Barack Obama’s $75 billion plan to help families avoid foreclosure should be bolder. While it is a meaningful rescue attempt that may help 9 million Americans, it could be doomed unless mortgage issuers have to write down principal to reflect current market values. The odious (to lenders) concept of a “mark-to-market” mortgage might be one way to put a floor on home-price declines. Why not give those in or facing foreclosure a haircut on principal? About 20 % would be fair, reflecting the national decrease in house prices.

And what about the diligent souls who have been paying their mortgage loans all along? Lower mortgage rates reflecting the Federal Reserve’s cost of funds — about 1 %, plus 2 %age points of profit for the lenders — would be beneficial. That may boost new-home sales, re-sales and refinance loans. A strong new mortgage law could limit writedowns before a foreclosure hits the overcrowded court system. To avoid abuse, mark-to-market would be used only as a last resort, after all other options are exhausted.

In its current form, though, the Obama mortgage bailout relies mostly on voluntary interest-rate modifications for relief through Fannie Mae and Freddie Mac, the government-seized mortgage companies. Designed to keep people in their homes, the plan calls for reducing mortgage interest rates so that monthly payments are eventually no more than 31% of household income.

Plan’s Shortfalls

If Congress sanctions mortgage write-downs or “cram-downs” in bankruptcy court — the essential next step in the bailout program that Obama supports — that will indirectly undermine home values. Each judge may be allowed to forgive as much principal as deemed appropriate.  Even if a homeowner avoids bankruptcy and heads straight to foreclosure, a bank that repossesses the home can lose 40% or more in fees, commissions and discounting when the lender finally resells it. Marking down 20 % in principal would be a relative bargain.

How do we avoid the moral hazard of people spuriously filing for bankruptcy to dump their mortgages? An estimated 350,000 households might take this route, according to the Congressional Budget Office. That’s where a write-down cap would come in. Index it to local real-estate prices. When there’s a recession, you are more likely to get a break. If you have positive equity, it’s unlikely you will write it down.

Mandatory Counseling

Combine the write-down and bankruptcy provisions with mandatory counseling and screening. That might stem future defaults, which have been occurring in 57% of Fannie’s and Freddie’s loan modifications.  Everyone has a stake in a sensible solution to the crisis. If your neighbor’s home goes into foreclosure, it will depress your property value and often lead to an increase in crime. The whirlpool of defaults also contributes to lower consumer spending, constricted bank lending and even lower home prices, which dipped almost 19% in December.  Curiously, there was no mention in the White House’s plan of the many loan-easing techniques that Fannie and Freddie are already using. They include:

– Short sales: Also called “pre-foreclosure” sales, these transactions involve selling a house for less than its mortgaged value. The servicer and borrower then negotiate the payment on the difference between the net sales price and what’s due on the mortgage.

Ownership Handover

– Deeds in lieu of action: The borrower hands ownership over to the servicer to repay the debt and avoid foreclosure. This doesn’t work where there are second mortgages, though.

– Forbearance plans: Employing short-term cuts in monthly payments, the borrower promises to make his account current in the future. This is worthwhile in the case of job loss or illness.

– Charge-off in lieu of foreclosure: Instead of foreclosing and taking the property title, the servicer charges off the debt, which becomes a lien against your property? The balance due must be paid when the property is sold.

All these options are available even if your mortgage loan isn’t owned or insured by Fannie or Freddie. But you need to contact your mortgage-servicing company before missing payments. The Obama team also needs to address the question of how to prevent future defaults on “80-20” home loans or second mortgages, jumbo mortgage loans for more than $417,000 and specific remedies for the more than 2 million homeowners in foreclosure proceedings now.

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26 Feb 09 Mortgage Relief Bill Sent to House

Debt stricken homeowners facing foreclosure could resort to bankruptcy to force reductions in their monthly home loan payments under a measure awaiting a House vote.  The bill set for a vote Thursday would let bankruptcy judges reduce the principal and interest rates on home loans. But the measure has been watered down since Democrats first proposed it, due in large part to mortgage industry lobbying to limit the cost for banks. The plan is part of a broader housing package that also would raise the Federal Deposit Insurance Corporation’s borrowing authority and take other steps to prevent foreclosures. President Barack Obama called for the bankruptcy measure last week as part of his housing rescue plan. Democrats and consumer advocates regard it as crucial to slowing the rapid rate of foreclosures.

 

The mortgage industry contends the measure will impose steep and unpredictable costs on its companies, which will be forced to raise fees and mortgage interest rates for borrowers. The industry spent millions last year on a successful lobbying effort to kill the bill, which almost all Republicans oppose. Opponents call it the “cram-down.”

 

This year, with Obama in the White House and Democrats enjoying a broader majority, a rift has emerged in the industry. One major player, Citigroup Inc., has bowed to the new political reality and moved to grab a seat at the negotiating table.  It cut a deal last month with Democrats to back the plan in return for some key concessions. The measure now in the House only applies to existing mortgage loans made before enactment and is limited to homeowners who have tried working with their lenders to adjust their loans before seeking relief in bankruptcy.

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12 Dec 08 Mortgage Rates Drop to 4.5 Year Low

Mortgage interest rates dropped again this week, following the government’s efforts to assist the troubled housing market.  Government sponsored mortgage lender Freddie Mac said Thursday that fixed rates on 30-year mortgages averaged 5.47% for the week ending Dec. 11. That’s down from 5.53% last week and well below 6.11%, which is where the rate stood at this time last year.  Mortgage interest rates began to fall after November 25th, when the administration announced that it would throw another $800 billion into the financial markets to unfreeze consumer credit and mortgage lending.

Specifically, mortgage rates responded to the Federal Reserve’s announcement that it would purchase up to $500 billion in mortgage loan securities backed by Fannie Mae, Freddie Mac and Ginnie Mae. It will also buy another $100 billion in direct debt issued by those firms.  Mortgage refinancing rates dipped to 5.77% on a 30-year, fixed rate loan the day after the government’s announcement, down from the previous Monday’s 6.06% average, according to Keith Gumbinger, vice president of HSH Associates. And the downward trend has persisted.  “What we’re seeing is a slight continued decline influenced by the Federal Reserve’s announcement to buy half a trillion in mortgage backed securities,” Gumbinger said. “And this continued minor downdraft is also due to the poor economic climate.”

The thirty-year mortgage rate has not been this low since March 25th, 2004 when it averaged 5.40%.  “Following the release of the November employment report, which showed the largest monthly decline in jobs since December 1974, bond yields fell slightly this week allowing fixed mortgage rates room to ease back a little further,” said Frank Nothaft, Freddie Mac vice president and chief economist, in a release on Thursday.  FHA home loan rates declined as well, so more homeowners should now be able to qualify for a refinance loan that features interest rates fixed in the 5% range.

The fifteen year fixed rate mortgage this week averaged 5.20%, which is down from 5.33% last week. A year ago at this time, a 15-year fixed rate loan averaged 5.78%.   The 15-year rate has not been this low since February 7, 2008, when it averaged 5.15%.  Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 5.82% this week, up from last week when it averaged 5.77%. At this time a year ago, the 5-year ARM averaged 5.89%.

According to the Mortgage Bankers Association, the one-year Treasury-indexed ARM averaged 5.09% this week, up from last week when it averaged 5.02%. Last year, the 1-year ARM averaged 5.50 percent.  “The housing market still hangs in the balance,” Nothaft said in a release. “On a year-over-year basis, after rising in both August and September, pending existing home sales fell 1.0% in October, based on figures from the National Association of Realtors. Meanwhile, conventional mortgage loan applications for home purchases over the week ending December 5th were up 2.0% from four weeks prior, but were still 51% below the same period last year.” Get informed when the interest rates change and get the most updated mortgage rate news online.

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