Here we go again. This past week we some mortgage companies drop there rates as others went up. This is one a sign of the government driving rates down as the plan was designed to. The other is, Lenders, Banks and other sources of money are overwhelmed with business so they have to raise rates to slow down the mortgages from coming in. I try to watch as many banks, lenders and mortgage companies as possible on a daily basis, even with all the tools I have, it has been very difficult.
This week I happen to take 2 mortgages that are 2 families, they are both occupied by there owners and make a nice rental income. The loans are somewhat perfect, good credit, good equity, life is just grand! Until I have to lock them in via the Fannie Mae pricing tools. Because it is a 2 family (all properties from 2 to 4 family) the client received a 1.00% pricing adjustment and not in there favor. It brought the rate of 5.125% to 5.50% just like that for owning a 2 family. Just one more way that Fannie Mae has be accustomed to charging us for everything. They already charge if you take cash out of your home over 70% of the appraised value, if your credit score is below 720 and numerous other adjustments. Frustrating to say the least. It becomes harder and harder to even quote a mortgage rate without knowing all the details of the borrower, the home and anything else they can think of penalizing.
Don't even bother trying an investment property these days unless you have a minimum of 20% down and want to pay points. The Private Mortgage Insurance companies will no longer insure these properties and the lenders don't want them either.
The most important advice I can give these days is to get pre-approved long before you begin to look for a home. Get all your credit documents into he lender/broker and let them review it. All too often we have that client stroll through the door and say " I just bought a house and now I need a mortgage!" This never works out!
Just a another day in the life of a changing market place. The good news, mortgage rates are staying fairly low, we did see them at 4.875% for a few minutes. Careful when you hear or read the average mortgage rate, typically it will have an average amount of points or other costs. I have heard it so much, the rate is now 5.1% and in fine print the average points came to .8% in fees.
If you are shopping for rates, The RATE MUST BE THE SAME AS THE APR!!!!!
Rate: 5.125% The APR should be 5.13, it is always carried out to 2 decimals and if the cost of the mortgage is low or reasonable the APR will be the same. The division of banks requires when in print, the APR be the same size font as the RATE.
Buyer beware!
I hope all is well and always feel free to give me a call or email with questions!!!!!
Bill Nickerson
Vice President
Mortgage Network/Emerson Lending
179 Great Road
Acton MA 01720
bill@billnickerson.com
www.emersonlending.net
Saturday, January 10, 2009
Sunday, January 4, 2009
Fed aims to buy $500 billion in MBS by mid-year
WASHINGTON (Reuters) - The U.S. Federal Reserve on Tuesday moved forward aggressively with an effort to drive down mortgage costs, setting a goal of buying $500 billion in mortgage-backed securities by mid-2009.
The central bank said it would start buying the securities in early January under a program announced last month. When it announced the program, mortgage rates dropped in anticipation of the purchases.
Still, some analysts on Tuesday expressed surprise with how vigorously the Fed was pledging to act and the news propped up prices for MBS in very thin trade.
"When they are buying along the lines of $80 billion to $100 billion a month, if they're going to do it in six months, they have to buy everything they can get their hands on," said Kevin Cavin, a mortgage strategist at FTN Financial in Chicago.
"It will push up prices and tighten spreads and push down primary mortgage rates," he said.
The Fed selected investment managers BlackRock Inc (BLK.N), Goldman Sachs Asset Management (GS.N), PIMCO, and Wellington Management Co to implement the program.
The mortgage-buying program is part of a sustained government effort to help the United States withstand a severe credit crunch and deep housing downturn that have tipped the economy into recession and damaged activity around the globe.
Earlier this month, the Fed cut benchmark U.S. interest rates close to zero and signaled that it was turning more heavily to unconventional measures to spur the economy.
On Tuesday, it said it would increase the money supply to make the MBS purchases, effectively easing monetary policy further.
The program only covers securities issued by government-sponsored mortgage enterprises Fannie Mae and Freddie Mac and government loan financer Ginnie Mae.
When it announced the program on November 25, the Fed also said it would buy up to $100 billion in debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks, and after its meeting on interest rates on December 15-16 it said it could press even more heavily into mortgage markets.
"The goal of the program is to provide support to mortgage and housing markets and to foster improved conditions in the financial markets generally," the Fed said in a statement on Tuesday.
The central bank said it would adjust the pace of its purchases based on changing market conditions and the impact of the program. The initiative is aimed at reducing the cost of credit and increasing its availability, which authorities hope will support housing markets and foster improved financial conditions generally.
Investment managers are needed because of the size and complexity of the program, the Fed said.
Investor appetite for debt issued by Fannie Mae and Freddie Mac had dried up since the government seized control of both companies in September.
By Mark Felsenthal Mark Felsenthal – Tue Dec 30, 6:56 pm ET
The central bank said it would start buying the securities in early January under a program announced last month. When it announced the program, mortgage rates dropped in anticipation of the purchases.
Still, some analysts on Tuesday expressed surprise with how vigorously the Fed was pledging to act and the news propped up prices for MBS in very thin trade.
"When they are buying along the lines of $80 billion to $100 billion a month, if they're going to do it in six months, they have to buy everything they can get their hands on," said Kevin Cavin, a mortgage strategist at FTN Financial in Chicago.
"It will push up prices and tighten spreads and push down primary mortgage rates," he said.
The Fed selected investment managers BlackRock Inc (BLK.N), Goldman Sachs Asset Management (GS.N), PIMCO, and Wellington Management Co to implement the program.
The mortgage-buying program is part of a sustained government effort to help the United States withstand a severe credit crunch and deep housing downturn that have tipped the economy into recession and damaged activity around the globe.
Earlier this month, the Fed cut benchmark U.S. interest rates close to zero and signaled that it was turning more heavily to unconventional measures to spur the economy.
On Tuesday, it said it would increase the money supply to make the MBS purchases, effectively easing monetary policy further.
The program only covers securities issued by government-sponsored mortgage enterprises Fannie Mae and Freddie Mac and government loan financer Ginnie Mae.
When it announced the program on November 25, the Fed also said it would buy up to $100 billion in debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks, and after its meeting on interest rates on December 15-16 it said it could press even more heavily into mortgage markets.
"The goal of the program is to provide support to mortgage and housing markets and to foster improved conditions in the financial markets generally," the Fed said in a statement on Tuesday.
The central bank said it would adjust the pace of its purchases based on changing market conditions and the impact of the program. The initiative is aimed at reducing the cost of credit and increasing its availability, which authorities hope will support housing markets and foster improved financial conditions generally.
Investment managers are needed because of the size and complexity of the program, the Fed said.
Investor appetite for debt issued by Fannie Mae and Freddie Mac had dried up since the government seized control of both companies in September.
By Mark Felsenthal Mark Felsenthal – Tue Dec 30, 6:56 pm ET
Friday, January 2, 2009
Mortgage Rates, Up or Down
Today was another wild ride in the mortgage rate arena. The stock market had a great day pushing the Dow Jones over 9000 for the first time since early November. This type of rally causes investors to sell treasuries, bonds and other securities that are less risky and move them over to the Stock market. In doing so, the markets that govern interest rates suffer. Today we saw a few of the lenders re-pricing interest rate twice. It is hard to give an exact rate, but is safe to say that most lenders and banks are quoting over 5.5% today with 0 points.
Per Bloomberg.com today: "Yields rose as stocks climbed to a two-month high on speculation government spending will curtail the recession"
What does this mean, if the government injects enough money into whatever markets, mortgage backs, bonds, treasury, you name it, it will help the overall health of the economy. As the economy gets better, it is the natural progression for mortgage rates to rise. Consumers and investors will start pumping money back into the stock market which pushes the mortgage rates up.
The national average of Mortgage Rates is based on last weeks closing and if you didn't catch the fine print it is also with .8 points as a fee. That equals about a 1/4 in interest rate: Actual average rate from last week would be 5.375 if we are comparing apples to apples, but I am not the media. I am only a mortgage professional who is trying to be truthful and ethical.
On the flip side, Lenders are closing out loans that were locked on November 24th and 25th (30 day rate locks) this will free up a lot cash from the lenders that will allow them to lend more. In doing so, we will see many lenders next week with great rates, more as a teaser. They will come out with a great rate in the low 5's for a few hours until they "get there fill", or sell what is allotted for the day and then they will push up the rate to stop or slow down the volume.
There are so many different directions that mortgage rates move in, it is hard to give an accurate prediction or determine which way rates will go.
Remember, if you are saving money in the course of refinancing your home, go with it. We may not see this again for quite some time!
Bill Nickerson
bill@billnickerson.com
Mortgage Network/Emerson Lending Company
Acton Massachusetts
Per Bloomberg.com today: "Yields rose as stocks climbed to a two-month high on speculation government spending will curtail the recession"
What does this mean, if the government injects enough money into whatever markets, mortgage backs, bonds, treasury, you name it, it will help the overall health of the economy. As the economy gets better, it is the natural progression for mortgage rates to rise. Consumers and investors will start pumping money back into the stock market which pushes the mortgage rates up.
The national average of Mortgage Rates is based on last weeks closing and if you didn't catch the fine print it is also with .8 points as a fee. That equals about a 1/4 in interest rate: Actual average rate from last week would be 5.375 if we are comparing apples to apples, but I am not the media. I am only a mortgage professional who is trying to be truthful and ethical.
On the flip side, Lenders are closing out loans that were locked on November 24th and 25th (30 day rate locks) this will free up a lot cash from the lenders that will allow them to lend more. In doing so, we will see many lenders next week with great rates, more as a teaser. They will come out with a great rate in the low 5's for a few hours until they "get there fill", or sell what is allotted for the day and then they will push up the rate to stop or slow down the volume.
There are so many different directions that mortgage rates move in, it is hard to give an accurate prediction or determine which way rates will go.
Remember, if you are saving money in the course of refinancing your home, go with it. We may not see this again for quite some time!
Bill Nickerson
bill@billnickerson.com
Mortgage Network/Emerson Lending Company
Acton Massachusetts
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