30-Year Mortgage Rates Jump

Freddie Mac reports a jump in 30-year fixed mortgage interest to 5.21 percent for the week of April 8 from 5.08 percent the prior week. Rates are climbing now that the Federal Reserve has ended its campaign to lower borrowing costs and the economy is starting to pick up.

Here’s how other rates fared:

• The 15-year fixed rate climbed to 4.52 percent from 4.39 percent.
• The five-year adjustable rate rose to 4.25 percent from 4.1 percent.
• The one-year ARM edged up to 4.14 percent from 4.05 percent.

Source: Buffalo News, Alan Zibel (04/09/10)

Survey: Americans Prefer Owning Over Renting

Despite the challenges facing the housing market, 65 percent of Americans would still prefer to own a home rather than rent, according to a Fannie Mae national housing survey.

In addition, 43 percent of respondents cite safety as a key reason to buy, while 33 percent are motivated to buy because they perceive schools to be better in neighborhoods where most homes are owned by their residents.

The survey results released Tuesday show that both buyers and renters are more cautious than they used to be. About 23 percent of renters say they will buy a home, but later than they once hoped.

A full 70 percent said they believe buying a home continues to be one of the safest investments available. This compares to 74 percent who think putting money into a bank account is safe. Only 17 percent believe buying stocks is a safe investment.

Also, 60 percent believe that it will be harder for them to get a mortgage to purchase a home than it was for their parents.

Source: Fannie Mae National Housing Survey (04/06/2010)

Homebuyers scramble as mortgage rates rise

Homebuyers scramble as mortgage rates rise

Higher payments could price many would-be buyers out of the market

By ADRIAN SAINZ and ALAN ZIBEL

updated 2:50 p.m. MT, Wed., April 7, 2010

WASHINGTON - The era of record-low mortgage rates is over.

The average rate on a 30-year loan has jumped from about 5 percent to more than 5.3 percent in just the past week. As mortgages get more expensive, more would-be homeowners are priced out of the market — a threat to the fragile recovery in the housing market.

And if you wanted to refinance at a super-low rate, you may have missed your chance. Mortgages under 4 percent are still available, but only for loans that reset in five or seven years, probably to higher rates.

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Rates are going up because of the improving economy and the end of a government push to make mortgages cheaper.

For people putting their homes on the market this spring, rising rates may actually be a good thing. Buyers are racing to complete their purchases and lock in something decent before rates go even higher.

"We are seeing some panic among potential buyers who have not found houses yet," said Craig Strent, co-founder of Apex Home Loans in Bethesda, Md. "They're saying: Man, I should have found a house three weeks ago or last month when rates are lower."

Decline in purchasing power
It's all about affordability. For every 1 percentage point rise in rates, 300,000 to 400,000 would-be buyers are priced out of the market in a given year, according to the National Association of Realtors.

The rule of thumb is that every 1 percentage point increase in mortgage rates reduces a buyer's purchasing power by about 10 percent.

For example, taking out a 30-year mortgage for $300,000 at a rate of 5 percent will cost you about $1,600 a month, not including taxes and insurance. But the same monthly payment at a rate of 6 percent will only get you a loan of $270,000.

Good economic news is the first reason rates are rising: U.S. government debt, a safe haven during the recession, is losing its appeal as investors turn to stocks and riskier corporate bonds.

Lower demand for debt means the government has to offer a better interest rate to sell its bonds. The yield on the 10-year Treasury note, which is closely tracked by mortgage rates, has hovered around 4 percent all week, the highest since June.

The second reason is the Federal Reserve. Last week, the Fed ended its program to push mortgage rates down by buying up mortgage-backed securities. When demand from the central bank was high, rates plummeted to about 4.7 percent for much of last year. And business boomed for mortgage lenders as homeowners raced to refinance out of adjustable-rate mortgages and into fixed loans.

As of Wednesday, the Mortgage Bankers Association put the national average for a 30-year fixed-rate mortgage at 5.31 percent. One week ago, it was 5.04 percent.

6 percent rates likely
Many analysts forecast rates will rise as high as 6 percent by early next year. If they go much higher, the already shaky housing recovery could stall. And that could slow the broader economic rebound.

In a normal market, with home prices steadily rising, a jump in rates doesn't cause a big dip in demand. That's because people know their homes will eventually rise in value, and are willing to accept a higher mortgage payment.

But now home prices are flat nationally and still falling in some places. Potential buyers are nervous about jumping in.

"In this environment, any rise in mortgage rates does significant damage because people don't think they're going to get their money back" if prices fall, said Mark Zandi, chief economist at Moody's Analytics.

For people who bought their first home in the 1980s, when rates stayed over 10 percent for several years, paying 6 percent for a home loan may seem like a steal. But it's coming as a shock to many first-time homebuyers this spring.

In Overland Park, Kan., Sirena Barlow checks mortgage rates online once a day. She's been shopping for a something around $130,000 and wants to sign a contract this month, to take advantage of a tax credit for first-time homebuyers.

Barlow, a legal assistant, has already told her landlord she's moving, so her stress level is high. Her real estate agent, Michael Maher, has been doing his best to calm Barlow and other clients, but rising rates are making them anxious.

"It's like giving hyperactive kids ice cream," he said. "It has really taken the ones who are focused on buying and amped them up a little bit."

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Housing Experts Say Real Estate is Recovering

Some of the nation’s top economists believe the housing market has turned and better days are on the way for the housing industry.

Increases in jobs, credit, and affordable homes will overcome impediments such as rising interest rates, and the expiration of the Federal stimulus program to push the housing market toward recovery, says Dean Maki, chief U.S. economist for Barclays Capital.

“I would bet even odds that we’re at a bottom and that we’re going to see improvement in the coming months,” says Karl Case, co-creator of the S&P/Case-Shiller Home Price Index and a professor of economics at Wellesley College.

“The underlying trend is turning positive,” says Bruce Kasman, chief economist at JPMorgan Chase & Co.

Source: Bloomberg, Kathleen M. Howley and Rich Miller (03/15/2010)

Fed Says Keeping Rates Low Is Key

The economy remains in a slump, motivating a Federal Reserve official, who is said to be President Obama’s favored candidate for vice chair of the Fed, to say that keeping interest rates at record-low levels is important.

Janet Yellen, head of the Federal Reserve Bank of San Francisco, said in a recent speech that the Fed remains committed to doing what’s necessary to hold down interest rates.

"Any significant run-up in mortgage rates would create risks for a housing recovery," she said.

Source: Associated Press, Jeannine Aversa (03/23/2010)

Greenspan: Housing Will Come Back

Former Federal Reserve Chair Alan Greenspan told officials in Mexico on Wednesday that he believes U.S. home prices have hit bottom. However, home owners are still unnerved by the decline in value, and until prices stabilize, the economy will remain weak.

"We will not be out of this crisis until home prices truly stabilize in the United States. They appear to have stabilized, but they are very fragile," Greenspan said in a televised interview.

"Eventually housing will come back; it can't get any lower," he added.

Source: Reuters News (03/25/2010)

A Good Time to Buy a High-End Home

I have just recently negotiated $200,000+ off the Purchase price for 2 of my High End Clients...

Some of the best housing deals are on high-end homes, many over $1 million. Some of them need TLC or they aren’t in the most-coveted locations. But there are plenty of desirable properties and lots of sellers who are getting impatient.

Buyers with cash have the best opportunities. Buyers who need a mortgage should move especially quickly. With the Federal Reserve ending its purchases of mortgage securities this month, the mortgage market is likely to rise from its current low level. Even if prices fall further, the rising cost of borrowing could eliminate any savings.

As Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California, says, this is a "very good time to be a buyer at the high end."

Source: The Wall Street Journal, Nick Timiraos and James R. Hagerty (03/27/2010)

HOAs Can't Ban Sex Offenders

I feel that if the majority of the Planned Development votes to BAN Sex Offenders than the vote should be honored. What do you think?

Home Owner Associations or neighborhoods with deed covenants, conditions, and restrictions (CCRs) are unlikely to be successful in an effort to ban sex offenders from purchasing a home, says Charlotte, N.C., attorney Michael Hunter.

Hunter, who specializes in community and condominium association law, says adding such a restriction to bylaws or covenants would likely be found unenforceable by the courts and could expose the HOA or community organization to a civil rights claim.

The best way to deal with the issue, Hunter says, is to ensure that all residents are aware that a registered sex offender is residing in the community. The board should avoid identifying the sex offender by name or address because of potential liability in the event that a resident reacts irresponsibly.

Source: Charlotte Observer (03/27/2010)

Government Making it Harder for You to Buy Your New Home...

Whether your buying your first or new home today or a year from now, these changes will dramatically affect your ability do both...

The FHA's move to raise upfront mortgage insurance premiums takes effect next week, soon to be followed by a reduction in allowable seller concessions toward a borrower's closing costs.

Speaking to a Housing Financial Services subcommittee earlier in March, MBA President John Courson expressed concern that "this could be another policy change that would have an adverse effect on the population that traditionally has sought FHA's assistance to purchase a home." He added that the cut in seller concessions would largely affect low-to-moderate, first-time, and minority home buyers.

Source: Memphis Daily News, Eric Smith (03/30/10)

Mortgage Applications Hit 6-Month High

Our market is not slowing down, Prices are not dropping and more people are buying. Get Your new Home before you no longer can...

The volume of mortgage applications to purchase homes rose 6.8 percent last week compared to the previous week on an adjusted basis, according the weekly survey by the Mortgage Bankers Association.

On an unadjusted basis, purchase applications were also up 6.8 percent compared to the previous week and rose 9.3 percent compared to the same week a year ago. This is the largest number of applications since the week ending October 2009.

The number of applications to refinance declined 1.3 percent on an adjusted basis compared to the previous week, and the overall mortgage index increased an adjusted 1.3 percent. On an unadjusted basis, it was up 1.5 percent.

Mortgage rates were on the upswing:

· 30-year fixed-rate mortgages increased to 5.04 percent from 5.01 percent.
· 15-year fixed-rate mortgages increased to 4.34 percent from 4.33 percent.
· 1-year ARMs increased to 6.88 percent from 6.75 percent.

Source: Mortgage Bankers Association (03/31/2010)

Economists Give Housing Mixed Reviews. (Tell me what you think)?

Home prices that approach what they were before the bust are at least five years away, says Peter Morici, a University of Maryland professor of economics.

“I think we’ll see housing values rise 20 or 25 percent and then more gradual appreciation," Morici says.

The problem, he believes, is the oversupply of housing. “Supply is a couple of years ahead of demand,” he says.

Other housing observers were less optimistic. “Foreclosures are still going to bite the market. Given the preponderance of negative housing data, we may see another leg down,” says Joseph Brusuelas, president of Brusuelas Analytics.

What is your opinion?

Source: Bloomberg, Courtney Schlisserman (03/30/2010)

The New Face of House Flipping

Home flippers have their groove back, but this time around most of them are pros who are savvy enough to buy the right properties and turn them over quickly.

Nationally, the number of flipped homes rose 19 percent to 197,784 in 2009, according to RealtyTrac. Flipping has been encouraged by a Federal Housing Authority one-year rule change, which allows FHA borrowers to buy foreclosed homes from owners who have held title for less than 90 days.

Many of the today’s flippers are wealthy foreign investors from countries like Israel, Germany, and Spain. In many cases, they bid without ever seeing the properties, relying on services that checks titles and send drivers to properties to relay photos and descriptions via mobile phone to bidders.

Source: BusinessWeek, Prashant Gopal (03/31/2010)