Did we say to expect a volatile week this week? That was an understatement.
To recap - The yield on the 10 year T bond was at 4% as we started the week.
Yesterday was saw the yield drop below 3.6% for a very brief time, before the bond selling exploded and yields went crazy. We closed yesterday with the yield at 3.73% - but opened this morning at 3.75% and we've been rising ever since. The yield, at this moment is at 3.84%!
In the absence of government intervention in mortgage bonds, they have been following the 10 year bond, and so mortgage rates have been on a roller coaster ride this week. I hate to even try to quote rates right now because updated rate sheets have been rolling out at least hourly the last 2 days.
So - what's causing all this craziness?
Hang onto your hats again. It looks like next week will be another rocky ride.
OH - and mortgage rates are somewhere between 5% - 5.5% for the 30 year fixed rate mortgage.
There was some more good news/bad news on the economic front this morning.
President Obama rolled out his plan for regulation reform in the financial industries. It is 85 pages of reform that is meeting with a lot of controversy, and resistance, both in Congress and in the business sector.
Here's the Did you know - The Senate is currently discussing whether or not to INCREASE the tax credit for a home purchase from $8,000 to $15,000. The amount will almost double, and will be available to every home buyer! not just first time home buyers. WOW - They are really trying to get this housing market moving again. This credit will be available for owner occupied homes only.
Stay tuned - you'll know more as soon as I do.
Shelby Bateson
Town & Country Mortgage
10228 SW Capitol Highway
Portland, OR 97219
503-819-6545 phone
1-866-626-2828 fax
Lic # ML-3604
* Best rates apply to borrowers with Loan to Value at or below 90% and credit scores of 740+. ** Best FHA rates apply to credit scores of 660 and up. There are upward rate adjustments for lower credit scores on all loan programs. All rates are subject to change without notice. These rates are NOT APRs - do not include closing costs.
Good morning, and happy end of the first half of 2009. Tomorrow we officially begin the "second half" of 2009, which many analysts and economists have predicted will mark the beginning of the end of the worst recession to hit this country, and the world in 5 decades. Let's hope all these brilliant people are correct in their predictions.
The Case Shiller index released home valuation numbers for April (note this is 2 months behind). The news was a bit encouraging as we are seeing a decrease in the drop in home values across the country. In fact, 8 cities reported values increasing slightly. Alas, Portland was not one of those cities, and we did see yet another 0.6% drop in values in our area. That is an improvement. So, if your house was worth $300,000 prior to April, as of May 1, according to this index, it was worth only $298,200. I have to comment here that $1800 drop on a $300,000 house is really not much - true it's a drop, but it shouldn't make or break a sale. In other cities on the West Coast, San Diego and San Francisco both reported a slight increase in values. We are now well into the traditionally busiest season for home sales. While home values appear to be steadying, we do know that with the high unemployment rate, more foreclosures are upcoming. But, we also know that banks are becoming more reluctant to sell homes at below value prices, and are actually holding off on releasing their REO inventory, to help sustain home values, and of course, to save on more losses to their bottom lines.
Hang onto your pocketbooks folks. In the ongoing saga between Swiss Bank UBS and the IRS, it appears that the IRS has won the battle. If you, or anyone you know has a "hidden" bank account at UBS (for the purpose of avoiding IRS taxes), you will NOT be able to access those funds unless you close the account or move the funds to an onshore account, beginning tomorrow, July 1, 2009! In response to this announcement, many lenders have already announced this morning that prior to closing a mortgage transaction, you will be required to sign a form authorizing the lender to do an OFAC (Office of Foreign Assets Control) search prior to drawing docs or funding your loan. Some of the credit bureaus we utilize have the capacity to make this search prior to issuing the credit report. Of course, there is a nominal extra charge for this search, but the few dollars up front (my best guess is not more than $5) could save hundreds of dollars in closing delays. So, of course, we will be utilizing this service beginning immediately.
Daniel Baldwin, brother of actor Steven Baldwin, has announced that he will be moving to Portland with plans of opening a film production company here in our city. The plan is to make films in and about Oregon. His initial plans include the start of at least 3 productions within the first year. Are we ready for a Portland based reality show? Please let me know if you will be appearing in that production so I can plug your move into "stardom." Other plans include a horror flick, and a documentary on the struggling economy in Oregon. In fact, a large part of the reason for Baldwin's move to Portland is to help our economy. Did you realize that Oregon's economy is just below the poverty level? Then why are our housing prices averaging approximately $125,000 higher than the median price of homes across the nation?
The stock market is down across the board this morning, as we close out this quarter. This is not unusual because the close of the quarter means we are moving into business earnings reports beginning next week (always a nervous time for investors). AND, we are again testing the 52 day and 200 day highs in the stock market indices. The S & P is right at 915, the DOW hit 8500, both significant points of resistance since we hit the low in March. In the meantime, the yield on the 10 year bond seems to be moving up again. It dropped slightly below 3.5% yesterday, but has reversed course today, and currently sits at 3.51%. Hang on - we're hearing the Feds are again infusing cash into the mortgage bond markets, so we just might see mortgage rates moving down again.
Best rates this morning:
30 year fixed - still above 5% - but trying to hit that mark again
5/1 ARM - this loan rate really depends on the lender. We are seeing the best rate between 4.5% - 5% for those lenders offering this product. This product is very sensitive to ALL the possible adjustments that can affect the rate you will pay.
FHA - 5.5% and up - again depending on the lender.
Speaking of lenders, please be sure to do some shopping around for rates and fees BEFORE you or anyone you know, applies at one of the bigger banks. We are hearing that more and more of the big banks are requiring non-refundable application fees, and once you pay that $500-$750 fee, you will feel stuck with that bank. But, rates are so variable between lenders these days, that getting yourself stuck may not be the best option for you. There are still over 90 lenders out there doing loans in our area, so there is significant competition for your business.
Do you remember that dreadful HVCC I have mentioned recently? The NAB (National Association of Builders) has joined our cry for repeal of this law. Apparently they are now experiencing appraisals coming in lower than the cost to build their new houses! We are hearing whispers that some regulatory bodies are reviewing this law and that a moratorium may go into effect shortly. One can only hope that some level of common sense will prevail in Congress.
And last but least, this is a short work week due to the 4th of July holiday. All banks and lenders will be closed on Friday. Sadly, Fort Vancouver has announced that there will be no 4th of July fireworks this year. The cost to produce our fabulous show has grown to almost $500,000, and the budget does not allow for that expenditure this year. But plans are already underway for the show to resume next year. Let's hope the economy cooperates.
Make it a great day everyone. We are in for some hot weather beginning tomorrow. 90 degrees and up is forecast for the rest of the week, and probably into the weekend, so be careful and wear your sunscreen.
Best regards,
* Best rates apply to borrowers with Loan to Value at or below 90% and credit scores of 740+. ** Best FHA rates apply to credit scores of 620 and up. There are upward rate adjustments for lower credit scores on all loan programs. All rates are subject to change without notice. These rates are NOT APRs - do not include closing costs.
After meeting for the last two days, Ben Bernanke held a press conference with the media summarizing the key points covered during the meeting. Here's a recap of today's Fed speak:
1. The Feds will leave overnight lending rates unchanged at between 0%-.25%, probably for at least the rest of 2009. For those of you with any debt tied to the prime rate (currently at 3.25%), this means no change in that rate or in those payments. NOTE: Mortgages are almost never tied to the prime rate. They are more likely to be tied to the LIBOR (London Interbank Offer Rate) index, and most specifically the 6 month LIBOR rate for most mortgages. The 6 month LIBOR is currently at 1.16%. ARM loans tied to the LIBOR will feel the effects of a rising LIBOR index only at the time of each payment adjustment.
However, if you have a variable rate HELOC (Home Equity Line of Credit), this type of loan is almost always tied to the prime rate. The good news for you is that your low monthly rate and payments will remain unchanged for now.
2. Bernanke also mentioned that the Feds are watching to see how quickly the economy will recover on its own. He said:
Bernanke disappointed Wall Street, and all of us in the housing industry by failing to say that the Feds will resume purchases of Mortgage backed securities. This failure caused the yield on the 10 year bond to rise, and mortgage rates to rise with the yield. Currently the 30 year mortgage is averaging a rate of 5.38% nationally. That's substantially higher than just a month ago, when we saw rates below 5%, but slightly below the high we saw last week at closer to 5.6%.
A government report released today showed an unexpected increase in durable goods orders (refrigerators, televisions, computers, etc.) , but at the same time, an increase in unemployment nationally.
Ben Bernanke is walking a tightrope of a sort. Trying to move our economy into recovery mode after the worst recession in 5 decades is almost unprecedented with the powers the Feds have been assigned. And, his appointment to Chairman of the FOMC will expire shortly. There is considerable debate on whether or not he will be re-appointed. President Obama pretty much deflected the question at a recent news conference. While Bernanke was appointed by his predecessor, this is a pretty tough spot to insert a new key player.
I said my mantra last night for lower rates, but apparently the powers that be weren't listening. Can we hope for a delayed reaction? Again, I think that a key factor in whether or not the Feds will resume purchases of Mortgage backed securities will rest on the effect of the higher interest rates on the housing market recovery. Those numbers won't be released until mid-late July.
Speaking of the housing market recovery - other news released today was that sales of new homes decreased in May, but prices for those homes increased. Are we surprised then that those sales decreased?
Here's more news:
The average price of homes that are selling is at $173,000 - $200,000 nationwide.
The current inventory of homes that qualify for conforming loans (at or below $417,000) is at 9+ months nationwide.
The current inventory of homes priced at $1,000,000+ is at 8+ YEARS!!
Builders take note - the buyers out there are snapping up the lower end of the price range. If you are building, you have to keep this in mind! Home buyers are following the trends seen in the retail stores. Walmart and Kohls are thriving during this economic downturn, while Nordstom, Saks, Tiffanys, etc., are all feeling the pinch. Those who have money are holding onto it.
OK - that's it for today.
Tomorrow I will focus onwhat you can do to qualify for the best mortgage rates out there, and why some of you, even with good credit, are still looking at higher rates.
Enjoy the rest of your afternoons and evenings.
503-819-6545
The stock market was down again today, and rates dropped significantly at the open. However, the open didn't hold. Rates moved up slightly as the day progressed, but still closed lower than yesterday. We are moving closer to 5% on the 30 year fixed. The 10 year bond closed at 3.69% today - considerably lower than yesterday.
HVCC = The Home Valuation Code of Conduct
The focus of my email today centers around HVCC. I think it's important that you know about HVCC and how it can and WILL affect you and anyone you know buying, selling or refinancing a house. HVCC went into effect on May 1st this year, and is raising havoc with the already fragile housing industry. If you'd like to learn about how HVCC can potentially cost you thousands extra in closing costs to purchase a home, or how it can literally kill a sale of your home, please click on the link below to view the video.
If you are as outraged as those of us in the real estate, mortgage, and appraisal industries are, please sign the petition and help us kill this travesty called reform. We are doing all we can to fight this bill, but we need your help too.
https://www.thinkbigworksmall.com/public/showArchiveVideo/1/4909
Thanks in advance for your help.
Best regards
http://www.shelbytncmortgage.com
Enjoy the rest of your day today. We might have rain in the forecast beginning tomorrow.
Good morning. Can you believe 2009 is almost half over, and summer is just around the corner?
As quickly as mortgage rates rose to their highest levels in a year, we are seeing Treasury and Mortgage bond rates drop late last week and this morning. There is resumed confidence in the US dollar after comments from Russian Finance Minister Alexei Kudrin that Russia has no immediate plans to switch from US currencies for their reserves. (If you'll recall, it was speculation that Russia would start selling off their US Treasuries that led to the huge rise in bond yields last week.) In addition, Japan has indicated that "investors have nowhere else to put their money that is more secure, nor paying higher yields than US Treauries."
Bond yields have dropped from just over 4% last week to around 3.7 right now. Mortgage rates are following the drop. However, before we get overly excited, a survey of Bloomberg analysts forecast that the bond yield might not drop lower than 3.65%.
However, there are other economic concerns now, which has the stock market diving as investors take profits and sit back and wait for other news that validates the recent rally. The DOW is currently down over 200 points, NASDAQ down more than 50 points, and the S & P has broken through a key resistance point of 925, now at 920. To make matters more precarious, this is a "triple witching week" which is always volatile. (Triple witching occurs the 3rd Friday of the last month of each quarter. It is the expiration of stock index futures, stock option futures, and stock options.) Traders and investors are required to close out these option trades by this Friday, or allow them to expire worthless, or at a potential loss. This is what causes the extreme volatility in weeks like this one.
On the good news front, oil prices are down from last week's highs, and most commodities are down substantially as well.
For those of us looking for more reform and regulation of our financial systems, stay tuned as President Obama will be announcing on Wednesday more reforms which will give the Federal Reserve broader powers to prevent the kind of "economic meltdown" we have just experienced over the last 2 years. It is reported that a comprehensive plan will be announced which will provide for a stronger framework for consumer and investor protection.
The G-8 (Canada, France, Germany, Italy, Japan, Russia, the United Kingdom, and the United States) is currently meeting,..... and is working on worldwide regulations, as well as an "exit strategy" to pouring money into worldwide economies. Treasury Secretary Tim Geitner is at the meeting representing the United States. In addition, there is a separate meeting being held by India, Russia, China and Brazil, currently the 4 strongest economies in the world. Now that it appears that economies world wide are reaching some level of stabilization, a plan (exit strategy) is required to return us all to some level of normalcy.
President Obama is also meeting with the AMA today, discussing his plans for health care reform The Congress is under a mandate to deliver a health care reform package to the President by October 2009. One option being discussed is a U.S. government owned insurance company to provide health care insurance. This would be in competition to other privately owned health care insurance providers, and forgive me speculation, but it appears that this would definitely help reduce the high costs of health care insurance in this country. Obama is urging the AMA to back his plan, while the plan is still meeting a lot of resistance from the Republican party.
This is likely to be a very volatile week on wall street, and is also potentially a volatile week in terms of mortgage bonds. Please stay tuned. I'll keep you updated as news breaks. For now, we're on rate watch.
*Best rates, as I write this: (remember these rates apply to those with the best scores, highest equity positions for purchase and rate and term refinances.)
30 year fixed 5.375% APR 5.41%
5/1 ARMs 4.5% APR 4.622%
FHA 5.5% APR 5.71%
Stay tuned as "our economy turns" this week. I'll do my best to keep you posted.
After a month of rising mortgage rates and rising yields on the 10 year T bond, we are finally seeing the pull back that we'd been hoping would occur. There are multiple reasons for the drop, but the most significant is a believed to be that a Wall STreet index fund showed confidence in the US dollar by making large purchases of shorter term bonds, and other funds followed. Also, a Japanese finance minister announced that they will continue to buy US debt because they have "unshakable" confidence in the US dollar. (The rise in rates had begun as countries, such as Russia, India and Brazil had previously annouced that they would sell US debt in favor of more stable multinational currencies.) It is now anticipated that Treasury yields should continue to drop, according to a spokesperson at Citigroup.
Yesterday, the yield on the 10 year bond hit 4% before it turned back down. Is that a new point of resistance? Let's hope it is, because mortgage rates hit almost 6% on the 30 year fixed before we saw the reversal begin. This morning we are seeing the yield back around 3.8% - a huge drop. It is currently at 3.77%. The best rates on 30 year fixed have also pulled back to as low as 5.375%* for the very strongest of borrowers.
The Feds still are reluctant to comment on whether or not they will resume purchasing bonds to keep yields low. They are still watching to see how the market handles the fluctuations, and how the fluctuations and higher borrowing rates are affecting consumers. We expect to hear more about this after the next FOMC meeting in 2 weeks.
Yesterday we saw the price of oil top $72/barrel - up more than $5 in just a week. We've watched gas prices rise just as quickly. There is now discussion among traders that oil prices could hit $80/barrel by year end. Let's hope not. We're at almost $3 per gallon now. Oil is currently trading at just under $72/barrel.
The eyes of the world, and Wall Street, are on Iran today. Iran is holding presidential elections and are reporting what could be record breaking turn out at the polls. This election could somewhat alter the course of politics in that region. The primary rivals in this election are the current conservative, hard-line, President Ahmadinejad, and reformist Mousavi, who favors more freedom for the people and closer ties with the United States. Election result are expected to be released on Sunday.
The Michigan consumer confidence index released this morning, showed an increase in confidence for the sixth straight month. This index shows us that consumers are beginning to spend again, and is a good signal that perhaps the worst truly is behind us.
The very popular 5/1 ARM loan is doing its coming and going thing. Currently, I see just a few lenders offering this product, with rates, for the most part, significantly lower than the 30 year fixed rate loan. The best rates on this loan, this morning, are at 4.5%*. Again, I feel that I must caution that this loan is not necessarily the best way to finance your property. We should discuss the pros and cons of this type of loan, before you make this decision. It is always important to remember that while 4.5% is a very attractive rate, it is almost certain to rise in 5 years, when this loan becomes adjustable. The Adjustable rate mortgage is a special offer by some lenders when they find investors with an interest in offering this type of financing. When these funds run out, this loan can become unavailable and/or rates for the product being offer can change significantly.
Have a fabulous weekend.
Big news today
Oil topped $70/barrel today, the first time since September 2008. $70 has been a point of resistance, so all eyes are watching to see if that point of resistance will hold, or if oil prices are about to move higher. It is reported that hedge funds are investing heavily in oil futures, as the hedge fund managers, in general, expect the upward movement in prices to become a trend.
10 of the 19 largest banks have gotten the green light to pay back TARP money. The Treasury should start receiving those repayments, with interest beginning this week. The total repayments totals $68 billion! That's a start on paying us back.
Mortgage rates went on another raving upswing yesterday as bond holders continued to dump inventory in anticipation of better prices and rates with the auctions this week. Rates are slightly improved today, but not even back to where they opened yesterday morning. 3 year bonds are being auctioned today, 10 year bonds tomorrow. Let's hope they are well received, so mortgage prices will drop more. We have seen mortgage rates rise a full 100 basis points (1%) in the last 3.5 weeks!
Check out the chart below for a real time look at what's going on in the Real Estate Market in our part of the world. If you are interested in a specific city in Oregon, please let me know and I'll be happy to post data for that area. After review, it appears that Portland is pretty average for the entire Portland metro area. Some areas have higher median prices, and of course, some lower, but in general, all areas are looking at 100+ days of inventory (do the math, that's only 3-4 months-which is much improved from the 9+ months we have been seeing and hearing about.)
The trend is definitely turning positive, for now, in our part of the world
The stock market is down this morning, approximately 100+ points on the DOW. So, shouldn't mortgage rates be down too? That's the way it used to work, but nothing seems to work the way it used to work anymore.
Currently, the word on the street is that the economy seems to be stabilizing. This is causing many economists and analysts to start talking about inflation again, sparking fears that the Feds will start raising rates again by the end of 2009. The result is that investors are dumping bonds so they are liquid, in case bond prices (which move in the opposite direction of bond yields) start to rise.
Ben Bernanke is experiencing a conundrum - what to do now? If the Feds keep buying bonds, and most specifically mortgage backed bonds, will this create some level of inflation, causing him to have to raise rates to curb inflation? But, if he doesn't resume purchases of mortgage backed bonds, will mortgage rates continue to rise? Right now, the Fed is being very quiet as they watch, and mortgage rates have been on a tear.
Low mortgage rates were helping with stabilizing house values. Buyers were tipping their toes into the market, encouraged by record low rates, lower prices, and for those first time home buyers, the $8000 tax credit. As of today, the buyer has less buying power (due to higher mortgage rates) than he/she had in December 2008 (when housing prices were higher)! This is a conundrum of huge proportions.
Over the last two weeks, we have watched the average rate on the 30 year fixed rate mortgage move from a national average of 4.84% 5.45% this morning. Does this mean that housing prices will have to drop more to keep housing affordable? It is predicted that the Fed probably will not make any adjustments to their Treasury purchase program until after their next meeting June 23-24. This is because they do not want to be perceived as "reacting" to swings in yields, or acting in an arbitrary fashion. But we do know the following:
The yield on the 10 year bond rose to as high as 3.90% this morning, before dropping back to 3.8+
Government bond yields, consumer rates and price swings are increasing as the Fed fails to say if it will extend
There are economists out there who believe that the rates on mortgage backed securities could drop back down to as low as 2.15% by the end of this year. This would equate to mortgage rates below 5% again.
If you think it would be beneficial to you to refinance at this time, or some time in the near future, again, my best advice to you is to get a mortgage loan application in process and pre-approved, so IF rates drop again, you are in a position to lock in those lower rates. Virtually noone is talking about future rates at 4% anymore. But who knows? It could happen?
The greatest compliment you can pay me is feedback and referrals.
The good news is that new job losses reported for May took a dramatic drop. The numbers came in at 345,000 jobs lost in May 2009. While under normal circumstances this would sound terrible, consider that in the past 6 months, that number was consistently above 600,000. BUT, nationally, unemployment now stands at 9.4%!
There's even more to make matters worse; cnbc reported this morning that the real unemployment figure is closer to 16%:
And,to make matters even more dismal on the employment front, the average work week is now down to 33 hours. There are currently 12,000,000 people out of work in the U.S.
There is a debate going on right now on CNBC about whether the worst is behind us. Those who say we are close to bottom cite the following:
Those who say "the other shoe has yet to drop" are citing:
What do you think? Are you an optimist or a pessimist?
The yield on the 10 year bond rose again today. It topped out over 3.9% this morning, and closed the day at 3.84%. I hate to say it, but of course, mortgage rates rose yet again today. The average rate on 30 year fixed rate loans, as of today is above 5.5%! As we have discussed before, this is eating into buying power in a major way. For each $100,000 increment of a mortgage loan, the payment increases $62/month when the rate goes from 4.625% (where we were 2 weeks ago) to 5.625% (where we are today).
HARP loans (perhaps better known to most of you as the Obama "Making Homes Affordable" loans, or the Fannie Mae/Freddie Mac streamline refinances) are still available. This program has been funding through June 2010. While the process is streamline and requires less documentation from you as borrowers, the rates are almost exactly the same as other prime loan rates for conforming loan amounts ($417,000 or less). Also, adjustments to the rate are exactly the same as for other prime loans. The big benefit to the HARP loans is that you can be underwater and still qualify for these mortgages without mortgage insurance (if you current loan does not require mortgage insurance.)
Currently, we are hearing that a few lenders are starting to accept applications for those of you WITH mortgage insurance, but the guidelines have not yet been announced. I am not accepting those applications at this point, because virtually all lenders require pre-paid appraisals with your applications, and if the terms are not favorable, you have spent up to $500 for an appraisal you don't want or need. I will keep you posted once we receive all the lending rates and guidelines for this product. We do know that NONE of the big banks (B of A, Wells Fargo, Chase, etc) are offering this program yet, so I suspect there is more to what this loan will entail than has been disclosed to us so far.
It is Friday. We are expecting the sun to be shining this weekend, after that crazy storm last night. I hope none of you experienced any injuries or property damage during that downpour.
Enjoy your weekend. Tomorrow is the Grand floral parade for the Rose Festival.
Yesterday we received some new lending guidelines related to "property flipping." The guideline changes were structured in a way to make it easier to sell flipped houses - a big change from the last time we saw flipping during the housing boom.
Here are some things we know:
IF lenders are now making it easier to finance these homes, what will this mean in terms of housing values?
The lending guidelines that have been loosened are FHA loans. Please feel free to draw your own conclusions.
Other news this morning:
There were some pretty dramatic thunder storms yesterday, which cooled us off a bit. We are expecting hot and humid today, but are looking for a cooling trend towards the end of the week.
Make it a great day today - and as always, call or email anytime if you have questions or concerns. I will get back to you as quickly as possible.
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