And the Fed Says…

March 20, 2013 by 3 Comments

Today wraps up the two day FOMC meeting with the Fed statement due around 11:00 am PST followed by a press conference featuring none other than Ben Bernanke. A change to the Fed Funds rate is not anticipated. Investors will be parsing through the press release and what the Fed Chair has to say about quantitative easing. The Fed has been hands on with keeping mortgage rates at artificial lows with their purchase of mortgage backed securities.

As I write this post (7:30 am on March 20, 2013) the DOW is up  75 bps at 14531 and MBS are down about 19 bps. 

3.625% for a 30 year fixed rate (apr 3.730) is priced with 0.479 in discount points for a 45 day lock. 

Stay tuned – I’ll try to do an update to this post throughout the day and we’ll see if what the Fed says influences mortgage rates today.

UPDATE: No surprises here. The Fed leaves rates unchanged and plan to continue to manipulate mortgage rates until unemployment improves.  From the FOMC statement:

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.

The Committee will closely monitor incoming information on economic and financial developments in coming months. The Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will continue to take appropriate account of the likely efficacy and costs of such purchases as well as the extent of progress toward its economic objectives.

As of 11:27 the DOW is up almost 85 points and MBS are down about 15 bps. No significant change since this morning.

12:55 pm: MBS down 37 points.

Filed Under: The Fed - FOMC Tagged With:

FOMC Minutes and Tid Bits

February 21, 2013 by Leave a Comment

Yesterday the Fed released minutes from last month’s FOMC meeting. The minutes reveal the committee is debating easing or ceasing the purchase of mortgage backed securities before the end of this year. 

A number of participants stated that an ongoing evaluation of the efficacy, costs, and risks of asset purchases might well lead the Committee to taper or end its purchases before it judged that a substantial improvement in the outlook for the labor market had occurred.

The Fed cannot continue to keep mortgage rates at their manipulated lows forever. Industry experts estimate that if the Fed was not involved with keeping mortgage rates low with the buying of mortgage backed securities, rates would be closer to “jumbo” rates (about a full point higher in rate).

Other points I of interest from the minutes – at least to me 🙂  

…some participants were concerned that the recent increase in the payroll tax could have a significant negative effect on spending, particularly on the part of lower-income consumers.

Effective the beginning of this year, did you notice your pay check is 2% less? Congress allowed the expiration of the payroll tax cut to expire during the “fiscal cliff”. During 2011 and 2012, Americans caught a break and only paid 4.2% of their incomes for social security; we’re now back to paying 6.2%. If your monthly gross income is $5000, then your monthly take home pay is $100 less than what you had before this payroll tax.

If you’re a home owner who has not refinanced in the last year, you may want to contact your local mortgage professional to see if it makes sense. Reducing your mortgage rate can help off set the payroll tax and reduce the amount of interest you’re paying on your mortgage.  Click here if you would like a rate quote for homes located anywhere in Washington state.

Participants remarked on the ongoing recovery in the housing market, pointing variously  to rising house prices, growth in residential construction and sales, and the lower inventory of homes for sale. A number of participants thought it likely that higher home values and low mortgage rates were helping support other sectors of the economy as well, and a couple saw the housing market as having the potential to cause overall growth to be stronger than expected this year…

In the greater Seattle area, home prices continue to increase and I’m hearing from home buyers that they wish there was more inventory to chose from. If you’ve been considering selling your home, this could be a good time to meet with a real estate agent. If you need me to refer one to you, I’m happy to do so! 

….Nonetheless, it was noted that mortgage credit remained tight and the fraction of homeowners with mortgage balances exceeding the value of their homes remained high.

Those seeking a mortgage, whether it’s for refinancing or buying a home do need to qualify and it is a “full doc” process. However, it’s not impossible. You need to be prepared to provide all income and asset documents, have steady employment and good credit. If you are considering buying a home (or even refinancing) in the next 12 months, I recommend starting with a preapproval now. 

Home owners who are still upside down with the loss of their home equity may still be able to take advantage of today’s low rates if:

  • they qualify for the Home Affordable Refinance Program (HARP 2.0). This is eligible for conforming mortgages securitized by Fannie Mae or Freddie Mac prior to June 1, 2009 on primary residences, second homes or investment properties. Or…
  • the existing mortgage to refinance is FHA, an FHA streamlined refinance may be possible for primary residence or investment properties. Or…
  • the existing mortgage is VA or USDA. 

If you are looking at buying a home or refinancing anywhere in the state of Washington, I’m happy to help you!

Filed Under: The Fed - FOMC Tagged With: , , ,

Mortgage rate update for the week of February 18, 2013

February 18, 2013 by Leave a Comment

The stock and bond markets are closed today in observance of President’s Day. Here are a few of the economic indicators scheduled to be released this week.

Wed. February 20: Building Permits; Producer Price Index (PPI); Housing Starts; FOMC Minutes released

Thurs. February 21: Consumer Price Index (CPI); Initial Jobless Claims; Philadelphia Fed Index; Existing Home Sales

Watch for signs of inflation from the PPI or CPI, which tends to drive mortgage rates higher. Wall Street will also be paying close attention to the FOMC minutes.

Happy President’s Day!

Filed Under: Economy Tagged With: , , ,

Mortgage rate update for the week of January 28, 2013

January 28, 2013 by Leave a Comment

Mortgage backed securities are in the red this morning. Although rates are still very low, those who have not locked in their mortgage rates may be surprised to see the rate or cost for the rate is now higher.  As the economy continues to show signs of improvement, investors will trade the safety of bonds (like mortgage backed securities) for stocks. 

As of 8:30 am this morning, 3.625% is priced near “par” (with as little rebate credit or discount points) for a 30 year fixed rate-term refinance (apr 3.690).  As you can see, mortgage rates are still very low however, they have been slowly trending higher. Rates change constantly and there are at least 10 factors that impact the pricing of mortgage rates. For your personal mortgage rate quote for your refi or home purchase anywhere in Washington state, click here.

This week is loaded with the FOMC rate decision on Wednesday and Friday’s Jobs Report. Here are some of the scheduled economic indicators and events that may impact mortgage rates this week.

Monday, January 28: Durable Goods Orders and Pending Home Sales

Tuesday, January 29: S&P Case Shiller Home Price Index and Consumer Confidence

Wednesday, January 30: GDP Chain Deflator, ADP National Employment Report, Gross Domestic Product (GDP) and FOMC Meeting

Thursday, January 31: Employment Cost Index (ECI), Personal Consumption Expenditures (PCE), Initial Jobless Claims and Chicago PMI

Friday, February 1: THE JOBS REPORT, ISM Services Index and Consumer Sentiment (UoM)

You can follow me on Twitter for live mortgage rate quotes at @mortgageporter and/or “like me” on Facebook.

If your home is located anywhere in Washington state, where I’m licensed to originate, I’m happy to help you with your mortgage. 

Filed Under: Economy Tagged With: , , ,

Mortgage rate update for the week of January 14, 2013

January 14, 2013 by Leave a Comment

This week is packed with economic reports that may impact the direction of mortgage interest rates. Mortgage rates are based on mortgage backed securities (bonds). When the Fed minutes revealed hints that the FOMC may stop purchasing mortgage backed securities last week, mortgage rates ticked slightly higher. However Japan is hinting of buying US bonds, which is helping rates trend lower this morning.

Signs of inflation or the economy recovering may also cause mortgage rates to trend higher. Here are some of the economic indicators scheduled to be released this week:

  • Mon, January 14: No scheduled data – however, Ben Bernanke is speaking this afternoon on monatary policy.
  • Tue, January 15: Producer Price Index (PPI), Retail Sales and Empire State Index
  • Wed, January 16: Consumer Price Index (CPI) and the Beige Book
  • Thurs, January 17: Initial Jobless Claims, Building Permits, Housing Starts and Philadelphia Fed Index
  • Fri, January 18: UoM Consumer Sentiment Index

NOTE: Monday, January 21, 2012 our office will be closed in observance of Martin Luther King Day.

As I write this post (8:24 am pst) the DOW is up 5 at 13493 and MBS for the FNMA 30 year is up slightly.

If you would like a mortgage rate quote for your Washington state home, please click here. I’m happy to help!

Filed Under: Economy, Interest Rates Tagged With: , , , ,

Mortgage update for the week of January 7, 2013

January 7, 2013 by 2 Comments

This week may seem like a real yawn with only the initial Jobless Claims being released on Thursday, January 10, 2013.  

On Thursday we may hear from the Consumer Protection Financial Bureau’s about what defines a “qualified mortgage” (QM). From Bloomberg:

The qualified mortgage rule, mandated by Congress as part of the 2010 Dodd-Frank Act, is aimed at tightening lax underwriting that fueled the housing bubble. The regulations aim to protect consumers from mortgages they cannot afford by requiring lenders to take steps such as verifying income and assets. In return, lenders gain some protection from lawsuits.

Although having a “qualified mortgage” may sound like a does of common sense, we won’t know what we are dealing with until we learn about what constitutes a “qualified mortgage”. For example, currently an industry standard for a debt-to-income ratio is 45%, should the government decide that a DTI of 43% is required in order to be deemed a “qualified mortgage”, many Americans will find themselves not able to obtain a mortgage OR possibly paying a higher rate or fee for a “non-qualified” mortgage. I’m anxiously awaiting Thursday’s news from the CFPB.

If you are interested in refinancing or buying a home in Bellingham, Bellevue, Bainbridge Island or anywhere in Washington, I’m happy to help you!

Filed Under: CFPB, Economy Tagged With: , ,

The Fed says….Mortgage Rates to Remain Low

December 12, 2012 by 1 Comment

2012-08-20-0845This morning FOMC announced no changes to the current Fed Funds rate (this is no surprise). The Fed has decided to keep the Fed Funds rate at 0 – 0.25% until the unemployment rate is under 6.5%.  This may be some good news to home owners who have HELOCs as many of them have rates tied to the prime rate, which is based on the Fed Funds rate.

[Read more…]

Filed Under: Economy, Interest Rates, The Fed - FOMC Tagged With: , ,

Mortgage Update for the Week of December 12, 2010

December 10, 2012 by Leave a Comment

iStock-000020911287XSmallMortgage rates continue to be very low levels. Freddie Mac has been reporting average interest rates for 30 year at under 4% for the last year with 15 year fixed rates being under 3% for the last six months.

While the Fed works at keeping rates at artificially low levels, Congress is considering increasing the guarantee fees to new conventional mortgages to help fund programs that have nothing to do with Fannie Mae, Freddie Mac or even the housing recovery. The guarantee fees (aka g-fees) are factored into the pricing of a mortgage rate. FHA mortgage loans are also becoming more expensive in 2013 with the increase of mortgage insurance premiums.

[Read more…]

Filed Under: Economy, Interest Rates Tagged With: , , , , ,
« Previous Page
Next Page »