What’s Ahead For Mortgage Rates This Week – August 3, 2015

Last week’s scheduled economic reports included the Case-Shiller 20 and 20-City Index reports, pending home sales data released by the National Association of Realtors® and the scheduled post-meeting statement of the Federal Reserve’s Federal Open Market Committee. This week’s economic calendar includes reports on consumer spending, core inflation and consumer spending. July readings on Non-Farm Payrolls and the national unemployment rate will also be released along with regularly scheduled weekly reports on new jobless claims and mortgage rates.

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Whats Ahead For Mortgage Rates This Week August 3 2015Last week’s scheduled economic reports included the Case-Shiller 20 and 20-City Index reports, pending home sales data released by the National Association of Realtors® and the scheduled post-meeting statement of the Federal Reserve’s Federal Open Market Committee.

Case-Shiller: Home Prices Growing at Normal Pace

The Case-Shiller 20-City Home Price index for May reported that year-over-year home prices grew by 4.40 percent year-over-year. S & P Index Committee Chair David M Blitzer said that home prices are increasing gradually by four to five percent a year as compared to double-digit percentages seen in 2013. Mr. Blitzer said that home price growth is expected to slow in the next couple of years as home prices have been growing at approximately twice the rate of wage growth and inflation, a situation that is not seen as sustainable.

Denver, Colorado led the cities included in the 20-City Index with a 10 percent year-over-year growth rate for home prices. San Francisco, California followed closely with a year-over-year gain of 9.70 percent and Dallas Texas posted a year-over-year gain of 8.40 percent.

Fastest month-to-month home price growth in May was tied by Boston, Massachusetts, Cleveland, Ohio and Las Vegas, Nevada with each posting a monthly gain of 1.50 percent. May home prices remain about 13 percent below a 2006 housing bubble peak.

Pending Home Sales Down From Nine-Year Peak

According to the National Association of Realtors®, pending home sales dropped by 1.80 percent in June as compared to May’s reading. The index reading for June home sales was 110.3 as compared to May’s index reading of 112.3. This indicates that upcoming closings could slow; June’s reading represented the first decrease in pending home sales in six months. Lawrence Yun, chief economist for the National Association of Realtors®, cited would-be buyers’ decisions about whether to hold out for more homes available or to buy sooner than later will affect future readings for pending home sales.

Fed Not Ready to Raise Rates, Mortgage Rates Fall

The Fed’s FOMC statement at the conclusion of its meeting on Wednesday clearly indicated that Fed policymakers remain concerned about economic conditions and are not prepared to raise the federal funds rate yet. The FOMC statement did not provide any prospective dates for raising the target federal funds rate, which is currently at 0.00 to 0.25 percent, but the Fed continues to watch employment figures and the inflation rate.

Freddie Mac reported that mortgage rates fell last week, likely on news of the Fed’s decision not to raise rates. Average mortgage rates fell across the board with the rate for a 30-year fixed rate mortgage dropping by six basis points to 3.98 percent; the rate for a 15-year fixed rate mortgage dropped by four basis points to 3.17 percent and the average rate for a 5/1 adjustable rate mortgage fell by two basis points to 2.95 percent. Average discount points remained the same for fixed rate mortgages at 0.60 percent and fell from 0.50 percent to 0.40 percent for 5/1 adjustable rate mortgages.

What’s Ahead

This week’s economic calendar includes reports on consumer spending, core inflation and consumer spending. July readings on Non-Farm Payrolls and the national unemployment rate will also be released along with regularly scheduled weekly reports on new jobless claims and mortgage rates.

 

First-time Home Buyers: Why Splurging for a Larger Home Beats Condo Living

While there may be some initial financial benefit associated with buying a smaller property, there are a few benefits associated with splurging and buying a larger home as a first purchase. By analyzing these benefits, first-time home buyers can make a more informed decision about how to proceed.

First-time Home Buyers: Why Splurging for a Larger Home Beats Condo Living Some first-time home buyers are on a tight budget when making their real estate purchase, and there may be an inclination by many to purchase a smaller property, such as a condo, rather than the home they truly want. While there may be some initial financial benefit associated with buying a smaller property, there are a few benefits associated with splurging and buying a larger home as a first purchase. By analyzing these benefits, first-time home buyers can make a more informed decision about how to proceed.

Costs Associated With Upgrading In The Future

Some people will purchase a smaller property initially with the goal of later upgrading to a larger property. This can provide the home buyer with the initial benefits of building equity, taking advantage of tax benefits associated with real estate ownership and more. However, there are costs associated with selling property, including closing costs, real estate fees, make-ready and improvement costs and more that should be considered.

Benefits Of Long-Term Ownership

For many, there will be a need to have a larger property over the years, such as when starting a family or when young children grow into teenagers who need more space. When the first property purchased is large enough for the family to grow into, the homeowner can enjoy long-term appreciation and equity growth. More than that, the higher value of the property may mean that there is more upside for property appreciation over the years.

Getting Established In A Community

In addition to the financial benefits associated with investing in a larger property initially, there are intangible benefits. Moving into a new home in a few years means that there is a need to get re-established in a community. When a home buyer settles down into a larger home that he or she plans to stay in for many long years or even decades, getting established and settled in the community can begin right away.

These are considerable benefits that can be enjoyed when a first-time home buyer makes a purchase that he or she plans to enjoy for many years to come, but there are other factors to consider. Each person needs to make a decision regarding a real estate purchase that is best for their needs, goals and financial situation, so there is not a best-fit solution that is right for everyone. Those who are thinking about buying their first piece of real estate should consider contacting their trusted mortgage professional for assistance to determine what they can afford and to discuss the loan process.

Federal Reserve FOMC Announcement

The stage was set in high suspense for FOMC’s post-meeting announcement on Wednesday. As fall approaches, analysts and the media are looking for any sign of when and how much the Fed will raise its target federal funds rate. According to CNBC, some analysts were projecting two interest rate hikes before year end, but the truth of the matter remains unknown until the Federal Open Market Committee announces its intentions.

Federal Reserve FOMC AnnouncementThe stage was set in high suspense for FOMC’s post-meeting announcement on Wednesday. As fall approaches, analysts and the media are looking for any sign of when and how much the Fed will raise its target federal funds rate. According to CNBC, some analysts were projecting two interest rate hikes before year end, but the truth of the matter remains unknown until the Federal Open Market Committee announces its intentions.

Meanwhile, reports of what Fed rate hikes will mean for consumers were released prior to the FOMC statement. Real estate analyst Mark Hanson said that a rate hike would “crush” housing markets, which continue to improve slowly in spite of the current 0.00 to 0.25 percent federal funds rate.

Last Friday’s report on June sales of new homes shows unpredictable progress in housing. Analysts estimated that new home sales would reach 550,000 units based on May’s reading of 517,000 new homes sold. June’s reading came in at 482,000 units sold.

FOMC Statement: Current Federal Funds Rate “Remains Appropriate”

The Federal Open Market Committee of the Federal Reserved announced as part of its post-meeting statement that it would not immediately increase the federal funds rate. The FOMC statement cited concerns over the inflation rate, which remains below the Fed’s goal of 2.00 percent. According to the statement, the FOMC will not move to raise the federal funds rate until the committee is “reasonably confident” that inflation will achieve the committee’s goal of 2.00 percent over the medium term.

No prospective dates for raising the target federal funds rate were given. The FOMC statement repeated language included in previous statements indicating that committee members anticipate that economic events could further postpone increases in the federal funds rate. The FOMC statement asserted that committee members continue to monitor domestic and global financial and economic developments as part of the decision-making process for raising the target federal funds rate.

FOMC members agreed that policy accommodation may be required “for some time” after the committee’s dual mandate of maximum employment and 2.00 percent inflation have been achieved. This suggests that FOMC members are not in a hurry to boost rates when economic uncertainty remains.

In terms of housing markets, the Fed’s decision not to raise rates likely caused a sigh of relief as rate increase would have caused consumer interest rates including mortgage rates to rise.

Understanding the Basics of How the Adjustable Rate Mortgage or ‘ARM’ Works

As the 2009 recession fades into the sunset, the home buying market is showing signs of improvement in areas all over the United States. With more home buyers now entering the market, this becomes a good time to discuss one popular type of mortgage called the “Adjustable Rate Mortgage” or ARM.

Understanding the Basics of How the Adjustable Rate Mortgage or 'ARM' WorksAs the 2009 recession fades into the sunset, the home buying market is showing signs of improvement in areas all over the United States. With more home buyers now entering the market, this becomes a good time to discuss one popular type of mortgage called the “Adjustable Rate Mortgage” or ARM.

What is an Adjustable Rate Mortgage?

An adjustable rate mortgage is a non-traditional home loan offered by lenders where the interest rate is tied to a specific rate index. The applicable rate on this type of mortgage is adjusted on an annual basis, usually beginning after the first 12 months. The rate index used is usually tied to one of the most popular indexes such as the London Interbank Offered Rate (LIBOR) or a cost-of-funds rate determined by the lending institution.

What Are Some Characteristics of an ARM?

ARMs are offered as a promotional option to help home-buyers purchase a home, beginning with an interest rate that is typically lower than normal markets rates. The loan provides for an adjustment period (the stated time-frames when the rate will be adjusted), the index to be used to determine rates, parameters on how the new rates will be determined at point of adjustment, and any caps related to the frequency and the minimum/maximum rates that will be charged during the life of the loan.

What Are Some Advantages of an ARM?

The primary advantages of an ARM begin with the borrower having access to a mortgage where the applicable interest rates are usually lower that those charged on fix-rate loans, which helps keep the monthly payments lower over the first couple years of the loan. This is particularly valuable to marginal borrowers who may need lower payments in order to qualify for a home loan. Also, many ARMs allow for principle prepayments without being charged a prepayment penalty.

What Are Some Disadvantages of an ARM?

The biggest issue related to an ARM in the unpredictability of the interest rate. During times of inflation, interest rate may escalate rapidly. This will result in a corresponding increase in related ARM rate, which might create payments larger than the borrower had envisioned. Consumers also need to be aware of potential rate errors or overcharges, whether intentional or not.

When Are ARMs Preferable?

The best time for a borrower to consider an ARM is if rates are high, but trending lower. This will keep the borrower’s payments lower over the life of the loan. Arms are also preferable if the borrower plans on holding the home for a shorter period of time. Finally, ARMs work well if the borrower wants to keep their initial payments lower in anticipation of high income in the future when larger payments are more feasible.

The HARP Mortgage Program is Coming to an End Soon – Here’s What You Need to Know

The United States government established the HARP program, otherwise known as the Home Affordable Refinance Program, to assist homeowners who are struggling with their mortgage payments. However, the program will be ending soon, and homeowners who have not yet taken advantage of the program and who intend to do so may need to act quickly.

The HARP Mortgage Program is Coming to an End Soon - Here's What You Need to KnowThe United States government established the HARP program, otherwise known as the Home Affordable Refinance Program, to assist homeowners who are struggling with their mortgage payments. Initially, the program was founded in March 2009, and it has provided many homeowners with an easier route to adjusting their mortgage payments to make them more affordable. However, the program will be ending soon, and homeowners who have not yet taken advantage of the program and who intend to do so may need to act quickly.

When Does the Program End?

The HARP mortgage program will officially end on December 31, 2015. If you intend to apply for a mortgage under this program, you must have your application submitted by this date. However, a closing date may extend into early 2016. There are special rules and eligibility requirements that must be met in order for you to take advantage of this program, and these must be in place before you submit a full application. Therefore, it is important that anyone who is interested in applying for a mortgage under the HARP program take time initially to understand more about the rules and eligibility requirements in place.

What Are the Requirements?

It is important to note that the HARP program is not suitable for all homeowners who wish to refinance, and special requirements must be in place. Just a few of the requirements include that you must be in good standing with your current mortgage with no late payments within the last six months. You also cannot have had more than one late payment within the last 12 months. In addition, you must be able to pay for the new mortgage payment, and the mortgage must be a Fannie Mae or Freddie Mac loan. These are just a few of the requirements, and you will need to work with a mortgage professional to ensure that you qualify for these and other requirements that are in place.

The HARP program has already helped many homeowners who have been struggling with their mortgage payments. While the program offers a permanent solution to homeowners by re-establishing a new mortgage payment amount, the program itself was only intended to be temporary in nature. Because it will officially end at the end of 2015, any homeowners who are still interested in taking advantage of the benefits of the HARP program should consider speaking with their trusted mortgage professional soon to learn more about the requirements and to begin the application process.

What’s Ahead For Mortgage Rates This Week – July 27, 2015

Last week’s scheduled economic news releases were limited as no news was released on Monday or Tuesday, but good news did arrive in the form of a dip in mortgage rates for fixed rate loans. NAR reported higher sales of pre-owned homes and FHFA reported that home price growth associated with mortgages held or backed by Fannie Mae and Freddie Mac held steady in May.

Whats Ahead For Mortgage Rates This Week July 27 2015Last week’s scheduled economic news releases were limited as no news was released on Monday or Tuesday, but good news did arrive in the form of a dip in mortgage rates for fixed rate loans. The National Association of Realtors® reported higher sales of pre-owned homes and FHFA reported that home price growth associated with mortgages held or backed by Fannie Mae and Freddie Mac held steady in May.

Sales of Pre-Owned Homes and FHFA House Prices Rise

According to the National Association of Realtors®, June sales of existing homes reached their highest level since February 2007. Sales of used homes reached a seasonally-adjusted annual rate of 5.47 million previously owned homes sold against expectations of 5.42 million homes and May’s reading of 5.32 million pre-owned homes sold. By comparison, sales of existing homes remain about 24 percent below a pre-recession peak. Lawrence Yun, chief economist for the National Association of Realtors® cited improving labor markets and home buyer concerns over rising mortgage rates as factors contributing to May’s reading for existing home sales.

FHFA, the federal agency that oversees Fannie Mae and Freddie Mac, reported that home prices associated with sales of homes financed with loans owned or backed by Fannie and Freddie rose by 0.40 percent month-over-month in May and held steady with April’s revised reading of 0.40 percent. FHFA home prices rose by 5.70 percent year-over-year in May.

Mortgage Rates Mixed

Freddie Mac reported that average rates for 30 and 15-year mortgages fell while the average rate for a 5/1 adjustable rate mortgage ticked upward by one basis point. The average rate for a 30-year fixed rate mortgage fell by five basis points to 4.04 percent; the average rate for a 15-year fixed rate mortgage fell by four basis points to 3.21 percent. The rate for a 5/1 adjustable rate rose by one basis point to 2.97 percent. Average discount points were unchanged at 0.60 percent, 0.60 percent and 0.50 percent respectively.

Expected reports on weekly jobless claims and new home sales were not released last week.

What’s Ahead

Scheduled economic reports for this week include the usual weekly reports on jobless claims and mortgage rates along with the Case-Shiller Home Price Index reports for May and the Commerce Department’s report on pending home sales. The Federal Open Market Committee of the Federal Reserve has scheduled an announcement on Wednesday, and reports on consumer confidence and consumer sentiment will also be released next week.

Have a Weekend to Spare? Consider These Quick Renovations to Add Value to Your Home

Homeowners who are thinking about listing their home for sale in the coming weeks or months may be focused on improving their home to help it sell more quickly, but there also may be a focus on adding value to the home in the process. In fact, these are a few simple and easy projects that can typicaly be completed over the course of a weekend; that can add value and desirability to the home.

Have a Weekend to Spare? Consider These Quick Renovations to Add Value to Your HomeHomeowners who are thinking about listing their home for sale in the coming weeks or months may be focused on improving their home to help it sell more quickly, but there also may be a focus on adding value to the home in the process. While each home is unique, there are a few projects that most homeowners would benefit from. In fact, these are a few simple and easy projects that can typicaly be completed over the course of a weekend; that can add value and desirability to the home.

Replace The Front Door

The front door has an impact on curb appeal, and it also is one of the primary features that buyers will see when they approach your home to take a tour. Replacing an older door that lacks style or that is plagued with signs of wear and tear can improve property value and curb appeal alike. Many homeowners who have basic tools and some do-it-yourself experience with other projects will be able to replace the front door without additional help from a contractor.

Update The Kitchen Back Splash

A kitchen is a key selling point in a home, and the back splash is among the most visible features in this space. Replacing the back splash with stylish tile can improve the look and can instantly make the home more desirable. This can be a relatively simple type of home renovation project, if you have experience with tile work, that may be completed within just a few hours.

Repaint The Walls And Baseboards

Few things can improve the look of a home more easily than a fresh coat of paint. If the walls are showing signs of wear or the colors do not have modern or universal appeal, applying a fresh coat of paint to walls and baseboards is a simple enough project to tackle. For the best results, focus on the rooms with the most undesirable paint colors, in the most visible rooms of the home or in areas where the paint is in generally poor condition.

Each of these projects can have a dramatic impact on the homes appeal and can influence the value of the home itself.   Each of these prjects under most circomstances can be completed with minimal time and cost to the homeowner. Those who are ready to improve their home in a short period of time can consider which of these projects will yield the most significant results in their home.