Mortgage rates fell for the third straight week on 30-year fixed home loans, according to Freddie Mac. This week average interest on 30-year mortgages was 4.99 percent, compared to 5.06 percent last week and 5.16 percent a year ago.
Rates on 15-year fixed loans were also lower, averaging 4.40 percent, compared to 4.45 percent last week. Adjustable-rate mortgages also fell this week, the 5/1 ARM being at 4.27% and the 1 year at 4.32. .
“Fixed mortgage rates followed bond yields lower for the third consecutive week, pushing 30-year mortgages below 5 percent once more,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Similarly, ARM rates eased along with shorter-term rates, as the federal funds futures market indicates no increase in the Federal Reserve’s target rate following its upcoming committee meeting on January 26th and 27th.
Source: Freddie Mac
Mortgage Rates Decline
According to Freddie Mac on Thursday, the 30 year fixed rate dropped from an average of 4.78% to 4.71% from last week. This is the lowest since Freddie Mac compiled data since 1971. Rates have been low all year because of the Fed’s purchase of mortgage-back securities, which in end in the Sping of 2010. This is helping to push mortgage applications which increased 2.1% during the Thanksgiving week stated the Mortgage Bankers Association. But while rates are low, there are still tight credit standards which may hinder buyers qualifying for the lowest rates. Most buyers will need 20% down, and a high credit scrore in order to qualify. But the push has helped drive more than 4 percent in purchase applications and nearly 2 percent increase in applications to refinance existing loans.
More Cash Required for an FHA loan
The Federal Housing Administration officials are proposing policy changes for FHA-insured mortgage borrowers to help the agency increase its federally mandated funding requirements. Higher credit scores and an increase in the current minimum down payment may be what buyers across America will have to have an order to qualify for and FHA loan. This proposed change is due to increasing financial issues FHA has been facing, which has increased it’s exposure and led to more delinquencies. The Obama Administration may try to propose other ways of increasing closing costs instead of increasing the minimum down payment, such as increasing mortgage insurance premimums or raising minimum credit score requirements so that the change would only effect the lower scoring borrowers. This will make it harder for some but will also reduce the risk of FHA having financial difficulites. FHA’s traditional role was to help American’s reach their dream of homeownership. The details of the change aren’t expected to be final until next month.
Calif. median home price - September 09: $296,090 (Source: C.A.R.)
Calif. highest median home price by C.A.R. region September 09: Santa Barbara So. Coast $750,000 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region September 09: High Desert $117,820 (Source: C.A.R.)
Calif. First-time Buyer Affordability Index – Second Quarter 2009: 67 percent (Source: C.A.R.)
Mortgage rates – week ending 10/29/09 30-yr. fixed: 5.03% Fees/points: 0.7% 15-yr. fixed: 4.46% Fees/points: 0.6% 1-yr. adjustable: 4.57% Fees/points: 0.6% (Source: Freddie Mac)
According to the Mortgage Bankers Association, the number of Mortgage applications recieved fell last week, falling 12.3 percent compared to last week.
Most of the decline was in refinances, which fell 16.2 percent and the purchase index declined 4.8 percent. Except for 15-year rates, mortgage rates were down slightly:
- 30-year fixed-rate mortgages decreased to 5.04 percent from 5.07 percent.
- 15-year fixed-rate mortgages increased to 4.53 percent from 4.51 percent.
- 1-year ARMs decreased to 6.79 percent from 6.86 percent.
Calif. median home price – August 09: $292,960 (Source: C.A.R.)
Calif. highest median home price by C.A.R. region August 09: Santa Barbara So. Coast $828,750 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region August 09: High Desert $111,770 (Source: C.A.R.)
Calif. First-time Buyer Affordability Index – Second Quarter 2009: 67 percent (Source: C.A.R.)
Mortgage rates – week ending 10/15/09 30-yr. fixed: 4.92% Fees/points: 0.7% 15-yr. fixed: 4.37% Fees/points: 0.7% 1-yr. adjustable: 4.60% Fees/points: 0.5% (Source: Freddie Mac)
Local Median Home Prices….
County/City/Area August 2009 August 2008 % Change
| Santa Clara County |
$ 450,000.00
|
$ 570,000.00
|
-21.1%
|
| Campbell |
$ 615,000.00
|
$ 652,000.00
|
-5.7%
|
| Cupertino |
$ 870,000.00
|
$1,153,000.00
|
-24.5%
|
| Gilroy |
$ 375,000.00
|
$ 415,000.00
|
-9.6%
|
| Los Gatos |
$ 900,000.00
|
$1,250,000.00
|
-28.0%
|
| Milpitas |
$ 410,000.00
|
$ 565,000.00
|
-27.4%
|
| Morgan Hill |
$ 517,500.00
|
$ 641,000.00
|
-19.3%
|
| Mountain View |
$ 732,500.00
|
$ 810,000.00
|
-9.6%
|
| San Jose |
$ 382,500.00
|
$ 500,000.00
|
-23.5%
|
| Santa Clara |
$ 525,000.00
|
$ 592,500.00
|
-11.4%
|
| Sara toga |
$ 1,337,000.00
|
$1,325,000.00
|
0.9%
|
| Sunnyvale |
$ 527,000.00
|
$ 650,000.00
|
-18.9%
|
Source:CAR
This morning the FED announced its target for the federal funds rate is in the 0 percent to 0.25 percent range.
“Information suggests that economic activity has picked up following its severe downturn,” the Fed said in a prepared statement.
“Conditions in financial markets have improved further, and activity in the housing sector has increased. Household spending seems to be stabilizing, but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. With substantial resource slack likely to continue to dampen cost pressures and with longer-term inflation expectations stable, the Committee expects that inflation will remain subdued for some time.”
The Fed will purchase $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt. This will provide help to mortgage lending and housing markets, and slow the pace of these purchases to allow for a smoother transition.
According to a Goldman Sachs economists this week, the Federal Reserve will probably keep interest rates low to assist with keeping debt low and getting rid of debt. While some think the Fed will probably raise rates, the economists believe rates will be close to zero until the end of 2010 or perhaps even longer. One more year of low interest rates will probably be in the best interest of the economy and help continue to stimulate the housing market, which is still in need of more stimulation.
According to Freddie Mac..the 30-year fixed mortgage rate dropped from 5.25 percent last week to 5.22 percent ending August 6th. The 15-year fixed-mortgage rate dropped to 4.63 percent from 4.69 percent and adjustable-mortgages fell to 4.73 percent from 4.75 percent. I would advise buyers to get those loan application in because who knows how long everything will last!
Fannie Mae and Freddie Mac are now able to allow up to 125% loan-to-value for existing loan refinances under the Home Affordable Refinance Program. The old limit was 105% loan-to-value. This move should help out borrowers who made their payments on time but were unable to refinance and take advantage of lower rates due to declining values on their homes. In addition the loan must be Fixed and fully amortized for >15 years to a maximum of 30 years. This is for manually underwritten loans only, and Fannie Mae is determining if the desktop underwriting engine should allow loan-to-value ratios above 105%. For more information please visit www.makinghomeaffordable.gov or call 1-800-7FANNIE. For Freddie Mac visit https://www.freddiemac.com/corporate.
