Mortgage markets improved last week as Wall Street managed news on both sides of the economic coin. There were several instances of higher-than-expected inflation – an event that tends to lead rates higher — but weak domestic jobs data and a soft manufacturing report suppressed the damage.
Rates were also held low by ongoing issues in Greece.
In Greece, the government is currently struggling to meet its debt obligations — despite a restructuring of existing debt negotiated in 2010.
Without a plan for its new debt, though, Greece will likely to default on what it owes. Eurozone and international banking leaders have failed to reach consensus on the situation, and now the citizens of Greece are in a state of social unrest.
The uncertainly surrounding the nation-state spurred a bond market flight-to-quality last week. That, too, helped to keep rates low.
Last week, mortgage rates fell for the sixth week out of nine, a streak that’s dropped conforming mortgage rates in Atlanta to their lowest levels of the year.
This week, that could change.
Wednesday, the Federal Open Market Committee adjourns from a 2-day meeting and anytime the Fed meets, there’s a good chance that mortgage rates will move. The FOMC makes the nation’s monetary policy.
The meeting adjourns at 12:30 PM ET and Fed Chairman Ben Bernanke will follow with a press conference at 2:15 PM ET. The press conference is meant to give context to the FOMC’s decision, and allow for back-and-forth with the press corps. Wall Street will watch closely, too, for signals of the Fed’s next action(s).
In addition, this week will see the results of May’s Existing Home Sales report and New Home Sales report. Both are considered important to the housing market, and to the economy overall.
If you’re still floating a mortgage rate, falling mortgage rates have helped you. There’s not much room for rates to fall further, however. Consider calling your loan officer and locking something in.
This week marks the official start of Summer in Atlanta. If your home’s outdoor area has furniture in it, you’ll want to make sure that your furniture is clean.
In this 4-minute video from Lowe’s, you’ll learn tricks to keep your outdoor furniture clean, and protected from the elements. All types of outdoor furniture are covered in the lesson including metal, resin-based, and wooden.
The offered tips include:
Why you should never remove the “care tags” from a furniture pillow
Choosing the proper pressure-washer tip for the job at-hand
How to use car wax as a rust-preventative
Furthermore, the instructional video includes tips for cleaning fabrics and canopies; and for shampooing an outdoor rug.
There’s lot of reasons to keep your outdoor furniture clean — health reasons among them — but it shouldn’t be lost that clean furniture will have a longer useful life than furniture that’s been neglected or ignored.
Clean your outdoor pieces at least twice annually and they’ll give you years of good looks and comfort.
The housing market received a jolt of good news Thursday. The Commerce Department reports that Single-Family Housing Starts improved in May.
As compared to April, last month’s Single-Family Housing Starts rose 4 percent to a seasonally-adjusted, annualized rate of 419,000 units, a figure slightly better than the 6-month average and the highest tally since January.
A “housing start” is defined as a home on which new construction has started.
In addition, Building Permits saw a boost in May, too, climbing nearly 9 percent overall. Building Permits are a gauge of future construction activity with 89 percent of permits leading to new construction within 60 days.
For several reasons, the May data surprised Wall Street analysts.
First, more homes being built suggests a healthier housing market, yet, earlier this week, the June homebuilder confidence report posted its lowest reading since September 2010.
Second, new home sales are only slightly higher than their all-time lowest annualized readings. Sales volume remains low in Atlanta and nationwide.
And, lastly, home prices have yet to recover in full. By adding additional inventory, builders may suppress price growth through the remaining portions of 2011.
For home buyers in Georgia , though, the Housing Starts data may be a signal that the market is turning. The data can be used to your advantage.
Home prices are a function of supply and demand and — based on the Housing Starts data plus the number of newly-issued Building Permits — home supply is likely to rise. Demand, on the other hand, despite low mortgage rates, may not. At least not in the short run.
As a buyer, you can use this information to your advantage. If you’re looking to buy new construction, ask your real estate agent about the current new homes supply. There are bargains to be found and May’s Housing Starts data should support low prices for at least the next few weeks.
According to foreclosure-tracking firm RealtyTrac, monthly foreclosure filings fell 2 percent in May to just under 215,000 filings nationwide. A foreclosure filing is defined as any one of the following: a default notice, a scheduled auction, or a bank repossession.
On an annual basis, foreclosure counts have dropped over 16 consecutive months, dating back to January 2010.
Like all things in real estate, though, foreclosures are local. 6 states accounted for more than half of the country’s foreclosure filings in May. Those six states — California, Michigan, Arizona, Florida, Georgia and Texas — represent just 34% of the U.S. population.
But even on a per household basis, the figures remain disproportionate.
Top 10 Foreclosure States : 1 foreclosure per 357 households, on average
Bottom 10 Foreclosure States : 1 foreclosure per 8,764 households, on average
The nationwide foreclosure rate was 1 foreclosure per 605 households.
As a home buyer in Atlanta , foreclosures matter. Distressed homes account for close to 40% of home resales and that’s because distressed properties often sell at steep discounts; in some markets, up to 20 percent less than a comparable, non-distressed home. Foreclosed homes can be a great “deal”, therefore, but only if you’ve done your homework.
Buying a bank-repossessed home is different from buying from “people”. The contracts and negotiation process are different, and homes are sometimes sold with defects.
If you plan to purchase a Georgia foreclosure, therefore, speak with a real estate professional first. With foreclosures, there’s a lot you can learn online, but when it comes time to submit an actual bid, you’ll want an experienced agent on your side.
The jobs market is recovering slower than expected, and so is housing. But neither condition has slowed U.S. consumers.
According to the Census Bureau, Retail Sales rose for the 11th straight month in May. Excluding cars and auto parts, sales receipts climbed to $322 billion last month. It’s an all-time high and another example of the U.S. economy’s resiliency.
Wall Street didn’t expect such results. As a result, mortgage rates worsened Tuesday.
By a lot.
The connection between Retail Sales and mortgage rates can be fairly tight in a recovering economy. Retail Sales accounts for almost half of all U.S. consumer spending, and nearly one-third of the economy overall. The May report, therefore, showed the economy may be on more solid footing than economists expect.
Plus, lately, as the economy goes, so go mortgage rates in Atlanta and nationwide.
When the economy has shown signs of life, mortgage rates have increased. When the economy has shown signs of a slowdown, mortgage rates have dropped.
It’s why mortgage markets reacted the way they did Tuesday; May’s Retail Sales data was strong. The resultant surge in conforming mortgage rates — from market open to market close — turned into one of the year’s fiercest, raising average mortgage rates well off their 7-month lows established earlier this week.
At today’s rates, each 0.125 percent change in rates yields a payment difference of $7.50 per $100,000 borrowed. Yesterday, some product rates rose by as much as 0.250 percent. It put a dent in home affordability and household budgets.
With Retail Sales are up 8 percent from last year, therefore, and showing few signs of a slowdown, today may be a prudent date to lock a rate with your lender. As the economy continues to grow, rates are expected to rise.
On a wave of uncertainty about Greece and its debt; and weaker-than-expected economic data at home, conforming 30-year fixed rate mortgage rates have fallen to levels not seen since December 2, 2010.
Mortgage rates have dropped 8 weeks in a row. Not even last year’s Refi Boom produced an 8-week winning streak. This season’s streak is historic.
The 30-year fixed rate mortgage now averages 4.49% nationally, down 42 basis points, or 0.42%, since early-April. For every $100,000 borrowed, that equates to a monthly savings of $25.24.
Adjustable-rate mortgages have shed even more, giving back 50 basis points since the streak began.
Because of low rates, it’s an excellent time to buy or refinance a home relative to just a few weeks ago. Note, though, that depending on where you live, you may find your quoted interest rates to be slightly higher or lower than what Freddie Mac reports in its survey. This is because the Freddie Mac figure is a national average.
Mortgage rates and fees vary by region:
Northeast : 4.49 with 0.6 points
Southeast : 4.52 with 0.8 points
North Central : 4.52 with 0.6 points
Southeast : 4.52 with 0.6 points
West : 4.45 with 0.8 points
You’ll notice that, in the West Region, rates tend to be low and fees tend to be high; in the North Central Region, the opposite is true. You should expect Georgia to have its own pricing norm within this region, too.
Is there a particular rate-and-fee setup that suits you best? The good news is that you can ask for it — no matter where you live.
If having the absolute lowest mortgage rate is more important to you than having the absolute lowest fees, ask your loan officer to structure your loan in the “West” style. Or, if low costs are more your style, ask for them.
Mortgage rates appears as if they’re headed lower but don’t forget how quickly markets can change. Once they do, mortgage rates in Atlanta should spike. Exploit today’s market while you still can.
Mortgage markets moved in feverish fashion last week, changing with extreme frequency, and eventually ending slightly worse on the week. Conforming mortgage rates fell to a 6-month low Wednesday but, by Friday, they had retreated higher.
Last week marked just the second time in 8 weeks that rates in Atlanta increased. During that span, Freddie Mac reports that mortgage rates have dropped 42 basis points, or 0.42%.
That equates to a monthly savings of $25.24 per $100,000 borrowed.
One reason why mortgage rates have been dropping is that the economy is growing more slowly than projected. In a speech last week, Federal Reserve Chairman Ben Bernanke described the U.S. recovery as “frustratingly slow”. In a separate speech, another Federal Reserve President, William Dudley, categorized the recovery as “subpar”.
Economic weakness tends to promote a low mortgage rate environment as equity markets sell off and investors seek safety of principal. Indeed, the Dow Jones Industrial Average fell for the 6th straight week, its longest losing streak since 2002.
Mortgage rates were also helped by ongoing uncertainty in Greece. The nation remains at-risk for default, and that’s spurring a bond market to flight-to-quality which benefits the U.S. mortgage market, too.
This week, mortgage rates may reverse their recent slide. There isn’t much data due for release, but the numbers that will hit the wires have the ability to move markets — especially the inflation-linked figures.
Tuesday : Producer Price Index, Retail Sales
Wednesday : Consumer Price Index
Thursday : Housing Starts
Friday : Consumer Sentiment
If you’ve been looking at mortgage rates for a purchase or refinance, now may be a good time to lock. FHA and conforming rates are at their lowest levels since December 2010.
Going forward, rates have much more room to rise than to fall.
A mortgage comes with many moving pieces and understanding them is the key getting a great deal. Unfortunately, studies show that few Americans have a firm grasp of how mortgages work — from mortgage types to mortgage fees.
In this back-to-basics interview on NBC’s The Today Show, you’ll learn some mortgage planning basics to help you get smarter with your next home loan in Atlanta or anywhere else — purchase or refinance.
Some of the topics covered include:
The mortgage applicants for whom adjustable-rate mortgages are a better choice than fixed-rate mortgages
Why you should include “How Good Is This Lender?”-type questions in the rate shopping process
What a pre-approval letter is good for, and what it is not good for
There is also one of the most simple explanations of “discount points” ever offered on network television.
The video runs 4-and-a-half minutes. For first-time buyers and experienced ones, it’s worth a watch. You’ll pick up some tips to use on your next mortgage.
It’s a fact: It’s more expensive to live in some cities than others. Beyond just the costs of buying a home, different cities also carry a different Cost of Living. For households relocating from Georgia and across state lines, the change in “life costs” can be jarring.
Depending on where you live, everyday expenses — from groceries to gasoline — make a different-sized dent in a household budget. And now you can see in numbers by how much your expenses might change.
The Cost of Living Comparison calculator is as basic as it is thorough. The calculator asks just 3 questions — (1) Where do you live now, (2) To what city are you moving, and (3) What is your salary — and uses your answers to produce a detailed, 60-item cost comparison between the two towns.
The city-to-city cost comparisons include:
Dry Cleaning Costs
Total Energy Costs
Beauty Salon Costs
Movie Costs
Dentist Visit Costs
The list also features a mortgage rate comparison, and a comparison of local home prices.
The Cost of Living calculator is based on data from the ACCRA. On the ACCRA website, a similar report sells for $5. At Bankrate.com, the information is free.
If you live in a high-cost area, keep an eye on your calendar. Effective October 1, 2011, temporary conforming loan limits will be lowered nationwide. Perhaps by as much as 14 percent.
These limits range up to $729,750 currently.
“Temporary loan limits” were enacted as part of the government’s 2008 economic stimulus package. At the time, the financial sector was entering its crisis and private mortgage lending had all but disappeared. Financing was scarce for both homeowners and home buyers for whom loan sizes exceeded Fannie Mae and Freddie Mac’s national $417,000 limit — even for those with excellent credit and income.
The issue was exacerbated in places like New York City where local home prices routinely topped $1 million. Buyers unable or unwilling to bring a substantial downpayment to closing (i.e. $600,000 or more) found themselves without financing.
The February 2008 package addressed this issue, using a math formula to change loan limits in Atlanta and nationwide. The government assigned to each U.S. metropolitan area a temporary, new loan size limit equal to 25% greater than its respective median home sale price, not to fall below $417,000, and not to exceed $729,750.
Then, later that same year, the Housing and Recovery Act made “high-cost areas” permanent, but with a reduced 15% increase to median home prices, and loan sizes not to exceed $625,500.
These new limits take effect October 1, 2011 — one day after the temporary limits expire.
If you live in a high-cost area, therefore, take note. Mortgage rates may be low, but the amount of loan for which you qualify may be less than you expect, and you may find yourself ineligible.
Whether you’re planning a refinance or a purchase, keep an eye on the calendar.
Mortgage markets improved last week as Wall Street managed news on both sides of the economic coin. There were several instances of higher-than-expected inflation – an event that tends to lead rates higher — but weak domestic jobs data and a soft manufacturing report suppressed the damage.
The housing market received a jolt of good news Thursday. The Commerce Department reports that Single-Family Housing Starts improved in May.
The jobs market is recovering slower than expected, and so is housing. But neither condition has slowed U.S. consumers.
Mortgage markets moved in feverish fashion last week, changing with extreme frequency, and eventually ending slightly worse on the week. Conforming mortgage rates fell to a 6-month low Wednesday but, by Friday, they had retreated higher.
It’s a fact: It’s more expensive to live in some cities than others. Beyond just the costs of buying a home, different cities also carry a different Cost of Living. For households relocating from Georgia and across state lines, the change in “life costs” can be jarring.
If you live in a high-cost area, keep an eye on your calendar. Effective October 1, 2011, temporary conforming loan limits will be lowered nationwide. Perhaps by as much as 14 percent.
