What’s Ahead For Mortgage Rates This Week – December 23, 2013

What's Ahead For Mortgage Rates This Week- December 23, 2013According to December’s NAHB/Wells Fargo Housing Market Index, home builder confidence rose by four points to a reading of 58; this surpassed the consensus of 56 and November’s reading of 56.

November Housing Starts were released Wednesday and also exceeded expectations and the prior month’s reading. 1.09 million housing starts were reported for November against expectations of 963,000 and October’s reading of 889,000 housing starts.

Building permits issued in November came in at 1.01 million and fell short of October’s reading of 1.04 million permits issued. November’s reading exceeded expectations of 990,000 permits issued.

The week’s big news emerged after the conclusion of the Federal Reserve’s FOMC meeting. The committee announced that it would begin tapering the Fed’s $85 billion purchases of securities. The taper was modest; the Fed will reduce its rate of purchases to $75 billion monthly, with a split of $40 billion in Treasury securities and $35 billion in mortgage-backed securities.

Fed Chairman Ben Bernanke gave his final press conference as Fed chair. He noted that the FOMC was confident that the economy would continue to improve at a moderate rate and that the Fed would continue monitoring economic and financial developments to guide future adjustments in its monthly purchase of securities.

Mortgage rates were expected to rise after news of the Fed’s tapering of its quantitative easing program, as the program was intended to hold down long-term interest rates and mortgage rates.

Mortgage Rates, Jobless Claims Rise

Freddie Mac’s Primary Mortgage Market Survey confirmed expectations of higher mortgage rates. Average mortgage rates ticked upward by five basis points to 4.47 percent for a 30-year fixed rate mortgage; the average rate for a 15-year fixed rate mortgage rose by eight basis points to 3.51 percent.

Discount points for a 30-year mortgage were unchanged at 0.70 percent for a 30-year mortgage and dropped from 0.70 to 0.60 percent for a 15-year fixed rate mortgage. The average rate for a 5/1 adjustable rate mortgage rose from 2.94 percent last to 2.96 percent with discount points unchanged at 0.40 percent.

Weekly Jobless Claims came in at 379,000 and were higher than projections of 338,000 and the prior reading of 369,000 new jobless claims. Although the reading was the highest since March, analysts attributed the higher reading to changes in work schedules during the holidays.

Sales of existing homes slipped to their lowest levels in close to a year. The NAR reported that existing home sales fell from 5.12 million in October to 4.90 million in November.

Projections were set at 5.00 million sales for November, but a shortage of available homes and rising mortgage rates were seen as reasons for fewer sales. The approaching holiday season and cold weather typically contribute to a lull in home sales during the winter months.

What’s Ahead

This week’s scheduled economic news is light due to the Christmas holiday, but Monday’s releases include consumer spending, personal spending and the University of Michigan’s Consumer Sentiment Index.

New Home Sales for November will be released Tuesday. The week’s scheduled news will conclude with Weekly Jobless Reports on Thursday, as no further economic news is scheduled for Friday.

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4 Safety Tips For Your Christmas Tree

4 Safety Tips For Your Christmas Tree It’s Christmas time, it’s Christmas time – which means it’s time to get a tree for your home. Whether you get a real tree or an artificial one, it’s also time to think about Christmas tree safety.

Prevent A Fire Hazard

There’s a potential fire hazard that comes with real trees, a danger that’s lessened with artificial trees, but artificial trees have their own safety issues. 

For instance, those that spin on their bases shouldn’t be left to rotate on their own. Make sure the motor is turned off whenever you leave the room.

Even though safety precautions are more necessary with real Christmas trees, sometimes you can’t resist the fresh pine smell filling your home. Should you decide to go with a real Christmas tree, here are some safety precautions that should be followed to avoid fire hazards.

Safety Precautions For That Tree Of Yours

1. Place the tree as far from any heat sources as possible. While it may seem picturesque to have your tree close to the fireplace, the heat can dry out the tree and make it more susceptible to burning.

2. Fresh cut the tree. While you may have cut the tree down before bringing it home, you still need to cut a little bit more off the bottom just before you put it in the Christmas tree stand. This gives the tree a better ability to absorb the water in the stand, which stops it from drying out.

3. Don’t let the water run out. It’s important to stress that your Christmas tree needs to stay moist and green. To check for dryness, lightly grab the end of a branch and pull on it.  If several needles come off, it’s time to take it down. 

4. Don’t burn the tree to get rid of it. A dry tree blaze is hard to control, and pine generates a lot of creosote that can catch fire. There are safer ways to dispose of your tree including recycling your Christmas tree. To learn more about safe disposal of your tree, contact your local city or state.

Have fun decorating your home and tree and for Christmas. Just remember to be safe as you celebrate the season! If a new home is on your Christmas list, contact your trusted mortgage professional today.

Fed Minutes Predicts Tapering Of Quantitative Easing Program

Fed Meeting Minutes Display Strong Signs Of Economic ReceoveryHousing Starts exceeded expectations and also beat October’s reading of 889,000. November housing starts were posted at 1.09 million against a consensus of 963,000.

This reading is more in line with the NAHB/Wells Fargo Home builder Market Index, which reached a four month high with December’s reading.

With that threat resolved and a new federal budget passed, builders can now proceed without worrying about setbacks caused by government shutdowns and legislative gridlock.

Building permits issued in November were slightly lower at 1.01 million than October’s reading of 1.04 million. Viewed as an indicator of future construction, and ultimately, available homes, it is not unusual for construction and permits to slow during the winter months.

FOMC Statement And Chairman Bernanke’s Last Press Conference

Throughout 2013, strong signs of economic recovery have led to predictions of the Federal Reserve tapering its quantitative easing program.

As each FOMC meeting approached, analysts predicted that the Fed would start reducing its $85 billion purchases of Treasury and mortgage-backed securities.

The asset purchases are part of the government’s quantitative easing program that was implemented to keep long-term interest rates and mortgage rates low.

The cut finally came on Wednesday as the FOMC made its customary post-meeting statement. Effective in January 2014, the Fed will reduce its monthly purchases by $10 billion.

The QE purchase will be split between $40 billion in Treasury securities and $35 billion in MBS. The Fed expects that the economy will continue recovering at a moderate pace.

The FOMC statement noted that the Fed will continue monitoring inflation, which remains below the Fed’s target rate of 2.00 percent, and the national unemployment rate, which remains above the Fed’s target rate of 6.50 percent.

The statement noted that asset purchases are not on a predetermined course, and that the Fed will continue to closely monitor labor market conditions, inflation pressure and economic developments in the U.S. and globally.

The Fed did not change its target federal funds rate of 0.00 to 0.25 percent, and would not do so at least until unemployment falls to 6.50 percent. Changes to policy accommodation are made with the Fed’s dual goal of achieving an inflation rate of 2.00 percent and achieving maximum national employment goals.

Bernanke Press Conference

Mr. Bernanke repeated key points of the FOMC statement, and noted that “highly accommodative monetary policy and waning fiscal drag” is helping with the economic recovery, but that the economy has much farther to go before it can be considered fully recovered.

Mr. Bernanke said that FOMC members saw the unemployment rate dropping from 7.00 percent in November 2013 to 6.30 to 6.60 percent in the fourth quarter of 2014. Improving labor markets and rising household spending were cited as signs of economic recovery.

Mr. Bernanke mentioned concerns about the high unemployment and underemployment rates and said that the Fed’s benchmarks for unemployment and inflation would not automatically trigger reductions in its QE asset purchases.

He also said that the committee did not expect to adjust the target federal funds rate immediately after the national unemployment rate reaches 6.50 percent. 

Mr. Bernanke repeated that the Fed’s actions regarding monetary policy and QE would be dependent on in-depth review of ongoing financial and economic developments, but said that further tapering of QE purchases is likely if the economy stays on its present course of moderate improvement.

Housing Market Index Shows Builder Confidence Up 23 Percent Year-Over-Year

Housing Market Index Shows Builder Confidence Up 23 Percent Year- Over- Year According to the National Association of Homebuilders/Wells Fargo Homebuilders Market Index for December, builder confidence recovered in with a reading of 58. This surpassed both expectations of 56 and last month’s reading of 54.

Analysts noted that builder confidence has steadied after the government shutdown. December’s reading was the highest in four months. Dave Crowe, NAHB chief economist, said that his organization was expecting a “gradual improvement in the housing recovery” in 2014.

Any reading above 50 indicates that more builders are confident about overall housing market conditions than not.

Builder Confidence – Highest Reading Since 2005

Pent-up demand for housing is driving housing markets in spite of higher mortgage rates. Three components of builder confidence used to calculate the overall reading also rose in December. Builder confidence in current home sales rose to 64 from a reading of 58 in November; this is the highest reading since 2005.

Confidence levels in housing markets over the next six months rose to 62 from last month’s reading of 60. Builder confidence also grew in the area of buyer foot traffic in new developments and gained three points to a reading of 44.

All of this is good news, but the NAHB said that a gap remains between higher home builder confidence and the rate of new home construction. A seasonal lull in home construction is not unusual especially in areas experiencing harsh weather.

More Jobs, Low Refinance Numbers Could Mean More Mortgages Available

MarketWatch analysts suggest that if the economy continues to add jobs “at a brisk pace” and mortgage lenders ease lending requirements next year, the demand for homes could further strengthen the U.S. housing market next year.  

Low numbers of refinance mortgages in 2013 may cause some lenders to loosen mortgage credit requirements, which were tightened after the housing bubble burst.

Economic News scheduled for today may provide a broader picture of economic health and likely trends for 2015. The Federal Reserve’s Federal Open Market Committee will provide its expected statement after its meeting, and Fed Chairman Ben Bernanke will give his last press conference as Fed chair as well.

Any indication of plans to reduce the Fed’s current quantitative easing program could upset financial and mortgage markets, but most economic analysts don’t expect an announcement of tapering the Fed’s asset purchases before next year.

Data on November Housing Starts and Building Permits will also offer clues as to how housing markets and the general economy are doing.

Get The Overview On Escrow Accounts

Get The Overview On Escrow AccountsWhether you are purchasing a new home or you are considering applying to refinance your home, chances are the lender will require an escrow account. These accounts are often a source of confusion for homeowners.

In reality, these accounts benefit the homeowner and help protect the lender.

What Is An Escrow Account?

Escrow accounts are sometimes called “impound” accounts. These accounts are set up to help manage payments of property taxes and homeowner’s insurance.

Depending on the individual requirements of the lender, you may be asked to pay as much as one-quarter of these upfront and they will be put into the account for the purposes of making payments.

Who Controls Escrow Accounts?

Lenders have complete control over escrow accounts. However, homeowners are entitled to receive an annual statement advising them of their escrow balance.

If there is an increase or decrease in insurance payments through the year, a homeowner may request the lender evaluate the escrow account and change the amount that is paid.

Is Interest Paid On Escrow Accounts?

There is no mandate to pay interest on escrow accounts. When you refinance your home, the funds for your taxes and insurance are calculated into your overall payment.

The portion that is to be used to pay taxes and insurance is placed in escrow. Arizona laws do not require lenders to pay interest on these accounts.

What Happens If I Sell My Home Or Refinance?

When you sell or refinance your home, your escrow account will be credited at closing. The amount may be used to lower your out-of-pocket costs or may be turned over to you as a direct payment.

What Happens If There Is Not Enough/Too Much Money In Escrow?

If your lender has underestimated your escrow payments, they may request you send an additional payment to make up the difference. In the event you are paying too much into escrow, your lender has the discretion to release the overage amount directly to you.

In most cases, shortfalls or overages of $50 or less are typically not a major concern.

If your lender requires you to have an escrow account for the taxes and insurance portion of your mortgage payment, it can be very helpful. Escrow accounts help ensure you do not have to come up with a large payment once a year for insurance or quarterly for taxes.

In some cases, if a lender does not require an escrow account, as a borrower, you may request they escrow your taxes and insurance for convenience.

Homebuilder Confidence Rises For 9th Straight Month

Housing Market Index December 2012The National Association of Home Builders (NAHB) released its Housing Market Index (HMI), showing another monthly gain — its ninth in a row.

The HMI — a gauge of homebuilder confidence — rose 1 point to 47 in December 2012, lifting the index to its highest levels since April 2006.

Readings under 50 indicate unfavorable housing conditions for builders. Readings over 50 signal “good” conditions. Coincidentally, the last time that the HMI read above 50 was April 2006, too.

The Housing Market Index is based on a survey which the NAHB sends to its members. The survey asks the nation’s builders to rate the current housing market conditions.

In December, home builders reported gains in two of the three areas surveyed:

  • Current Single-Family Sales: 51 (+2 from November 2012)
  • Projected Single-Family Sales: 51 (-1 from November 2012)
  • Buyer Foot Traffic: 36 (+1 from November 2012)

It’s noteworthy that buyer foot traffic has climbed over nine straight months and is now at it’s highest reported level in nearly 7 years. Low mortgage rates and rising home prices throughout Greenville have compelled today’s renters and existing homeowners to consider their home buying options.

This was none more apparent that in the Northeast Region in which builder confidence grew twelve points to 42. The Midwest Region also showed a strong improvement, climbing 2 points to 53. The West and South regions fell slightly between November and December.

For today’s buyers, rising builder confidence may be a signal that home prices are headed higher. Confident home sellers — including the nation’s builders — are less likely to make price concessions into an improving market, or may be less likely to offer free upgrades to buyers.

Therefore, if you are in the market for a newly-built home, consider that you may get the best “deal” by acting sooner rather than later. Mortgage rates are rising and home prices are, too. Six months from now, your costs of homeownership may be higher.

Short Sales Outnumber Foreclosure Sales For Third Straight Quarter

Short sales risingForeclosure-tracker RealtyTrac reports falling foreclosure sales nationwide as banks get better at selling homes via short sale.

In its Q3 2012 report, RealtyTrac says that 193,059 homes in some stage of foreclosure were sold, accounting for 19% of all residential home sales. In addition, pre-foreclosure sales — also known as “short sales” — climbed 22% on a year-over-year basis.

For the first time since 2007, the number of short sales outnumbered the number of homes sold in foreclosure over three consecutive quarters.

The average price of a short sale home fell by 5 percent as compared to a year ago which may reflect an eagerness on the part of mortgage lenders to dispose of distressed properties before they fall into foreclosure. Foreclosures can increase a lender’s losses, and foreclosed properties be expensive to manage.

Compare the average Q3 2012 sale price of a home in short sale versus one in foreclosure :

  • Average sale price of a residential property in short sale : $191,025
  • Average sale price of a residential property in foreclosure : $161,954

It’s not just the higher home sale prices that have pushing banks to settle on short sales, either. Short sales are less costly, too. Foreclosing on a home requires banks to pay court costs, among other fees, and which positions the short sale outcome as a clear winner for many banks. 

For homebuyers in South Carolina , the banking industry’s shift toward short sales is welcome news.

Buying a short sale has been a notoriously slow process with a lack of defined timeline. As banks improve their distressed sales division, they’re getting faster and more efficient. This makes it “easier” for a buyer to buy a home in short sale.

However, don’t buy a short sale without the help of an experienced, licensed real estate professional.

The negotiation process is different for a short sale than with a “traditional” home purchase. Time lines are different, responsibilities are different, and purchase contract language may be different, too. The same is true for buying a foreclosure.

What’s Ahead For Mortgage Rates This Week : December 17, 2012

Mortgage rates drop, according to Freddie MacMortgage bonds worsened last week, moving mortgage rates higher. Economic news was mostly positive and the Federal Open Market Committee (FOMC) changed some of Wall Street expectations for future monetary policy.

Freddie Mac reported the average 30-year fixed rate mortgage rate at 3.32 percent nationwide for borrowers willing to pay an accompanying 0.7 discount points plus closing costs. The average 15-year fixed rate mortgage rate was listed at 2.66 percent nationwide with an accompanying 0.6 discount points plus closing costs.

Both mortgage rates had climbed by week’s end, however. Mortgage rates made their best levels Monday afternoon. Between Tuesday and Friday, mortgage rates in Greenville climbed.

Also last week, the National Association of Homebuilders/First American Improving Markets Index (IMI) reported 201 improving metropolitan economies nationwide. This index uses data including local employment statistics and home values to determine whether an area’s economy is “improving”.

76 new areas were added to the IMI list in December as compared to November. The geographic diversity the newly-added markets suggests an overall improvement in the national economy.

Last week’s major event, however, was the 2-day Federal Reserve meeting, which adjourned Wednesday.

The post-meeting press release after included the Fed’s commitment to hold the Fed Funds Rate near zero percent where it’s been since December 2008. However, the Fed announced a change to in its plans to raise the Fed Funds Rate from near-zero at a future date.

Previously, the Fed had said it would raise the Fed Funds Rate beginning in mid-2015. Now, the Fed says it will start to raise rates when the national unemployment rate reaches 6.5 percent.

This week, mortgage rates have a lot to move on including Housing Starts (Wednesday) and Existing Home Sales (Thursday) from the housing sector; Jobless Claims (Thursday) from the Labor Department; and a key inflation reading from the Department of Commerce. Each has the capability to move mortgage rates.

Markets will respond to Fiscal Cliff discussions, too.

Homebuilder Confidence Rises on Surging Sales Volume, Foot Traffic

Homebuilder Confidence 2009-2011Homebuilder confidence is rebounding sharply.

Just one month after falling to a multi-month low, the Housing Market Index rebounded four points to 18 for October. It’s the highest reading for the HMI since May 2010 — the month after last year’s homebuyer tax credit expiration.

The Housing Market Index is published monthly by the National Association of Homebuilders and is scored on a scale of 1-100. Readings above 50 indicate favorable conditions for homebuilders. Readings below 50 indicate unfavorable conditions.

The index has been below 50 since May 2006 — a 66-month streak.

The Housing Market Index is a composite reading; the result of three separate surveys sent to home builders each month. Builders are asked about current single-family home sales volume; projected single-family home sales volume over the next 6 months; and current “foot traffic”.

In October, builder responses were stronger in all 3 categories :

  • Current single-family sales : 18 (+4 from September)
  • Projected single-family sales : 24 (+7 from September)
  • Buyer foot traffic : 14 (+3 from September)

Meanwhile, of particular interest to today’s Greenville home buyers is that builders expect volume to surge over the next two seasons. And, with current sales volume rising and foot traffic strengthening, the fall and winter months could be strong ones in the new homes market.

In addition, the builder trade group press release states that rising costs for materials are squeezing building profit margins.

For buyers, it all adds up higher home prices ahead. As builders grow more confident about the housing market, they’re less likely to make concessions on pricing or upgrades. Rising building costs fortify that argument. The “great deal” will be tougher to negotiate. 

At least mortgage rates are low.

Low mortgage rates are keeping homes affordable in South Carolina and nationwide. If you’re looking for the right time to buy new construction, therefore, this month may be it.

Foreclosure Rate Drops For The 12th Straight Month

Foreclosures by state September 2011Foreclosure activity continues to slow throughout the United States.

According to data from RealtyTrac, a national foreclosure-tracking firm, the number of foreclosure filings dipped below 215,000 in September 2011, a 6 percent decrease from August.

A “foreclosure filing” is defined as any foreclosure-related action including Notice of Default, Scheduled Auction, or Bank Repossession.

September marks the 12th straight month in which foreclosure filings fell year-over-year.

There are several reasons why foreclosure filings are down, including an increase in the amount of time it takes banks to move a foreclosure through its pipeline. It now takes a nationwide average of 336 days from the date of initial default notice to bank repossession.

Some states work quicker than others, however, because of a combination of state law and personnel.

Homes in New York take an average of 986 days to foreclose, for example, the longest in the country. Homes in Texas foreclose the quickest, registering just 86 days.

As in prior months, bank repossessions remain concentrated by state. Just 6 states accounted for half of the country’s REO last month:

  • California : 16.6 percent
  • Georgia : 8.5 percent
  • Florida : 8.3 percent
  • Texas : 6.2 percent
  • Michigan : 6.1 percent
  • Illinois : 5.2 percent

Collectively, these 6 states represent just 36 percent of the nation’s population.

By contrast, the bottom 6 states were home to just 192 repossessions last month — 0.3% of the national total. Those 6 states were Alaska, Wyoming, District of Columbia, North Dakota, South Dakota, and Vermont.

For home buyers in Greenville , shopping for foreclosed properties can be an excellent way to get “a deal”. Foreclosed homes typically sell at discounts as compared to “non-foreclosed” homes, but are often sold “as-is”. This means that homes listed for sale may be defective or out-of-code.

Before placing a bid on a foreclosed home, make sure that you’re represented by an experienced real estate professional.