Mortgage Business

Anyone Have a Spare Listing?

20140309-080351.jpgIt really could not be predicted. For years during and after the financial crisis analysts warned that the real estate market would be weighed down by an avalanche of bank-owned properties and short-sales. And these analysts were right, at least for awhile. But quicker than most everyone expected we turned from a buyers’ market to a sellers’ market in many areas of the country. How can it be that buyers can’t find homes for sale when there are still so many foreclosures to deal with?

One reason is that investors have bought every bargain in sight. Those with the money recognize good buys and investor money poured into the real estate sector. Another reason is that home building slowed down to a snail’s pace during the recession and we were not building enough properties to keep up with our muted household growth, let alone older homes which had to be replaced. Finally, the most recent long, cold winter put a lid on new listings. This effect we have hypothesized to be temporary and already we are seeing numbers that support this hypothesis.

But there is another reason and this reason is psychological. Most who list their home are “moving up” to a bigger and better home or if they are closer to retirement, they are trading down. However, if they don’t believe they can find the home they want, they will obviously be reticent to list. So the dearth of listings is actually causing some not to list. Is this temporary? We believe so. As more homes become available, more will list their homes. We are not looking for a flood, but more of a balanced market. Meanwhile, if you are thinking about selling–this may very well be an opportune time.


The Markets. Rates moved to their lowest point of the year in the past week. Freddie Mac announced that for the week ending May 8, 30-year fixed rates decreased to 4.21% from 4.29% the week before. The average for 15-year loans fell to 3.32%. Adjustables were stable in the past week with the average for one-year adjustables decreasing slightly to 2.43% and five-year adjustables remaining at 3.05%. A year ago 30-year fixed rates were at 3.42%. Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac –“Rates on home loans continued moving down following the decline in 10-year Treasury yields after a dismal report on real GDP growth in the first quarter. Meanwhile, the economy added 288,000 jobs in April, the largest since January 2012, and followed an upward revision of 36,000 jobs for the prior two months. Also, the unemployment rate fell to 6.3 percent.” Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Current Indices For Adjustable Rate Mortgages 
Updated May 9, 2014

Daily Value Monthly Value
May 8 April
6-month Treasury Security 0.05%  0.05%
1-year Treasury Security 0.10%  0.11%
3-year Treasury Security 0.86%  0.88%
5-year Treasury Security 1.63%  1.70%
10-year Treasury Security 2.61%  2.71%
12-month LIBOR  0.550% (Apr)
12-month MTA  0.123% (Apr)
11th District Cost of Funds  0.701% (Mar)
Prime Rate  3.25%

  According to Freddie Mac’s latest weekly mortgage survey, rates on home loans hit their lowest levels of the year in the past week. This is good news for potential homebuyers as it has lowered the cost of owning a home. It is also good news for those who are considering refinancing their home loan as well. Those who are considering refinancing can take advantage of lower rates to lower their monthly housing payments. In addition, there are several other benefits that someone who is contemplating refinancing might consider:

  • Building equity more quickly. Rates on 15-year loans are significantly lower than 30-year alternatives right now and this financial move will help save a homeowner tens of thousands of dollars in interest costs.
  • Lowering consumer debt payments. Using equity to take cash out to pay off consumer debts can have a significant effect upon a homeowner’s monthly payments and might allow them to pay off their home loan more quickly as well.
  • Eliminate mortgage insurance payments. Rising home values may make it possible for a homeowner to eliminate costly mortgage insurance payments or consolidate a second mortgage into their home loan with a lower overall payment.
  • Move to Safety. Lower rates will enable homeowners to move from their adjustable rate loans to the safety of a fixed rate. Others may opt to move to longer-term adjustables such as those fixed for up to ten years.

Whatever the reason for the refinance, it is not known how long rates will stay this low. Therefore, acting quickly makes sense. Contact me to get a free mortgage analysis to see whether you might benefit from today’s low rates.

Americans’ outlook on the economy is improving and they’re ready to make more purchases, especially regarding real estate, according to the latest PulteGroup Home Index Survey. Sixty-seven percent of the 1,004 adults surveyed say they plan to purchase a home in the future; 32 percent of which are looking to buy within the next two years. The survey found that the most engaged consumer segments are millennials and move-up buyers. Eighty-five percent of millennials and 71 percent of move-up buyers say they intend to purchase a home in the future, according to the index. Fifty percent of those aged 55 and older said they’re looking to purchase a home in the future. Overall, the two main drivers to buying are the need for more space and the view that owning a home is a smart financial investment, according to the survey. Seventy percent of home shoppers say they intend to spend more—or as much—money on their next home, not only to increase the size of the home but also to upgrade the finishes. Sixty-four percent say they prefer to spend more on a home that’s move-in ready, rather than spend less and then renovate a home. “For the first time in years, Americans have a growing sense of optimism that the housing market is improving, and that these positive changes may be sustainable,” says Margaret Gramann, senior vice president of sales for PulteGroup, Inc. “This favorable outlook is giving them the confidence to pursue more meaningful, big-picture life opportunities they may have otherwise put on hold.” Source: Pulte Group

One out of three Americans live in a housing market where rent for a three-bedroom home takes more than 30 percent of their monthly median income, according to a new study released by RealtyTrac. In some cities, the percentage is even higher. Renters in the New York City borough of the Bronx are spending the most in the U.S. The average household there is forking over nearly 66 percent of their monthly income to rent a three-bedroom apartment, which averages $1,800 a month. Since the housing crisis, a large demand for rental housing has pushed rents more than 21 percent higher since the housing market peaked in 2006, according to Harvard’s Joint Center for Housing Studies. However, real income has dropped about 14 percent over the past six years. Source: CNN/Money

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