Mortgage Business

Turning the Corner

20140309-080351.jpgIf 2014 was a one mile race, we would now be heading down the last lap. It has been an interesting year. We started with a long, cold and snowy winter. We then began to thaw out, and just as the sun started shining, the world seemed to erupt in crisis. But like many obstacles we have faced during the recovery, from natural disasters to fiscal calamities, we seem to move ahead slowly but surely. The big question is, will the last lap feature us gaining speed during the straightaway or will we be hampered by another road block?

If the year has been like a one mile race, then the recovery from the recession has been a marathon. Actually, 26.2 miles may not describe the trek we have gone through. But like the year, we are coming into the final lap, though this is a much longer lap. If we gain momentum during the last quarter of the year, we will be able to see, but not reach the finish line. This year we have marked a full five years of recovery, one of the longest recoveries from a recession in history, but also one of the weakest. Many predict two years or more before we can be considered fully recovered, but the last lap of 2014 could change that story.

The release of the employment report this Friday will hint of how much speed we will have garnered going into the last lap of 2014. The last report was mildly disappointing but we definitely have seen some momentum built up during the majority of 2014. If the numbers released on Friday include an upward revision of last month’s numbers or September’s numbers move back towards or over 200,000 jobs added, the one slow report will be seen as nothing more than a pebble in the road instead of a road block. Then we can rev things up and hopefully we don’t have a huge snowstorm in November. Can we get a little help, weatherman?


The Markets. Fixed rates eased back a bit in the past week after rising the previous week. Freddie Mac announced that for the week ending September 25, 30-year fixed rates eased to 4.20% from 4.23% the week before. The average for 15-year loans also decreased slightly to 3.36%. Adjustables were mixed, with the average for one-year adjustables remaining at 2.43% and five-year adjustables increasing to 3.08%. A year ago, 30-year fixed rates were at 4.32%. Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac — “Rates on home loans were slightly changed with the rate on the 30-year fixed down three basis points. Meanwhile, existing home sales dropped 1.8 percent in August to a seasonally-adjusted annual rate of 5.05 million. Sales of new single-family homes surged 18.0 percent in August to an annual pace of 504,000 units. Also, the Federal Housing Finance Agency reported house prices rose just 0.1 percent on a seasonally-adjusted basis in July, and were up 4.4 percent over the past year.”  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 September 26, 2014

Daily Value Monthly Value
Sept 25 August
6-month Treasury Security 0.03%  0.05%
1-year Treasury Security 0.10%  0.11%
3-year Treasury Security 1.03%  0.93%
5-year Treasury Security 1.75%  1.63%
10-year Treasury Security 2.52%  2.42%
12-month LIBOR  0.559% (Aug)
12-month MTA  0.115% (Aug)
11th District Cost of Funds  0.668% (July)
Prime Rate  3.25%

  America has been recovering from our deep recession for over five years. Gradually over that time, standards for home loans have loosened up, but unfortunately the media has failed to take notice because it does not make for impactful headlines when there are not difficulties to report. Slowly but surely, lending standards have normalized so that one does not get a rubber stamp when they apply for a home loan, but they don’t have to walk on water either. The good news is that you can now get a loan to purchase a home in a very attractive market in which rates are still low and home prices, for the most part, are lower than they were during the height of the real estate boom. More reasonable underwriting standards for home loans are making the dream of home ownership a possibility for millions of more Americans. Many don’t realize these possibilities exist because of media headlines.  What guidelines have enhanced the possibility of owning a home?  If you would like the complete text of this article, “Yes You Can Buy a Home,” please contact us and we will email it to you. 

The long tug of war between big cities and suburbs is tilting ever so slightly back to the land of lawns and malls. After two years of solid urban growth, more Americans are moving again to the suburbs and beyond. Fourteen of the nation’s 20 biggest cities saw their growth slow or their populations fall outright in 2012-2013 compared with 2011-2012, led by cities such as Detroit and Philadelphia, according to data released Thursday by the U.S. Census Bureau. In some cases, fast-growing cities are slowing down: Austin’s growth rate decreased from 3.1% to 2.4%. In other instances, slower-growing cities grew at an even more diminished pace: New York’s rate decreased to 0.7% from 0.9%. A year earlier, 17 of the nation’s 20 largest cities showed faster population growth than the previous year. The Suburbs and areas beyond the suburbs within the same metro known as exurbs, meanwhile, are seeing an uptick in growth after expanding more slowly during the recession and its aftermath. All told, just 18 of America’s 51 metropolitan areas with more than 1 million people had cities growing faster than their suburbs last year, down from 25 in 2012, according to an analysis of census data by William H. Frey, a demographer at the Brookings Institution. “City growth may be bottoming out, as well as the downsizing of the outer suburbs,” Mr. Frey said. He said it remains unclear “whether the city slowdown signals a return to renewed suburban growth.” Source: The Wall Street Journal

Veros Real Estate Solutions (Veros) says that approximately 80 percent of the country’s real estate markets are forecast to appreciate in value during the next 12 months, while 20 percent are forecast to experience depreciation, and all but the most upbeat markets are slowing in their value improvements. This insight is from the company’s VeroFORECAST national real estate market forecast for the 12-month period ending June 1, 2015, updated quarterly and covering more than 1,000 counties, 340 metro areas, and 13,770 zip codes. Veros’ future home price index (HPI) forecast indicates that, on average for the top 100 metro areas, Veros expects 2.5 percent appreciation over the next 12 months, down from last quarter’s 3.4 percent forecast. This is the eighth consecutive quarter where the index has shown forecast appreciation, but the pace has continued to slow down, according to Eric Fox, Veros’ vice president of statistical and economic modeling and developer of VeroFORECAST. Source: NMP Daily

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s