Mortgage Rates

The Federal Reserve Meets Today: Mortgage Rates Expected To Move

The Federal Open Market Committee adjourns from a scheduled 2-day meeting today, its the first of 8 scheduled meetings this year.

The FOMC is a designated, rotating, 12-person committee within the Federal Reserve, led by Federal Reserve Chairman Ben Bernanke. Members of the FOMC sub-committee are the voting members of the Federal Reserve; the ones that ultimately determine U.S. monetary policy.

The most well-known Federal Reserve monetary policy tool is the central bank’s Fed Funds Rate. The Fed Funds Rate is the prescribed interest rate at which banks borrow money from each other for a period of one night. The Fed Funds Rate can only be changed by FOMC vote.

For home buyers and would-be refinancing households in Schererville Indiana, it’s important to recognize that the Fed Funds Rate is an interest rate separate and distinct from “mortgage rates”. Mortgage rates are not voted upon by the Federal Reserve. Rather, mortgage rates are based on the price of mortgage-backed bonds, a security bought and sold among investors.

Historically, there is little correlation between the Fed Funds Rates and 30-year fixed rate mortgage rates throughout Indiana. Going back 20 years, the benchmark rates have been separated by as much as 5.29% and have been as near as 0.52%. 

The spread has even gone negative, most recently in 1979 and 1981 — a period marked by high inflation.

Today, the separation between the Fed Funds Rate and the average, 30-year fixed rate mortgage rate is roughly 3.60%. Beginning at 11:30 AM CT, however, that spread is expected to change. The FOMC will make its statement to the press at that time, and will release its quarterly forecast to the markets.

As Wall Street reacts to the Fed’s press release and projections, mortgage rates will move.

Investors expect the Fed to vote the Fed Funds Rate unchanged from its current range near 0.000 percent, but are unsure of how the Fed will characterize the U.S. economy. If the Fed speaks optimistically on the economy, stock markets should rise and mortgage bonds should fall, driving mortgage rates higher.

Conversely, if the Fed shows concern for future economic growth, mortgage rates should drop. Either way, today figures to be volatile one for mortgage markets. 

When mortgage markets get volatile, the safe play as a mortgage rate shopper is to lock your mortgage rate immediately. There is too much risk in floating your mortgage rate.

Mortgage Rates

Housing and Mortgage: The Experts Make Their 2012 Predictions

As the new year begins, there are no shortage of stories telling us what to expect in 2012. Housing finished 2011 with momentum and mortgage rates closed at the lowest rates of all time.

Some expect those trends to continue through the first quarter and beyond. Others expect a rapid reversal.

Who’s right and who’s wrong? A quick look through the newspapers, websites and business television programs reveals “experts” with opposing, well-delivered arguments views. It’s tough to know who to believe.

For example, here are some “on-the-record” predictions for 2012 :

• Home prices will rise in 2012 (says Freddie Mac)
• Home prices will fall in 2012 (says CBS News)
• Mortgage rates will rise in 2012 (says American Banker) 
• Mortgage rates will fall in 2012 (says the LA Times)

The issue for buyers, seller, and would-be refinancers in Crown Point and nationwide is that it can be a challenge to separate a “prediction” from fact at times. 

When an argument is made on the pages of a respected newspaper or website, or is presented on CNBC or Bloomberg by a well-dressed, well-spoken industry insider, we’re inclined to believe what we read and hear.

This is human nature.

However, we must force ourselves to remember that any analysis about the future — whether it’s housing-related, mortgage-related, or something else — are based on a combination of past events and personal opinion.

Predictions are guesses about what might come next — nothing more.

For example, at the start of 2009, few people expected the 30-year fixed rate mortgage to stay below 6 percent, but it did. Then, at the start of 2010, few people expected the 30-year fixed rate mortgage to stay below 5 percent, but it did.

All we can know for certain about today’s market is that both mortgage rates and home values are low, creating favorable home-buying conditions in and around Northwest Indiana and nationwide.

At that start of last year, few people expected mortgage rates to even reach 4 percent. Today, rates “with points” price in the 3s.

What 2012 has in store we just can’t know.

Mortgage Rates

Top Real Estate and Mortgage Headlines for December 2nd

In case you didn’t hear the news, the unemployment rate has fallen down to 8.6% a 2-1/2 year low. But before you get too excited, make sure to understand the reason behind the drop in November’s Unemployment Rate.

As we officially enter into the busiest of holiday seasons it seems as if real estate and home loans are on the back burner. Needless to say, there are great offers for both home buyers and homeowners throughout Northwest Indiana and the suburbs of Chicago.

Although real estate might not be at the top of our agenda, let’s take a minute to review what the top real estate and mortgage headlines are today according to the National Association of Realtors.

• 7 Housing Markets Buyers Are Eyeing Online
  Sunbelt cities are attracting more attention online from would-be buyers.
• Mortgage Rates Continue to Hover at Record Lows
  “The extraordinarily low mortgage rates of the past month may provide a needed spur to housing activity,” Freddie Mac’s chief economist says.
• Federal Agencies Crack Down on HAMP Fraud
  Some scam artists are preying on home owners looking to refinance using the government’s Home Affordable Modification Program. How do home owners tell the legit HAMP issuers from the fraudulent ones?
• The Perfect Holiday Gift: A Down Payment?
  Families feeling a little extra generous this holiday season may offer loved ones help with a down payment on a home. But they need to make sure they follow the government’s rules for down-payment gift-giving.
• C.A.R. Goes Bilingual in Online Property Search
  With Spanish being the second most widely spoken language in the U.S., and Spanish speakers making up 35 percent of California’s population, the California Association of REALTORS(R) has rolled out a Spanish-language property search site.
• Winter-Selling Tips for Overcoming the Gloom
  Selling a home in the cold, dreary winter months may not be ideal, but there’s still plenty you can do to get a home to standout.

These are the top real estate and mortgage headlines for Friday, December 2, 2011.

Want to know how these national real estate headlines could impact you right here locally in Northwest Indiana? Subscribe to this blog, Today’s Real Estate Reality, and let our collective years of real estate experience in Northwest Indiana guide you to an informed and successful real estate transaction today.

Mortgage Rates

Fannie Mae Mortgage Bonds 48 Hour Reversal of Fortune

It seems as if it were just yesterday that everyone in the financial sector was astounished how low the yield for the Fannie Mae 30 year fixed mortgage bonds had been pushed. Wait a second…it was yesterday.

Fast forward to the closing bell today and it was a complete reversal of fortune for Fannie Mae mortgage bonds. Take a look at the chart below and observe the performance from yesterday through today.

It should be noted that when the price increases on the Fannie Mae mortgage bond, it actually has an inverse relationship with mortgage rates. Coincidentally, mortgage rates on 30 year fixed rate home loans would go down. The opposite holds true as well. When Fannie Mae mortgage bonds decrease in price, 30 year fixed mortgage rates increase.

As you can see in the chart from the past 48 hours, Fannie Mae mortgage bonds are actually worse than where they opened Thursday morning. Although this occurs often in today’s volatile bond market, it is the extreme range in price movement that was all the buzz.

Rarely do you see Fannie Mae mortgage bonds increase and/or decrease more than 50 bps a day. In this case, they changed near 100 bps both days. What does all this mean to you as a home buyer or someone who was interested in refinancing their home?

Mortgage rates literally decreased by more than 0.250% – 0.375% on Thursday to only increase 0.375% – 0.500% today. If you’re uncertain as to which way mortgage rates are trending, we don’t blame you. The quickest and easiest way to monitor the daily rate trend is to keep an eye on the rate meter to the right.

Don’t have the time or the patience to keep close tabs on how Fannie Mae mortgage bonds and mortgage rates are trending? Call or text me at 512-522-7284 to get your personalized rate monitor service.

Mortgage Rates

Top Real Estate and Mortgage Headlines for April 2nd

In case you didn’t hear the news, the unemployment rate has fallen to 2-year lows. Why is this important to real estate?

People who are not employed can not buy homes. As lending guidelines have tightened over the past 2 years, even a temporary layoff could derail a home purchase.

While we collectively wait for more jobs, let’s take a minute to review what the top real estate and mortgage headlines are today according to the National Association of Realtors.

• Bargain-Seeking Home Buyers on the Hunt
  The spring selling season is heating up as investors make more cash buys, foreign buyers increase, and other buyers look to snag a good deal.
• Mortgage Rates Continue to Inch Up
  For the second straight week, mortgage rates were on the rise, reports Freddie Mac.
• GOP Senators Join Efforts to End Fannie, Freddie
  More lawmakers are jumping in to chip away at the housing giants as the government continues to seek ways to shrink it’s role in the mortgage market.
• Watch for Red Flags That May Get You Audited
  The number of tax audits is increasing. Find out what may put your tax return at risk of being audited.
• You Can’t Bribe Your Way to Lower Property Taxes
  An Orlando man was arrested Wednesday on charges that he tried to bribe an appraiser to lower his home’s tax assessment.
• Home Owners See Big Value in Remodeling
  Nearly 40 percent of home owners say that a major home improvement is the best long-term investment you can make, according to new research by Mintel.

These are the top real estate and mortgage headlines for Saturday, April 2, 2011.

Want to know how these national real estate headlines could impact you right here locally in Northwest Indiana? Subscribe to this blog, Today’s Real Estate Reality, and let our collective years of real estate experience in Northwest Indiana guide you to an informed and successful real estate transaction today.

Mortgage Rates

Top Real Estate and Mortgage Headlines for March 26th

The weekend is in full swing and tonight the world will celebrate Earth Hour. What is Earth Hour? Every year individuals, businesses and communities are asked to shut off their lights for one hour to show their commitment to protect the one thing that unites us all…the planet.

Before we all collectively unplug and power down in support of Earth Hour, let’s take a minute to review what the top real estate and mortgage headlines are today according to the National Association of Realtors.

• Real Estate Web Site Traffic Jumps 27%
  More Web visitors were eyeing real estate Web sites last year. Find out the most popular keyword searches when it comes to real estate.
• Proposal Would Pay Defaulters to Leave Homes
  The nation’s five largest mortgage service providers were asked by regulators this week to consider an industry-wide “cash-for-keys” program, in which banks would pay delinquent borrowers up to $21,000 each to leave their home.
• Mortgage Rates Edge Up This Week
  Still sitting below 5 percent, 30-year mortgage rates–a popular choice among home buyers–were on the rise this week but still remain at overall low levels, Freddie Mac reports.
• Seller’s Market a Year Away, Survey Says
  More than 61 percent of Americans say that the tables will soon turn and a real estate market where the seller’s are more in control is at least a year away, according to a new survey.
• Questions Raised Over Good Faith Estimates
  The lack of clarity in the revamped disclosure reforms for home buyers and borrowers can lead to delayed closings or the loss of a locked-in interest rate, says a spokeswoman for the Mortgage Bankers Association.
• NAR Home Ownership Bus Tour Stops in Portland
  If you are in Portland, come out for prizes, information, and fun during the Home Ownership Matters Bus Tour at the Better Living Home Garden & Lifestyle Show on Saturday, March 26.

These are the top real estate and mortgage headlines for Saturday, March 26, 2011.

Want to know how these national real estate headlines could impact you right here locally in Northwest Indiana? Subscribe to this blog, Today’s Real Estate Reality, and let our collective years of real estate experience in Northwest Indiana guide you to an informed and successful real estate transaction today.

Mortgage Rates

Will Home Loan Rates Go Back Down to Lows of 2010

Ever since the announcement of Quantitative Easing 2 in late November of 2010, mortgage rates have been on a quick climb higher. This has unfortunately prevented many homeowners from refinancing and homebuyers from buying real estate.

The number one question that has been debated amongst homebuyers, home sellers, real estate investors, Realtors and mortgage professionals alike has been the following:

QUESTION: Although home loan rates are still near historic lows, they have been heading up. So are those unbelievably low home loan rates behind us for good?

ANSWER: There are only a couple things that would bring back the historic home loan rates of 2010:

1. If the Fed’s recent round of Quantitative Easing 2 falls on its face and doesn’t meet its mission of creating inflation, boosting Stock prices, lowering unemployment and creating consumer demand, then Bond prices could make some gains as the threat of deflation reemerges. But this is a long shot. As the saying goes: “Don’t fight the Fed” – which means that if the Fed wants to raise inflation, it most likely will.
2. If the financial problems in Europe that we saw in 2010 worsen significantly in 2011, then this could drive investors into the safe haven of the U.S. Bond market, which would help mortgage bonds.

Realistically, the chances of these events happening are unlikely. And when you consider the stimulative action of extending the tax rates and adding further cuts, it’s tough to see mortgage bonds or home loan rates improving much.

So the bottom line is that home loan rates may see a brief and fleeting improvement here or there, but many experts including myself believe that the overall trend will continue – meaning home loan rates will creep up as we progress through 2011.

The good news is that home loan rates are still extremely attractive and are still near historic lows for now. That may not be the case in the coming weeks and months. If you or someone you know has been thinking about purchasing or refinancing a home, NOW is the time to call or text me at 512-522-7284.

Mortgage Rates

What Does the Fed’s Quantitative Easing 2 Mean to You?

In the statement released after its November meeting, the Federal Reserve announced that it will purchase a further $600 Billion of longer-term Treasury securities by the end of the second quarter of 2011, in what is known as another round of Quantitative Easing (or QE2).

To help you understand what this means to the economy and to you, let’s break down the details, starting with what QE2 is and the reasons behind this move by the Federal Reserve.

What is Quantitative Easing?

Quantitative Easing is the concept of the Fed becoming a heavy buyer of Treasuries and Bonds. This is done to artificially cause those security prices to move higher under the increased demand. That demand should, in turn, cause interest rates to move lower with the hope of stimulating the economy.

What other impacts might Quantitative Easing have?

Quantitative Easing 2 will almost assuredly hurt the US Dollar, which helps make US exports more affordable abroad as well as make imports appear relatively more expensive. Such a shift helps large multi-national companies, which have a large influence on the economy and the major Stock market indices.

Of course, the Fed can’t outright say it is trying to weaken the currency. After all, haven’t many members of Congress and the Administration been bashing China for currency manipulation?

But the point is, even if Quantitative Easing 2 doesn’t have a direct impact, the drop in currency value can be very beneficial to corporations and Stocks.

How can Quantitative Easing 2 impact home loan rates?

While Stocks should benefit from another round of Quantitative Easing, Bonds may have a different reaction. And that brings us to the heart of what you need to know: What does Quantitative Easing 2 mean to Bonds and home loan rates?

With another round of Quantitative Easing, Bond prices should initially improve because Quantitative Easing 2 includes large Bond purchases.

But…the key word is “initially.” That’s because, even if Bonds show signs of initially improving, the eventual softening of the Dollar, rising commodity prices, and rise in Stock prices could become a drag on Bonds, which would negatively impact home loan rates.

The bottom line is, Quantitative Easing 2 and a weaker US Dollar may make our exports more attractive to foreign buyers, but it may ultimately drive rates higher. That’s an important point to consider if you’re thinking about refinancing or purchasing a new home.

The reality is, home loan rates are still near historic lows, but won’t be forever.

Mortgage Rates

Your Door to Historic Low Mortgage Rates Is Set to Close

You may have heard that home loan rates reached record lows in October of this year. Qualified mortgage professionals have been slammed with emails and phone calls from clients just like you who wanted to take advantage of this wonderful situation ever since.

Over the last week however mortgage rates have started rising again due to a combination of good economic news and the Federal Reserve’s latest Treasury Security purchase plan, more commonly referred to as Quantitative Easing 2.

Mortgage rates have risen 0.250% in the past week. You read that correct…0.250% in the past week alone.

While some people say good things come to those who wait, others say to strike while the iron is hot. In this case, the “iron is still hot” with mortgage rates at exceptionally low levels but you have to act now.

The market conditions that have led to historic low mortgage rates are starting to turn around and quickly I might add. We might never see these historic low mortgage rates again in our lifetime as we must remember the extreme nature of the economic forces that drove home loan rates this low.

The door has been open to historic low mortgage rates for several months. More than ever, it is important to act right now. Take a few minutes and give me a quick call so we can review your situation together. It doesn’t cost you anything for the mortgage review and ultimately you have the final say of moving forward.

Soon the door to historic low mortgage rates will be closed and you will be locked out only to look back and wish you had done something. What better gift to give you and your family than a gift that could significantly improve your cash flow and monthly budget?

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