Mortgage Rates Still Rising. Is This The End Of The Refi Boom?

Rock-bottom mortgage rates may be gone for good.  This week's Freddie Mac Primary Mortgage Market Survey shows in numbers what rate shoppers have learned the hard way -- mortgage rates are spiking.

During the 7-day period ending November 18, the average 30-year, conforming fixed rate mortgage jumped to 4.39 percent, an increase of 0.22% from the week prior.

And it's not just rates that are soaring. The average number of points charged to consumers increased to 0.9 percent last week. For most of the year, that cost had been 0.7 percent.

One "point" is equal to 1 percent of your loan size.

With the sudden rise in mortgage rates, we have to question whether the Refi Boom is ending. Between April and early-November, conforming mortgage rates dropped more than a full percentage point and, during that time, a lot of homeowners capitalized on the market. Refinance activity was strong; rates cut new lows each week.

Today, however, Wall Street sentiment is different. There's a growing concern for the future of the U.S. dollar, and that's making mortgage bonds less attractive to investors. As demand drops, so does the underlying bond's price which, in turn, causes mortgage rates to rise.

Buy-sell patterns like this are common. The speed at which they're changing is not.  Mortgage lenders can barely keep up with the volatility, issuing up to 4 separate rate sheets in a day.

Therefore, if you're shopping for mortgage rates, or wondering whether it's finally time to join the Refi Boom, the time to lock is now. Mortgage rates should remain volatile through the New Year, at least. At what level they'll be then, though, is anyone's guess.

Housing Starts Data Much Better Than The Headlines Would Have You Believe

Newspaper stories can be misleading sometimes -- especially with respect to real estate. We saw a terrific example of this Wednesday.

A "Housing Start" is a privately-owned home on which construction has started and, according to the Commerce Department's October 2010 data, Housing Starts data dropped by nearly 12 percent as compared to September.

The media jumped on the story, and its negative implications for the housing market overall.

A sampling of the headlines included:

• Housing Starts Plunge: Market's 'Pulse is Faint' (WSJ)
• Housing Starts Tumble (Reuters)
• Housing Starts Sink 11.7 Percent In October (NPR)

Although factually correct, the headlines are misleading. Yes, Housing Starts fell sharply in October, but if we strip out the volatile "5 or more units" portion of the data -- a grouping that includes apartment buildings and condominiums -- Housing Starts only fell 1 percent.

That's a big difference. Especially because most new construction buyers around the country don't purchase entire condo buildings. They buy single-family residences.

As an illustration, 84% of October's Housing Starts were single-family homes. The remaining starts were multi-units.

This is why the headlines don't tell the whole story. The market that matters most to buyers -- the single-family market -- gets completely glossed over. The Housing Starts reading wasn't nearly as awful as the papers would have you believe.  Furthermore, it's never mentioned that single-family Housing Permits climbed 1 percent last month, either.

According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance. Therefore, we can expect December's starts to be higher, too.

Homebuilders Expect A Surge In New Home Sales

Homebuilder confidence is higher for the third straight month this month.

According to the National Association of Home Builders/Wells Fargo Housing Market Index, a combination of shrinking new home inventory plus higher-quality foot traffic is boosting builder optimism.

November's confidence reading of 16 is the highest since June 2010. The Housing Market Index is now above its 3-year trendline, too.

The purpose of the Housing Market Index is to measure "the pulse of the single-family housing market". The survey is sent to home builders around the country, asking them to report on their business.

The survey is 3 questions:

1. How are market conditions today?
2. How do market conditions look 6 months from now?
3. How is the prospective traffic of new buyers for new homes?

Responses are then collected, and seasonally-weighted.

Of course, it's no surprise that builder confidence is rising. The sales of new homes spiked in September, and the jobs market is moving in the right direction. Additionally, low mortgage rates help to attract new buyers, too. Altogether, the outlook in the New Home market is as rosy as it's been in months.

The downside for new home buyers , though, is that, because of their optimism, builders may be unwilling to offer free upgrades or other discounts. Certainly not with sales are expected to return to "federal tax credit" levels, anyway.

Therefore, if you're in the market for a new home, or expect to be "buying new" in early-2011, you may want to move up your time-frame. Not only are low mortgage rates not likely to last, but neither are low home prices.

Mortgage Rates Spike On Strong Retail Sales Data. Could 4 Percent Rates Be Done?

If consumer spending is a key to economic recovery, the nation is on its way.

Monday, the Census Bureau released national Retail Sales figures for October and, for the second straight month, the data surged past expectation. Last month's retail figures jumped 1.2 percent -- the largest monthly jump since March -- as total sales receipts climbed to a 2-year high.

Consumer confidence is rising, too. Though still below the long-term trend, confidence in the future up-ticked in October.

The current confidence reading is now double the low-point from February 2009.

It's no surprise that both Retail Sales and Consumer Confidence are higher. They correlate in a common-sense-type manner. When consumers are more confident in the economy, they're more likely to spend their money. This, in turn, leads to more purchases and rising retail receipts.

Unfortunately, for home buyers and rate shoppers , it also leads to rising mortgage rates.

Because consumer spending accounts for two-thirds of the economy, spending growth leads to economic growth. But it's been a lack of growth that's kept mortgage rates this low.

When the growth starts, the low rates end. It's why mortgage rates have added as much as 1/2 percent over the past 10 days. Consider the recent "good news":

• Retail Sales made a 2-year high in October
• Existing and New Home Sales showed big improvement in September
• Jobs growth returned in October

The days of 4 percent, 30-year fixed rate mortgages may be nearing its end.  If you're still floating a mortgage rate or thinking of buying or refinancing, consider the impact of rising rates on your budget.

The time to act may be sooner than you had planned.

How To Protect Your Home From The Influenza Virus

The 2010-2011 Flu Season has started and the Center for Disease Control expects that the H1N1 influenza virus (i.e "Swine Flu") will play a large role worldwide, as in 2009-2010. Last year, the virus reached pandemic status -- the first time that's happened in 40 years.

In public places, avoiding "germy" places can be difficult. But within your home, you can easily create germ-free spaces.  This 4-minute interview from NBC's The Today Show teaches about the flu virus, and how to protect yourself.

A few of the cleanliness tips shared include:

• Flu virus can live for up to 8 hours on a household surface
• Computer keyboards carry 400 times more bacteria than a toilet seat
• Make sure your cleaning tools (i.e. sponges, mops) are, themselves, clean

The video also shares tips for keeping a cleaner, safer home, plus facts on the influenza virus.

Stay clean, stay healthy, and consider vaccinations. The flu virus hospitalizes 200,000 people each year.

 

October 2010 : 5 States Account For Half Of The Nation's Foreclosure Activity

According to October data from foreclosure-tracking firm RealtyTrac, foreclosure filings topped 300,000 for the 20th straight month last month as 1 in every 389 U.S. homes received a foreclosure filing.

The generic term "foreclosure filing" is defined to include default notices, scheduled auctions, and bank repossessions. Versus the month prior, filings fell 4 percent, and as compared to October 2009, filings were essentially the same.

As usual, foreclosure density varied by region last month, with just 5 states accounting for close to half of the nation's repossessed homes.

• California : 14.8 percent of all bank repossessions
• Florida : 14.4 percent of all bank repossessions
• Michigan : 7.3 percent of all bank repossessions
• Texas : 6.6 percent of all bank repossessions
• Arizona : 6.0 percent of all bank repossessions

The other 45 states accounted for the remaining half.

It reminds us that, like everything else in real estate, foreclosures are local.

For today's home buyers, though, foreclosures represent an interesting opportunity. 

Homes bought in various stages of foreclosure are often less expensive than other, non-foreclosure homes and it's one of the reasons why distressed home sales now represent 35 percent of all home resales.  But don't confuse less expensive for less costly.  Foreclosed homes may also be in various stages of disrepair. Getting them into living condition can be expensive.

Your best real estate "deal", therefore, may be that non-distressed home that's in sound, move-in ready condition.

If you're buying foreclosures -- or even just thinking about it -- make sure you talk with a real estate agent first. Buying distressed property is different from the "typical" home purchase. You'll want somebody experienced in your corner.

Fed Survey : Mortgage Guidelines Tighten Further, Freeze Out Would-Be Refinancers

It's getting tougher to get approved for a mortgage. Still.

In its quarterly survey of senior loan officers around the country, the Federal Reserve asked whether "prime" residential mortgage guidelines" have tightened in the prior 3 months.

A "prime" borrower typically carries a well-documented credit history with high credit scores, has a low debt-to-income ratio, and uses a traditional fixed-rate or adjustable-rate mortgage.

For the period July-September 2010, 52 of 54 responding loan officers admitted to tightening their prime guidelines, or leaving them "basically unchanged".

Just 4% of banks loosened their lending standards.

If you've applied for a home loan lately -- for either purchase or refinance -- you've likely experienced the effects of the last 4 years. Because of delinquencies and defaults, today's mortgage underwriters are forced to scrutinize income, assets and credit scores, among other facets of an home loan application.

Mortgage applicants have higher hurdles to clear:

• Minimum credit scores are higher versus last year
• Downpayment/equity requirements are larger versus last year
• Debt-to-Income ratios must be lower versus last year

In other words, although mortgage rates are the lowest they've been in history, qualification standards are not.  Minimum eligibility requirements are tougher, and appear to be toughening still.

If you're among the many people wondering if now is the right time to join the Refinance Boom, or to buy a home, consider that, while mortgage rates may fall further, eligibility standards may not.

Low mortgage rates don't matter if you can't qualify for them