Bob Phillips\’s Blog

Because of strife in Greece, Spain and North Korea, conforming mortgage rates are back to all-time lows. They’re at levels not seen in 50 years.   For homeowners that missed the Refi Boom of November 2009, it’s a second chance.

In this well-presented, 3-minute video from NBC’s The Today Show, you’ll get tips getting low rates and choosing the best time to lock in.

Some of the topics covered include:

• Why were the experts wrong about rates moving higher this summer?
• How much money can you save with a 1 point drop in your interest rate?
• Should you buy a bigger home now that rates have fallen?

The advice in the piece is matter-of-fact and centered.   There is no cheerleading and the message is honest. Mortgage rates are low and they likely won’t stay that way.   If you’ve been thinking about a refinance, talk to your loan officer as soon as possible.

Sales of existing homes rose in April, buoyed by an expiring home buyer tax credit and exceptionally low mortgage rates.

As compared to March, April’s Existing Home Sales rose by 410,000 units nationwide — the second straight month of large gains. An “existing home” is a home resold by a prior owner (i.e. not new construction).

It’s a solid report for housing overall, with rising sales suggesting that the real estate market’s recovery is ongoing. However, the data presented a mixed message.

According to the National Association of Realtors ®, although the number of homes sold ticked higher in April,   so did the supply of existing homes for sale, too.

Sellers are now listing homes faster than buyers can buy them.

After adding another 0.3 months of supply in April, resale home supply is nearly two full months larger than at November 2009′s low-point. This put downward pressure on home prices.

Furthermore, because 49% of April’s buyers were first-time buyers and the tax credit has since ended, we can expect that sellers will continue to outweigh buyers in the months ahead.

It presents an interesting opportunity for June’s home buyers. Mortgage rates are still at their lowest levels of the year — despite expert predictions to the contrary — and homes remain affordable. Plus, in a lot of markets, home values have started to creep higher.

There’s good values and good rates but neither should last long. For the next few weeks, real estate may be in its 2010 sweet spot.

If you were thinking of moving in September of this year or later, consider moving up your timeframe.

While the demand for mortgage loans to purchase a new home has declined following the expiration of the home buyer tax credit, mortgage applications overall, increased last week as home owners looked to  refinance. Mortgage rates have reached their lowest levels since March and many homeowners are looking to refinance their mortgage loans. While falling home prices have reduced the popularity of refinancing to tap into home equity, low mortgage rates have drawn the attention of borrowers looking to reduce their interest payments.

The Mortgage Bankers Association reported an increase in the number of applications for  mortgage loans. The first week of May saw just under a 4 percent jump in applications from the previous week. With U.S. fixed rate mortgages hovering close to 5 percent, many homeowners jumped at the opportunity to refinance into lower  mortgage rates. And with home prices starting to stabilize, the housing market is beginning to return to business as usual.

In the past few years homeowners have seen tremendous volatility in the housing market, including some of largest declines in  home prices in recent memory. Falling home prices have wiped out an unprecedented amount of U.S. homeowner’s equity, shaking up the mortgage business. With home prices showing more stability, borrowers and lenders can once again be confident that once a home is refinanced its value will most likely not fall below the mortgage balance. Some borrowers have even chosen to do cash-in refinances, putting more  equity into their home to qualify for lower interest rates.

Mortgage Rates Remain Incredibly Low.

Despite the Federal Reserve ending it mortgage purchasing program, mortgage rates remain low. The Mortgage Banker Association reported that they were as low as 4.96 percent for the first week of May. While above the 4.76 percent they were this time last year, the sub 5 percent rates are still historically low. Many homeowners have been waiting for rates to once again dip down and as the trend of increased mortgage loan applications indicates they are swooping in to take advantage.

In some lower price ranges, because values have nudged up over the last year, some homeowners who couldn’t refinance a year or two ago, now can – at historically low fixed rates! Look into it with your favorite loan person – I can recommend a couple of good ones.

DataQuick™s homebuying stats for April are out, and they show a real estate market still on the mend with sales of all residences of 2,669 ” that™s up 11.60% in a year and the best April in 3 years. Median selling price was $430,000 ” up 13.2% in a year. Also ¦
Slice Price Yr. ago Sales Yr. ago

Houses $505,000 +17.4% 1,704 +9.7%

Condos $299,000 +16.6% 877 +18.7%

New $629,500 +32.8% 88 -11.1%

All O.C. $430,000 +13.2% 2,669 +11.6%

• $430,000 median selling price that is still 33% below June 2007™s peak of $645,000.
• The most recent median is 16% above the cyclical low hit in January 2009 at $370,000 ” a current bottom that was -43% below the peak.
• Prices fell on a year-over-year basis from Sept. 2007 through August. (Worst at -31.5% in August 2008.)
• Single-family homes resell for 31% less than their peak pricing (June ˜07) while condos sell 36% below their peak in March 2006. Builder prices for new homes are 27% below their February ˜05 top.
• Single-family homes were 69% more expensive than condos in this period vs. 68% a year ago. From 1990-2008, the average house/condo gap was 57%.
• 2,669 residencessold in April vs. 1997-2006 monthly sales average of 4,304 per month.
• Builder™s new homes sales were 3% of all residences sold in the period vs. 4% a year ago. From 1990-2008, builders did 15% of the selling.

May 18th, 2010,   by Jon Lansner   of the Orange County Register

ForeclosureRadar: Cancellations up 174% year-over-year

Foreclosure cancellations in California skyrocketed 174 percent year-over-year in April, according to a  report by foreclosure data company ForeclosureRadar.

At the same time, foreclosure filings in the Golden State fell month-to-month for the first time since January. Notices of default fell 41.2 percent year-over-year and 16 percent month-to-month, while notices of trustee sale were down 3.1 percent year-over-year and 10.3 percent month-to-month.

Cancellations jumped 11.4 percent month-to-month and 174.4 percent since April 2009.

œThe steady rise in cancellations leads us to believe that loan modifications and short sales are gaining traction, said Sean O™Toole, founder and CEO of ForeclosureRadar.com, in a statement.

œI™d caution, however, that cancellations also occur due to filing errors and extended postponements, which require the notice of trustee sale to be re-filed. In fact, 14.6 percent of new notice of trustee filings in April were on previously canceled foreclosures.

Cancellations are one of the three possible foreclosure outcomes ForeclosureRadar tracks. The other outcomes ” the property™s return to the bank as an REO and sale to a third party ” also shot up year-over-year: 19.5 percent for REOs and 158.6 percent for third-party sales.

Total foreclosure inventory ” which includes preforeclosures, properties scheduled for sale and REOs ” was down slightly: 2.2 percent month-to-month and 2.5 percent year-over-year. Properties scheduled for sale rose about 50 percent while preforeclosures and REOs fell nearly 20 percent each.

As in  March, the amount of time banks took to foreclose on a property jumped: 40.1 percent year-over-year and 6.2 percent month-to-month, to 239 days. It took banks 5.56 percent longer year-over-year (247 days) to resell a property in April after taking it back. For third parties purchasing properties at trustee sales, time to resell fell 17.4 percent to 162 days.

On the first Friday of every month, the U.S. government releases its Non-Farm Payrolls report.  

More commonly called “the jobs report”, Non-Farm Payrolls is a major market mover. The number of working Americans is directly tied to the health of the economy which, in turn, drives the stock and bond markets.

In general, when jobs numbers improve, it’s good for stocks and bad for mortgage bonds. It follows, therefore, that conforming mortgage rates in California rise because rates always move opposite of mortgage bond prices.

Conversely, when jobs numbers worsen, it tends to be bad for stocks and good for mortgage bonds.   Mortgage rates fall.

Today, markets are behaving a bit differently.

Despite 290,000 jobs created in April 2010 — nearly twice the expected amount — and a 40 percent upward revision of March’s numbers, mortgage rates are essentially unchanged.  

In a normal environment, rates would be higher.   Today is not normal.

Today is a departure because, for all of the jobs report’s import to Wall Street, it’s less important to markets than what’s happening in Greece right now.

Greece is struggling to meet its debt obligations and its citizens are rioting.

Until a debt solution for Greece is made that sticks, unrest in the region will drive safe haven buying both domestically and abroad. U.S. mortgage bonds will gain on that movement because mortgage bonds are “safe”, and mortgage rates will fall.

Indeed, this is exactly what’s been happening since the start of April. Mortgage markets have been rallying for 5 weeks.

So, today’s jobs news is terrific for the economy and mortgage rates should be rising because of it.   But, they’re not. Consider taking advantage — lock in a rate.

April 30th, 2010, · posted by Jeff Collins  of the Orange County Register
 

A lot of last-minute homebuying decisions were made Friday as buyers rushed to qualify for a federal tax credit that expired that day.

Buyers needed to have a signed contracts in hand to get a credit of $8,000 for first-time buyers and $6,500 for repeat buyers. They also must close escrow by June 30.

œI think there™s definitely some last-minute scurrying around, said Tustin agent Charles Folcke. œI™m sure that if some offers are accepted (this weekend), agents are going to backdate it.

œLots of quick decisions (were) made this week from our fabulous last-minute type of folks, added Huntington Beach agent Vivian Young. œI™ve been showing property for lots of clients the entire month to quickly get them under contract before the month ends.

Broker Steve Thomas of Altera Real Estate reported that the number of deals signed increased 6.2 percent from two weeks ago and 10 percent over the past month.

œBuyers are pushing their way into escrow, but I think the momentum will carry even after the expiration, Thomas said.

Coto de Caza agent Bob Phillips spent part of Friday dashing from Santa Ana to Capistrano Beach, then to a listing agent™s office to get a signed contract to an East Coast bank in time for its approval.

His clients got outbid Thursday,  after offering $11,000 over the asking price on a bank-owned home. His cell phone rang at 6 a.m. Friday with news that the top bidder got cold feet and backed out.

He had to drive to both clients™ work places to get their signatures, then dash over to the listing agent™s office for the bank™s approval.

œI am now going to drive to Dana Point to open the escrow before they close at 5 p.m., he said Friday. œIt has been an exciting day.

Several agents noted that buyers stopped looking at homes listed as short sales, or selling below what™s owed the bank, since lenders typically are pokey in responding to offers.

Thomas and others predicted that the $200,000 set aside for the California tax credit likely will be exhausted in a month, rather than in the seven months allotted for it.

œThere is still a lot of confusion about the California tax credit, which will last about a minute, Thomas said. œThe first 17,500 lucky first-time home buyers win and everybody else is going to be upset.

Mortgage markets worsened last week in see-saw trading. By the time Friday’s market closed, mortgage rates were higher across the board — ARMs, fixed rates, FHA and conventional.

The biggest stories of last week were actually non-stories.  

First, the ash cloud from Iceland™s Eyjafjallajökull volcano dissipated, allowing warehouses to move inventory, airlines to move people, and businesses to move product.   In addition, Greece moved closer to securing emergency funding that will help it stave off default.

When these two issues were threats earlier in the month, mortgage bonds rallied on safe haven buying, driving rates down. As the threats lessened over the course of last week, however, mortgage bonds sold off and mortgage rates rose.

By contrast, this week features lots of stories. Economic data will be at the forefront, as will the Federal Reserve which meets for one of its 8 scheduled meetings of the year.

• Monday : Greece is expected to announce an aid package
• Tuesday : Case-Shiller Index reports on home values from February
• Wednesday : Fed adjourns from its 2-day meeting
• Thursday : Initial Unemployment Claims are released
• Friday : GDP and consumer confidence numbers are released

Furthermore, Wall Street will have its eye on the Senate’s questioning of key Goldman Sachs employees in the wake of the SEC’s fraud charge.

In general, news that’s “good” for the U.S. economy will be bad for mortgage rates, and vice verse.   And with mortgage rates changing as quickly as they have been, rates could really rise in a hurry.

The best defense against rising mortgage rates is to execute a rate lock. If you’re nervous about rates moving higher, call your loan officer and execute your rate lock today.

Mortgage rates and home affordability have improved lately, thanks to an unlikely ally — Mother Nature.

In the 7 days since Iceland’s Eyjafjallajökull erupted, ash clouds have grounded planes, disrupted businesses, and stranded exports in warehouses worldwide.

It’s a drag on commerce that’s spilled over onto Wall Street. As experts debate the potential for future seismic activity, traders are taking some of their investment risk off the table.  

In trading circles, it’s called “safe haven buying”. When the market gets cloudy, investors often move their cash into relatively safe assets.   This includes government-backed securities — mortgage-bonds among them.

Demand for bonds rise, pushing up prices and driving down rates.

Conforming and FHA mortgage rates touched a 3-week low earlier this week.

Volcanic eruptions and like natural disasters remind us: mortgage rates change for all sorts of reasons. Some we can predict, most we cannot. There’s literally thousands of influences on the U.S. mortgage market.

If you’ve been shopping for a home or floating a mortgage rate, luck’s been on your side. Mortgage rates have fallen post-Eyjafjallajökull. However, as ash clouds dissipate and business resumes worldwide, investors will regain their collective appetite for risk and safe haven buying will reach its natural end.

When that happens, mortgage rates will rise.

Therefore, use the seismic uncertainty to your advantage.   Consider locking your mortgage rate sooner rather than later — while rates are still low.

After a strong March showing and a surprise upward-revision for February, Housing Starts are, once again, trending better.

It’s yet another signal that the housing market nationwide is stabilized.

A Housing Start is a new home on which construction has started and, over the last 6 months, home builders are averaging one half-million starts per month.

This marks the highest 6-month average since 2008 and a reading one-fifth percent better from 12 months ago.   Revisions to prior data have all been higher, too.

Even more interesting, though, is that the number of newly-issued building permits is exploding. Permits were up more than 5 percent last month and have climbed back to the levels of late-2008.

Housing permits are an important data point in housing because permits are precursors to actual housing starts.   According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance.

Therefore, because March’s housing permits increased, we should expect Housing Starts to continue to rise into the early months of summer.

This, too, reflects well on housing because the federal home buyer tax credit won’t be in existence this summer. The simple fact the homes are being built now shows that housing is likely to expand even after the tax credit expires.

Non-military members must be under contract by April 30, 2010 and closed by June 30, 2010 in order to claim up to $8,000 in federal tax credits. Of course, we Californians have a new $10,000 tax credit which begins on May 1st – until the alloted funds run out, anyway.