Mortgage Rates Make New All-Time Lows (Again)

Conforming mortgage rates continue to drop.

For the second straight week, the 30-year fixed rate mortgage fell to a new, all-time low nationwide. According to Freddie Mac’s weekly mortgage rate survey, the average 30-year fixed rate mortgage rate dropped 1 basis point to 3.83% this week for borrowers willing to pay 0.7 discount points plus a full set of closing costs.

The 15-year fixed rate mortgage also set a mortgage rate record, registering 3.05% with an accompanying 0.7 discount plus closing costs.

Discount points are a one-time, up-front closing cost, based on loan size. 0.7 discount points is equal to 0.7% of the borrowed amount. A home buyer in Bellevue opening a $200,000 mortgage and paying 0.7 discount points, therefore, would be subject to a one-time $1,400 fee paid at closing.

Borrowers wanting to avoid paying discount points can expect higher mortgage rates than Freddie Mac’s reported national average.

Falling mortgage rates are nothing new throughout Washington. Since peaking in February 2011, mortgage rates of all types have been in steady decline. The 30-year fixed rate mortgage has shed 122 basis points since that date, falling from 5.05%; the 15-year fixed rate mortgage has shed 124 basis points, falling from 4.29%.

Low mortgage rates give today’s home buyers additional purchasing power, stretching home affordability to new heights.

Low rates also help existing homeowners to lower monthly mortgage payments. For example, as compared to mortgage rates just 15 months ago, homeowners refinancing into today’s 30-year fixed rate mortgage stand to save 13.4 percent on their respective mortgage payments.

A comparison :

• February 2011 : $539.88 principal + interest per $100,000 borrowed
• May 2012 : $467.67 principal + interest per $100,000 borrowed

A homeowner with a $300,000 mortgage at February 2011 30-year fixed rate mortgage rates would save $2,600 annually with a refinance to this week’s low rates. Even accounting for discount points and closing costs, the “break-even point” on savings like that comes relatively quickly.

Mortgage rates can’t be predicted so there’s no guarantee of low rates forever. If today’s rates meet your budget, consider locking something in. For questions call Sammamish Mortgage at 425-401-8787 or visit our website at www.sammamishmortgage.com.

8-Fold Increase In “Improving Markets” Since September

The economic recovery continues nationwide, but the recovery’s an uneven one.

Some metropolitan areas are faring very well this year, posting measurable gains in both employment and housing. Other metropolitan areas, by contrast, are struggling.

To help identify those markets in which growth is occurring, the National Association of Homebuilders created the Improving Market Index, a metric analyzing three separate, independently-collected data series “indicative of improving economic health”.

The IMI’s three collected data series are :

1. Employment Growth (as published by the Bureau of Labor Statistics)
2. Home Price Growth (as published by Freddie Mac)
3. Single-Family Housing Growth (as published by the Census Bureau)

A metropolitan area is considered to be “improving” if all three indicators show growth at least six months after the respective area’s most recent trough, or “bottoming out”.

In May, there are exactly 100 U.S. markets that qualify for the NAHB’s Improving Market Index, down from 101 last month but higher by more than 800% from the reading in September 2011, the index’s inaugural release.

17 areas were added to the Improving Market Index list this month including Phoenix, Arizona; Ann Arbor, Michigan; and Bend, Oregon. 18 areas were removed from the May IMI.

83 metropolitan areas remained from April.

There is little actionable information in the Improving Markets Index but the report does a good job of highlighting how “real estate markets” can’t be summarized on a national level and remain relevant to everyday home buyers and sellers across Washington and nationwide. For example, Fort Collins, Colorado is listed as an Improving Market. However, Greeley, Colorado — located just 30 miles away — was just downgraded from the same list.

Home values and economies vary by region, by state, by city, by neighborhood, and even by street.

The complete Improving Markets Index can be viewed at the NAHB website but for the best read of what’s happening in your neighborhood, talk to a local real estate agent.

What’s Ahead For Mortgage Rates This Week : May 7, 2012

After two weeks of no change, mortgage markets improved last week, pushing mortgage rates lower.

The majority of the improvements occurred Friday after the April jobs report failed to impress Wall Street, and after it became clear that the Eurozone’s struggles with sovereign debt would continue.

According to Freddie Mac, conforming 30-year fixed rate mortgage rates fell to 3.84% nationwide, on average, for borrowers willing to pay 0.8 discount points at closing plus a full set of closing costs.

1 discount point is equal to 1 percent of your loan size such that one discount point on a $200,000 loan would require $2,000 to be paid at-closing.

Freddie Mac’s reported rates for the benchmark 30-year fixed rate mortgage are the lowest in recorded history.

The 15-year fixed rate mortgage is also at its lowest point in history. According to Freddie Mac’s survey, the 15-year fixed averaged 3.07% with 0.7 discount points last week. One year ago, the rate was 3.89%.

This week, with a data-sparse economic calendar, mortgage markets will likely take cues from events in Europe. Notably, France has elected a new leader, one that prefers growth over austerity; and voters in Greece have “punished” austerity-backing leaders, in the process creating a split parliament.

Each event adds uncertainty to an already unstable economic environment and uncertainty favors U.S. rate shoppers.

Doubt spurs investors to seek “safe” assets and U.S. government-backed bonds — including mortgage backed bonds — meet that criteria. As demand for mortgage bonds rise, mortgage rates tend to fall.

This week, rates are starting the week improved. Whether it’s a knee-jerk reaction to Eurozone news from the weekend, or low rates are here to stay is tough to know. Therefore, if today’s mortgage rates look good to you, consider locking something in. There’s more room for rates to rise than to fall.

Seattle Home Inventory Drops 39% Year Over Year

Yes you read that correctly – since this time in 2011, Seattle real estate market forecasts show a drop of almost 40 percent in the number of houses available on the market. According to housing data compiled by Realtor.com, of the 146 markets they track, all but two show year over year declines in the inventory of “for-sale single family homes, condominiums, townhouses and co-ops”.  The housing market inventory trends are down 21% nationwide while Seattle’s drop of 39% ranked 7^th on the national survey.

Seattle Real Estate Market Forecast – Signs of a Recovery

Median list prices in Seattle and nationwide are up more than 5 percent which points toward a recovery. This data is much different than numbers compiled at the same time last year when average prices were down 4.81 percent and the housing inventory was up 26 percent.  February (up 3 percent) and March marked the first consecutive months year over year housing prices escalated in Seattle since the housing crisis of 2008. Some experts point to the low number of homes for sale as the ultimate sellers’ market where house prices are propped up through simple supply and demand.  Reasonably priced homes are seeing multiple offers in almost every case according to a recent article in the Seattle Times.

Why are so few owners putting their homes up for sale?

Many homeowners who bought houses when Seattle real estate market trends were at their peak are now underwater making it difficult to sell their home for anything but a loss.  Others see the competition in the Seattle home inventory from a glut of distressed properties and would prefer to wait until the market is more level before listing their property.  This isn’t to say there aren’t sellers who see the lack of inventory as an opportunity – in some cases sellers hope to take advantage of the situation with inflated listing prices for their properties.

Even with the lack of homes for sale, February of this year saw the most homes sold in King County (1.230) since any February since 2007. That total is up 23 percent from 2011 home sales.  Most of those homes are the lower priced homes as many first time home buyers are entering the market now than in the immediate aftermath of the housing market crash.

What does this mean for prospective homebuyers?

If you’re looking to buy real estate in the Seattle area, now more than ever is the time to get help from industry insiders who can read the nuances of a fragile market. As the market shows signs of stabilizing and home prices in the Seattle area start to increase, you’ll be comforted knowing you have the mortgage loan experts at Sammamish Mortgage at your side to help you make the best decision in a challenging market.

Make A Mortgage Rate Plan Ahead Of The Jobs Report

Been shopping for a mortgage rate? You may want to lock something down. Tomorrow morning, mortgage rates are expected to change. Unfortunately, we don’t know in which direction they’ll move.

It’s a risky time for Washington home buyers to be without a locked mortgage rate.

The action begins at 8:30 A.M. ET Friday. This is when the government’s Bureau of Labor Statistics releases its April Non-Farm Payrolls report.

The monthly Non-Farm Payrolls report is more commonly known as “the jobs report” and provides a sector-by-sector breakdown of the U.S. employment situation, including changes in the Unemployment Rate.

In March 2012, the government reported 120,000 net new jobs created — half the number created during the month prior, and the third straight month of declining job creation. The Unemployment Rate fell one-tenth of one percent to 8.2%.

For April, economists expect to see 160,000 net new jobs created, and no change in the national Unemployment Rate.

Based on the accuracy of those predictions, mortgage rates are subject to change. If the actual number of jobs created in April exceeds economist expectations, mortgage rates should rise. Conversely, if the actual number of jobs created falls short, mortgage rates should drop.

Job growth’s link to mortgage rates is straight-forward. Jobs are an economic growth engine and mortgage rates are based economic expectation. Therefore, as the number of people entering the U.S. workforce increases, so do Wall Street’s growth projections for the economy. When that happens — especially in a recovering economy such as this one – mortgage rates tend to rise.

So, for today’s rate shoppers, Friday’s job report represents a risk. The economy has created jobs for 18 straight months, a winning streak that has added 2.9 million people to the U.S. workforce. If that winning streak continues and expectations are beat, mortgage rates are likely to rise off their all-time lows, harming home affordability.