Thursday, September 18, 2014

U.S. mortgage applications rise most since June

Mortgage applications last week climbed by the most in three months as Americans rushed to refinance their homes amid rising interest rates.

The Mortgage Bankers Association's index rose 7.9 percent in the period ended Sept. 12, the biggest jump since the beginning of June, to reverse a 7.2 decline in the prior week, the Washington-based trade group reported today.

The refinancing gauge rose 10.3 percent, also the most since early June, while the measure of purchase applications climbed 4.8 percent.

The share of applicants seeking to refinance climbed to 57.2 percent, the highest since late February, today's report showed.

The average rate on a 30-year fixed loan climbed for a second week, rising to a three-month high of 4.36 percent. The average rate on a 15-year mortgage also advanced, increasing to 3.56 percent, the highest since April.


Wednesday, September 17, 2014

Today’s Mortgage Rate Strategy For This Week’s FOMC Meeting

The Federal Reserve Is Meeting

The Federal Reserve's Federal Open Market Committee (FOMC) adjourns from a scheduled two-day meeting Wednesday afternoon. The outcome may lead current mortgage rates higher.

For home buyers now floating a rate or actively shopping for mortgage loan, put yourself on alert. In 24 hours, mortgage rates may look decidedly different from how they look right now.

Prudent consumers are locking their mortgage rates today.

Mortgage Rates : Not Controlled By The Fed

The Federal Open Market Committee is a rotating, 12-person sub-committee within the Federal Reserve. The group is currently headed by Federal Reserve Chairperson Janet Yellen, and meets eight times annually on a pre-set schedule.

The Fed also meets on an emergency basis, as needed.

For example, between 2008-2011, as the U.S. economy entered, then recovered, from recession, the Federal Open Market Committee held 13 emergency meetings to discuss its ongoing economic stimulus plans.

The FOMC's most well-known role is as keeper of the Fed Funds Rate. The Fed Funds Rate is the prescribed rate at which banks lend money to each other on an overnight basis.

When the Fed Funds Rate is low, the Fed aims to promotes economic growth. This is because the Fed Funds Rate is correlated to Prime Rate, and Prime Rate is the basis of most bank lending.

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Tuesday, September 16, 2014

Reverse mortgages are poised for a rebound

WASHINGTON —Advertised as a path to an affordable retirement, federally insured reverse mortgages are showing signs of a rebound, drawing the scrutiny of regulators seeking to reduce historically high default rates that have cost the government billions.

Industry analysts expect strong growth as the housing market improves, particularly in once hard-hit Sun Belt areas including Phoenix, Miami and San Diego, and aging Americans find value in growing old in their homes.

They are also being boosted by high-appreciation, gentrifying neighborhoods in older cities such as New York's Brooklyn borough.

Analysts say they expect continued interest as the leading edge of 78 million baby boomers approach 70, the age when a person typically begins to consider a reverse mortgage. A poll by Gallup in April found that 68 percent of Americans ages 50 to 64 said they were "very" or "moderately" worried about having enough money in retirement.

A reverse mortgage allows borrowers 62 or older to receive a line of credit or lump-sum or monthly cash payments off the accumulated equity in their homes. The loan comes due when the borrower dies, moves or sells the house. The borrower's heirs are not liable if the loan balance exceeds the value of the home; FHA covers the risk. Reverse mortgages have been pitched in slick TV ads featuring actor Henry Winkler and former U.S. Sen. Fred Thompson.


Monday, September 15, 2014

Reverse mortgage can be a useful financial tool

Older homeowners often use reverse mortgages to pay off their traditional mortgages so they can get rid of their monthly house payments. Is that a wise strategy?

Reverse mortgages have gained a bad reputation over the years, but they can be a useful financial tool to seniors when used appropriately, said David Johnson, associate professor of finance at the University of Wisconsin-Superior.

Reverse mortgage

A home equity loan in which the borrower is not required to make payments. The homeowner must be at least 62 years old. A reverse mortgage accrues interest and does not have to be repaid until the homeowner dies or moves out of the house. The Federal Housing Administration calls it an HECM, for home equity conversion mortgage.

Not only for the desperate

"Years past, financial planners didn't view reverse mortgages as a planning tool," said Johnson, who recently co-authored a study discussing the growing importance of reverse mortgages in retirement. "It was viewed as a last resort and they assumed that the only people that do reverse mortgages are people that are desperate. Clearly that's not the case, and I think they are starting to view it differently now.

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Friday, September 12, 2014

Mortgage rates edge up but remain near yearly lows

Mortgage rates ticked up a bit while continuing to drift along near their yearly lows, according to the latest data released Thursday by Freddie Mac.

For the first time in three weeks, the 30-year fixed-rate average moved, albeit marginally. It edged up to 4.12 percent with an average 0.5 point. The 30-year fixed rate had been 4.1 percent for the past three weeks and 4.57 percent a year ago.  Since late June, it hasn’t been above 4.14 percent or below 4.1 percent.

The 15-year fixed-rate average crept up to 3.26 percent with an average 0.5 point. It was 3.24 percent a week ago and 3.59 percent a year ago. The 15-year fixed rate has floated between 3.27 percent and 3.22 percent since late June.

Hybrid adjustable rate mortgages also were up. The five-year ARM average climbed to 2.99 percent with an average 0.5 point. It was 2.97 percent a week ago and 3.22 percent a year ago.

The one-year ARM average rose to 2.45 percent with an average 0.4 point. It was 2.4 percent a week ago.

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Thursday, September 11, 2014

U.S. mortgage applications fall to lowest level since 2000

Applications for U.S. home mortgages fell last week to the lowest since December, 2000, as interest rates rose for the first time in four weeks, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 7.2 per cent in the week ended Sept. 5.

The MBA’s seasonally adjusted index of refinancing applications dropped 10.7 per cent to the lowest since November, 2008, while the gauge of loan requests for home purchases, a leading indicator of home sales, fell 2.6 per cent.

Fixed 30-year mortgage rates averaged 4.27 per cent in the week, up from 4.25 per cent the week before.

The survey covers over 75 per cent of U.S. retail residential mortgage applications, according to MBA.

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Wednesday, September 10, 2014

Mark Carney: Rate rise getting closer

But Carney said the timing of the next rate rise still depends on the unemployment rate falling from 5.5% to below 5% while keeping CPI inflation below 2%.

And he added that average working hours should increase so the gap between actual and desired working hours is reduced by half.

Carney said: “With many of the conditions for the economy to normalise now met, the point at which interest rates also begin to normalise is getting closer.

“In recent months the judgement about precisely when to raise Bank Rate has become more balanced. We have no pre-set course, however; the timing will depend on the data.

“Moreover, the precise timing of the first rate rise is less important than our expectation that, when rates do begin to rise, those increases are likely to be gradual and limited.

“Rates will go up only as far and as fast as is consistent with price stability as part of a durable expansion, with the maximum sustainable level of employment.”

According to Carney the Bank kept base rates at 0.5% even when inflation fell below 2% due to the unemployment rate, as he described the recovery as “fragile”.

But he said: “The recovery has exceeded all expectations. It has momentum. There has been a sustained and sharp fall in the unemployment rate to 6.4%.

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