Mortgages: What you need to know in 2009

With all the doom and gloom over housing, you might be surprised to know that this is a fantastic time to get a mortgage. Not if you have poor credit, to be sure. But you can get a great deal on a 30-year, fixed-rate, conforming loan these days if you have a solid FICO score, a manageable debt burden, and proof positive of a reliable income.

You have to go back to around 1961 to find a time when 30-year mortgages had rates this low, according to Keith Gumbinger, a vice-president at financial publisher HSH Associates in Pompton Plains, N.J. For that, thank the U.S. government, which is trying to jump-start the stalled housing market by buying up mortgage-backed securities. On Dec. 31, Freddie Mac reported that average rates on 30-year fixed mortgages dropped to 5.1 percent for the week, down about 1.3 percentage points since late October and the lowest since its survey began in 1971.

Rates are probably headed even lower in 2009, raising the question of whether you should borrow now or wait for a better deal. The (read more here) 

Mortgage rates rise after record five-week run

Rates on a 30-year mortgage rate rose to 5.12 percent

Rates on 30-year mortgages rose above 5 percent this week, ending a five-week run at record low levels, Freddie Mac reported Thursday.

Mortgage rates have been in decline since the Federal Reserve said in late November it would buy up to $500 billion in mortgage-backed securities to get banks to lend more money in hopes of bolstering the troubled U.S. housing market.

Freddie Mac reported Thursday that average rates on 30-year fixed mortgages rose to 5.12 percent this week from a record low of 4.96 percent established last week. At this time last year, the 30-year fixed rate mortgage averaged 5.48 percent. (read more here)

Housing Market Oulook - Indiana Univ Profs (PDF article)

Jeffrey D. Fisher: Director, Benecki Center for Real Estate Studies; Charles H. and Barbara F. Dunn Professor of Finance and Real Estate, Kelley School of Business, Indiana University Bloomington

...the housing industry has taken the blunt of the blame for the financial crisis and the current economic recession. Certainly, the unprecedented growth of subprime mortgages made to people who really couldn’t aff ord a home was a major cause of the problems. It is questionable, at best, whether or not these mortgages were sound loans even when home prices were rising...

Read more and get the PDF here (housing market outlook 2009).

Educated Buyers are our best asset at THP.

Mortgage Applications Decrease In Latest MBA Weekly Survey

WASHINGTON, D.C. (January 7, 2009) — The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending January 2, 2009.  The Market Composite Index, a measure of mortgage loan application volume, was 1143.8, a decrease of 8.2 percent on a seasonally adjusted basis from 1245.7 one week earlier.  This week’s results included an adjustment to account for the shortened week due to the New Year’s Day holiday. On an unadjusted basis, the Index decreased 8.9 percent compared with the previous week and was up 28.3 percent compared with the same week one year earlier.

The Refinance Index decreased 12.3 percent to 5904.5 from 6733.8 the previous week and the seasonally adjusted Purchase Index increased 7.3 percent to 344.2 from 320.9 one week earlier.  The seasonally adjusted Conventional Purchase Index increased 2.3 percent while the Government Purchase Index (largely FHA) increased 19.2 percent.
 
The four week moving average for the seasonally adjusted Market Index is up 7.9 percent. The four week moving average is up 3.6 percent for the Purchase Index, while this average is up 9.3 percent for the Refinance Index.

The refinance share of mortgage activity decreased to 79.8 percent of total applications from 82.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 0.9 percent from 0.8 percent of total applications from the previous week.

The average contract interest rate for 30-year fixed-rate mortgages increased to 5.07 percent from 5.03 percent, with points decreasing to 1.16 from 1.24 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.67 percent from 4.79 percent, with points decreasing to 1.16 from 1.26 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for one-year ARMs decreased to 5.90 percent from 6.15 percent, with points decreasing to 0.31 from 0.44 (including the origination fee) for 80 percent LTV loans.

Source

Fannie Mae, Freddie Mac - A Look Ahead

Here is some recent news about the outlook for F. Mae and F. Mac (link).

Fannie Mae and Freddie Mac: A Look Ahead

As everyone reading this magazine knows, the apartment industry has been affected by credit and liquidity problems. But multifamily mortgage finance has been shielded from the worst of the banking and mortgage meltdown. What's behind this phenomenon? Simply put, Fannie Mae and Freddie Mac.

The two firms have been critical in continuing to provide mortgage debt to apartment firms during the current economic crisis—just as they did during previous economic storms, including the 1998 Russian financial crisis and the 2001-2002 downturn. 

As lawmakers and regulators begin to recast the Government Sponsored Enterprises (GSEs), National Multi Housing Council (NMHC) is making sure they understand the differences between the single-family and the multifamily market—and why those differences require different regulatory approaches. 

Multifamily firms have several sources of mortgage capital other than the GSEs, including insurance companies, banks and even HUD. Still, for various reasons, Fannie and Freddie have been the most reliable source of debt to the full spectrum of apartment owners. 

Banks and insurance companies are major providers of mortgage capital, but they have more restrictive loan terms, are more selective in their investments and tend to lend for shorter terms. Banks are further limited by regulatory restrictions, and insurance companies continually reset their commercial real estate investment strategies. 

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