MORTGAGE MARKET UPDATEOver the past several months mortgage rates have pretty much been in a free fall improving daily it seemed! Although not exactly the case, they have dropped dramatically from where they were even 6 months ago. Almost a full percent in some cases… Over the past couple weeks we have watched the stock market slowly creep upwards and even break the 11,000 point barrier. While this is great news for our 401k’s and moneys invested within this entity, it has a reverse effect on mortgage rates. As I have explained before, the more money that is pumped in to the bond market creating a safe place for investors for their long term stabilization, the better mortgage rates get. As investors place more money in the stock market for a little riskier short term gain, less money is being placed in bonds therefore driving mortgage rates up. As within the last week we have watched bonds drop, mortgage rates are starting to creep back up.
With current midterm elections present, bond auctions, and the upcoming job report coming out on Friday this will all affect the current market conditions. One thing I want to point out is the fact that are mortgage rates were initially driven down by the Fed and their purchasing of Mortgage Backed Securities (MBS). While the Fed was purchasing MBS on the secondary market, it was influencing a positive cash flow and providing stability to the bond market. Back in April when the Fed’s stopped purchasing MBS rates should have taken off and trended upwards. However, this was not the case. As general investors from across the world began to purchase MBS it allowed bonds to stay stable and rates to remain low. As these elections take place and investors are pumping money in to stocks, we are losing our support on the secondary market. However, the Fed has announced they may purchase further MBS to keep the interest rates low and in a further effort to help stabilize the economy. This sounds like great news at first glance! However, as we have all watched them try to stabilize the economy with countless programs previously, this is all “fictitious” money. The more money that they spend on these programs, the worse off we’ll all be in the future. That being said, it would be better for them to let the market run its course and take natural action.
Western Washington reported the sharpest increase in foreclosures with a 71% increase last month! We thought we were in the clear with the major corporations holding us up in the Northwest. To some extent this may be true, however, we are still going to be faced with foreclosure and short sale issues as many have faced a job loss, or at least some sort of pay cut in one way or another. The current foreclosure and short sale issue affects everyone - unfortunately… As with many home owners out there right now disappointed in their current home value, the short sale fiasco that is going on is affecting home values tremendously. The reason I am bringing this up is for those of you looking at refinancing. If you are considering refinancing I encourage you to act sooner than later in hopes of less comparable sales (specifically short sales) being present when obtaining an appraisal on your property. These lower purchase price homes are going to decrease the value of your home and take away your loan to value ratio’s.
Current loan programs:
There are several loan programs out there right now that will allow up to 105% rate / term refinances, and in some cases up to 125% depending on the servicer of your mortgage. These programs allowing you to lower your current interest rate without paying monthly mortgage insurance as with those loans over 80% loan to value.
Those of you with FHA mortgages still have the ability to do a streamline refinance, however with the new increased monthly mortgage insurance that went in to effect in October this program is less attractive but can still be done and in some cases many will still see significant savings with these low interest rates!
(USDA streamline refinances and VA streamline refinances are available as well)
Basic conventional refinance – 80% loan to value
These are just a quick snapshot of a few programs out there right now. For more information or questions regarding your specific scenario please feel free to contact me at any time – (253) 632-2280 or at jgabrio@alliedhomenet.com
People Looking to Purchase:
Right now with interest rates being at all time lows and housing values less than 30% of what they were several years ago in some areas, there is honestly no better time to purchase a new home! Think of it as a long term investment. There are several down payment programs available for those with no money for a down payment, and several loan programs that allow for up to 100% financing such as VA and USDA loans.
People Looking to Refinance:
As mortgage rates have truly hit ALL time lows, there is no better time to refinance than right NOW! As we have hit our highest levels ever within the bond market over the past few weeks, the increasing volatility and additional money being placed in the stock market, is only going to drive interest rates up in the future. Don’t let these great rates slip away!
30 year rates are in the low 4's and 15 year rates are in the high 3's!
And last…
In case you guys weren’t aware, we have another fellow member on here that I have worked with steadily, Adam Vandebrake (vandeman17), who is a financial representative with Country Financial. He does everything from home and auto insurance, to life insurance and disability insurance. He also can help you plan and save for your retirement, as well as put away some extra money for your kid’s education etc. The best part is that there is no fee or charge to talk with him. Even if you just have questions about your current plans or want to see if he could save you a few bucks on your insurance, feel free to give him a call. 425-747-4306 He has been a great resource for numerous clients of mine!
I hope all of you are having a great hunting season and I wish you all the best of luck in your time in the woods! Once again please don’t hesitate to contact me regarding any questions you may have as I will be more than happy to sit down with you and discuss your scenario.
Take care,
