Economic Update: Mortgage Rates Rise

Stronger than expected Employment data and the end of the Fed’s Mortgage Backed Securities (MBS) purchase program were negative for mortgage markets. Mortgage rates ended the week at the highest levels since January.

Investors viewed Friday’s Employment report as positive for the economy, which means it was bad news for mortgage markets, and mortgage rates climbed after its release. Against a consensus forecast of 200K, the economy added 162K jobs in March, the highest level since March 2007. The Unemployment Rate remained at 9.7%. While the headline number fell a little short, other aspects of the data displayed a larger degree of unexpected strength. Hiring of census workers, a temporary boost, added just 48K jobs, which was far less than expected. Revisions to data from prior months added 62K jobs. The separate employment survey used to calculate the unemployment rate, which includes smaller companies, showed a higher level of job gains in March.

To support the economy, the Fed has purchased almost $1.25 trillion of MBS since the start of 2009, but the MBS purchase program ended on March 31. Forecasts for the impact on mortgage rates of reduced demand for MBS varied from slight to as much as a one percent rise. While mortgage rates rose this week, yields in other bond markets posted comparable increases, meaning that the effect of the end of the MBS purchase program was close to the lower end of the estimated range this week.

Compliments of:
Brian Campbell
KeyBank Mortgage
Phone: 503-309-9800
Email Brian
21327 SW Sherwood Blvd.
Sherwood, OR 97140

New Construction Sales Continue to Struggle

The US Census Bureau News reported this past week that the new construction industry is still struggling and hit a low last month. High inventory, decimated and damaged builders, a difficult financing market, and a lingering lack of confidence in the market are surely to blame. It is likely that builders will build again when these conditions improve, the re-sale market is moving better, and when customers are ready to commit money to custom built jobs.

Mortgage Interest Rates for Fixed Rate Mortgages*

Rates as of Monday, March 22, 2010

Rates courtesy of Travis Newton
Sr Mortgage Banker, ML-137

Preferred Mortgage
Phone: 503-931-4490
Fax: (503) 779-1234
travis@pmforegon.com
www.travis-approves.com

New Real Estate Market Report for Portland-Metro areas

The most recent Market Action Report has been published. Read Randy McCreith’s analysis and view or download the January Market Action Report.

Here is a snippet of Randy’s analysis:

For over a year now, the sales numbers for the Portland metropolitan area have continued to improve each month, although the progress is slow. Properties have not been this affordable since 2004, prices on average are at 2005 levels, and the numbers of sales continues to rise. Inventories have reduced significantly.

One year ago we began the climb out of the pit created by the financial melt-down of late 2008. Pending and closed sales have improved 25-34% since one year ago. The drop in closed sales from December and the dramatic increase in inventory since last month reflect normal seasonal activity. There was low sales activity in December and in January people put their properties on the market with the hope of selling (and buying) during this year. Continued high figures for ‘days on market’ have conditioned sellers to list their properties sooner rather than later.

FHA Loans – Waiting to Buy Will Hit Your Pocketbook

Yesterday morning mortgage broker Venessa Ward of Pacific Residential Mortgage spoke to the Bella Casa Real Estate brokerage. She covered a lot of valuable information and I wanted to share some of the key points we learned from Venessa.

Venessa provided this FHA loan scenario to illustrate how waiting to purchase will hit your pocketbook in just a short 6 weeks from now. You will notice three upcoming changes that will affect your out-of-pocket expenses:

  • The UFMI rate is increasing from 1.75% to 2.25% (Up Front Mortgage Insurance is an insurance premium collected by FHA at the time the loan is initially made. It is in contrast to private mortgage insurance (PMI), which is collected by the lender each month when a buyer’s down payment is less than 20% of the purchase price.)
  • The allowable Seller Contribution will decrease from 6% to 3%. For example, a seller can only contribute up to 3% toward the buyer’s settlement charges (formerly called “closing costs”).
  • The Homebuyer Tax Credit expires on April 30. Buyers must be under contract, having a signed purchase agreement in hand by April 30th, but you have until June 30th to close the financing. If a first-time homebuyer misses this April 30th deadline then you will miss out on $8,000.

Now take a look at this chart. In the case of $193,000 loan, there is a potential difference of $14,965 by purchasing after April 2010.

The lending industry has undergone big changes this past year, resulting in different paperwork, requirements to qualify for loans, and more complexity. Bella Casa firmly and absolutely encourages all buyers to ONLY seek financing from LOCAL mortgage lenders. You need to be able to sit face-to-face with your lender so they can educate you about the process and your loan, and also so that you can hold your lender accountable.

We realize that these figures can be confusing, so we highly recommend that you call a local lender to discuss your specific situation.

Special thanks to Venessa Ward from Pacific Residential Mortgage!

Pacific Residential Mortgage has offices in McMinnville and Lake Oswego.

Venessa Ward, Sr. Mortgage Banker
NMLS# 140124
“Making it happen in 2010”

Pacific Residential Mortgage, LLC
117 NE Fifth Street, STE D
McMinnville, OR 97128
(503) 437-9200 Office
(971) 241-2001 Cell
(503) 670-0674 Fax
(800) 758-0030 Toll Free

Mortgage Rates – Economic Update

The Fed has told us repeatedly that their massive purchasing program of Mortgage Backed Securities is just about over – and this translates to home loan rates rising in the near future.

As you can see in the chart below, the amounts of Mortgage Backed Securities the Fed is purchasing are slowly dwindling, as the program is set to wrap up by March 31st, and are clearly trying to ration out the remaining portion. Last week, the Fed purchased $11 Billion in Mortgage Backed Securities, which leaves them with $66 Billion to spend out of their original $1.25 Trillion allotment. So about 95% of the total has already been spent and has purchased about 3 out of every 4 home loans during the past year. When such a large buyer leaves the market, it is very likely that prices will worsen.

This is very important because as the Fed has less money to last through the remaining months of the program, their ability to keep home loan rates low via their purchasing power will wane.

And to those who can take advantage of currently low home loan rates, DO NOT WAIT, as the clock on these historically low rates is ticking.

Article Source: Glen Bremer Alpine Mortgage Planning Mobile: 503-502-5373 Email: gbremer@alpinemc.com

Economic News Update

Article Source: Kimberly Coleman, Branch Manager Prospect Mortgage, Mobile: 503-476-7020  Kimberly.Coleman@prospectmtg.com

Recap of the Last Week’s Economic News

  • The Institute for Supply Management reported that the monthly index of manufacturing activity rose to 58.4 in January after reaching 54.9 in December. It was the sixth straight month of expansion and the fastest pace of growth since August 2004. A reading above 50 signals expansion.
  • The Commerce Department reported that total construction spending fell 1.2% in December after a downwardly revised 1.2% decline in November. Economists had expected a decrease of 0.5%.
  • The National Association of Realtors reported that its pending home sales index, a forward-looking indicator based on signed contracts, rose 1% in December. Compared to a year ago, pending home sales are up 11%.
  • The U.S. non-manufacturing sector rose to 50.5 in January from a downwardly revised 49.8 in December. A reading above 50 signals expansion. Economists had anticipated a reading of 51.
  • The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ending January 29 rose 21% to 620.7. Purchase volume increased 10.3% to 237.8. Refinancing applications jumped 26.3% to 2,854.8.
  • The Commerce Department reported that factory orders rose 1% in December. That was double the 0.5% increase economists had anticipated. It was the fourth straight gain and follows a revised 1% increase in November.
  • The Labor Department reported that productivity rose at an annual rate of 6.2% in the fourth quarter, following a revised third-quarter gain of 7.2%. Labor costs fell at an annual rate of 4.4%.
  • The unemployment rate fell to 9.7% in January from 10% in December. Employers cut 20,000 jobs in January, far fewer than the 150,000 jobs lost in December. The four-week average for continuing jobless claims fell 51,250 to 4.618 million.

Upcoming on the economic calendar are reports on wholesale trade on February 9, retail sales on February 11 and consumer sentiment on February 12.

Forbes Magazine Encourages Portland-Area Renters to Buy

In a recent Forbes magazine study, Portland was named one of the top 10 cities in the nation where it is smarter to buy than rent. Market conditions are such that now is a particularly good time for some renters to become homeowners.

To rank the cities, Forbes computed the premium to buy—the spread between what a consumer would spend to rent and what they would pay for a mortgage—and also identified locales where economists predict home prices will go up the most over the next five years.

Continue reading “Forbes Magazine Encourages Portland-Area Renters to Buy”