Lending Landscape - October 25, 2007

Mortgage rates dropped sharply this week as the ten year bond yields dropped on continued negative economic news. CNNMoney reports -

Fears of a slowing economy over the next few months helped push mortgage rates lower, Freddie Mac reported Thursday.

The government-sponsored loan buyer said the rate on a 30-year fixed-rate loan averaged 6.33 percent for the week ended Oct. 25, down from 6.4 percent last week.

Last year at this time, 30-year mortgage rates averaged 6.40 percent.

All other amortization types; 15yr, 5yr and 1yr also saw noticeable drops. With new home sales and existing homes sales reports also showing continued weakness in the national housing market this week, mortgage rates should continue their downward trend.

Perhaps one the most unique situations that will likely affect mortgage rates is the release of 3rd quarter numbers by Countrywide, the nation's largest mortgage company and loan servicer. Wall Street analysts think these figures will give them better insight into the true condition of the housing market. Countrywide has struggled this year with high foreclosure rates and deep financial losses. Their stock has lost over 50% of value since the beginning of the year.

Despite the media's attention to the troubles in the real estate market, the credit crunch of August has been lifted. Lenders are eager to loan money. For those borrowers with documented income and jobs, the mortgage market is actually improving as rates continue to drop.

Besides the Countrywide news affecting mortgage rates in the coming week, the Federal Reserve Board will meet this coming Tuesday and Wednesday to decide policy on short term rates effecting adjustable rate mortgages and home equity lines. The Fed lowered rates when they last met in September.

Lending Landscape - October 18, 2007

Mortgage rates were unchanged this week as anticipation of the Fed's next meeting at the end of the month has many analysts speculating on the future of rates. CNNMoney reports -

Mortgage rates were flat this week as the housing industry continues to experience high inventories and slow sales, Freddie Mac reported Thursday.

The government-sponsored loan buyer said the rate on a 30-year fixed-rate loan averaged 6.4 percent for the week ended Oct. 11, which was unchanged from last week.

Last year at this time, 30-year mortgage rates averaged 6.36 percent.

Other loan terms; 15 year, 5 year and 1 year saw little change as well. The benchmark 10 year bond has dropped quite a bit this week, so expect fixed rates to drop in the coming week.

Speculation over the Fed's next rate move could add some volatility to both the stock and bond markets as the end of the month nears.

For prospective home buyers, FHA loans have returned as a viable and cost effective program. Loan limits for Utah were raised in the spring putting many of Utah's new homes squarely into the program's parameters. FHA loans allow first time home buyers and people with less than perfect credit the opportunity to buy a home with little money down.

New Homes In Utah - Turn Slowdown Into Opportunity

You know the old saying, "When life hands you lemons, make lemonade." Utah's home builders are getting a heavy load of lemons being delivered to them right now. An article in this past Sunday's Salt Lake Tribune detailed some of the problems these home builders are currently facing.

For many of Utah's home builders, tough staffing decisions and profit eroding price cuts and promotions are top of mind. For prospective home buyers, the choices and prices are the best they've been for years.

Particularly in the upper price ranges, those above $350,000, some amazing deals can be had. This is especially true about move-in-ready inventory homes. The Tribune reported this about Homes Today regular, Hamlet Homes -

Last year around this time, a common incentive offered by Hamlet - which sells homes priced from the $200,000s to the $400,000s - was about $5,000 in free upgrades. Today, the builder is offering discounts of up to $10,000 on certain homes and an option of no housing payments for four months to buyers who obtain a mortgage through an affiliated mortgage company.

Unadvertised bonuses are also available, but you may have to ask for them. This is especially true of existing inventory homes.

It can't hurt to ask for additional incentives beyond what the builder is offering. It could be a washer and dryer or something bigger, such as an upgraded kitchen or three-car garage. "The best-qualified buyers are a pretty hot commodity to the builders right now," said Gary Cannon, president of the Salt Lake Board of Realtors.

The lowest priced new homes still have a strong demand. Little discounting can be expected in high demand communities or those with new homes priced below $220,000. Still, with mortgage rates that are still near historical lows, the increased choices and incentives make the Utah new home market quite tantalizing for prospective homeowners.

So pour yourself a glass of lemonade and see what the Homes Today builders can offer you.

Lending Landscape - October 11, 2007

The lending landscape is shaping up to be more favorable to prospective homeowners. Despite interest rates increasing slightly in the last week, they are at nearly the same point they were a year ago.

The government-sponsored loan buyer said the rate on a 30-year fixed-rate loan averaged 6.4 percent for the week ended Oct. 11, up from 6.37 percent last week.

Last year at this time, 30-year mortgage rates averaged 6.37 percent.

15 year fixed loans stayed at the same rate they were last year, while adjustable rates moved up very slightly.

The release of the Fed's minutes from its previous rate meeting calmed Wall Street, though decreased chances for further rate cuts of adjustable and short term loans. The bond market which affect fixed rates have moved up, but only slightly in this holiday shortened week.

Most importantly for prospective homeowners is the psychology of the credit markets has improved. Increased liquidity has removed many of the credit crunch fears of the past few months though increased foreclosure activity continues to be a threat.

There's good and bad in this lending landscape forecast, but for those borrowers with good credit, rates are still favorable on fixed rate loans. Many Utahns can also qualify for FHA loans for first time homeowners and those with a few spots on their credit history.

River View at Jordanelle Ridge

Imagine calling this home! A new development near Jordanelle Reservoir could allow you to do just that.

From the press release -

The Sorenson Group of Real Estate Companies today announced the opening of a new residential community on a mountain only minutes from Park City and Deer Valley, Utah. Named “River View at Jordanelle Ridge,” the master-planned development is a mix of 150 upscale townhomes and custom lots on a picturesque aspen ridge in the heart of the Wasatch Mountains.

Along with panoramic views of alpine scenery, River View homeowners will have four-season outdoor recreation and Olympic-quality downhill skiing only minutes away. Designed for individuals who are looking for a first or second home in a pristine mountain location, River View is immediately south of Jordanelle Reservoir in Heber Valley and approximately 40 minutes from Salt Lake International Airport.

River View homeowners will have a rich amenity package, including access to a clubhouse, trails, miles of dedicated open space, and more. Outstanding recreational opportunities in the surrounding Wasatch Mountains include hiking, fly-fishing, mountain biking and horseback riding.

Lot prices range from $232,400-$420,500. For additional information, visit the Sorenson Group website or watch Homes Today - Utah Edition.

Lending Landscape - October 4, 2007

The mortgage landscape has improved over the last week. Mortgage rates for fixed rate loans have dropped and the ten year bond market has leveled out a bit since the Fed rate cut two weeks ago.

Normally, the economic news that affects mortgages has already been released by Thursday. This week the big pending news is the September jobs report, which will be released tomorrow. If the news on jobs is bad, more hope for an additional Fed rate cut should drive rates lower. On the other hand, if this report turns out well, long term mortgage rates should be expected to rise.

On the mortgage front there was good news. The "credit crunch" many had feared would reduce the pool of new home buyers has been resolved at least temporarily. A group of banks established during the Great Depression has injected hundreds of billions of dollars to lenders.

As the credit crunch hit hard in the third quarter, most banks were forced to cut back their lending. But one group of banks increased lending by an incredible $182 billion. Who were these deep-pocketed lenders -- and are they capable of handling such a large rise in loans, especially at a time when credit markets are unsettled and mortgage defaults on the rise?

"Funding has not been a problem," says Dorfman, of the FHLB of Atlanta. The FHLB banks, like Fannie and Freddie, benefit from the market's perception that their debt has a government guarantee, or that the government would step in and provide assistance if any of them ran into trouble. That not only translates into lower borrowing costs, but it also means investors flock to buy FHLB debt for perceived safety when bond markets get jittery. As a result, the FHLBs can borrow cheaply even in tough times.

Mortgage loans continue to be made and no further tightening of lending requirements has taken place. So long as interest rates remain low, it is still a very favorable environment to buy a new home in Utah.