Lending Landscape - November 29, 2007

The rate portion of the lending landscape continues to improve. In the past week rates dropped to levels not seen since 2005.

Interest rates on fixed-rate mortgages slipped again this week as the glut of available homes exerted downward pressure on prices and construction activity, Freddie Mac reported Thursday.

The government-sponsored loan buyer said the rate on a 30-year fixed-rate loan fell to an average 6.10 percent for the week ended Nov. 29, from 6.20 percent the prior week. At this time last year, the 30-year FRM averaged 6.14 percent.

The 30-year rate has not been lower since the week ending Oct. 13, 2005, when it averaged 6.03 percent, Freddie Mac said.

Shorter term rates have also come down.

Freddie Mac said rates on 15-year fixed-rate loans averaged 5.73 percent, down from 5.83 percent last week. A year ago, the 15-year FRM averaged 5.87 percent. The 15-year rate has not been lower since the week ending January 26, 2006, when it averaged 5.70 percent.

Five-year adjustable-rate mortgages (ARMs) averaged 5.86 percent this week, down from 5.88 percent last week. A year ago, the five-year ARM averaged 5.95 percent.

The combination of falling interest rates and falling home prices (on a national level) is providing a very attractive atmosphere for people considering buying a new home.

Lending Landscape - Turkey Day Edition

Welcome to a special Thanksgiving Day version of the Lending Landscape. Mortgage rates have dropped significantly this week and recent activity by the stock markets have sent bond rates down even further than official numbers reflect.

The government-sponsored loan buyer said the rate on a 30-year fixed-rate loan fell to 6.20 percent for the week ended Nov. 21 from 6.24 percent the prior week. At this time last year, the 30-year FRM averaged 6.18 percent.

The 30-year rate has not been lower since the week ending May 10, 2007, when it averaged 6.15 percent, Freddie Mac said.

Since these rates were released on Tuesday, the benchmark 10 year bond that affects long term mortgage rates has fallen to levels not seen for several years.

The yield on the 10-year Treasury note fell below 4 percent for the first time in two years early Wednesday.

The 10-year note was later up 24/32 with a yield of 4.01 percent, down from late Tuesday's 4.09 percent.

Despite falling rates, the government sponsored enterprises that help the production of mortgage loans, Fannie Mae and Freddie Mac are struggling. How that will affect borrower's ability to obtain new loans has yet to be determined. So far no recent changes have happened that affect borrowers.

Homes Today wishes you and yours a Happy Thanksgiving.

Lending Landscape - November 15, 2007

The lending landscape has remained unchanged this week with mortgage rates for 30 year fixed loans coming in even with last week and last year. However, downward pressure on bond yields this week should push long term rates down for next week.

The government-sponsored loan buyer said the rate on a 30-year fixed-rate loan remained at 6.24 percent for the week ended Nov. 15.

The 30-year rate has not been lower since the week ending May 17, 2007, when it averaged 6.21 percent, Freddie Mac said.

At this time last year, 30-year mortgage rates also averaged 6.24 percent.

Perhaps the bigger question brewing for new home buyers is if they can get a loan at all. As it stands, a downpayment is the biggest change in the lending landscape over the past four months. For borrowers with poor credit, a 10% downpayment is pretty much required, unless its possible to qualify for an FHA loan where a 3% downpayment is required. Borrowers with good to excellent credit can obtain financing for 5% down and there are still 0 down programs available.

So long as a new home buyer can document their income and can come up with a downpayment, obtaining a mortgage is not that difficult.

Lending Landscape - November 8, 2007

The lending landscape was relatively unchanged this week from a rate perspective, but banks surveyed admitted standards have tightened, even for borrowers that are considered good risks.

Rates moved up one basis point across the board, but activity on Wall Street today leads me to believe the downward trend is continuing. The benchmark 10 year bond yield closed at 4.29 today, a number not seen since last year.

Mortgage applications are cyclical on a monthly basis and true to form they slowed this week. CNNMoney reports -

Refinance volume declined 3.2 percent during the week, while purchase applications fell 0.05 percent. Refinance applications accounted for 49.1 percent of total mortgage applications during the week.

Concerning interest rates -

The average interest rate for a traditional, 30-year fixed-rate mortgage increased to 6.16 percent during the week ending Nov. 2, from 6.15 percent the prior week.

The average interest rate for one-year adjustable-rate mortgages increased to 5.94 percent from 5.93 percent a week earlier.

Mortgage loans are still available for borrowers with good credit and a downpayment. Subprime lending is requiring higher credit scores or a larger down payment and higher interest rates. The rate difference between a prime borrower and a subprime borrower has increased to nearly a four percent difference based on examining certain lenders.

It has been a particularly bad week for Wall Street with higher oil prices and a declining real estate market driving fears. For buyers, a favorable rate environment and builders willing to deal make now an attractive time to buy.

Lending Landscape - November 1, 2007

It's been an interesting week in the mortgage business. Last week, the nation was waiting for third quarter results from the nation's largest lender, Countrywide. The company reported a significant loss, but held out hope for the near future and predicted a return to profitability as soon as the coming quarter and throughout 2008. If this outlook is correct, the future is promising for both the company and potential borrowers.

Yesterday, the Federal Reserve Board lowered interest rates for short term loans by .25%. Initially, long term rates rose, but have recovered completely today. Compared to last week, 30 year rates are at a six month low.

The government-sponsored loan buyer said the rate on a 30-year fixed-rate loan averaged 6.26 percent for the week ended Nov. 1, down from 6.33 percent last week.

The 30-year rate has not been this low since the week ending May 17, 2007.

Last year at this time, 30-year mortgage rates averaged 6.31 percent.

In addition to rate concerns being a drag on the real estate market in some parts of the country, the availability of mortgages has become a concern nationally. Today the Federal Reserve eased some of those concerns by injecting $41 billion of additional money to the nation's lenders.

The foreclosure problems hampering some parts of the country have left Utah behind for now.

New home buyers are in a position where rates are the lowest they've been for several years, builders are offering discounts unavailable for five years and lenders are searching for borrowers. In my opinion, the landscape looks pretty good right now for new home buyers in Utah.