Lending Landscape - January 31, 2008

Mortgage rates bumped up slightly this week ahead of the Federal Reserve Board's interest rate decision. Improvements in the stock market sent prices of the benchmark 10 year bond lower which subsequently pushed 30 year rates higher.

The government-sponsored loan buyer said the rate on a 30-year fixed-rate loan averaged 5.68% for the week ending Thursday, up from 5.48% last week, but still well below its historical average Freddie Mac noted.

At this time last year, the 30-year fixed-rate mortgage averaged 6.34%, Freddie Mac said.

Financial markets have been quite volatile this month, but mortgage rates appear to be leveling off. Short term mortgage rates are trending down under Fed guidance. More importantly, the Fed is bringing confidence to the housing market.

TV personality Jim Cramer wrote -

Cramer was -- to put it mildly -- vocal about his displeasure with the Fed's lack of response to the credit and housing woes that have gripped the markets since last summer. But now he's so confident in the economy he's considering buying what might be "the most loathed and toxic investment around": a house. The additional cut, which came just a week after another 75 basis-point emergency cut, has made a turnaround in housing "inevitable," he said.

Utah has been slow to feel the pain of the housing crisis, but the underlying problems in the mortgage industry affect every state. Lower rates and a slowing housing market in Utah have created opportunities for financing and builder discounts/incentives on new homes.

Lending Landscape - January 24, 2008

Mortgage rates have been on a roller coaster this week. Ultimately they ended up lower and economic policies revealed this week should continue to push them further down. On Tuesday the Federal Reserve Board cut short term interest rates in an emergency meeting by .75%. Concerns on the stock market sent mortgage rates plunging, though a recovery later in the week sent rates, roller coaster like, lower. In addition, short term rates have finally become lower than fixed rates.

Mortgage rates continued to fall this week, with 30-year and 15-year fixed-rate mortgages hitting their lowest levels in nearly four years, Freddie Mac reported Thursday.

The government-sponsored loan buyer said the rate on a 30-year fixed-rate loan averaged 5.48 percent for the week ending Thursday, down from 5.69 percent last week.

At this time last year, the 30-year fixed-rate mortgage averaged 6.25 percent. The 30-year rate has not been lower since the week ending March 25, 2004, when it averaged 5.40 percent.

One-year Treasury-indexed ARMs averaged 4.99 percent, down from 5.26 percent last week. At this time a year ago, the 1-year ARM averaged 5.49 percent.

It's been a volatile week, indeed a volatile month with concerns in housing spilling over to other parts of the economy. Decisions made this week by the Fed in regards to interest rates and by the Federal government in regards to loan limits and FHA loan qualifications should stabilize the housing and lending markets.

The Salt Lake Tribune reported today -

Utah should be able to rely on steady job growth, which has slowed from 4.5 percent to 3.5 percent but is expected to remain among the most robust in the nation. "It's much better than any other state, and we're a long way from a negative situation," Matthews said.

Developments since this article was published should further stabilize the real estate market. Ultimately, lower rates and lower prices in the face of a slowing market present excellent opportunities to buy new housing in Utah now. Let's not forget that interest rates fluctuate on an hourly basis and remarkable opportunities present themselves to those that are prepared. In the past two days mortgage rates have adjusted up several times per day. Those who are prepared to act can benefit.

Recent activity by the Fed and Congress will significantly benefit new home buyers in Utah.

Lending Landscape - January 17, 2008

As economic indicators worsen, mortgage rates are in free fall. Lending rates are significantly lower today than they were last year and are trending down from the previous week.

The government-sponsored loan buyer said the rate on a 30-year fixed-rate loan averaged 5.69 percent for the week ending Jan. 17, down from 5.87 percent last week.

At this time last year, the 30-year fixed-rate mortgage averaged 6.23 percent.

Shorter term loans have also seen decreases based on economic news from major financial companies and in anticipation of the Fed further cutting rates at their next meeting.

Freddie Mac said 15-year fixed-rate loans averaged 5.21 percent, down from 5.43 percent last week. A year ago, the 15-year rate averaged 5.98 percent.

Five-year adjustable-rate mortgages (ARMs) averaged 5.40 percent this week, down from 5.63 percent last week. A year ago, the 5-year rate averaged 6.04 percent.

Rates are becoming significantly more attractive for potential new home buyers. While the GSEs entrusted with keeping the mortgage machine running smoothly, Freddie Mac and Fannie Mae, have enacted premiums for high loan to value loans and borrowers with less than excellent credit, FHA is looking more enticing in the current landscape. FHA loans are comparable rate wise with the printed listings and are far more lenient with down payments and credit scores. In Salt Lake County, FHA loans go up to $360,000.

It's true the nation is suffering a housing crisis, but in Utah favorable rates and FHA qualification are really making now an attractive time to buy a new home.

Lending Landscape - January 10, 2008

Trouble in the American economy and housing markets across the country are making it favorable to buy a new home. Besides price concessions, especially by builders, mortgage rates are headed down. If one is to believe forecasts in the press, mortgage rates should trend down throughout 2008.

In the past week, mortgage rates for fixed terms came down significantly.

Application volume jumped while fixed interest rates tumbled. The average interest rate for traditional, 30-year fixed-rate mortgages fell to 5.73 percent from 6.05 percent the previous week. The average interest rate for 15-year fixed-rate mortgages, which are often used to refinance mortgages, dropped to 5.21 percent from 5.61 percent the prior week.

Short-term adjustable rates are trending up slightly, but anticipated rate cuts by the Fed at the end of the month should provide a correction.

In Utah the real estate slowdown and lower rates are making home ownership more affordable.

Stephanie Jensen, of Logan, who struggled to buy a home last summer, had been watching mortgage rates for weeks hover around 6 percent when one day they dipped. She locked in on a 30-year loan at 5.34 percent in July before rates quickly drifted back up.

"I'm now paying less each month for my mortgage than I was paying in rent," said Jensen, who received assistance from Utah Housing. Thomas said the lower rates also can help people with adjustable-rate loans that are resetting or already have reset by making it a bit easier for them to qualify for fixed-rate loans.

While Utah did see appreciation over the past few years, it didn't experience the extremes of some of the markets in California, Arizona and Nevada where extreme corrections are now taking place. Demand for housing below $250,000 remains strong while housing above $400,000 is seeing a slowdown.

The combination of lower prices for new homes and lower interest rates are definitely turning the Utah real estate market towards buyers.

Lending Landscape - January 3, 2008

Not much has changed on the mortgage front, except rates appear to be headed on a long, downward trend. Mortgage rates dipped after rising last week.

The average interest rate for traditional, 30-year fixed-rate mortgages fell to 6.05 percent from 6.1 percent the previous week. The average interest rate for one-year adjustable-rate mortgages declined to 6 percent from 6.03 percent.

As more uncertainty is revealed in the lending industry, the stock market has seen declines, which boost the demand for safer bonds. Because of that, bond yields decrease, in turn lowering fixed rate mortgages.

This situation improves affordability for prospective home buyers. While lending standards have tightened, FHA continues to low downpayment and expanded credit criteria for new home buyers. 2008 will be very telling for both the mortgage and real estate markets. We'll just have to wait and see.