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More Cities Achieve Housing Stability

According to Freddie Mac, about half of the country’s large metropolitan areas have returned to a historic stable range. This is according to their Multi-Indicator Market Index, or MiMi. Using proprietary data along with local market data, including home purchase applications, payment-to-income ratios, proportions of on-time mortgage payments, and local employment rates, MiMi rates cities based on their own individual stable ranges.

At present, a full forty-seven of the United States’ one hundred biggest metros fall within the stable range. Cities throughout the west coast have been particularly strong, with Seattle, Portland, and all of California’s big cities ranking as “in range”. Washington State itself is among the most improved states, with an improvement of 10.41%.

The national MiMi value currently stands at 81.2. Such a number is indicative of an overall housing market that is on the outer range of stable. This represents an improvement of 37% over the all-time low experienced in October of 2010. However, it still has a way to go to reach the high of 121.7.

Market Stabilizes at October’s Highest Rates

Friday closed with the highest mortgage rates for the month so far. Fortunately, these rates still represent an improvement over most of September. These rates remained steady through Monday, as is normal for a three-day weekend. What to expect as we move forward, though, remains very much in question.

The stocks and bonds markets are both at a significant crossroads, both with the potential to either move back into the range seen in June and July or continue a long trend of downward-moving yields and stock prices. There may be some risk for rates to quickly move higher, if we can take the Fed at their word and ignore the weak trends in global economic growth. The Fed seems convinced that the economy will allow for a rate hike by the end of 2015, but many critics are saying otherwise.

All things considered, it may be too optimistic to expect rates to dip any lower than they currently are; anyone looking to float should expect to play the long-term game, and be prepared to pay more if you turn out to be wrong.

October Opens with Lowest Rates Since Spring

October opened with some wild activity in the mortgage market. With the introduction of European quantitative easing, investors have been moving money to take advantage of European rates, and domestic rates have been feeling the benefits. On Friday, the average conventional thirty-year, fixed-rate mortgage quote plummeted. Almost all lenders opened the day offering the lowest levels we have seen in over five months. Unfortunately, the afternoon saw a substantial reversal in the bond markets that most affect mortgage rates, increasing the chance of rates shooting upward again.

One of the big factors at play currently is the recent September jobs report, which came in slightly weaker than was expected. This weak activity promises to call a Fed rate hike into question, and deter any general economic growth. It is difficult for long-term rates to go up significantly without a positive growth outlook.

In the near-term, we can still expect some volatility in mortgage rates. Anybody not prepared to deal with this volatility would be well-advised to lock into the current five-month lows.

What is Your Credit Score?

There are a lot of scams out there these days, none that we find as frustrating though as the infamous online credit score! Here we have one of the all-time greatest inventions to rip off the average consumer, why isn’t anybody creating a fuss about such a magnificent scam? The reason is because almost nobody understands how it all works and the powers to be keep it all very hush hush.

How many people have checked their scores online at some point? There is no great data on this but we are thinking the majority of everyone has checked their scores online. Now, out of all these millions of people, how many could use these exact scores for lending purposes? We are going to go with 0, give or take. This is due to the fact that online scoring models, even the ones provided by the bureaus themselves, are completely different from the scoring models that lenders use when a loan is being applied for. This makes the average online and the credit bureau’s scoring models completely worthless.

How is this legal you may ask? They don’t claim they are giving a FICO lending approved scores, they are saying is what “we” calculate your score to be, based on our system. Even on the rare occasion if they use a FICO model, there are over 50 of those scoring algorithms created so it’s unlikely to be the one your lender is using. Some of the online scores are so off it seems like a bad joke, like Transunion direct source who is Truecredit, their score range goes from an 501 to a 999 so you easily see yourself with an 800 or 900 but that doesn’t mean it’s worth the paper it’s printed on.

Another laughable aspect about this system is that you notice how a consumer never applies for a loan only to find out that their score is actually much higher than what they recently pulled online. In fact the average online score is roughly 40 points higher than what you see through a lender. The conspiracy theory behind this is that the better score you show someone on average, the more people you will attract to your website through referrals.

Kick your feet up – lean back, and rest assured you can be in the driver seat – when you meet with a real mortgage lender and get your true FICO mortgage score – and know all about the loan programs, options, LLPA info then you will be well informed to make the right decision.

So, What Is Your Credit Score?

Mortgage Rates Down as Bonds Thrive

Mortgage rates are poised to end September on a strong note. Entering the final week, rates moved close to recent lows experienced in the previous week. We can likely expect many borrowers to see these same rates through Friday, enjoying noticeable gains in the form of low closing costs and high lender credit. All in all, it’s one of the best days we have seen since early May.

This strong activity can be attributed to broad economic weakness. Fears among investors are driving stocks downward, which is generally good news for the mortgage market. The Federal Reserve’s decision to keep interest rates near zero has not provided investors with the certainty they need to pour money into riskier assets, so money has been moving out of stocks and into bonds, causing prices to go up and rates to go down.

Anybody planning to close on a loan within the coming thirty days may be well advised to lock in to current rates. Contact us to talk to a Lynnwood mortgage broker right away.

Existing Home Sales Dip in August

Looking back at August, we can see that sales of existing homes dipped 4.8% from July’s 5.58 million units to a seasonally adjusted annual rate of about 5.31 million units, despite low prices and reasonable mortgage rates. This decline is cutting off three consecutive months of increases.

However, the news is not all bad. Though August was down from July, it represents a year-over-year increase of 6.2%. This is the eleventh consecutive month wherein we have seen year-over-year improvement of existing home sales.

Meanwhile, prices continue to go up. The median price for existing homes was $228,700 in August, which comes to an increase of 4.7% over the $218,400 we saw in August of 2014. This is the 42nd consecutive year-over-year gain in existing home prices.

Though inventory continues to be a big problem, August showed an increase of 1.3% to 2.29 million homes. This comes out to a 5.2 month supply, compared to the 4.9 month supply in July. However, this inventory is 1.7% lower than what was experienced in August of 2014.

Mortgage Rates Await Thursday’s Fed Announcement

Going into the third week of September, mortgage rates appear to be doing nothing but waiting for Thursday’s FOMC Announcement. Indeed, the entire bond market is holding its breath to see what the Fed decides upon.

Should the Fed announce a rate hike, it would not necessarily be a negative force for mortgage rates. It is largely the uncertainty leading up to this decision that is having the most effect on our current rates. Indeed, the absence of volatility in the market for a while now can likely be attributed to this uncertainty, as investors are on hold in anticipation of a decision.

Once the announcement is made, regardless of what it turns out to be, we can likely expect some dramatic activity. One way or another, rates could either rally or sell off. Many people trying to decide whether to lock or float would probably be wise to secure the reasonably low rates that are currently available, while only those who are sure they can afford to be wrong should take the chance of floating. Further, as we cannot necessarily expect that this lack of volatility will persist right up to Thursday, sooner is better than later.

Underwater Homes Fall Below 10%

The housing crisis saw many homeowners go underwater with their mortgages, where their outstanding mortgage balance exceeds the actual value of the home. As the market continues to improve, though, it would appear that these days are far behind us. Just last quarter, more than three-quarters of a million US homes regained equity, bringing the percentage of homes with negative equity down to single digits.

Currently, there are approximately 4.4 million properties still underwater, representing about 8.7% of the country’s homes. The national aggregate value of this negative equity was down to $309.5 billion, representing a decrease of 11.6% from the $350 billion a year ago. The total borrower equity rose by $691 billion.

All the same, there is still a fair number of homes that are under-equitied. These homes, which have less than 20% equity, generally have a more difficult time securing a refinancing into a more favorable mortgage rate. They can also easily fall underwater when home prices dip. At present, there are about 9 million under-equitied homes, representing about 17.8% of total homes.

Economy Outlook Weakens, Housing Indicators Improve

We’re past the halfway point in 2015, and the news is not good. According to Fannie Mae’s economic team, the outlook for the economy is less robust than had been anticipated earlier in the year. This is as a result of the second quarter economic growth reports, which came in lower than expected. Even factoring in the revised, improved growth reports of the first quarter of the year, the full-year outlook for 2015 remains at an improvement of 2.1%.

Currently, we are looking to the housing market to be a bigger contributor to growth for the rest of the year. Though activity was mixed throughout June, the first half of 2015 showed improvement over the same period in 2014. Existing home sales in June were at their strongest pace since February of 2007, and marketing time is shorter than it has been in the past four years. Throughout 2015 so far, we have seen a year-to-date improvement over 2014 of 7.7% in existing home sales, 20.3% in new home sales, 9.1% in single-family housing starts, and 14.4% in multifamily housing starts.