Are mortgage rates really going to jump this year?

At the start of each of the last two or three years we have been warned that mortgage rates were likely to increase, possibly sharply, in the coming year. Last year, when the Fed announced that it was thinking of ending its purchase of mortgage-backed securities, there was indeed a sharp jump, but since then rates have dropped back again.

So far this year the yield on the US 10 year Treasury, the main determinant of the 30 year fixed rate mortgage, has dropped from 3% to 2.5% and mortgage rates have followed, with the rate reaching 4.12% in Freddie Mac’s latest weekly survey. The same geopolitical factors (that would be Russia’s expansionist activities) that have sparked renewed buying of US Treasuries are also restraining economic growth in Europe. There are no signs of renewed inflationary pressures.

Against that background, the yield of 2.5% on 10 year Treasuries compares favourably with that in Germany, 1.4%,or Japan, 0.6%, with only the UK at 2.6% offering a comparable return.

While it is hard to see the reason for mortgage rates to rise, it is also worth bearing in mind that we remain very close to all-time lows. I am including a chart of rates over the last year together with one going back to 1971. (more…)

Is the 30 year fixed rate mortgage an endangered species?

Discussion about mortgage rates normally focuses on the 30 year fixed rate mortgage (FRM). As the table below shows, the US is unique in developed countries in having FRMs as the dominant product:

Mortgage_type_Country

Only Denmark and France have significant FRM markets and their products differ from the US in certain ways. (more…)

Year end reviews

I shall be publishing year-end reviews over the course of this weekend. The best way to know when they are published is to sign up on www.OliverReports.com to receive email alerts of new articles. Here’s a screenshot showing where you can sign up on the home page.

Sign-up

 

If you are considering buying or selling a home and have questions about the market and/or current home prices, feel free to contact me on 781.631.1223 or andrew@HarborsideRealty.com.

Andrew Oliver is a Realtor with Harborside Realty in Marblehead

New FHFA Head moves to delay fee increases

According to the Wall Street Journal’s Nick Timiraos, Rep. Mel Watt (D., N.C.), the incoming director of the regulatory agency that oversees Fannie Mae and Freddie Mac, said on Friday night he would delay an increase in mortgage fees charged by the housing-finance giants, which was announced earlier this month by that agency.

Upon being sworn in, “I intend to announce that the FHFA will delay implementation of the loan-fee increases until such time as I have had the opportunity to evaluate fully the rationale for the plan,” said Mr. Watt in a statement.
(more…)

Conforming mortgage loan limits raised for Essex County

While the Federal Housing Finance Agency (FHFA) has announced that the 2014 maximum conforming loan limits for mortgages acquired by the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, will remain at $417,000 for one-unit properties in most areas of the country, the limit in Essex County will increase from $465,750 to $470,350.

Earlier this year FHFA had announced that it was contemplating a reduction in loan limits for 2014, but that announcement was met with a tsunami of protests.

With the change in the rules for Senate approval of most nominees, it is highly probable that the FHFA will soon have a new head, Rep. Mel Watts, who is expected to be more amenable to carrying out the Administration’s goals in the housing market.

Here is an article with comment on some of the effects expected with Mr. Watts in charge.

Conforming Loan Limit

Fannie Mae and Freddie Mac are restricted by law to purchasing single-family mortgages with origination balances below a specific amount, known as the “conforming loan limit.” Loans above this limit are known as jumbo loans. The national conforming loan limit for mortgages that finance single-family one-unit properties increased from $33,000 in the early 1970s to $417,000 for 2006-2008, with limits 50 percent higher for four statutorily-designated high cost areas: Alaska,  Hawaii, Guam, and the U.S. Virgin Islands.  Since 2008, various legislative acts increased the loan limits in certain high-cost areas in the United States.  While some of the legislative initiatives established temporary limits for loans originated in select time periods, a permanent formula was established under the Housing and Economic Recovery Act of 2008 (HERA).

If you are considering buying or selling a home and have questions about the market and/or current home prices, feel free to contact me on 781.631.1223 or andrew@HarborsideRealty.com.

Andrew Oliver is a Realtor with Harborside Realty in Marblehead.

 

 

 

Mortgage rate forecast to rise to 5.1% in 2014

This time last year, when the 30-year mortgage rate was under 3.5%, the Mortgage Bankers Association forecast that it would rise to 4.5% by the end of 2013. That is very close to current mortgage rates so with that track record their forecast for 2014 bears noting.

MBA is forecasting a rise to 5.1% by the end of 2014 and a further rise to 5.3% by the end of 2015. (more…)

Falling mortgage rates and other housing news

As suggested in last week’s blog, mortgage rates have fallen back with the national average for a 30 year fixed rate loan at 4.32%, a level last seen in July.

While the 30 year fixed rate mortgage is the benchmark normally quoted, note that the average 15 year rate is 3.37%, while the 5/1 ARM is just 3.07%. Freddie Mac weekly mortgage rates

For my comments on Adjustable Rate Mortgages (ARMs) read Is it time to consider an ARM?. (more…)

Mortgage rates drop as Fed blinks

On Wednesday, when it was widely expected that the Federal Reserve would announce plans to start reducing its purchases of mortgage backed securities (MBS)* this month, it surprised the market by announcing that the start of the slow down – the taper – would be delayed. The result was a drop of about 1/4% in mortgage rates. (more…)

Outlook for mortgage rates

I have commented before that HSH Associates (HSH.com) publishes very good commentary on the mortgage market.
In this week’s article (which will be on their website on Monday) they point out:
(more…)