Austin Real Estate Blog

What Did Interest Rates Do This Week?
** based on Freddie Mac weekly average survey **

30-yr Fixed – Lower
This Week:  4.78% (lowest since April 30, 2009)
Last Week:  4.83%
1yr Ago:  5.97%

15-yr Fixed – Slightly Lower
This Week:  4.29% (record low)
Last Week:  4.32%
1yr Ago:  5.74%

Jumbo Fixed (Average 30-yr Fixed)
Last Week:  5.75%Previous Week:  5.75%

Highlight of This Week’s Major Economic Reports

Despite the nation’s economic challenges, there’s a lot to be thankful for this year.  For one, the housing market has started to see stabilization – thanks in combination to historic low interest rates and increasing affordability.  Then, there’s the first-time buyer tax credit, which was set to expire on December 1^st and has since been extended to April 30^th.  The original expiration helped to prop up home sales in October, which saw the fastest sales pace since October 2007, with existing home sales jumping over 10% and new home sales spiking 6.2% from September’s figures.

What to Look for Next Week

The latest unemployment picture will be framed with the release of November’s employment report.  Even though unemployment claims have slowly dropped in recent weeks, it’s expected we’ll see a rise in the 10% unemployment rate through the end of the year.

Short-Term Rate Outlook
Relatively Unchanged

Stay Informed:  What’s in the News

“America’s Fastest Recovering Cities” – Austin #3 from Forbes.com

http://www.forbes.com/2009/11/19/cities-recovery-unemployment-lifestyle-real-estate-top-ten_print.html

“Texas’s Existing Home Sales Climb, Prices Inch Up” from Texas A&M Real Estate Center

A total of 19,347 existing single-family homes were sold in Texas last month, a 15 percent increase from October 2008, according to MLS data compiled by the Real Estate Center at Texas A&M University.

The median price rose 1 percent to $143,300 during the same period, and the state finished the month with a 6.9-month inventory of existing homes.

Here is how select Texas cities fared in October (data current as of Nov. 24, 2009):

“US Job Losses to Bottom out Next Quarter: NABE” from CNBC.com

Economists expect the joblessness that has weighed down the nation’s economic recovery will start to slowly abate in 2010, but they predict consumers will continue to keep a tight rein on spending, according to a new survey.

“Fed Remains Cautious on Strength of Recovery” from The New York Times

The Federal Reserve’s new economic forecast and minutes from a session earlier this month reveal that policymakers continue to fret over whether the economy is strong enough to hold up without government stimulus efforts, such as the temporary fiscal programs for the housing sector. Concern about the recovery comes as Fed officials begin debates on when to start raising interest rates, which have been held at virtually zero since last December, and on ending their program to purchase $1.25 trillion in mortgage-related securities. The real estate industry fears an increase in mortgage rates, but the Fed also wants to focus on reducing its holdings and bringing its balance sheet back to normal.

Marie Funston | Sr. Mortgage Advisor | (512) 750-7270
9442 N Capital of Texas Hwy., Suite 1-600
Austin, TX 78759
Fax:  (512) 343-1224
Marie@austinmortgageadvisor.com

The new home valuation code of conduct is a lazy tool of weak minds. If you can’t stand by your estimation of value in the face of scrutiny, then maybe you should be changing your values. And if you don’t like working for a bank that pressures you to inflate values or do other things that you don’t like, FIND OTHER CLIENTS! That’s what everyone else in the business world does.

I just had a transaction get pushed out a week, a family lose a weeks worth of on the market time for their existing home, and a family end up putting $5k extra down that they didn’t have to put down because of an appraiser who did a sloppy job. Of course, I pulled the data that showed an error in the comparable lot size the day we got the appraisal a week before the originally scheduled closing. I forwarded the evidence of the error to the lender, who forwarded it to the appraisal management company, who forwarded it to the appraiser, who did nothing about it. Why should he? He can’t be fired from the bank’s list of appraisers. We can’t talk to him or say hey man, are you retarded? Look at the lot? Turn your head 90 degrees and look at the lot next door, can’t you tell that it’s not twice the size of the lot you are appraising and that therefore your adjustment and the data on the appraisal should be fixed? I plan on filling a complaint with the Texas licensing board for this and every single apathetic appraiser that I run across now.

In what other free market do people get handed business with their license and then get removed from responsibility for the quality of work they do and professionalism with which they do it? Your license is your ticket to the game, not tenure and guarantee of business. Sorry, but real estate is a rough and tumble business. 95% of agents don’t make it 5 years. It should be the same way with appraisers as with all other new businesses. Find a way or find the door.

I’m open to hearing other viewpoints, but right now, this whole deal seems like a cop out.

One last thought. When other groups like NAR put aout a Code of Conduct or Code of Ethics as NAR calls it generally speaks to how the group’s members should act. When the appraisers lobby for and get passed a Home Value Code of Conduct it speaks to what everyone else must do. Strange huh?

A slightly miffed Austin Realtor.

Joe

Thirty-year mortgage rates fell to 4.78% last Friday, hitting their lowest level since Freddie Mac started tracking rates in 1970.One-year Adjustable Rate Mortgages (ARMs) were almost the same, at 4.77%.

Mortgage rates tumbled yesterday as a result of the Fed announcement that they will be buying mortgage-backed securities!

What does this mean to you?  30-yr fixed rates are now at about 5.25% with 1pt OR 5.5% with no points!!!

Compare this to average rates just from earlier this week – 5.75% with 1pt or 6.125% with no points.  That’s almost a $100/mo payment savings in just two days!

And … if you compare this to Freddie Mac’s estimated average 30-yr rate of 6.3% for next year, that’s about a $230/mo savings.

Marie Funston | Senior Mortgage Advisor | 750-7270

What Did Interest Rates Do This Week?
** according to Freddie Mac **

30-yr Fixed – Higher
This Week:  6.03%
Last Week:  5.88%
1yr Ago:  6.16%

15-yr Fixed - Higher
This Week:  5.62%
Last Week:  5.40%
1yr Ago:  5.87%

5/1 ARM – Higher
This Week:  5.68%
Last Week:  5.48%
1yr Ago:  5.88%

Highlight of This Week’s Major Economic Reports

Not-so-bad economic news and continued fears of inflation sparked a jump in mortgage rates this week.  This has led to many downgrading their beliefs that the Fed will cut rates much – if at all – when it meets next week.

While economic growth remains subpar, recent data shows that things may not be as bad anymore as feared.  Unemployment claims were down last week.  Manufacturing isn’t as down as it had been earlier in the year.  Overall economic activity was less negative – a possible sign that the downturn is leveling off.

On the housing front, home sales fell again in March.  Existing Home Sales fell 2% last month, while New Home Sales tumbled 9%.  The good news to these bleak numbers is that the declines were softer than expected, and the average price for existing homes did go up slightly by 0.9%.  With demand continuing to stay low, inventory remains at higher levels, but many economists expect for inventory to come back down in the not too distant future.

The relentless spike in food and oil prices (hello, $5/gal?) are weighing heavily on our checkbooks, so the government has decided to start shipping the “stimulus checks” earlier than expected.  We probably shouldn’t expect for this to do much to actually stimulate the economy, as this extra money will likely just go towards paying for gas and food.

The market has set the expectation that the Fed will cut short-term rates by 0.25% next week.  It is also anticipated that they will note stability in the financial markets and will shift their focus back to inflation – a sign that this may be the end (at least for now) to the rate cuts.  Don’t take this as bad news, however, as the Fed’s rate cut will only impact the Prime Rate.  Mortgage rates, remember, are separate and follow longer-term bond yield movement.

What to Look for Next Week

The Fed’s monthly policy meeting and the April Employment Report will be the headliners for the week.

We will likely see a 0.25% rate cut from the Fed (perhaps the last one for now), which has already been priced in to current mortgage rates.  And, many expect for the unemployment rate to tick up slightly in April.

Odds aren’t great for us to see any improvement in rates.

Short-Term Rate Outlook

Slightly Higher

Tools to Help Your Buyers & Sellers

Rates on the rise?  It doesn’t matter!  With Pre-Purchase Rate Protection from PHH Mortgage, you can protect your purchasing power with the ability to cap your interest rate for up to 90 days at no cost while still offering a “float down” option to take advantage of possible rate improvements.  So, whether rates go up or down, you will win!

Call Marie Funston – PHH Mortgage – (512) 691-6757

What Did Interest Rates Do This Week?
** according to Freddie Mac **

30-yr Fixed – Down Slightly
This Week:  5.67%
Last Week:  5.68%
1yr Ago:  6.28%

15-yr Fixed – Down Slightly
This Week:  5.15%
Last Week:  5.17%
1yr Ago:  6.02%

5/1 ARM – Lower
This Week:  5.21%
Last Week:  5.32%
1yr Ago:  5.99%

Highlight of This Week’s Major Economic Reports

Congress passed its much-talked-about economic stimulus package, which is aimed at putting more money back in consumers’ hands.  More money in our pockets means more spending, which means more economic activity to thwart a recession.  At least we hope.

On the mortgage side, it allows for Fannie Mae and Freddie Mac to increase their loan limits up to $729,750.  But only for “high cost” areas.  For places like Austin, Texas, the “confirming limit” will stay put at $417,000, which means any loan above this amount will still be considered a jumbo loan and will therefore be subject to different (stricter) underwriting guidelines and higher interest rates.

Will this economic stimulus package actually help the national housing downturn?  We’ll just have to wait and see how the markets react to the changes.

One thing has been clear, though:  lenders are continuing to tighten their underwriting requirements, making it harder to obtain a new mortgage loan.  According to a recent Fed survey of Loan Officers, 53% tightened requirements for “prime” borrowers, 72% for “subprime” borrowers, and 85% for “non-traditional” borrowers (i.e., those seeking such products as interest-only loans).  While the tightening for subprime and non-traditional borrowers comes as no surprise, it’s amazing to see how much even those with good credit scores are being impacted.

What to Look for Next Week

January Retail Sales and an appearance by Fed Chairman Ben Bernanke will highlight the economic show next week, but neither is expected to significantly impact mortgage rates.

Short-Term Rate Outlook

Stable to Slightly Higher