I Don’t Want To Say I Told You So, But…
September 3rd, 2010 by Quentin Keefe
With all the blog-mania circulating fear of a double dip recession, low and behold, we get encouraging economic news this week. In fact there was surprisingly good news in the ever so important labor market, housing and manufacturing reports, (all of which negatively impacted mortgage rates). The private sector added 67,000 jobs in August, with upward revisions being reported for June and July. July pending home sales ticked up 5% above June’s numbers and the manufacturing indicators rose as well. No, it’s not all rosy, but all indications are that we are slowly, but surely growing out of this recession. Unemployment, of course, remains our biggest problem with the number actually ticking up a bit to 9.6% nationally from 9.5% last month. This was expected though, as the labor force grew by some 550,000 workers, yet we only created 67,000 jobs. Also, the temporary census workers accounted for loss of another 114,000 jobs. The housing news prompted the chief economist for the National Association of Realtors to say he expects “improved affordability conditions” going forward, but warned that the housing recovery still has a way to go.
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Double Your Pleasure, Double Your Fun…but don’t Double Dip the recession!
August 31st, 2010 by Quentin Keefe
Okay, perhaps a little corny, but all the talk about a double dip recession is making me crazy. We are not going to have a double dip recession! There, I said it. The economy is improving, albeit more slowly than molasses traveling uphill in the winter time, but improving nonetheless. Let’s all take a deep breath, have a little faith, and go out and spend a little money. You’ll feel better and the fact that you’re spending money will help make the economy feel better. Home prices haven’t been lower in a very long time, and interest rates are at historic lows. APR’s in the low 4% range on 30 year fixed rates and in the high 3% range for a 15 year fixed rate. I don’t know what possibly could be keeping folks away from the real estate market? But my advice is to get pre-approved for a mortgage loan and then go visit a Realtor and find out exactly what is going on in your favorite area. And then….buy! You’ll be thanking me in 2-5 years, believe me! Double Dip nothin’!
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The Mortgage Rate Environment
August 24th, 2010 by Quentin Keefe
Questions persist about how long these historically low mortgage rates can last? The answers are never easy when it comes to the financial markets, but the consensus seems to be that they will remain low for the foreseeable future. Why? Well, the easy answer is that the economy remains rather anemic, and so long as there is no real growth, continued low inflation, and unemployment teetering near double digits, there is really no where for rates to go. This, coupled with the fact that investor demand remains relatively high for bonds and consumers aren’t yet opening their pocketbooks are a recipe for continued support of these historically low mortgage rates. So, if you haven’t yet inquired into refinancing your existing mortgage, you should. And, if you are in the market to purchase a new home, you couldn’t have chosen a better time. Get pre-approved today and then call your local realtor.
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Is This a Recovery?
August 12th, 2010 by Quentin Keefe
So what is really going on with the economy? The latest NBC/Wall Street Journal poll shows that 64% of Americans don’t believe we have bottomed out yet. Can this be possible? Probably not, but consumer sentiment cannot be discounted either. Seeing that 2/3rds of our economy is fueled by consumer spending, a number like this cannot be ignored. But, the facts really don’t support this sentiment, although for so many this recession is anything but over. There is a lot of good news and all in all the economic indicators are much improved over two years ago. Corporate profits are back on track, job losses have been pretty much stopped and moderate job growth has begun, albeit, not nearly what we need in order to really get the economy heated up, `foreclosures are starting to slow and housing prices, for the most part, have stabilized. Bad economic news has a way of spreading like wildfire and can be very unsettling for American families. Good news is often seen as an anomaly and not given its due. Yes, this is what a recovery looks and feels like after the worse recession since the Great Depression. We are on the mend, slowly, but most certainly.
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A Financial Roller Coaster
August 3rd, 2010 by Quentin Keefe
Just when it looks like rates are going up…well…Last week we had another strong week for mortgage-backed securities (MBS) due to all of the uncertainty about the economy. It seems every time there is positive economic news (bad for MBS’s), it is immediately countered with negative news(good for MBS’s). Hence, rates are on what is akin to a financial roller coaster…up one minute and down the next. This has lead to a pretty stable rate environment all in all. Yes, rates will go up. It’s inevitable. But when, at this point, is anyone’s guess?
Get the word out, because these historic low interest rates are definitely on life support!
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Mortgage Rates Remain Low
July 27th, 2010 by Quentin Keefe
Mortgage rates are among the lowest in history as the uncertainty about the pace of the economic recovery continues to attract investors to the safer investments such as government guaranteed mortgage-backed securities. This fact, coupled with low inflation has created a perfect storm for continued low mortgage interest rates.
The economic uncertainty has been best expressed in the housing sector. In June existing home sales were down 5% from much stronger May levels. Yet, they were still 10% higher than a year ago. While first time home buyers accounted for 43% of the sales, there is uncertainty going forward about how the end of the tax credit program will affect these new buyers. Still, the National Association of Realtors expects annual existing housing sales to be up in 2010 over 2009 and to grow even more in 2011.
The good news is that the economy, while certainly not recovering at a pace we had all hoped for, is, nonetheless, on a growth path. This week’s release of the second quarter Gross Domestic Product (GDP) will shed more light on what is happening in terms of broad economic activity. For now, anyone considering getting into the housing market or refinancing their existing higher mortgage rate should do so, because this “perfect storm” will not last forever!
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New and Existing Home Sales Reports
June 30th, 2010 by Quentin Keefe
The performance difference in this week’s two housing reports was stark, but it was mostly due to measurement methods. May Existing Home Sales fell 2% from April, and were up 19% from one year ago. May New Home Sales dropped 33% from April, which was about 13% lower than one year ago, and a record low level. There’s an important difference between the two reports, though. Existing Home Sales measure transaction closings, while New Home Sales are based on contract signings. The April 30 contract signing deadline to receive the home buyer tax credit pulled many contract signings forward into April, and some of these deals closed in May. As a result, Existing Home Sales were still boosted by the tax credit in May, while New Home Sales were not.
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Financial Reform bill
June 29th, 2010 by Quentin Keefe
After months of debate, Congress reached agreement on the Financial Reform bill, and it is expected to pass next week. The bill includes many provisions which will affect mortgage lending and the home buying process, but the impact will not be fully known for some time as many of its changes are subject to regulatory discretion. Separately, the larger bill containing an extension to the home buyer tax credit “close-by” deadline failed to pass this week. Lawmakers will continue to debate the bill, but it appears unlikely that the “close-by” deadline will be changed before the current June 30 deadline is reached.
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Lowest Mortgage Rates in Decades
June 28th, 2010 by Quentin Keefe
Mortgage rates dropped to the lowest level in decades this week, and home affordability is very favorable. Uncertainty about the extent of global economic growth and continued low inflation levels have helped mortgage rates reach these levels.
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Loan Originator Compensation
June 15th, 2010 by Quentin Keefe
There has been a lot of speculation about what exactly will end up in HB 4173 as it relates to Loan Originator Compensation. Most of the focus has been on Sen. Merkley’s amendment to the senate version, SB 3217. The most controversial language is the reference to a prohibition of direct or indirect compensation ( which includes Yield Spread Premiums or YSP’s) to originators based on the terms of the mortgage, including its rate. This amendment, if it stands, will severely handicap mortgage brokers, as YSP is their primary compensation method. The amendment would allow lenders to be compensated by a subsequent purchaser( through a servicing release premium or SRP) because that transaction is seen as a secondary market transaction. In no case however, can an originator receive compensation through the yield of the interest rate if that originator is receiving any part of their compensation directly from the consumer or an interested third party. This also applies if a consumer is paying any upfront discount points or origination fee. Therefore, the originator can only receive compensation through the interest rate if that is the only source of compensation.
Whatever language ends up in the final bill will have a lasting impact on mortgage banking going forward.
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