Mortgage rates continue to slide down
September 29, 2009 by admin
The mortgage industry may never offer another year like we have experienced in 2009. Interest rates have been at or below historic low levels for almost the entire year, offering home buyers the opportunity to purchase homes locking in ultra low payments and existing home owners a window to refinance their mortgages at interest rates that once seemed unattainable. The window to lock in even larger savings has arrived as mortgage rates have moved to their lowest levels since January of this year, following a commitment from the FOMC to continue to support the secondary mortgage market. The recent announcement from the FOMC and Ben Bernanke has helped to drop interest rates on mortgage loans by over a quarter of a percent. This drop has positioned long term interest rates barely above five percent on thirty year loan terms and well below five percent for fifteen year loan terms.
The recent downward trend with interest rates may spur a record month in home sales. The potential for a record housing month could grow momentum as to date the government has yet to extend the first time home buyer tax credit. The current credit for purchasing a home and receiving up to $8,000 back from the government ends at the end of November. The combination of the improved rates and potential elimination of this program is likely to push buyers who have been on the fence into action. This opportunity may be one of the greatest financial windfalls new home owners could ever imagine.
Long term interest rates are likely to stay in the five to six percent range for the balance of 2009 and well into 2010, thanks to recent policy decision by the FOMC. The secondary mortgage market remains quite dysfunctional. Despite a surge by the stock market and growing sentiment that the economy is doing better, there remains a lack of investment buyers in the marketplace for mortgage securities. This dramatically impacts all areas of the mortgage industry, especially areas such as jumbo loans and home equity loans, which are not eligible for sale to Fannie Mae, Freddie Mac or Hud through their FHA mortgage program. These three companies remain the catalyst of home lending in the U.S. and will be responsible for securitizing upward of ninety percent of all mortgage loans financed this year. The government has stepped up and provided these companies with a partner to securitize these loans on a secondary market, freeing up working capital which allows the agency lenders to continue offering mortgage loans on a capital lending basis.
Clearly the FOMC would like to move out of primary positions supporting the secondary market. The likelihood of this transition beginning in 2010 is growing more realistic. Every month that the economy improves helps to bring more investors into the market. The stabilization of home prices will help to bring more investors into the market as well, and housing is likely to reach a bottom in the next six to twelve months. It is unclear what impact the presence of more private investors will have on mortgage rates, one can assume the likelihood interest rates will be moving higher is pretty certain. This year has offered homeowners a window to some of the best mortgage rates ever, but that window could begin to close over time and locking into a great interest rate should not be taken for granted.
September 28, 2009
September 28, 2009 by admin
The end of the month stock slide may be coming to an abrupt end on Monday as the market jumped well over 100pts today in early trading. The market is looking to regain its footing, following a rough week of selling as investors renewed their confidence in equity positions. The market is moving without influence from economic data and is relying on corporate headlines to push investors. The ten year Treasury bond remains relatively unchanged, despite the sharp upward move from equities today. The ten year bond was trading at 3.31% on Monday, very close to its six month lows. The attractive yields on bonds are carrying over to fixed mortgage rates that remain at or under 5.25% with most national mortgage lenders for thirty year loan terms, and well under five percent for fifteen year loan terms. Interest rates for continue to be resistant to dramatic changes in the equities markets, good news for home owners and potential home buyers who are benefitting from improved portfolio valuations and great financing opportunities.
The stock market has been in a downward spiral up until today, investors fearing that growing out of the current recession would be much longer and more difficult have begun to pull back on their equity positions and take new found profits off of the table. Today, investors were greeted with some key corporate earnings figures in addition to mergers and acquisitions.
New Website Feature – What are best rate offers
September 27, 2009 by admin
We are excited to announce a new feature to the BestRateSource.com website. We will be scouring the Internet to try and find the best rate offers on all types of consumer finance, products, bank savings and credit card programs. Our goal is to do all of the heavy lifting to uncover the best of the best, helping you to save time and money. In previewing the best services, we will go beyond the glossy advertising to break down the fine print, fees and potential savings to help you make informed and educated decisions along the way. As always, we welcome suggestions from our loyal consumer base as well as encourage companies that have exceptional offers to share these opportunities with us and allow us to further showcase the best of the best.
Discover renews zero percent balance transfer offer
September 27, 2009 by admin
The first offer we can review in our series uncovering the best rate savings program across the Internet is a new promotion that Discover Card® is offering. The meltdown in the financial markets has dramatically offered the credit card industry, from the way they market to consumers, interest rates and credit limits they offer. One of the most notable changes in the industry is the promotions that they offer to try and attract new consumers. For years, consumers have been able to navigate the balance transfer game, transferring balances from higher rate cards to low rate and zero percent promotional programs.
The credit meltdown forced many credit card issuers into eliminating almost all of their balance transfer promotions, forcing consumers into sticking with their current card holders and paying their set interest rates, with few exit strategies. This past week, Discover Card® took a major step forward in providing an alternative avenue to attract these potential customers. The introduction of the Discover® More(SM) Card – American Flag offers new balance transfer promotions with a Zero Percent Rate for the first twelve months. This was one of the only credit card companies we could find that would offer a balance transfer with a zero percent rate for longer than a six month period. There is an upfront fee for a balance transfer, so it is important to crunch the number to make certain this offer is truly beneficial.
For example, if you are a consumer with a credit card balance of $8500 and your current interest rate is 12%, over the course of twelve months you should expect to pay $1020 in interest (potentially less if you are paying the balance lower). If you elect to transfer the balance of this card and take advantage of the zero percent offer, you will incur a fee of $425 upfront (the five percent transfer charge) but have the potential to save between $500-600 over the twelve months that your balance is at zero percent.
The Discover More American Flag card offers a variable interest rate after the first twelve months. The interest rate can adjust to 11.99% to 18.99% after the first year so it is very critical to crunch the numbers to ensure you are potentially coming out ahead in the balance transfer scenario. If you have a low fixed rate, then should closely weigh the short and long term financial benefits of exploring a balance transfer promotion, including a realistic payment plan and a financial exit strategy as you work to becoming debt free. Zero percent promotional credit cards can be very enticing, but it is important to review all of the fine print details to ensure this is the right financial decision.
You can find more details and apply for Discover More American Flag Card® with the following link:
Discover® More(SM) Card – American Flag
September 24, 2009
September 24, 2009 by admin
Stocks posted their second straight day of declines on Thursday as investors lost confidence in the markets following a weaker than expected report on existing home sales for the month of August. Investors have moved to the side of growth fears in the near term and have led a correction of nearly two percent in the market in the past forty eight hours. The commodity markets are showing renewed signs of weakness and the price for a barrel of oil dropped by $3, sending oil to its lowest levels in the last thirty days.
The headline story of the day was a disappointing report for existing home sales from last month. The housing market has been a catalyst in helping to fuel the surge in the stock market. Housing has benefitted from historically low mortgage rates and government tax incentives to help create a bottom in the marketplace. For the month of August, existing home sales fell by 2.7%, the first month of decline since March of this. Particularly concerning to investors who are following the market is the potential for further weakness if the government fails to renew the first time home buyer tax credit that many believe critical to the market recovery. The silver lining in today’s report is that the drop in equities helped to bring bond yields significantly lower. The ten year treasury has dropped by over ten basis points this week, finishing today at 3.36%. The drop correlates to a drop of approximately .125% in long term mortgage rates with most national lenders. Fixed rate mortgage loans for thirty year loan terms are now at or below 5.25% with most national lenders, with rates on fifteen year loans still under five percent.
A sliver lining to the days disappointing news was the weekly job and employment report. This report was better than expected, with a decline in benefit applications being processed. One of the lingering concerns that is hanging over the economy is the lack of job creation and the high rates of unemployment. Good news in the job sector normally would have fueled a market rally, but investors appear to be growing more pessimistic. The challenge facing the stock market for the balance of the month is balancing confidence and fear. There is a steady confidence that the worst of the recession is over, but a growing fear that a recovery is going to take longer than expected. Many economists are referring to this as the difference between a V shaped or U shaped recovery. The drop in the U.S. stock market has carried over to the Asia stock market which was down by nearly three percent in early trading on Friday. There is speculation that the market correction could equate to a sell off of nearly ten percent, if this scenario unfolds it is not unlikely for mortgage rates to retest the lows of March when fixed rate loans for both thirty and fifteen year loan terms were available below five percent.
Busy day of news, Fed holds rates steady and banks reduce fees
September 23, 2009 by admin
The clear cut winners from today’s news were consumers. The FOMC policy to keep interest rates intact for the Fed Discount and Fed Funds rate was anticipated by almost everyone in the economy. The key news was not related to the Fed’s decision to leave interest rates unchanged; more specifically it was the news that the Fed would be extending their policy of supporting the purchase of mortgage backed loan securities into 2010. This move is a significant boost to existing home owners who have yet to refinance and potential home buyers looking to purchase in the next few months. Today’s announcement should be a significant factor in helping to keep interest rates at their current historic low levels. The Fed began supporting the secondary mortgage market in December of last year and has been instrumental in helping to keep rates low, finally spurring some positive traction on the housing front as witnessed over the last several months with key reports on both new and existing home sales. The yield on the ten year bond moved lower with the news and could push into the low three percent range, further driving down long term interest rates for the balance of the year.
The stock market sell off was somewhat of a surprise. The market has been rallying with an eye on the ten thousand point mark for the DOW. The news that the Fed remains very cautious with growth in the coming corners, is somewhat contradictory to testimony from Ben Bernanke and Warren Buffet over the last few weeks, that seemed to spark optimism with the chance of a quick rebound. The Fed clearly understands that a return to economic prosperity relies strongly on the labor front. With the national unemployment rate hovering near ten percent, there remains little optimism that the economy will have a V-shaped recovery.
Consumers won a key battle with the banking system today. Two of the nations largest depository banks (Bank of America and JP Morgan Chase) announced they would be altering their overdraft policy. Consumer advocacy groups have been challenging the current overdraft practices in the banking industry, and area that provides a significant amount of revenue, put preys on the most troubled consumers in the economy. The major area of focus is banks allowing consumers to utilize their debit cards for purchases that exceed their account balance, and then issuing overdraft fees on this process. The majority of consumer groups are requesting that consumers have to opt into this service with their bank as opposed to this being and industry standard, to help and protect consumers. The banking industry has suffered numerous black eyes over the past twenty four months and appears to have little wiggle room or face Congressional interaction to begin changing their policies. Congress has also put the banking industry on notice of their intentions to try and push forward a credit card reform bill to be adopted into law earlier than previously projected, another move to try and help struggling consumers.
September 21, 2009
September 21, 2009 by admin
The stock market was off sharply in early action on Monday as equity investors pulled backed their positions, looking to lock in profits for the month of September. Investors appeared to have concerns over the recent rally in the markets amid fresh economic news that seems to be indicating economic recovery. The market was off by nearly 100 pts in early action, before rallying back in the afternoon. The drop in the equity market could have one silver lining, providing some breathing room for fixed mortgage rates that have rallied over the last two weeks. The yield on the ten year Treasury bond was trading under 3.5% on Monday, helping to keep the Treasury bonds from surpassing the two week high mark of 3.49%. The net effect is long term mortgage rates remain relatively unchanged on Monday. Most national mortgage lenders are offering thirty year fixed rate home loans at 5.375 percent with zero points. Loans at or under the five percent level are still available of fifteen year loan terms, or thirty year mortgage terms with upfront discount points.
The market had an opportunity to review a U.S. leading economic index report, which recorded positive market improvement for the fifth straight month. The report echoes a string of positive economic news predictions from Warrant Buffet to Ben Bernanke this month. Most economists now believe that the worst of the economic recession is officially over. This will be an interesting week for the market as the Federal Reserve will be holding policy meetings. All indications are that the Fed’s policy is likely to stay intact. The market however, will be anxious to review the text of the Fed’s decision to see, what if any changes they are anticipating in the upcoming future to their policy decisions. The recent rally in equities and improvement in home sales are good signals for the economy, but the lack of job growth is likely to be an area of lingering concern. The Fed will have the benefit of little to no inflationary pressure in the market to influence its policy. The market has been very soft for price growth, with energy the only area of potential concern. Oil prices have remained relatively stable over the summer months, showing little momentum to rally past $70 per barrel. This is a good signal that oil prices could remain at or below current levels until next summer. Removing the threat of surging energy prices from the Fed’s horizon should help them to keep current policy intact until the first or second quarters of next year.
The real winners with the Fed policy could be the major financial institutions that helped to steer the economy off the cliff. The historically low rates are allowing these companies to enjoy healthy profit margins on a variety of lending products, creating revenue that can be used to offset defaults. The stock market seems very acute to this potential, as financial stocks have enjoyed the largest percentage rally from March lows of any area within the equity marketplace. The Fed’s policy decision this week is one that could dramatically move the equity and bond market and is important to follow if you are in the process of applying for a loan and have yet to lock in your interest rate.
HUD ups the ante for FHA lenders
September 19, 2009 by admin
The department of HUD (Housing and Urban Development) a government agency that oversees the Federal Housing Administration loan program (FHA mortgages) is in the process of tightening guidelines for companies that offer its loan programs. The government agency is attempting to ensure that its lending partners are the best of the best, and help to mitigate potential fraud and misrepresentation. This past week, HUD announced they would be increasing the required net worth of its lending partners to one million dollars, up from two hundred and fifty thousand. In addition, they would be eliminating licensing for mortgage brokers and shifting more emphasis to direct lending partners.
FHA mortgages have surged in popularity over the past twenty four months. FHA loans, which tend to be more lenient to borrowers with less than perfect credit histories also offer the lowest down payment option for home buying in today’s mortgage market. FHA loans allow a borrower to purchase a new home with as little as three and a half percent down payments. The government also initiated a program this year, allowing the first time home buying tax credit to be applied towards and FHA buyers closing fees. This allows first time homebuyers to purchase homes with minimal out of pocket expense, and is being credited as one of the key catalyst in helping to drive the rebound in the housing market this year.
Borrowers who wish to apply for FHA mortgages need to apply with banks or lenders that are approved to offer FHA backed mortgage loans. FHA does not directly offer home loans to the general public. Their role, as a government sponsored agency is to provide funding and purchase mortgage backed loan securities that are underwritten to FHA guidelines. This process is similar to how Fannie Mae or Freddie Mac, conventional home loan agency lenders operate. Establishing the underwriting guidelines and approving select lenders allows FHA to reduce their risk in their loan portfolios. The agency, which has not been immune to the slump in the housing sector, has yet to receive bailout money from the government, despite growing defaults within its loan portfolio. The Department of HUD, also regulates reverse mortgage loans through the FHA loan administration. Borrowers applying for a reverse mortgage need to apply through lenders that have endorsements from FHA.
The role of FHA as a key component in the mortgage finance industry has never been more apparent. The agency, has stepped in and filled a large void in the secondary market for home buyers and home owners who would not qualify for conventional loan funding. The companies decision to increase its regulation on its lending partners, comes at a time when FHA mortgages have seen their market share increase by almost two hundred percent in the past two years. The decision to implement additional guidelines could help FHA to ensure a cleaner and more profitable loan portfolio in the future. Consumers in the market for an FHA mortgage need to investigate if they are working with a direct FHA lender, or simply a middle company, representing an FHA lender.
September economic data sends mortgage rates higher
September 17, 2009 by admin
The mortgage industry is beginning to feel the pinch of rates moving higher as the economy continues to gain confidence as new data shows further strength in the recovery and better days ahead. The month of September, is typically a challenging month for the equity markets. This year, the market is not playing by the same rules, economic reports have reassured investors that the worst is likely over, and the market is now well positioned to eclipse the 10,000 point level on the DOW. The strong rally from investors in equity positions has carried over to the bond market. Yields on the ten year treasury have risen over ten basis points in the past two weeks, and indications that mortgage rates could continue moving higher are beginning to surface. Last week, the mortgage bankers association reported a decline in mortgage applications of almost nine percent as momentum in the home refinance market is carrying through.
The connection between equities and bonds has been significantly altered in trading this year. Historically, upward movement in the stock market carries over to the bond market, rising up required yields and interest rates along the way. This paradigm has been greatly reduced this year as bonds yields have held near record lows, despite the upward movement in the stock market. The month of September, may be one of the last remaining months that bonds benefit from this unusual trend. The stock markets approach to the 10,000 point level could carry significant changes in the mindset of investors. As equity investors regain confidence and begin to place sideline funds back into equities, a further rally could start to take additional funds off the table for bonds, forcing yields to move higher.
This month, the market has been reassured by testimony from Ben Bernanke and recently Warren Buffett as to the state of the economy and the further likelihood that the recession will be coming to and end over the next coming quarters. Despite the lack of job growth, there are a number of economic reports that have been released this month that help to indicate brighter days in the near future. The housing market is continuing to show signs of improvement, including the release of the housing starts report, which topped expectations for multi family home building. The housing market has been one of the key beneficiaries from the low bond yields and historically low mortgage rates this year. The market also reacted favorably to a report from the Philadelphia Fed Factory Index, This key economic reports, and monitors factory production on a monthly basis in and around the Philadelphia region. Last month, productions surged by 10 points, and are now at its highest level since the fall of 2007. These better than expected economic reports are being a catalyst behind another rally in the stock markets. There are many experts who believe that the job market is one of the lagging indicators in an economic recovery, and the stabilization of other key data are some of the most important factors that will point to the ending of a recession. Time will tell, if this philosophy holds true for the current recession, credited as being the worst economic recession since the great depression. The silver lining, is confidence appears to be slowly growing, and is one of the main components of the economy, which could help speed up the process.
September 15, 2009
September 15, 2009 by admin
The anniversary of the collapse of Lehman Brothers is being taken in stride by the stock market which is looking to extend its streak of positive gains for the month of September. The market sees no signs of falling into a traditional September funk as all signs for the Stock market to finish the month higher are holding firm. Investors have been forced to make decisions without the benefit of traditional corporate guidance and assurances as the month is quiet on the news front. Headlines of the day, include another report from the Federal Reserve and Ben Bernanke, indicating that the economy is turning the corner and signaling and end to the economic recession.
The testimony from the Federal Reserve is almost identical to the earlier testimony on the state of the U.S. economy. The testimony today, reflected back on the challenging economic times brought on by the fall of Lehman Brothers, and the subsequent damage that was sent through the global economic system. To date, the Federal Reserve has yet to acknowledge, allowing Lehman Brothers to collapse was a mistake. The result of the collapse of Lehman Brothers, was one of the key forces behind the collapse of the lending system and credit markets. The loss of confidence in the marketplace was seen as the driving force behind the beginning of the meltdown, which soon carried over to every area of the economy. The testimony is peculiar by the Fed in that they have failed to acknowledge the damage caused by the collapse (over three million job losses in the U.S.) and Billions of dollars in lost wealth, which likely could have been tempered with a more proactive approach to dealing with Lehman and other institutions at an earlier stage. This is not to acknowledge that the Fed was faced with a difficult challenge, as they had limited authority in their previous role, but could have been more forceful in demanding additional government interaction and oversight of the unwinding process.
The stock market, has reacted favorably to belief that the fundamentals of the global economy are steadily improving. Today, the major headlines arrived from a stronger than expected report on retail sales. For the month of August, retail sales were up by almost three percent, thanks in large part to a strong showing in the auto sector. This report, was a welcome sign to investors and consumers, as the previous month, sales were down in a surprise showing.
The net effect on the mortgage industry has been a slight pressure on the trading of bond yields. The yield on the ten year Treasury bond has moved off of its six month low in the 3.3% range, and is now at 3.43%. This upward tick in the bond market yield, has carried over to long term fixed mortgage rates which have moved up approximately .125% over the same period. Most national mortgage lenders are now offering thirty year fixed loans at 5.25% or higher without points. Rates on fifteen year fixed loans remain under five percent. September mortgage rates, remain near historic lows and consumers who are willing to pay points, may be able to negotiate a better fixed interest rate.