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Posts tagged adjustable rate mortgages
Mortgage Refinance Applications Increase Slightly
Jun 2nd
The Mortgage Bankers Association released its Weekly Mortgage Applications Survey for the week ending May 28, 2010.
Demand for loans to buy homes fell last week for the fourth straight week, holding 13-year lows, as the housing market adjusted to a selling environment without the federal tax credits.
The Mortgage Bankers Association’s index for mortgage loan application increased 0.9% from one week earlier, while the Refinance Index increased 2.4% from the previous week.
Purchase intentions have slumped following the April 30 deadline for a tax credit worth as much as $8,000. The incentive pulled house sales forward and triggered the largest monthly construction spending gain in nearly a decade.
Average interest rate for 30-year fixed-rate mortgages increased to 4.83% from 4.80%, with points decreasing to 1.05 (including the origination fee) for 80% loan-to-value (LTV) ratio loans.
Average interest rate for 15-year fixed-rate mortgages decreased to 4.24% from 4.25%, with points increasing to 1.11 (including the origination fee) for 80% loan-to-value (LTV) ratio loans.
The average contract interest rate for one-year adjustable-rate mortgages (ARM) increased to 6.96% from 6.83%, with points decreasing to 0.27 (including the origination fee) for 80% loan-to-value (LTV) ratio loans.
“With another week of historically low mortgage rates, the trend from the prior three weeks continued, as refinance applications increased while purchase applications dropped. Purchase applications are now almost 40 percent below their level four weeks ago, while the refinance share, at 74 percent, is at its highest level since December,” said Michael Fratantoni, MBA’s Vice President of Research and Economics.
“In addition, the ARM share dropped last week to its lowest level since March of this year, as borrowers took the opportunity to lock in at historically low fixed mortgage rates.”
Mortgage Rates Fall Closer to Record Low
May 27th
Freddie Mac: 30 year fixed-rate mortgage lowest since December 2009
Mortgage rates continued their downward trek for the week ending May 27, 2010, according to a survey released by Freddie Mac.
30-year fixed-rate mortgage average fell to 4.78% with an average 0.7 point, the lowest since December 3, 2009 when it averaged 4.71%. In the previous period, the average was 4.84%, and the year-ago average was 4.91%.
15-year fixed-rate mortgages fell to 4.21%, compared with 4.24% a week earlier and 4.53% last year.
5-year Treasury-indexed hybrid adjustable-rate mortgages (ARM) averaged 3.97%, up from 3.91% a week earlier, but down from 4.82% on year.
1-year Treasury-indexed adjustable-rate mortgages (ARM) hit a fresh 5 1/2-year low of 3.95%, down from 4% and 4.69%, respectively.
To obtain the rates, the one-year required payment of an average 0.6 point, while the rest had an average 0.7 point. A point is 1% of the mortgage amount, charged as prepaid interest.
“These low rates will help to elevate home-buyer affordability and soften the effects of the sunset of the home-buyer tax credit,” said Frank Nothaft, Freddie Mac chief economist, in a statement. “The credit substantially propelled home sales, as reflected in the strength of the April existing and new home sales, which were up 7.6% and 14.8%, respectively.”
Mortgage Refinance Applications Continue to Increase
May 26th
The Mortgage Bankers Association released its Weekly Mortgage Applications Survey for the week ending May 21, 2010.
Mortgage applications rose last week by the most in a month as homeowners took advantage of borrowing costs close to a record low to refinance.
Mortgage applications to refinance home loans jumped to a seven month high last week as rates neared record lows, but purchase demand remained stuck at a 13-year low.
The Mortgage Bankers Association’s applications index increased by 11.3%, followed a 1.5% drop the previous week. Mortgage refinancing surged 17%, the most since February. Purchase applications fell to the lowest level since 1997.
“Refinance application volume jumped last week as continuing financial market turmoil related to the budget crises in Europe extended the opportunity for homeowners to lock in at historically low mortgage rates,” said Michael Fratantoni, MBA’s Vice President of Research and Economics.
“In contrast, purchase applications fell further this week, following last week’s sharp decline, keeping the purchase index at 13-year lows.”
Average interest rate for 30-year fixed-rate mortgages decreased to 4.80% from 4.83%, with points remaining constant at 1.08 (including the origination fee) for 80% loan-to-value (LTV) ratio loans.
Average interest rate for 15-year fixed-rate mortgages increased to 4.25% from 4.19%, with points decreasing to 1.00 from 1.36 (including the origination fee) for 80% loan-to-value (LTV) ratio loans.
Average interest rate for one-year adjustable-rate mortgages (ARM) increased to 6.83% from 6.81%, with points increasing to 0.38 from 0.37 (including the origination fee) for 80% loan-to-value (LTV) ratio loans.
Mortgage Purchase Applications Fall
May 19th
While Refinance Applications Increase
The Mortgage Bankers Association released its Weekly Mortgage Applications Survey for the week ending May 14, 2010.
Mortgage loan application volume, decreased 1.5% on a seasonally adjusted basis from one week earlier.
Mortgage Refinance Index increased 14.5% from the previous week and the seasonally adjusted Purchase Index decreased 27.1% from one week earlier.
Average interest rate for 30-year fixed-rate mortgages decreased to 4.83% from 4.96%, with points increasing to 1.08 from 0.91 (including the origination fee) for 80% loan-to-value (LTV) ratio loans.
Average interest rate for 15-year fixed-rate mortgages decreased to 4.19% from 4.32%, with points increasing to 1.36 from 0.81 (including the origination fee) for 80% loan-to-value (LTV) ratio loans.
Average interest rate for one-year adjustable-rate mortgages (ARM) decreased to 6.81% from 6.86%, with points increasing to 0.37 from 0.35 (including the origination fee) for 80% loan-to-value (LTV) ratio loans.
“Purchase applications plummeted 27 percent last week and have declined almost 20 percent over the past month, despite relatively low interest rates. The data continue to suggest that the tax credit pulled sales into April at the expense of the remainder of the spring buying season. In fact, this drop occurred even as rates on 30-year fixed-rate mortgages continued to fall, and at 4.83 percent are at their lowest level since November 2009,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. “However, refinance borrowers did react to these lower rates, with refi applications up almost 15 percent, hitting their highest level in nine weeks.”
Mortgage Applications Increased 3.9%, Refinancing Surge
May 12th
The Mortgage Bankers Association released its Weekly Mortgage Applications Survey for the week ending May 7, 2010.
Mortgage applications rose last week, led by a rebound in refinancing as long-term borrowing costs dropped below 5% for the first time in two months.
The Market Composite Index, a measure of mortgage loan application volume, increased 3.9% on a seasonally adjusted basis from one week earlier. The refinance index climbed 15%, while the purchase index fell 9.5% in the first week since the end of a government incentive.
Average interest rate for 30-year fixed-rate mortgages decreased to 4.96% from 5.02%, with points decreasing to 0.91 from 0.92 (including the origination fee) for 80% loan-to-value (LTV) ratio loans.
Average interest rate for 15-year fixed-rate mortgages decreased to 4.32% from 4.34%, with points increasing to 0.81 from 0.80 (including the origination fee) for 80% loan-to-value (LTV) ratio loans.
Average interest rate for one-year adjustable-rate mortgages (ARM) decreased to 6.86% from 7.03%, with points increasing to 0.35 from 0.28 (including the origination fee) for 80% loan-to-value (LTV) ratio loans.
“The recent plunge in rates on US Treasury securities, due to a flight to quality as investors worldwide sought shelter from the Greek debt crisis, benefitted US mortgage borrowers last week. Rates on 30-year mortgages dropped to their lowest level since mid-March. As a result, refinance applications for conventional loans jumped, hitting their highest level in six weeks,” said Michael Fratantoni, Mortgage Bankers Association’s Vice President of Research and Economics.
“In contrast, purchase applications fell almost 10 percent in the first week following the expiration of the homebuyer tax credit, as the tax credit likely pulled some sales into April that would otherwise have occurred in May or later.”
The drop in applications for purchase financing may be the first sign that the expiration of a tax credit worth as much as $8,000 will depress demand in coming months. The outlook for home sales later in the year will depend on improvement in jobs.
The tax credit for first-time home buyers, which was extended in November 2009 to include some current owners, required contracts be signed by April 30 and settled by June 30.
Are Adjustable Rate Mortgages “Bad”?
May 9th
Are adjustable rate mortgages “bad”?
No.
No, they are not.
There is nothing inherently bad about an adjustable rate mortgage — regardless what you may have seen on the evening news recently.
There are all kinds of adjustable rate mortgages: 3/1, 5/1, 7/1, 2/28 — just to name a few. And each loan product has a different use for a different person who may be in a different situation.
And generally speaking, the only time I have seen an adjustable rate mortgage be “bad” is when a homeowner gets into an adjustable rate without understanding the risks associated with the loan. Occasionally, I suppose that the 2/28 adjustables could be argued as “potentially bad” but there isn’t really anything “bad” about them for someone who understands them.
Now.
The reason I bring up the fact that there isn’t anything really bad about adjustable rate mortgages is that the 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.97 percent according to the latest Freddie Mac press release, with an average 0.7 point, down from last week when it averaged 4.00 percent. A year ago, the 5-year ARM averaged 4.90 percent.
“Treasury bond and note yields declined this week, and rates on fixed-rate mortgages and hybrid ARMs followed suit,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Rates for both the 30-year and 15-year fixed-rate mortgages were the lowest in six weeks; initial rates on 5/1 hybrid ARMs hit an all-time low since they were added to the survey in the beginning of 2005.
With rates this low, are adjustable rate mortgages “bad”?
Only if you don’t know what you are getting yourself into.
Fixed-rate Mortgages at Lowest in Six Weeks
May 6th
5-year adjustable-rate mortgages below 4%
Mortgage rates moved lower this week. The average rate on 30-year and 15-year fixed-rate mortgages drifting to their lowest levels in six weeks, according to Freddie Mac’s weekly survey of conforming mortgage rates.
30-year fixed-rate mortgage averaged 5% for the week ending May 6, down from 5.06% last week; the mortgage averaged 4.84% a year ago.
15-year fixed-rate mortgages were 4.36%, down from 4.39% last week; the mortgage averaged 4.51% a year ago.
5-year Treasury-indexed hybrid adjustable-rate mortgages (ARM) averaged 3.97%, down from last week’s 4% and 4.9% a year earlier, hitting the lowest level since Freddie started tracking such loans at the beginning of 2005.
1-year Treasury-indexed adjustable-rate mortgages (ARM) averaged 4.07%, down from 4.25% last week; they averaged 4.78% a year ago.
To obtain the rates, the 30-, 15- and 5-year mortgages required payment of an average 0.7 point, and the one-year required an average 0.6 point. A point is 1% of the mortgage amount, charged as prepaid interest.
“Treasury bond and note yields declined this week, and rates on fixed-rate mortgages and hybrid ARMs followed suit,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Rates for both the 30-year and 15-year fixed-rate mortgages were the lowest in six weeks; initial rates on 5/1 hybrid ARMs hit an all-time low since they were added to the survey in the beginning of 2005.”
Low rates and the April 30 deadline to qualify for the federal home buyer tax credit fueled a run-up in applications for loans to buy homes last week for the third straight week.
“Pending existing home sales rose for the second consecutive month in March to the strongest pace since October 2009, just before the original deadline for the credit, based on figures published by the National Association of Realtors,” Nothaft said. “Three of the four Census regions showed an up tick in sales, led by the South with a 12.7% gain, while sales in the Northeast fell 3.3%.”
Home Loan Demand Up in Tax Credit’s Last Days
May 5th
The Mortgage Bankers Association released its Weekly Mortgage Applications Survey for the week ending April 30, 2010. Demand for loans to buy homes raced to a seven-month high last week for federal tax credits, Mortgage Bankers Association data showed on Wednesday.
Home purchase loan applications jumped 13% in the week ended April 30 to the highest level since early October, overshadowing a 2.1% drop in refinancing demand. Total mortgage applications rose by a seasonally adjusted 4%, the mortgage trade group reported.
“Purchase application activity continued to increase in the last week of the homebuyer tax credit program,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. “Purchase applications were up 13 percent over the previous week and almost 24 percent over the last month, driven by significant increases in both conventional and government purchase applications. We also saw the Government share of applications for purchasing a home increase to over 50 percent of all purchase applications last week, which is the highest in two decades.”
Average interest rate for 30-year fixed-rate mortgages decreased to 5.02% from 5.08%, with points increasing to 0.92 from 0.91 (including the origination fee) for 80% loan-to-value (LTV) ratio loans.
Average interest rate for 15-year fixed-rate mortgages decreased to 4.34% from 4.38%, with points decreasing to 0.80 from 0.93 (including the origination fee) for 80% loan-to-value (LTV) ratio loans.
Average interest rate for one-year adjustable-rate mortgages (ARM) remained unchanged at 7.03%, with points decreasing to 0.28 from 0.30 (including the origination fee) for 80% loan-to-value (LTV) ratio loans.
Eligible borrowers seeking to take advantage of federal tax credits of $8,000 for first-time buyers and $6,500 for existing homeowners were required to sign contracts by April 30 and to close on their loans by June 30.
Housing demand is likely to drop off after the recent flurry of sales ahead of the tax credit expiration.
Sales of new homes jumped almost 27% in March, and sales of existing home increased by 6.8%. The number of previously owned homes in contract to be sold, known as pending home sales, rose 5.3% to a five-month high in March.
Mortgage Rates Fall, 30-Year Fixed at 5.06%
Apr 30th
Mortgage rates mostly edged lower for the week ended April 29, 2010.
“Mortgage rates on 30-year fixed loans have averaged about 5% over the first four months of this year, staying within a band of roughly a quarter percentage point and virtually matching 2009’s annual average,” said Freddie Mac chief economist Frank Nothaft. “These low rates have been helping to moderate house price declines over the course of the year.”
30-year fixed-rate mortgage averaged 5.06%, down slightly from its 5.07% average last week. The mortgage averaged 4.84% a year ago.
15-year fixed-rate mortgages averaged 4.39%, unchanged from the prior week. The mortgage averaged a 4.51% rate a year ago.
5-year Treasury-indexed hybrid adjustable-rate mortgages (ARM) averaged 4.00%, down from 4.03% last week. The ARM averaged 4.90% a year ago.
1-year Treasury-indexed adjustable-rate mortgages (ARM) averaged 4.25%, up from 4.22% last week. The ARM averaged 4.78% a year ago.
To obtain the rates, the fixed-rate mortgages required payment of an average 0.7 point, the 5-year ARM required an average 0.6 point and the 1-year ARM required an average 0.5 point. A point is 1% of the mortgage amount, charged as prepaid interest.
Home sales jumped in March as buyers took advantage of the tax credit. Sales of previously owned homes rose 6.8% in March to a 5.35 million annual pace, the National Association of Realtors reported last week. New home sales surged 27%, the biggest gain since 1963, to a 411,000 annual pace.
First-time home buyers can get up to $8,000 tax credit and a $6,500 credit for home owners buying a new residence. Eligible buyers must sign contracts by April 30 and close loans by June 30.
