Daily Mortgage Comment

Courtesy of Alicia King, Suntrust Mortgage. (703) 335-6889

Mortgage bond prices fell considerably applying upward pressure on mortgage interest rates. Trading remained volatile. Energy prices subsided a bit but not enough to overshadow higher than expected inflation data. Consumer prices rose 1.1%, higher than the expected 0.7% increase. Mortgage bonds sold off following the release Wednesday and continued to fall the rest of the week. Fannie Mae and Freddie Mac bailout rumors turned out to be true. Unfortunately, the details remained unclear and left mortgage investors still on edge. For the week, interest rates on government and conventional loans rose by about 2 discount points or 1/2% in rate.
Leading economic indicators data Monday will set the tone for trading next week. Be cautious heading into the data releases.

Deciding Between Mortgage Programs

Choose a Loan Type from Mortgage Loan Programs

When considering the many mortgage loan programs that are available, you may find yourself overwhelmed. Click on a mortgage loan type to get a primer (in layman’s terms) on how a particular mortgage plan works. Fixed-Rate Mortgage - A mortgage loan program where the interest rate does not change for the life of the loan. Adjustable Rate Mortgage (ARM) - A mortgage loan program in which the interest rate is adjusted periodically based on an index. Also called a variable rate mortgage. Balloon Mortgage - Behaves like a fixed-rate mortgage loan for a set number of years (usually five or seven) and then must be paid off in full in a single “balloon” payment. Balloon mortgage loan programs are popular with those expecting to sell or refinance their property within a definite period of time. Two-Step Mortgage - A mortgage loan program where the interest rate is fixed for the first seven years and then is adjusted one time for the balance of the loan period. Conforming Loan - A mortgage loan program for up to and including $417,000 in the continental United States (Alaska and Hawaii limits are higher). Jumbo Loan - A mortgage loan program for $417,001 or more in the continental United States (Alaska and Hawaii limits are higher). These limits are set by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. Because jumbo loans cannot be funded by these two agencies, they usually carry a higher interest rate.

Daily Mortgage Comment

Tuesday’s bond market has opened in positive territory as investors await today’s FOMC meeting results. The stock markets are mixed with the Dow down 21 points and the Nasdaq up 3 points. The bond market is currently up 12/32, which will likely improve this morning’s mortgage rates by approximately .250 of a discount point.

There is no relevant economic news scheduled for release today, but this afternoon does brings us the results of today’s FOMC meeting. There seems to be a slight consensus that another rate cut is coming today, but with much debate on the size. Some are predicting a quarter point cut while others are calling for a half point. There are still some analysts that think the Fed may wait until early next year before making another move.

Daily Mortgage Comment

Friday’s bond market has opened well in negative territory following stronger than expected employment figures. The stock markets are showing modest losses with the Dow down 2 points and the Nasdaq down 8 points. The bond market is currently down 24/32, which will likely push this morning’s mortgage rates higher by approximately .375 of a discount point over yesterday’s morning rates.

The Labor Department posted November’s Employment data this morning, showing that the unemployment rate remained at 4.7% last month and that 94,000 new jobs were added to the economy. Analysts were expecting to see 70,000 jobs and a 0.1% up tick in the unemployment rate.

Daily Mortgage Comment

Thursday’s bond market has opened in negative territory yet again as the stock markets show early gains and investors await tomorrow’s employment figures. Stocks are in positive territory with the Dow up 35 points and the Nasdaq up 14 points. The bond market is currently down 9/32, which will likely push this morning’s mortgage rates higher by approximately .125 of a discount point.

There is no important news scheduled for release today. The Labor Department did post weekly unemployment claims, saying that 338,000 new claims were filed last week. Analysts were expecting to see 335,000 new claims. This was not enough of a variance to affect trading since the data is considered to be relatively low in importance.

Choosing a Fixed Rate Loan

Fixed rate loans generally come with one of two options; the 30-Year Fixed and the 15-Year Fixed. If a borrower is planning on being in the same home for a long period of time, a 30-Year Fixed may be more attractive because it offers stability. The monthly payment will remain consistent over the life of the loan. If interest rates are at historic lows at the time the borrower is seeking to obtain financing, this is a good program to consider.

A 15-Year Fixed loan program offers the same stability, but the accelerated amortization schedule makes the monthly payment substantially higher. While the interest rate may be lower on this type of loan, the borrower must be willing to commit to a higher monthly payment. If the borrower wishes to retire in 15 years and be debt-free at that time, this loan program may be more suitable to the borrower’s long-term needs.

It is also possible to make pre-payments on a 30-Year loan and reduce the life of the loan, as well as the overall interest payment, without committing to the higher monthly payment of a 15-Year program. As long as there is no pre-payment penalty associated with the 30-Year mortgage, pre-payment offers the borrower the latitude to make additional payments when it is affordable. If cash flow becomes difficult, this arrangement will not put the borrower in a compromising position.

 Courtesy of David Messineo, APEX Home Loans 301-365-3100 Ext 110

Daily Mortgage Comment

Wednesday’s bond market has opened in negative territory again following early stock strength and mixed economic news. The stock markets are posting strong gains with the Dow up 101 points while the Nasdaq has gained 33 points. The bond market is currently down 8/32, which will likely push this morning’s mortgage rates higher by approximately .250 of a discount point.

The first of today’s two releases gave us favorable news when the 3rd Quarter Productivity index was revised significantly higher. It showed that worker output improved at a 6.3% annual pace. This was higher than the 5.8% that was expected and much higher than the previous estimate of 4.9%. This is good news because high levels of productivity allow economic growth without significant inflationary pressures.

Weekly Mortgage Talk

Mortgage bonds prices rose last week applying downward pressure to mortgage interest rates. Trading was volatile throughout the week as market participants remained concerned over the recent credit issues and high energy prices. Adding to the volatility were triple digit movements in stock prices. For the week, interest rates on government and conventional loans fell by about 1/4 of a discount point.

The employment report Friday will be the most important event this week. ISM Index, productivity, factory orders, and consumer sentiment data will also be important.

Mortgage Week in Review

Last Week In Review

“I CAN SEE CLEARLY NOW, THE RAIN IS GONE…” Johnny Nash hit number one on the charts with this classic tune in 1972…and 35 years later, Fed Chairman Big Ben Bernanke is singing the same tune, mentioning in comments last week that the Fed would be more transparent so we all can see their policies clearly.

The new, improved, and more transparent Fed is a far cry from the days of “The Cryptic One”…Former Fed Chair Alan Greenspan, who was famous for his hidden messages. After a Greenspan speech, many traders were left scratching their heads and wondering what exactly was said. In sharp contrast, Bernanke has been very clear and easy to understand.

More importantly, Ben has done a good job of keeping inflation under control. The latest read on inflation was tame for last month, as a large jump in energy costs were offset by meek automobile, housing, and clothing prices. This suggests that higher oil prices haven’t yet pushed up the prices of other goods overall.

But one topic that is still cloudy is the Fed’s next move on December 11th. The latest chatter from the “more transparent” Fed indicates that the Fed will not cut – but traders in the pits are betting the ranch on another quarter-point cut. One thing is very clear – this topic will be debated right up until the Fed makes the announcement.

Bonds and home loan rates saw quite a bit of activity in the holiday shortened week, but ended up exactly where they started.

Affordable Mortgage coming to a home near you…

Effective Monday, November 12, 2007 the DC Bond Program interest rate will be revised to 5.60% and 2 points!This is good news for purchasers who are looking to get their first place!The DC Housing Finance Agency is offering special programs to help make home ownership more affordable through a DC Bond Program.This special program is available to home buyers interested in purchasing in Washington, DC. Funds will be given on a first come, first-served basis so act quickly to see if you qualify.These programs offer below-market interest rateson a 30-year fixed rate loan to qualified candidates.Additional assistance programs may apply dependingon your qualifications.Find out more by calling Jordan Milne today.As a participating lender, he can help you determine if you qualify. After all, we’ve been making homeownership a reality for more than 110 years. An opportunity for homeownership you can’t afford to miss…Courtesy of Jordan Milne, BF Saul Mortgage 240-497-8533