Case-Shiller Posts 16th Straight Month Of Home Price Improvement

According to the Standard & Poors Case-Shiller Index, home values rose 5 percent in June versus the month prior, and 4 percent from a year earlier. It’s the 16th consecutive month in which Case-Shiller reported an increase in home values and the third straight month of outstanding results.

That said, homeowners and home buyers would do well to temper Case-Shiller enthusiasm. The

June figures are issued on 60-day delay and, over the last 60 days, housing data has been lackluster at best.

• Existing Home Sales are down 27 percent
  
• New Home Sales are down 12 percent
  
• Homebuilder confidence is down
  

Stories like these highlight a key weakness of the Case-Shiller Index — it’s out of date as soon as it’s published. Because of this, the Case-Shiller Index relevance to everyday Americans is muted. People don’t buy homes in the “60 days ago” real estate market, after all.

June is ancient real estate history.

However, the Case-Shiller Index does have its place. As the most widely-followed, private-sector housing tracker, the index is used to help make policy decisions and to shape Wall Street’s expectations of the economy. This means that a strong Case-Shiller reading can cause mortgage rates to rise, and a weak Case-Shiller reading can cause rates to fall.

Tuesday, mortgage rates fell.

Mortgage Rates May Be Low, But They’re Tough To Pin Down — Especially This Week

Mortgage rates are low right now but pinning them down this week could be a challenge. As Labor Day Weekend nears and Wall Streeters take their head-start on the holiday, trading volume will fall, which will cause mortgage rates to get jumpy.

As mortgage rates change, so does the long-term cost of owning a home. Every 1/8 percent adjustment changes a household budget.

Meanwhile, the relationship between “vacation days” and mortgage rate volatility is an interesting one; based more in scarcity than market fundamentals.

Rates tend to get volatile near holidays because of two inter-related facts:

1. Conforming mortgage rates are based on the price of mortgage-backed bonds
   
2. Mortgage-backed bonds can’t trade without a buyer and a seller at a specific price
   

So, as the week progresses and more traders leave for their respective “extended” 3-day weekends, there’s fewer buyers and sellers left on Wall Street to connect for a trade. As a result, mortgage bond prices move across larger gaps than on a “normal” day which, in turn, translates into faster, larger changes in rates.


This phenomenon can be exaggerated during periods of economic uncertainty — like what we’re in now — and, furthermore, there’s a bevy of important data set for release this week including the FOMC Minutes, inflation data, and August jobs figures.

In other words, rates would have been volatile without the vacation week. The presence of Labor Day just piles on.

Mortgage rates may rise this week, or they may fall. Either way, if you have a chance to lock something favorable and within your budget, consider doing it. Rates are at all-time lows and likely won’t last

What’s Ahead For Mortgage Rates This Week: August 30, 2010

Mortgage markets improved last week despite a major mortgage bond sell-off Friday afternoon. Prior to the jump, conforming mortgage rates had cut new, all-time lows by Thursday, only to lose up to 0.250 percent on the last day of the week.

Meanwhile, the same type of news that drove rates lower Monday through Thursday also contributed to rates rising Friday — revised projections for the U.S. economy.

Early in the week, “bad” news piled on which, in turn, lowered expectations for the economy and pushed mortgage rates down:

• Existing Home Sales dropped 27% from June
  
• Single-Family New Home Sales dropped 12% from June
  
• Purchases of “big ticket” items plunged
  

Then, on Friday, two events revised the market’s expectations back higher:

• Q2 GDP was revised lower, but not as low as had been expected
  
• Fed Chairman Ben Bernanke said the economy will keep expanding through the end of the year and into 2011

When Chairman Bernanke talks, markets listen. His comments about the U.S. economy helped fuel that late-Friday surge in mortgage rates last week.

This week, the momentum could continue — depending on the data.

There’s a lot for markets to digest this week including key inflation figures from the government; home value data from Case-Shiller; Fed Minutes from the Federal Reserve; and, the always-important jobs report due Friday.

Since April, mortgage rates have been on a downward trajectory and that may continue this week. Or, it may not. If you own a home and haven’t talked to us about a refinance, now is as good a time as any — rates are at historic lows and could rebound at any time.

Last June, mortgage rates rose 1.125% in 10 days. Under the right circumstances, it could happen again.

Mortgage Rates Make New Lows For The 9th Week In A Row

Another week, another new low for conforming mortgage rates. In fact, this week marks the 9th time in a row it’s happened.

Mortgage rates are (again) at their lowest levels in history.

The data comes from the Freddie Mac, a government group and major loan securitizer for the U.S. mortgage market. Freddie Mac’s weekly survey is among the most widely-cited reports on mortgage rates and is the data used in home affordability models, among other statistics.

The 30-year fixed rate is averaging 4.42% nationally with an accompanying cost of 0.7 points. 1 point is equal to 1 percent of the loan size. This week’s reported rate is lower by 0.02 percent from last week, and lower by 0.70 percent from one year ago.

On a region-by-region basis, though, “average” 30-year fixed mortgage rates are different.

Northeast : 4.44 with 0.6 points
Southeast : 4.44 with 0.8 points
N. Central : 4.42 with 0.4 points
Southeast : 4.46 with 0.5 points
West : 4.35 with 0.8 points

But this isn’t to say that mortgage pricing is better in, say, California as compared to Florida.

Note that the West Region — with the lowest average rate — has the highest required points.

This is because mortgage rates and mortgage fees move in opposite directions. The type of low-rate/high fee structure common in the West may be right for some home buyers and would-be refinancers, but may not be right for others.

What’s important to remember is that, as a rate-shopper , it’s always your choice on how your loan is structured. Banks offer multiple set-ups — with or without points — to meet every applicant’s budget.

As mortgage rates continue to slide and touch new lows, it’s an excellent opportunity to see what we can do for you. Low rates won’t last forever.

How Much Should You Expect To Pay In Mortgage Closing Costs?

How much does a mortgage cost? The answer depends on where you live. But no matter which your locale, chances are strong that you’ll pay more for a mortgage in 2010 as compared to 2009.

According to Bankrate.com and its annual Closing Cost Survey, a typical $200,000, purchase mortgage now carries an average $3,741 in closing costs — up nearly 37 percent from last year.

As defined by Bankrate.com, “closing costs” is defined as the sum of two numbers. The first group is labeled “origination charges”, a category that includes such items as underwriting fees, application fees and processing fees. These fees are paid directly to the loan originator’s company at the time of closing.

The second grouping of costs is labeled “third-party fees”. Third-party fees include appraisals, credit reports, settlement fees and title searches — items paid in connection with the loan, but not paid to the lending bank or broker.

It’s unclear why closing costs appear to have escalated into 2010, but Bankrate.com suggest that recently-enacted federal lending laws are a culprit:

1. The new law requires loan officers to be accountable to a Good Faith Estimate’s accuracy. Bankrate.com’s prior-year surveys may have been “understated”, therefore, because of a lack of accountability.
   
   
2. The cost of federal compliance is high, and banks may be passing on compliance costs to consumers.
   
   

To see the complete list of closing costs by state, visit the Bankrate.com website.

Single-Family Housing Starts Fade In July

Sometimes, you need to look deeper than the headlines to get the news that matters. This basic truth’s latest example comes from the July Housing Starts data, as published by the U.S. Census Bureau.

According to the newspapers, Housing Starts improved last month:

• US Housing Starts Make Modest Rebound (FT)
  
  
• Housing Starts Rise Slightly (MoneyWatch)
  
  
• Housing Starts Tick Higher In July (MarketWatch)
  
  

However, these stories are speaking in terms of all housing starts — not just the single-family ones. This is a major point of difference for home buyers because the most people don’t buy the multi-unit homes and apartment buildings that’s also a part of the Housing Starts data.

The overwhelming majority of buyers buy single-family homes and in July, as in the previous 3 months, the number of single-family housing starts fell.

In fact, single-family housing starts are down by nearly 25 percent since April and are now at their lowest levels since May 2009.

This is a much different message from the headlines above.

It’s not surprising that single-family housing starts are down; builder confidence is down as well and the two metrics tend to trend in the same direction.

Furthermore, building permits for single-family homes fell in July, too.

As a home buyer, the drop in Housing Starts should help reduce housing inventory in the months ahead. This may lead home prices to rise because home values are based on supply and demand. For home sellers, falling starts should help reduce competition for buyers.

Each real estate market is unique and supply levels will vary from ZIP code to ZIP code. For up-to-the-minute inventory levels, make sure to talk with your real estate agent.

What’s Ahead For Mortgage Rates This Week : August 16, 2010

Mortgage markets worsened last week, putting a pause on the mortgage rate rally that dates to mid-April. Mortgage rates rose last week and home affordability suffered.

The Refi Boom remains in full effect, but rates were not as dazzling during the week as they were the previous week.

It’s somewhat strange that mortgage rates rose last week given the heavy dose of negative-bending news.

• The Federal Reserve noted that the economy “has slowed“
  
  
• New unemployment claims rose to a 6-month high
  
  
• Retail sales — excluding auto sales — rose less than expected
  
  

Mortgage rates often to fall on such news, but last week, they rose. The biggest reason was weak demand on a new 30-year bond issuance from the government. In turn, that weakness spilled over into mortgage bonds, which pushed rates up.


This week, mortgage rates could rise or fall — it depends on how new data influences market sentiment.

• Monday : Home builder confidence survey
  
  
• Tuesday : Housing Starts and Building Permits; Producer Price Index
  
  
• Thursday : Jobless claims; 2 Fed members make speeches
  
  

Keep a close eye on the housing-related data early in the week. It’s widely believed that housing will lead the economy forward so a rebound in home builder confidence, or a jump in building permits, for example, should push rates even higher. Weakness


In the meanwhile, if you haven’t spoken with us about a refinance, consider reaching out this week. Rates are lower than they’ve ever been in history and more people are getting financing than the news would have you believe. You can’t know until you ask so make that call today.