Rates on 30-year fixed-rate mortgages drop to 6.20% from 6.46% and are expected to remain firm.
NEW YORK (CNNMoney.com) -- Mortgage rates fell this week amid a pullback in consumer spending and a weaker job market.
Mortgage finance firm Freddie Mac reported Thursday that 30-year fixed-rate mortgages averaged 6.20% this week. That's down from 6.46% last week and below 6.24%, the rate at this time last year.
Even though interest rates were slightly lower this week, rates are fairly firm and likely to remain that way, according to Keith Gumbinger of HSH Associates.
"From the mortgage-lender standpoint, the risks are rising," he said. "And because the risk of real estate lending remains so acute, the price of that money reflects the risks."
Lenders are tightening their credit standards in the face of a contracting economy and record home foreclosures, according to Frank Nothaft, Freddie Mac (FRE, Fortune 500) vice president and chief economist. A survey of senior loan officers from the Federal Reserve found that about 70% of banks raised their lending standards for prime mortgages, and about 90% of banks that offer nontraditional mortgages did so as well.
Rates on 15-year fixed-rate mortgages fell to 5.88% from 6.19% last week. A year ago, the rate was 5.90%.
The five-year adjustable-rate mortgage fell to 6.19%, from 6.36% last week. A year ago, the rate was 5.89%.
The rate on a one-year adjustable-rate mortgage fell to 5.25% from 5.38% last week. At this time last year, the rate was 5.50%.
Rates for 30-year fixed-rate mortgages have been at 6% or higher for four straight weeks. Between the week of Oct. 9 and Oct. 16, the 30-year fixed-rate mortgage posted its biggest weekly jump since April 1987, rising from 5.94% to 6.46%.
In September, the government took control of the mortgage giants Fannie Mae (FNM, Fortune 500) and Freddie Mac with a rescue plan that could inject them with $200 billion.
By Lara Moscrip, CNNMoney.com contributing writer
Last Updated: November 6, 2008: 4:32 PM ET
Friday, November 7, 2008
The Best Time to Buy a Home
No one knows when we’ll reach a bottom, but you can get a great bargain, if you shop around. Questions: Given all the foreclosures and other problems in the housing market and the economy, do you think this is a good time for someone to buy a house? Or would I be better off waiting for the housing market to recover? —Mari, San Francisco
Answers: If you’re asking me to predict when the housing market will hit bottom and when prices are likely to start climbing again, I’m sorry, but I can’t help you. My housing crystal ball is on the blink.
I can tell you, though, that at this point we’re still looking at one bleak house scenario.
If anything, the latest price statistics suggest that the market is still falling. The Standard & Poor’s/Case-Shiller Home Price Index for 20 large metropolitan areas was down 16.6% in August compared to its level a year ago. That’s more than the index was down for the year ending in July (16.3%) and in June (15.9%). National Association of Realtor stats for September also show a decline.
If anything, the latest price statistics suggest that the market is still falling. The Standard & Poor’s/Case-Shiller Home Price Index for 20 large metropolitan areas was down 16.6% in August compared to its level a year ago. That’s more than the index was down for the year ending in July (16.3%) and in June (15.9%). National Association of Realtor stats for September also show a decline.
On a marginally positive note, there has been somewhat of an uptick in sales of both existing and new homes. But given the fact that foreclosures and mortgage delinquencies have also been rising and the job market and the economy generally have been softening, I don’t think anybody believes that the recent improvement in sales represents an imminent reversal of fortune.
I suppose it’s possible that the various government and private efforts to help homeowners avert foreclosure could help stabilize the market. When you look at the overall picture, however, it’s hard to imagine the housing situation improving significantly before the end of next year.
Don’t time the market
But I don’t think all this necessarily means that you should put off buying until certain prices have bottomed out, assuming you’re planning to live in your house for, say, at least five years as opposed to flipping it.
But I don’t think all this necessarily means that you should put off buying until certain prices have bottomed out, assuming you’re planning to live in your house for, say, at least five years as opposed to flipping it.
Why? Well, for one thing I don’t think it’s possible to time the housing market any more than it is to time the stock market. Sure, you might be able to get a somewhat better deal by postponing your purchase. On the other hand, it’s unrealistic to think that you’re going to be able to catch the market just as prices are ready to rebound.
Buying a house isn’t something you can do at a moment’s notice. You’ve got to find the house you really want, settle on a price and get your financing. Your chances of timing all this to coincide with the market trough - even if you could call it - are pretty much nil. Besides, even when prices do eventually start to rise, no one knows how quickly (or slowly) they’ll climb.
Do some legwork
That said, if you’re really serious about owning a home, you’re actually in a very good position as a buyer right now. Prices have fallen substantially over the past year or so, which should give you lots of leverage to negotiate a favorable price. And since there’s no immediate sign of a turnaround in the market, it’s not as if you’ve got to rush into a deal either.
That said, if you’re really serious about owning a home, you’re actually in a very good position as a buyer right now. Prices have fallen substantially over the past year or so, which should give you lots of leverage to negotiate a favorable price. And since there’s no immediate sign of a turnaround in the market, it’s not as if you’ve got to rush into a deal either.
So don’t. Use this opportunity to do plenty of research in areas where you might consider buying. You can do that online these days at sites like Zillow and Trulia.
But don’t restrict yourself to virtual legwork. Drive around a bunch of neighborhoods, talk to homeowners and business owners to get a better sense of how the area is doing and what it would be like to live there, stop by real estate offices and banks to get the current pulse of that specific market. You may even be able to pick up bargains among foreclosures or by working with sellers eager to avoid a foreclosure.
At the same time, you can start lining up your financing so you’ll be ready to move ahead should you find a home you like at a price you’re willing to pay. Remember, lenders are more picky about making loans than they were during the real estate bubble, which means they’re requiring more information about your income, assets and expenses.
You don’t want a snag in the mortgage process to hold you up when you’re ready to close a deal. So get all your financial paperwork in order ahead of time and scout out lenders offering competitive loan rates, which you can do by checking out our Real Estate section.
Bottom line: Without the benefit of 20/20 hindsight, no one can tell you when it’s the absolute best time to buy. But if you make a real effort to shop around and get a feel for the market, you can almost certainly increase your chances of getting a house at a price you can be happy with now and in the future.
Monday, November 3, 2008
Existing Home Sales See Largest Gain in Years
September number possible glimmer of hope housing bottoming out
msnbc.com staff and news service reports updated 6:06 p.m. ET, Fri., Oct. 24, 2008
WASHINGTON - Sales of existing homes rose by the largest amount in more than five years in September. But analysts cautioned against reading too much into the gain, noting that it reflected conditions before the latest upheaval in financial markets increased the likelihood of a recession in the overall economy.
The National Association of Realtors reported that sales of existing homes rose by 5.5 percent from August to September to a seasonally adjusted annual rate of 5.18 million units — far better than the flat results analysts had expected. On an unadjusted basis, sales were up 7.8 percent from September last year.
But even with the gain in sales, prices kept falling. The median sales price has dropped to $191,600, down by 9 percent from a year ago.
In Richmond, Va., Jack Jebo sold his three-bedroom house last month for $267,000, after lowering his price $18,000. He carried two mortgages for two months before the house was sold in the Richmond area.
“In retrospect, (the experience) probably wasn’t too bad,” said Jebo, 32, an attorney. “At the time, it probably felt pretty difficult because we didn’t get an offer before we lowered the price.”
But analysts said that the current financial crisis, which has contributed to the biggest upheavals on Wall Street since the 1930s, was sending consumer confidence down, unemployment up and had greatly increased the prospects that the country was either in or about to enter a full-blown recession. All these factors were expected to add to the headwinds buffeting housing in the months ahead.
“In October, mortgage applications sank to six-year lows,” said Sal Guatieri, an economist at BMO Capital Markets. “This suggests house sales, like the rest of the economy, fell off a cliff because of the worsening credit crunch.”
Many analysts are predicting that home prices — already down 18 percent nationally from their peak in mid-2006 — could decline another 10 percent, as a continued glut of foreclosed homes being dumped on the market depresses prices further.
The National Association of Realtors estimated that 35 percent to 40 percent of sales currently are distressed sales — either foreclosed homes or short sales in which the owner is selling the house for less than the value of the mortgage.
Distressed sales are having a big impact in lowering prices in some formerly red-hot sales markets in such regions as the West, where sales prices fell in September by 18.5 percent from a year ago.
Lawrence Yun, chief economist for the Realtors, said there were some glimmers of hope that the bottom of the housing slump may be near. He said that a sales turnaround first seen in California was beginning to broaden to other regions of the country including Colorado, Kansas, Minnesota, Missouri and Rhode Island.
And the number of unsold existing homes on the market dropped by 1.6 percent in September to 4.27 million units. That marked the second month in a row inventories have dipped, but the level still represented a 9.9-month supply — about double what’s normal.
Yun cautioned that this rebound could be aborted by what he said was the high likelihood that the country has fallen into a recession. For that reason, he said, it was important for Congress to pass a second stimulus package including measures that would bolster the housing market.
Other economists, including former Federal Reserve Chairman Alan Greenspan, are expressing concerns that the financial market turmoil will further weaken housing activity and prolong the current slump.
Greenspan told Congress on Thursday that the country had been hit by a “once-in-a-century credit tsunami.” He said he did not expect the overall economy to make a sustained rebound until housing, where the economic troubles began, stabilized. He said that was still many months away.
Congress on Oct. 3 passed a $700 billion rescue package for the financial system. Shelia Bair, the head of the Federal Deposit Insurance Corp., is pushing Treasury to include in that package a new program to prevent more mortgage foreclosures as a way to provide further support for housing.
Under Bair’s proposal, the government would provide guarantees for mortgages that have been reworked by banks to lower the payment schedules to more affordable levels.
By region of the country, sales in the West soared by 43 percent, on an unadjusted basis, from September last year, and rose a more moderate 5 percent in the Midwest. In the South, sales dipped 1.2 percent and in the Northeast they slipped 1.4 percent.
Housing has been suffering through its worst downturn in decades following a five-year boom that ended in 2006. Since that time sales and prices have plummeted.
Builders have responded to the huge glut of unsold homes by sharply cutting back on construction as their confidence levels have fallen to record lows. The National Association of Home Builders is projecting that construction of new homes and apartments will total just 936,000 units for this year, which would be the weakest performance since 1945.
msnbc.com staff and news service reports updated 6:06 p.m. ET, Fri., Oct. 24, 2008
WASHINGTON - Sales of existing homes rose by the largest amount in more than five years in September. But analysts cautioned against reading too much into the gain, noting that it reflected conditions before the latest upheaval in financial markets increased the likelihood of a recession in the overall economy.
The National Association of Realtors reported that sales of existing homes rose by 5.5 percent from August to September to a seasonally adjusted annual rate of 5.18 million units — far better than the flat results analysts had expected. On an unadjusted basis, sales were up 7.8 percent from September last year.
But even with the gain in sales, prices kept falling. The median sales price has dropped to $191,600, down by 9 percent from a year ago.
In Richmond, Va., Jack Jebo sold his three-bedroom house last month for $267,000, after lowering his price $18,000. He carried two mortgages for two months before the house was sold in the Richmond area.
“In retrospect, (the experience) probably wasn’t too bad,” said Jebo, 32, an attorney. “At the time, it probably felt pretty difficult because we didn’t get an offer before we lowered the price.”
But analysts said that the current financial crisis, which has contributed to the biggest upheavals on Wall Street since the 1930s, was sending consumer confidence down, unemployment up and had greatly increased the prospects that the country was either in or about to enter a full-blown recession. All these factors were expected to add to the headwinds buffeting housing in the months ahead.
“In October, mortgage applications sank to six-year lows,” said Sal Guatieri, an economist at BMO Capital Markets. “This suggests house sales, like the rest of the economy, fell off a cliff because of the worsening credit crunch.”
Many analysts are predicting that home prices — already down 18 percent nationally from their peak in mid-2006 — could decline another 10 percent, as a continued glut of foreclosed homes being dumped on the market depresses prices further.
The National Association of Realtors estimated that 35 percent to 40 percent of sales currently are distressed sales — either foreclosed homes or short sales in which the owner is selling the house for less than the value of the mortgage.
Distressed sales are having a big impact in lowering prices in some formerly red-hot sales markets in such regions as the West, where sales prices fell in September by 18.5 percent from a year ago.
Lawrence Yun, chief economist for the Realtors, said there were some glimmers of hope that the bottom of the housing slump may be near. He said that a sales turnaround first seen in California was beginning to broaden to other regions of the country including Colorado, Kansas, Minnesota, Missouri and Rhode Island.
And the number of unsold existing homes on the market dropped by 1.6 percent in September to 4.27 million units. That marked the second month in a row inventories have dipped, but the level still represented a 9.9-month supply — about double what’s normal.
Yun cautioned that this rebound could be aborted by what he said was the high likelihood that the country has fallen into a recession. For that reason, he said, it was important for Congress to pass a second stimulus package including measures that would bolster the housing market.
Other economists, including former Federal Reserve Chairman Alan Greenspan, are expressing concerns that the financial market turmoil will further weaken housing activity and prolong the current slump.
Greenspan told Congress on Thursday that the country had been hit by a “once-in-a-century credit tsunami.” He said he did not expect the overall economy to make a sustained rebound until housing, where the economic troubles began, stabilized. He said that was still many months away.
Congress on Oct. 3 passed a $700 billion rescue package for the financial system. Shelia Bair, the head of the Federal Deposit Insurance Corp., is pushing Treasury to include in that package a new program to prevent more mortgage foreclosures as a way to provide further support for housing.
Under Bair’s proposal, the government would provide guarantees for mortgages that have been reworked by banks to lower the payment schedules to more affordable levels.
By region of the country, sales in the West soared by 43 percent, on an unadjusted basis, from September last year, and rose a more moderate 5 percent in the Midwest. In the South, sales dipped 1.2 percent and in the Northeast they slipped 1.4 percent.
Housing has been suffering through its worst downturn in decades following a five-year boom that ended in 2006. Since that time sales and prices have plummeted.
Builders have responded to the huge glut of unsold homes by sharply cutting back on construction as their confidence levels have fallen to record lows. The National Association of Home Builders is projecting that construction of new homes and apartments will total just 936,000 units for this year, which would be the weakest performance since 1945.
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