A quick mortgage rate update from Julian Hebron at RPM mortgage:
Rates open the first full week of the year about the same as they were leading into the holidays. A good 30yr fixed rate target for loans up to $417k is 5% or below, and the target for loans up to $625k is around 5.25%. For loans up to $417k and $625k, we’re close to those targets. Rates for loans from $625k to $1m are mid-6% range.
The Fed announced just before New Year’s that they’ve hired outside money managers to run their $500 billion mortgage bond purchase program and that it will start in January. We’ll likely see another update on timing this week. When that purchasing starts, it will drive bond prices up and rates down. [Editor’s Note: They’ve started.]
The biggest news this week is Friday’s jobs report for December, which calls for 475,00 lost jobs and unemployment going from 6.7% to 7%. And this doesn’t even include post-holiday retail worker layoffs that won’t be captured until next month. It would mark 12 straight months of job losses and about 2.5m jobs lost for 2008. This news can cause rates to drop as investors dump stocks and buy bonds.
UPDATE (1/6): “Longer-term Treasuries fell for a fourth day, pushing yields on 10-year notes to the highest in three weeks, as concern the U.S. will sell record amounts of debt drove investors from the safety of government securities.”
∙ All Your Home Loans Are Belong To Us (To Boost Liquidity) [SocketSite]
∙ Treasuries Drop Amid Concern U.S. to Sell Record Amount of Debt [Bloomberg]
I understand that up front fees are way up for people with lower credit. Someone buying a 389K modest home in the burbs is going to be hit with extra fees up to $12,000 that weren’t there last week if their credit is spotty.
This refinance thing is driving me crazy! We were offered 5.1% with zero points or pay a point and go down to 4.625% (30 year fixed, $625K loan). If the rates keep dropping and go below 4.625% in the next few weeks, I’ve lost $6K. I know, I know, at some point it’s time to roll the dice and take a gamble. I just hope it works out in my favor.
Do you know if anyone are doing refi’s on 90% LTV? I have a loan under $600k with a 30 fixed of 5.75%. Not bad, but people are talking low 5’s now and I’d like to refi if the math works. Anyone have any info on 90% LTV refi’s?
You might contact Patelco Credit Union and see if they will do 90%.
Whether mortgage interest rates are 5% or 8% really does not have a material impact on the SF real estate market right now. It may drive refis, but not sales. The problem is that the lenders are requiring 20%-plus down payments, low LTVs, and high incomes. There just are not that many would-be buyers who can come up with $200,000 or $300,000 cash and meet the other requirements. And those who can are not willing to jump in and buy in a market that is declining more rapidly than ever before seen, and where job and income security is weakening.
I see that Congress is again considering a modification to the bankruptcy code to allow bankruptcy courts to modify home mortgages. This would actually be a sensible change, but it will result in even tighter lending standards (or higher rates) as lenders will need to avoid the risk of the borrower’s bankruptcy. That is a good thing as it will hasten the return to solid underwriting, but it would have the opposite affect as that intended re the housing market (although it would permit a very, very small number of current borrowers to keep their homes).
sub 5% 30 year money would drive many people into the re market imo. i think many on this board and in sf have pulled $$ out of the securities market and its looking for a home (so to speak).
sub 5% 30 year money would drive many people into the re market imo.
You could be right, but it will be interesting to see whether this is enough to offset the structural overvaluation of most SF real estate right now. I’m betting it won’t.
I’m getting interesytd in income property in the NY area (Section 8 rentals), and we are also looking to buy a nice SFH on the Intracoastal in Florida (likely Lighthouse Point) with an eye towards getting it by late summer/early fall if we can find what we are looking for at what we consider a good valuation bet. It’s going to be for personal and family use (and to establish a presumption of Florida residency – damn trading is throwing off so much profit these past few months that we are looking for an escape hatch from California taxation!).
Low rates definitely increase the attractiveness of income property in NY, although in FL we are likely to be all cash buyers. In any event, rates would have to go down to about 2% for it to make sense for us to purchase the $1.2mish house we are now renting enjoying for $2800 per month (all maintenance, gardener service and free Tiburon public schools included) 🙂
Infinity resident (happy one) chiming in here. Months a go there was a post – something about a guy walking floors and noting door sticker colors. I have no idea what that meant however based on the thread and word on the street it could equate to a unit closing, in escrow, etc.
I don’t walk floors like the past poster but obviously see the doors on my floor daily. I am happy to report that units that sat for a few months end of year have started changing color again and I have seen many “shoppers” on the floor in recent weeks. Perhaps the rate drops are helping?
From the article:
“Ten-year Treasuries are becoming “bubble like,” and the risk of an “unruly unwind of long positions” will increase as the first quarter progresses, Barclays Plc strategists including Jordan Kotick in New York said in a note yesterday.”
Lots of talk now in financial circles about the Treasury bubble, and what happens when the flight to quality ends and people start dumping these things. Less buyers = higher rates. May just coincide with the new administration trying to fund the next stimulus plan:
“The U.S. may borrow as much as $2 trillion in the 12 months ending on Sept. 30, Treasury Assistant Secretary Karthik Ramanathan said Dec. 10, citing analysts’ estimates. That compares with $892 billion in notes and bonds sold during the last fiscal year. U.S. marketable debt climbed to $5.82 trillion in November, the most ever, from $4.54 trillion a year earlier.”
We can’t perpetually borrow for free. Especially when the main reason we’re borrowing is that we already have too much debt in the first place.
I think (hopeful anyways) that when the fed starts purchasing bonds rates will go down and possibly get home sales rolling again. I am optimistic that what led us to this mess in the first place could help us get out?
Where are you getting that rate from Noe Nut?
Wells Fargo.
I just got locked into a 30year loan for 4.875%.
This did need 2 points, but is for a 2 unit building, so was very happy with this.
It means postive cashflow after only a year of holding it.
The 2 unit has a higher limit – 800k as opposed to 625k – so I think this could be a good time to buy the right investment property.