Houston is known for its hot weather, but days like today make it all worthwhile! No wonder our New Year season is always labeled as the kick start to the home buying season. Is it the crisp weather, or the sense of starting with a ‘clean slate’ that motivates buyers to put off buying until the Spring each year? Whatever the reason, this year I have surely seen an increase in buyers. And financing is definitely available! Take for example, the fact that I am in the office on a Saturday, and was last Saturday. In fact, after I wrote my newsletter to you last week (on Saturday!), I received 4 new referrals, all purchases, and had to come in Sunday. My husband has just resolved to the fact dishes and laundry are now on his honey do list! If your prospective buyer roster has not filled up yet, my prediction is that it will, and fast. So enjoy the silence. Use your time wisely to get recharged and organized.
What about these rates? With the Fed announcing this last week their plans to buy mortgage backed securities, a partial approval of the stimulus plan for the economy, and the news that national home sales ROSE 9% in December, you would think the rates would have gone down. Well, except these are different times. Unchartered territory. The stock market is manic (really). Nothing seems to make sense or follow basic economic principles anymore. After this weeks’ news, the bond market (where mortgages most closely relate) did not fare well, as yields , or rates, of bonds lowered because (1) the bailout plan shows flaws, and had not Republican support (2) The FED did not announce ‘specific’ plans for purchasing securities and ( c) 100,000 layoffs that were announced. So you see, the news is never good enough! Never specific enough!
Despite what you may hear, the government cannot directly control the rates . They can purchase the mortgage backed securities in an attempt to push the rates down, but what if that doesn’t work? What if ‘other’ pressures on the bond market cause their plan backfire? It could very well happen, and some critics of this strategy are anticipating it. So my point here is that borrowers (whether purchasing or refinancing) need to take what they can get NOW. Enjoy these low rates now. Waiting on the sidelines for 4.5% or lower, may be about as reasonable as me hoping to win the lottery tonight – when I didn’t even buy a ticket.
Saturday, January 31, 2009
Friday, January 23, 2009
Where are the 4.5% rates?
So where are the 4.5% rates, you are wondering? Your clients are asking, I am sure. They ask me too! Well, as you can see below, the rates are not far from that at 4.625%. But keep in mind, to get that, you MUST pay 1% origination fee (1% of the loan amount added to closing costs). If you want to ‘waive’ that fee, you can expect .625-.75% higher interest rate. That is a far cry from the .25% in the past. In other words, it makes sense to pay the 1% origination for many people, who expect to be in the home a long time. For those on a 6 year or less timeline, maybe not pay the point, and save your cash.
Why such a large spread between the 1 Origination and 0 Origination? I have heard several theories (a) lenders do not want to sell the higher coupons (rates), as they anticipate rates will go down, and their fallout will increase (b) they have been burned in the past paying originators the premiums on the back end, just to have early payoff in low rate markets, and (c) no one knows. I pick C! Does anyone really know?
Another rumor I have heard, is that some , if not all, of the big banks are losing money in their mortgage divisions. Big money. So they are hesitant to lower their rates because they are adding larger margins than in the past. To make it ‘worth it’ for them to stay in business. The margins from 03/04 when the rates were also at historic lows, and lenders could not print money fast enough, were turbulent times. Hiring frenzies, backlog in processing and fundings. The grass was not necessarily greener on the lenders’ side. Are they now remorseful and learning from their mistakes?
The FED meets this week for a 2 day meeting (Tuesday/Wednesday). For the first time, they will not consider lowering or increasing the rates. They will be concentrating instead on strategy to get the economy turned around.
On a personal front, I took my home off the market this week after 90 days. 27 showings and 4 offers later, we were just amazed at some of the offers (low) we were getting. So, since we don’t have to sell, we decided to stay put for now. I know, agents hate sellers like us. But as my article last week mentioned, the psychology (of buyers and sellers) must change in order for the market to get moving again. Even in Houston, a healthy, stable real estate market. As for me, I am stubborn, wanting a fair price for my house. A price that was there 1 year ago. Not willing to accept that the psychology of the CNN glued buyers are driving prices down. They think that all sellers are going bankrupt? No thanks, I would rather wait.
Have a great and prosperous week! Remember, we at Patriot Bank Mortgage are your trusted source in mortgage lending. We are here for you! Steadfast and strong.
Why such a large spread between the 1 Origination and 0 Origination? I have heard several theories (a) lenders do not want to sell the higher coupons (rates), as they anticipate rates will go down, and their fallout will increase (b) they have been burned in the past paying originators the premiums on the back end, just to have early payoff in low rate markets, and (c) no one knows. I pick C! Does anyone really know?
Another rumor I have heard, is that some , if not all, of the big banks are losing money in their mortgage divisions. Big money. So they are hesitant to lower their rates because they are adding larger margins than in the past. To make it ‘worth it’ for them to stay in business. The margins from 03/04 when the rates were also at historic lows, and lenders could not print money fast enough, were turbulent times. Hiring frenzies, backlog in processing and fundings. The grass was not necessarily greener on the lenders’ side. Are they now remorseful and learning from their mistakes?
The FED meets this week for a 2 day meeting (Tuesday/Wednesday). For the first time, they will not consider lowering or increasing the rates. They will be concentrating instead on strategy to get the economy turned around.
On a personal front, I took my home off the market this week after 90 days. 27 showings and 4 offers later, we were just amazed at some of the offers (low) we were getting. So, since we don’t have to sell, we decided to stay put for now. I know, agents hate sellers like us. But as my article last week mentioned, the psychology (of buyers and sellers) must change in order for the market to get moving again. Even in Houston, a healthy, stable real estate market. As for me, I am stubborn, wanting a fair price for my house. A price that was there 1 year ago. Not willing to accept that the psychology of the CNN glued buyers are driving prices down. They think that all sellers are going bankrupt? No thanks, I would rather wait.
Have a great and prosperous week! Remember, we at Patriot Bank Mortgage are your trusted source in mortgage lending. We are here for you! Steadfast and strong.
Friday, January 16, 2009
Houston's Economic Outlook for 2009
I wish you and yours the most prosperous year ever! This is my first newsletter in the new year. I have missed you all dearly. So let’s get on with it!
What a year end and new year it has been! I slaved all through Christmas, and ever since the new year (don’t feel sorry for me please, I welcomed it). December we issued a record number of approval letters- in my 14 year history as an originator! We had more purchase closings this January than ever as well. This tells me that the low rates are spurring activity. People are regaining confidence. Certainly there are some that are concerned about job stability and finances. That is a given. But rates are historically good! Who would not want to get a rate in the 4’s! So hang in there. I predict Q1 of 2009 will be vibrant.
Earlier in the week, I had the privilege of hearing Mike Inselmann speak. He is the President of Metro Studies http://www.metrostudy.com/corpwebsite/about/who.aspx . They are a housing market research firm . Mike is a household name to many lenders, realtors and builders. Each year he is almost right on his forecasts! In summary, this is what he predicts for 2009:
It’s not a buyer’s market. It’s not a seller’s market. It is balanced. We have 6-7 months of inventory, and 78 days on market. That is healthy!· The last quarter of 2008 we had a hurricane, an election, and the most horrible financial news in a matter of 6 weeks. So let’s agree to forget Q4 2008! Ok by me!· Texas is NUMBER 1 in job growth in the nation! The 5 top cities in Texas are all in the Top 20 for job growth in the nation, Houston being the leader, of course!· Houston housing GREW in 2008. However there was a shift – more rentals than ever before. Housing is not declining, it has just shifted. These people will need homes eventually· Houston will add jobs in 2009, but potentially not many. Energy and Healthcare will be important fuelers of the economy.· We had 29,000 home starts in 2008! That is a stable number! What is unstable are the gargantuan numbers we saw in 2006/2007. So the market has adjusted to normalcy.· Houston has the lowest appreciation market in the nation – 4.4% average. But look at us now! We are not seeing the ‘bubble ‘ effects of other markets .· In 2008 there were 12,000 foreclosures in Houston. There were 50,000 in 1987. Foreclosures are a given in any market. The numbers we see are normal for a market as large as ours. The takeaway from Mike’s talk, if you forget all the graphs and fancy numbers that only an economist can understand, is that it is really not as bad as it seems. Not in Houston anyway. TWO THINGS must happen for our market to turn around. (1) Psychology of buyers and sellers have to change, and (2) Credit must be available. The latter, credit, is available, but it is more difficult to obtain.
What a year end and new year it has been! I slaved all through Christmas, and ever since the new year (don’t feel sorry for me please, I welcomed it). December we issued a record number of approval letters- in my 14 year history as an originator! We had more purchase closings this January than ever as well. This tells me that the low rates are spurring activity. People are regaining confidence. Certainly there are some that are concerned about job stability and finances. That is a given. But rates are historically good! Who would not want to get a rate in the 4’s! So hang in there. I predict Q1 of 2009 will be vibrant.
Earlier in the week, I had the privilege of hearing Mike Inselmann speak. He is the President of Metro Studies http://www.metrostudy.com/corpwebsite/about/who.aspx . They are a housing market research firm . Mike is a household name to many lenders, realtors and builders. Each year he is almost right on his forecasts! In summary, this is what he predicts for 2009:
It’s not a buyer’s market. It’s not a seller’s market. It is balanced. We have 6-7 months of inventory, and 78 days on market. That is healthy!· The last quarter of 2008 we had a hurricane, an election, and the most horrible financial news in a matter of 6 weeks. So let’s agree to forget Q4 2008! Ok by me!· Texas is NUMBER 1 in job growth in the nation! The 5 top cities in Texas are all in the Top 20 for job growth in the nation, Houston being the leader, of course!· Houston housing GREW in 2008. However there was a shift – more rentals than ever before. Housing is not declining, it has just shifted. These people will need homes eventually· Houston will add jobs in 2009, but potentially not many. Energy and Healthcare will be important fuelers of the economy.· We had 29,000 home starts in 2008! That is a stable number! What is unstable are the gargantuan numbers we saw in 2006/2007. So the market has adjusted to normalcy.· Houston has the lowest appreciation market in the nation – 4.4% average. But look at us now! We are not seeing the ‘bubble ‘ effects of other markets .· In 2008 there were 12,000 foreclosures in Houston. There were 50,000 in 1987. Foreclosures are a given in any market. The numbers we see are normal for a market as large as ours. The takeaway from Mike’s talk, if you forget all the graphs and fancy numbers that only an economist can understand, is that it is really not as bad as it seems. Not in Houston anyway. TWO THINGS must happen for our market to turn around. (1) Psychology of buyers and sellers have to change, and (2) Credit must be available. The latter, credit, is available, but it is more difficult to obtain.
Saturday, December 20, 2008
Mortgage Rates at their lowest in 50 Years!
The week has been exciting, to say the least. Mortgage rates have been up and down at least 15 times, the prime rate is down to 0.0-0.25% (the lowest EVER), the auto giants are getting bailed out, and the government legislated that credit card companies can no longer raise rates on existing balances when there are on time payments, and a 21 day grace period on late charges. Oh, but the companies have until July 2010 to comply. What a relief!???????
The mortgage rates are the lowest in 50 years. According to where the 10 year treasury is, they should be lower than 4.25%, but no investors on the secondary market are buying these coupons. No buy, no sell. The lenders are gridlocked. Running scared to offer a coupon (rate) they cannot finance as a mortgage backed security. The government has talked of stepping in and buying such coupons, so that lenders will lend. Not official yet, but when they do, who knows? The result would be motivated buyers, and ability to qualify for the dream home they have always wished for. Maybe just in time for all of us to return from the holidays refreshed, and ready to sell some houses! I really do predict that 09 (at least Q1) will be vibrant, and the market will begin to move. Who would not want to buy a home at historic lows?
Have a joyous holiday. This will be my last update of the year. Thank you for your support of Patriot Bank Mortgage. Your referrals are so appreciated, and we look forward to being your trusted mortgage source in 2009!
The mortgage rates are the lowest in 50 years. According to where the 10 year treasury is, they should be lower than 4.25%, but no investors on the secondary market are buying these coupons. No buy, no sell. The lenders are gridlocked. Running scared to offer a coupon (rate) they cannot finance as a mortgage backed security. The government has talked of stepping in and buying such coupons, so that lenders will lend. Not official yet, but when they do, who knows? The result would be motivated buyers, and ability to qualify for the dream home they have always wished for. Maybe just in time for all of us to return from the holidays refreshed, and ready to sell some houses! I really do predict that 09 (at least Q1) will be vibrant, and the market will begin to move. Who would not want to buy a home at historic lows?
Have a joyous holiday. This will be my last update of the year. Thank you for your support of Patriot Bank Mortgage. Your referrals are so appreciated, and we look forward to being your trusted mortgage source in 2009!
Friday, December 12, 2008
Rates to 4.625%, Will builders be the next demise?
Well, on Friday I did receive confirmation from Santa that I have been good….rates were 4.625% on a 30 year fixed. (They were 4.5% for about an hour). This is for purchases. Refinances are a bit higher, so additional quotes apply. My feeling is that this WILL spark the interest of home buyers, and that activity in the new year will be renewed, and that it will spark the activity the government is hoping for. Why are rates so low? Who cares…take it for what it is, if I can be so blunt.
What else can I write about this week? I already hit the climax…the rates! Should I write about the deal that almost didn’t close because the appraisal was almost denied for high land/value ratio, or the builder we had to deny for a construction loan (a well known one at that)….. I better not. It’s too negative! But I will summarize to only say that things are tight. Banks are tight because they can be. But wasn’t it this way 7 or 8 years ago? Yes it was, but who can remember back that far? I surely cannot.
I would like to address builders. I predict that this is the next industry to be really affected by our economic downturn (recession!). In fact they already are. Track builders mostly, who build specs. But custom builders too. They are being squeezed , and in some cases cut off, by banks . The strong builders are surviving, and are being required to put more equity in deals. Gone are the days of 100% cost lending. So, in turn, builders with inventory worried . They cannot get more lines to build more homes. Many will unfortunately go under. Spec lending is on hold with many banks, including ours. The banks just don’t want the risk. So I sit here and think what this could mean for consumers: (a) Good deals on new construction (b) less inventory , and that will cause inventory homes to be more expensive. (c) less new homes, for now. ONLY MY PREDICTION that has no merit other than my own.
hope you are enjoying the holidays! Have a great week, and keep saying your prayers. Its working. Oh, by the way, the 30 and 15 fixed being the SAME is not a typo…….strange, but true.
What else can I write about this week? I already hit the climax…the rates! Should I write about the deal that almost didn’t close because the appraisal was almost denied for high land/value ratio, or the builder we had to deny for a construction loan (a well known one at that)….. I better not. It’s too negative! But I will summarize to only say that things are tight. Banks are tight because they can be. But wasn’t it this way 7 or 8 years ago? Yes it was, but who can remember back that far? I surely cannot.
I would like to address builders. I predict that this is the next industry to be really affected by our economic downturn (recession!). In fact they already are. Track builders mostly, who build specs. But custom builders too. They are being squeezed , and in some cases cut off, by banks . The strong builders are surviving, and are being required to put more equity in deals. Gone are the days of 100% cost lending. So, in turn, builders with inventory worried . They cannot get more lines to build more homes. Many will unfortunately go under. Spec lending is on hold with many banks, including ours. The banks just don’t want the risk. So I sit here and think what this could mean for consumers: (a) Good deals on new construction (b) less inventory , and that will cause inventory homes to be more expensive. (c) less new homes, for now. ONLY MY PREDICTION that has no merit other than my own.
hope you are enjoying the holidays! Have a great week, and keep saying your prayers. Its working. Oh, by the way, the 30 and 15 fixed being the SAME is not a typo…….strange, but true.
Friday, December 5, 2008
Rates down to 4.875%, be careful what you wish for!
Merry Christmas….oh, is it not Christmas yet? I thought the 4.875% 30 Fixed I saw this morning was Santa’s gift to me for being such a good girl this year. Then it vanished into thin air hours later, and we are at 5.25% . We should be careful what we wish for. Rates are extremely low, but the economy is in the tanker. There are so many things making the yields (rates) of bonds go down on a daily basis. Remember that yields/rates down means prices are up. Prices up means that there is more demand for bonds. This happens when investors lose confidence in stocks, and they buy more bonds. For the mortgage coupons these days, no one seems to know what they are buying. The spreads between buying a point are unreal, anywhere from .500% - .750%. Never in 14 years have I seen that much of a spread. So save your money to buy that point down, otherwise, you will be paying dearly in the interest rate.
Some headlines for you, that affect the market in every way: Foreclosures have risen in every state in the nation (out just hours ago), foreclosures are forecasted to double in 09, California is on the verge of literally running out of money (all of Arnolds muscle flexing and charm means nothing now!), car giants are folding, we are officially in a recession (since Dec 07- ya think?), major corporate layoffs, terrorist attacks in Mumbai, changing regime in USA for the presidency, and to top all this off, there are pirates attacking ships off the coast of Somalia. Pirates? Are we living in some fairy tale now? Some days it sure feels like it.
But let’s look at the bright side! Gas is under $2.00/gallon, every consumer product imaginable is on sale, cars prices are rock bottom, and we have a new President that has given hope to the country, and seems like the world. There are right this very minute, 4,000 job openings in the Texas Medical Center that need to be filled. Houston is adding jobs! The Medical Center led us through the 80’s, and it will lead us through this, I can assure you.
I had a thought this week that should solve our country’s problems: why don’t we use part of lottery winnings to finance these bail outs!? The mega jackpot was $146 million! Who needs that kind of money anyway?
Some headlines for you, that affect the market in every way: Foreclosures have risen in every state in the nation (out just hours ago), foreclosures are forecasted to double in 09, California is on the verge of literally running out of money (all of Arnolds muscle flexing and charm means nothing now!), car giants are folding, we are officially in a recession (since Dec 07- ya think?), major corporate layoffs, terrorist attacks in Mumbai, changing regime in USA for the presidency, and to top all this off, there are pirates attacking ships off the coast of Somalia. Pirates? Are we living in some fairy tale now? Some days it sure feels like it.
But let’s look at the bright side! Gas is under $2.00/gallon, every consumer product imaginable is on sale, cars prices are rock bottom, and we have a new President that has given hope to the country, and seems like the world. There are right this very minute, 4,000 job openings in the Texas Medical Center that need to be filled. Houston is adding jobs! The Medical Center led us through the 80’s, and it will lead us through this, I can assure you.
I had a thought this week that should solve our country’s problems: why don’t we use part of lottery winnings to finance these bail outs!? The mega jackpot was $146 million! Who needs that kind of money anyway?
Friday, November 21, 2008
Does the new Homeowner Rescue Package encourage default?
Maybe this month I will not make my mortgage payment. Then, skip January and February too, and then I’ll be 90 days late so I can qualify for the homeowner’s assistance that was just passed through Congress. At that point, my mortgage payment will be reduced to 31% of my gross monthly income (good news if I lost my job). My rate will be set as low as 3% for five years, and amortized for as much as 40 years. Apparently there are 2.2 million borrowers that would benefit from this just like me. DO NOT GET ME WRONG here, I am all for helping out those in need. Those that have had the misfortune of a real estate market gone bad, a layoff , etc. Sometimes, however, the consequences are hard to process in my brain. I pay my bills, and , if I get laid off, I would work at Wal Mart if I had to , or wait tables, or something, in order to feed my family. Where does the buck stop between those of us that are ‘taking a bat for the team’, and those that will manipulate the system to benefit themselves? We saw it happen with FEMA assistance after Katrina (remember that?), and we will see it again. How will we be able to differentiate between those people that are really in need, or looking for a handout? Didn’t we all at some point benefit from (a) subprime, (b) stated income (c) high debt to income ratios, etc…………Are the people that foreclosed the ones that had those types of loans? Probably. But we will never know.
In the last couple of weeks, I have advised several people to contact HOPE NOW, the non profit agency that was formed in June 2007, to help persons renegotiate with their lenders. They have helped 2.5 million people avoid foreclosure since then. Even if temporarily. When you do foreclose, your credit will be affected. You will not be able to obtain another conventional loan for 5 years, or an FHA loan for 2 (FHA loans are limited to $270,050, currently). If you do a short sale, you will still fall into the same category. You are settling for less than the owed amount. In leiu of foreclosure. It is like a collection. So where will all these people go? They will be renters….time to buy a rent house! IT is a great time right now to be an investor…….If you can get the loan.
INVESTORS, in my opinion, have been hardest hit by the credit crunch. Maximum 4 properties financed, 20% down (rate is MUCH better if you do 25%), and full documentation of income. There are a lot of investors that do not meet that criteria. Who will buy these homes? The answer is, the investors that have cash, or form investment groups where they have multiple partners to qualify on the application. Or hard money for 14% and 5 points origination. Seriously. Hopefully some smart and savy financier will invent a product to service this segment of the market to allow these homes to be bought. That could be why much of the inventory is sitting there. In the past, the programs available allowed for investors to gobble up properties at a record pace. They balanced the market. Or did they? I have been searching for statistics on how many foreclosures were investment properties. I have not found it yet. But will keep you posted. So would we have been in this situation before now, or ever, had they never been able to get 0% down, stated income on an investment property? It sounds preposterous, doesn’t it?
Lastly, I would like to comment that RATES ARE DOWN THIS WEEK! The mortgage market continues to stay steady, and loans are definitely available. If you have CASH, CREDIT AND INCOME, you will have no problem at all. The key word is proof , proof, proof. Sometimes I wonder how we even deviated from that?
In the last couple of weeks, I have advised several people to contact HOPE NOW, the non profit agency that was formed in June 2007, to help persons renegotiate with their lenders. They have helped 2.5 million people avoid foreclosure since then. Even if temporarily. When you do foreclose, your credit will be affected. You will not be able to obtain another conventional loan for 5 years, or an FHA loan for 2 (FHA loans are limited to $270,050, currently). If you do a short sale, you will still fall into the same category. You are settling for less than the owed amount. In leiu of foreclosure. It is like a collection. So where will all these people go? They will be renters….time to buy a rent house! IT is a great time right now to be an investor…….If you can get the loan.
INVESTORS, in my opinion, have been hardest hit by the credit crunch. Maximum 4 properties financed, 20% down (rate is MUCH better if you do 25%), and full documentation of income. There are a lot of investors that do not meet that criteria. Who will buy these homes? The answer is, the investors that have cash, or form investment groups where they have multiple partners to qualify on the application. Or hard money for 14% and 5 points origination. Seriously. Hopefully some smart and savy financier will invent a product to service this segment of the market to allow these homes to be bought. That could be why much of the inventory is sitting there. In the past, the programs available allowed for investors to gobble up properties at a record pace. They balanced the market. Or did they? I have been searching for statistics on how many foreclosures were investment properties. I have not found it yet. But will keep you posted. So would we have been in this situation before now, or ever, had they never been able to get 0% down, stated income on an investment property? It sounds preposterous, doesn’t it?
Lastly, I would like to comment that RATES ARE DOWN THIS WEEK! The mortgage market continues to stay steady, and loans are definitely available. If you have CASH, CREDIT AND INCOME, you will have no problem at all. The key word is proof , proof, proof. Sometimes I wonder how we even deviated from that?
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