Smart Borrower Blog

Archive for the ‘Mortgage Rates’ Category

Federal Reserve Makes Historic Rate Cut Decision

The Federal Reserve made an unprecedented move Tuesday by resetting its target interest rate to a range of zero to 0.25 percent, down from 1.0 percent, citing continued weakness in the U.S. markets as the impetus for the dramatic decision. “Since the Committee’s last meeting, labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment, and industrial production have declined,” said the Federal Open Market Committee in a statement. “Financial markets remain quite strained and credit conditions tight.  Overall, the outlook for economic activity has weakened further.” The Fed has consistently lowered its rate from... more »

NAR Predicts Lower Mortgage Rates as Pending Home Sales Stabilize

The National Association of Realtors is forecasting lower mortgage interest rates into 2009 even though  its index of pending home sales has been relatively stable. According to a release Tuesday, the NAR Pending Home Sales Index slid down just 0.7 percent in October from the previous month and down 1.0 percent from October 2007. The index is based on signed sales contracts and is an indicator of future sales. “Despite the turmoil in the economy, the overall level of pending home sales has been remarkably stable over the past year, holding in a generally narrow range,” said Lawrence Yun, NAR... more »

Mortgage Demand Up 112.1 Percent As Interest Rates Fall

The volume of U.S. mortgage applications shot up dramatically in the latest week as borrowers sought to take advantage of low interest rates, according to the Mortgage Bankers Association Wednesday. “Many borrowers missed an opportunity to take advantage when rates dropped sharply for a brief period when the GSEs were placed under conservatorship,” said Orawin Velz, associate vice president of economic forecasting for the MBA. GSE stand for government-sponsored enterprises, meaning mortgage companies like Freddie Mac and Fannie Mae. “When rates plummeted following the Fed’s announcement that it would buy GSE debt and MBS [mortgage-backed securities], many of those on the... more »

Mortgage Interest Rates Fall on New Rescue Plan

Interest rates on long-term U.S. home loans fell in the latest week, a reaction to the newly announced Bush administration’s $800 billion bailout package to provide more liquidity for consumer and mortgage debt markets, according to data from Freddie Mac. “Interest rates for 30-year fixed-rate mortgages fell for the fourth consecutive week as signs the overall economy is flagging lowered most interest rates market-wide,” said Frank Nothaft, Freddie Mac vice president and chief economist. “And economic growth in the third quarter was revised downward this week, led by the first decline in consumer spending since the fourth quarter of 1991... more »

Hope for Homeowners Program Not Yet Providing Much Hope

A new government program designed to help homeowners avoid foreclosure is not attracting many takers at this point, according to the Federal Housing Administration and lenders around the country. The program, Hope for Homeowners, is a Bush administration-led effort to help struggling mortgage borrowers refinance  into FHA-backed loans with lower balances and possibly even lower interest rates. The end result for homeowners would be smaller payments and a partial recuperation of equity. When the program began officially on Oct. 1, the FHA estimated that it could help as many as 400,000 borrowers stay out of foreclosure through 2011, yet new... more »

Fed Slashes Rate to 1.0 Percent

By a unanimous vote, the Federal Open Market Committee, a branch of the Federal Reserve, decided to cut its target rate by 50 basis points Wednesday to 1.0 percent. The last time the federal funds rate, the interest rate which banks charge each other for overnight transfers, was at 1.0 percent was in 2003 and before that it had not fallen that that low since 1958. The group cited slowing economies both at home and abroad as part of the reason for the cut. “Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly... more »

Mortgage Demand Falls to Record Low

The number of U.S. mortgage applications submitted in the latest week reached an eight year low, according to data released Wednesday from the Mortgage Bankers Association. The MBA’s mortgage application index, fell dramatically by 16.6 percent to a seasonally adjusted 408.1 during the week ended October 17, 2008. That represent the lowest reading since December 2000. The Association’s home purchase application index, widely considered a timely measure of national home sales, fell 10.9 percent to 279.3, and the demand for refinance home loans plummeted down 23.5 percent to 1,158.8. Not even falling interest rates during the same period were enough... more »

McCain Announces New Mortgage Plan for American Homeowners

Struggling homeowners could get direct help from the government if Republican presidential candidate John McCain is elected. The Arizona senator announced his new $300 billion mortgage aid proposal during Tuesday night’s presidential debate. The plan, dubbed the American Homeownership Resurgence Plan, would authorize the federal government to buy up failing home loans and refinance them into more affordable mortgages for each affected homeowner. “I would order the Secretary of Treasury to immediately buy up the bad home loan mortgages in America,” McCain said during the debate, “and renegotiate at the new value of those homes, at the diminished values of... more »

Mortgage Demand Tanks as Markets Await Bailout

The volume of home loan applications dropped significantly in the past week, even as mortgage interest rates remained relatively low, according to figures released Wednesday from the Mortgage Bankers Association (MBA). The MBA’s market composite index, an indicator of U.S. loan application volume, fell a seasonally adjusted 23.0 percent to 455.4 during the week ended Sept. 26, from 591.4 the previous week. The current reading is also down 28.4 percent on a year-over-year basis. Home purchase loan requests fell by 10.9 percent, but refinance mortgage applications sank by 34.7 percent, an indication of the slowing economy and a painful credit... more »

Mortgage Rates Rise, Applications Fall, and Officials Debate the Bailout

The U.S. mortgage industry saw rising interest rates and declining demand in the latest week, as officials in Washington battled over the Bush administration’s proposed bailout of several major financial companies. According to the Mortgage Bankers Association Wednesday, the average rate on a 30-year fixed rate home loan, excluding points, rose to 6.08 percent from 5.82 percent the previous week.  Rates on 15-year fixed rate loans averaged 5.84 percent, up from 5.54 percent and one-year adjustable rate mortgages carried an average rate of 7.01 percent, an increase from 6.95 percent the week before. During the same week, the MBA recorded... more »