ABBA First Mortgage News

A brief look back at 2019

January 14th, 2020

On the market level, stocks had a great year in 2019, with the major indices gaining over 20%, despite slower growth. This could be attributed to lower interest rates which prevailed in 2019. Freddie Mac pegged the average 30-year fixed rate home loan at 3.9% for 2019, the fourth lowest average in the past 50 years. These lower interest rates also pumped up the real estate markets, as many took advantage of lower rates to purchase new homes or refinance their existing homes. In November, new home sales were 17% higher than one year ago. Of course, as we have seen, markets can turn on a dime and certainly the threat of the escalation of tensions in the Middle East provides an example of that possibility.

Rates fell due to Mid-East tensions in the past week, but started to rise late in the survey week as tensions eased. For the week ending January 9, Freddie Mac announced that 30-year fixed rates moved down to 3.64% from 3.72% the week before. The average for 15-year loans decreased to 3.07% and the average for five-year ARMs moved down to 3.30%. A year ago, 30-year fixed rates averaged 4.45%, more than .75% higher than today. Attributed to Sam Khater, Chief Economist, Freddie Mac – “Rates fell to the lowest level in thirteen weeks, as investors sought the quality and safety of the U.S. Treasury fixed income markets. The drop in interest rates, combined with the strong labor market, should propel a continued rise in homebuyer demand.”

ABBA First Mortgage has continued to offer some of the lowest rates and terms in both NC and TN.  Give us a call toll free at 866-676-3349 for your no obligation, free customized quote today.

Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Rates are stable- or are they?

January 8th, 2020

For the week ending January 2, Freddie Mac announced that 30-year fixed rates moved down to 3.72% from 3.74% the week before. The average for 15-year loans decreased to 3.16% and the average for five-year ARMs moved up slightly to 3.46%. A year ago, 30-year fixed rates averaged 4.51%, more than .75% higher than today. “The combination of improved economic data and market sentiment has led to stability in interest rates, which have hovered around 3.7 percent for nearly the last two months. The stability is welcome news after the interest rate turbulence of the last year, which caused a slowdown in the housing market and other interest rate sensitive sectors. The low rate environment combined with the red-hot labor market is setting the stage for a continued rise in home sales and home prices,” said Sam Khater, Chief Economist, Freddie Mac.

Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Looking forward to a prosperous and HAPPY NEW YEAR

December 31st, 2019
As we come to the end of the year, we can look back and see plenty of pot holes the economy had to overcome. But the economy did overcome the challenges and we had a very good year — for stocks, bonds and real estate. Of course, that is all old news. What we all want to know is what 2020 will look like. As in any year, there are a modicum of predictions. And none of these highly paid economists or analysts are likely to really be able to predict the future. But it is all interesting to see what they say.

For the U.S. economy overall, Kiplinger expects growth of 1.8% in 2020, compared with an expected 2.3% in 2019 and 2.9% in 2018. Business spending in the U.S. has been subdued by uncertainty about a trade deal, the fallout from Brexit and angst over the presidential election. But with unemployment at decades-long lows, consumers, who account for the bulk of the U.S. economy, remain a strong underpinning. Kiplinger expects the unemployment rate to inch up to 3.8% in 2020 from 3.6% in 2019, and the Fed to cut rates at least once early in 2020. “The economy is in a tug-of-war between geopolitical risk and the underlying resilience of the American household, plus the Fed,” says Mike Pyle, global chief investment strategist at BlackRock.

As far as real estate, sales of new homes probably will rise to a 13-year high in 2020 as the U.S. dodges a recession, according to Lawrence Yun, chief economist of the National Association of Realtors®. New-home sales probably will jump 11% to 750,000, according to Yun’s new forecast, which would be the highest reading since 2007. Sales of existing homes likely will increase 3.7% to 5.56 million in 2020, the highest tally since 2017, Yun said. “Some loosening in inventory will happen in 2020, and so we expect home sales to rise,” Yun said. “We’ll see an increase in inventory, but not any oversupply, so home prices should continue to move higher – our hope is in a much tamer fashion.”

Rates still slightly inching up

December 20th, 2019

Mortgage interest rates were somewhat higher again today–the 4th day in a row that we’ve been forced to observe such mildly unpleasant things.  Technically, this brings the average lender to the highest rates in more than a month, but it’s important to note how narrow the range has been and how mild the movement has been on most days.  Even if we add up all of the weakness after rates hit their best recent levels at the beginning of the month, the average lender is only 0.125% away from those lows.

Reassuring caveats aside, it’s still important to keep in mind that rates are still best described as being in a mild uptrend over the past few weeks and in a more volatile uptrend since September.  When it comes to planning on locking/floating rates, it makes more sense to be defensive (i.e. don’t assume rates will come back down until and unless they give us a clear indication that is what they’re doing).

Conclusion-Rates are “quite a bit” higher than the lowest of the lows that we have seen since they hit bottom.  I would estimate about the difference to be about .5% higher which seriously is not really that much higher.  Rates are also a “little bit higher” than where they were since we started talking about the rates going up or edging up.  That difference is only .125% which truly is very little, but as it continues to inch up, it shows this ongoing trend of slight deterioration to the rate.


Interest rates edging up

December 19th, 2019

For the first time this year, interest rates edged up from October to November as refinances dwindled, according to the Ellie Mae Origination Insight Report.

Interest rates increased slightly from 3.94% to 3.97%, pushing the share of refinances down. Refinances made up 49% of originations in November, falling back from 51% in October. Meanwhile, the percentage of adjustable-rate mortgages climbed from 5% to 5.3% month over month.

“Interest rates rose for the first time in 2019, and as expected, we are seeing the percentage of adjustable-rate mortgages rise and the percentage of refinances taper off,” said Jonathan Corr, president and CEO of Ellie Mae.

Closing rates on all loans reached their highest levels in 2019 at 78.6%. Closing rates on refinances jumped to 77.1% while closing rates on purchase loans remained unchanged at 80.6% for the second straight month.

The time to close all loans inched up to 45 days in November from 44 days in October. The time to close refinances also grew one day longer to 43 days, while the time to close for purchases held steady at 47 days for the second month.

“Simultaneously, closing rates have reached the highest point in 2019 at 78.6%,” Corr said. “We will watch to determine the impacts of holiday seasonality on the home-buying market as we close out 2019.”

Mortgage interest rates inching up again. Economists suggest not to wait for better rates.

December 10th, 2019

We’re in December and closing in on one of my favorite holidays, Christmas which is a precursor to the New Year. Several borrowers would like to close their loans before the end of the year to take advantage of tax laws and how the laws affect them with their overall tax earnings and deductions.  Today is December 10th and it’s up to you to get your loan inquiry in within a couple of days to possibly be able to join those who are in this group of looking forward to keep what they can in their pockets rather than in the government’s vaults.

Although rates were fairly stable this past week ending on December 5th, today is a different story.  Rates have begun the worsening that we had dreaded over the many weeks that we continued to see them improve.  The request to LOCK in your rate ASAP is out there for all to see.  Let’s hope there is a change in the direction of where the rates are heading and that you too can take advantage of the lowest rates in the history of the mortgage market.  Several actions would have to happen to see improving rates once again.  Please call us at 910-332-0650 and let’s talk about where the rates are today and what you might be able to obtain for your particular loan scenario.

[For the week ending December 5, Freddie Mac announced that 30-year fixed rates remained at 3.68%. The average for 15-year loans moved down one tick to 3.14% and the average for five-year ARMs moved down to 3.39%. A year ago, 30-year fixed rates averaged 4.73%, more than 1.0% higher than today. Attributed to Sam Khater, Chief Economist, Freddie Mac –“This week the economy sent mixed signals, leaving rates on home loans unchanged. Survey data for manufacturing and service industries varied while construction spending fell modestly. However, homebuyer demand continued to improve, rising eight percent. Clearly homebuyers remain bullish on the real estate market.”]

Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.  [Taken from Origination Pro Update-The Hershmann Group]

From the lows of last week to “Going up!”

December 4th, 2019
For the week ending November 27, Freddie Mac announced that 30-year fixed rates rose to 3.68% from 3.66% the week before. The average for 15-year loans remained at 3.15% and the average for five-year ARMs moved up to 3.43%. A year ago, 30-year fixed rates averaged 4.81%, more than 1.0% higher than today. “Following a decline in the first nine months of 2019, rates on home loans have traded narrower during the last two months with a modest drift upward due to an improved economic outlook. While there has been a lag in the housing market’s response to lower rates, real estate volumes have clearly shifted into a higher gear. Moreover, the recent improvement in the cyclical segments of the economy and easing financial conditions will provide a gentle tailwind to the real estate market rebound over the next few months,” said Sam Khater, Chief Economist, Freddie Mac.

Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Even with rates slightly higher, refinancing of mortgages should continue throughout 2020

November 18th, 2019

Homes that were purchased with rates of 4.5% or higher still may have a wonderful chance of refinancing through ABBA First Mortgage and SAVING money over the life of their loan (even with any closing costs that may have been collected!  But don’t delay- call today as rates are ticking up and we don’t know if we’ll see that spike down to new lows that some investors are hoping for.  If we do, ABBA First will offer their clients a “NO COST OUT OF POCKET REFINANCE” to those that have refinanced recently to bring their rates down and are now looking to do the same once again!  It’s true, and many previous borrowers of ABBA First will attest to how the program works and how it is truly a money saving option for those who are looking to capture their lowest mortgage rate possible!  But refinance now and avoid what the market has been experiencing recently.

Despite a slight uptick in mortgage rates, applications for home loans climbed last week to their highest level in over a month.

Data from the Mortgage Bankers Association showed that overall mortgage application volume grew 9.6% on a seasonally adjusted basis and 9% on an unadjusted basis week over week.

“Positive data on consumer sentiment and growing optimism surrounding the US and China trade dispute were behind last week’s rise in the 30-year fixed mortgage rate to 4.03%,” said Joel Kan, associate vice president of economic and industry forecasting at MBA.

Refinance applications jumped 13% week over week to the highest level in five weeks. Meanwhile, the purchase index was up 5% seasonally adjusted and 2% unadjusted from the week before.

“With rates still in the 4% range, we continue to expect to see moderate growth in refinance activity in the final weeks of 2020,” Kan said.

The refinance share of mortgage activity rose to 61.9% of total applications from 59.5% from the prior week. The adjustable-rate mortgage (ARM) share of activity, on the other hand, shrank to 4.9% of total applications.

The FHA loans comprised 13.1% of total applications, up from 11.8%. The VA share of total applications inched up from 12% to 12.7%, while the USDA share dipped from 0.6% to 0.5%.

“Last week was a solid week for homebuyers,” Kan said. “Purchase applications increased 2% and were 15% higher than a year ago. Low supply and high home prices remain a key characteristic of this fall’s housing market, which is why the largest growth in activity continues to be in loans with higher loan balances.”

Why I believe that rates may continue to go down

November 12th, 2019

Many economists are predicting somewhat of a mild recession in 2020. However, their predictions are not unanimous and those who believe the economy will continue to grow are pointing to the real estate sector having the potential to keep us out of a recession. Certainly, we can see the economy has slowed when you consider that the last six months the economy has grown by around 2.0%. It is quite apparent that the positive effects of the tax overhaul were temporary, at least in this regard.

The last recession was led by a contracting real estate market. Thus, it would be quite a turnaround if real estate bolstered this economy just enough to keep us out of the next recession. Yes, the economy is slower, but that does not necessarily mean that it will slip into negative territory. The weaker economy is the factor which has caused interest rates to fall more than expected. And those lower rates are the biggest factor bolstering real estate. Rates fell back last week after rising for three straight weeks. For the week ending November 7, Freddie Mac announced that 30-year fixed rates fell to 3.69% from 3.78% the week before. ABBA First follows the trend by keeping in step with the market movement although the radical pricing is typically found on the west coast and priced in other markets such as Florida where the rates are slightly lower than the rest of the USA.

Real estate has also been given a boost by increased household formulation. The Census Bureau recently reported that nearly 1.5 million households were formed in the past year. That formulation is increasing demand for housing nationwide. And lower rates have made owning more affordable. That is a good combination, and if it holds, a factor which might boost the economy by just enough.

Third week in a row that mortgage rates go up

November 4th, 2019

Mortgage rates have increased for the third week in row, with the 30-year fixed-rate mortgage rising three basis points from the prior week.  ABBA First Mortgage has kept their rates very steady from week to week and will continue to hold the line for as long as they have the ability to do so.  However compared to nearly a year ago, we are better than then by more than 1% in both the 30 and the 15 fixed year mortgages.

The Freddie Mac Primary Mortgage Market Survey showed that the upswing pushed the 30-year Fixed RateMortgage up to 3.78% from 3.75%. A year ago, the 30-year FRM averaged 4.83%.

“This week marks the third consecutive week of rate increases, which hasn’t happened since April of this year,” said Sam Khater, Freddie Mac’s Chief Economist. “That said, purchase activity continues to show strength, indicating obvious homebuyer demand.”

However, Khater also said that the shortage in housing supply remains a major drawback to the housing market and even the overall economic recovery.

Meanwhile, the 5-year Treasury-indexed hybrid adjustable-rate mortgage climbed to 3.43% from 3.4% the week before and 4.04% a year ago.