ABBA First Mortgage News

Fed cuts benchmark interest rate by 25 basis points

September 20th, 2019

With the U.S. and global economies dealing with a period of turbulence, the Federal Reserve on Wednesday shaved 25 basis points off its benchmark interest rate for the second time in two months.

The cut comes despite a solid labor market and economic activity that, according to the Fed, has been rising at a “moderate” rate. Still, manufacturing has shown considerable weakness, with business fixed investment and exports showing vulnerability amidst the ongoing U.S.-China trade war and other international stressors, such as the United Kingdom’s messy divorce with the European Union.

“In light of the implications of global developments for the economic outlook as well as muted inflation pressures, the [Federal Reserve’s Federal Open Market] Committee decided to lower the target range for the federal funds rate to 1-3/4 to 2 percent,” the Fed announced. Seven of the Fed’s 10 regional presidents voted for the rate cut.

Despite the decisive (and predicted) action by the Fed, the cut did little to alleviate market uncertainties, said Mike Fratantoni, chief economist and senior vice president of research and industry technology for the Mortgage Bankers Association.

“Although the financial markets fully anticipated today’s Federal Reserve decision to lower their target for the Fed Funds rate, the level of uncertainty in respect to the global and domestic economy and future monetary policy has been quite high. This is why there’s been a wild swing in mortgage rates over the past month.

“Today’s news does little to reduce uncertainty. The trade war with China, and now conflict in the Middle East, certainly add to the overall uneasiness. While it is not surprising that FOMC voters cannot agree on the outlook for monetary policy, as indicated by the three dissenting votes today, the disagreement itself also adds to the uncertainty.”

Looking ahead, Fratantoni said, the MBA expects the recent home-refinance wave, spurred by the last month’s drop in mortgage rates, will tail off toward the end of 2019. The home-purchase market should continue to benefit from significantly lower mortgage rates compared to last year and, coupled with a continually strong job market, these factors should continue to support homebuyer demand, he added.

As Fratantoni said, the divisive nature of the vote is noteworthy. The trio of dissents represents the most in a Fed vote since December 2014. Two regional presidents indicated a preference to keep the federal funds rate unchanged, while the third, James Bullard of St. Louis, pushed for an even larger rate cut of 50 basis points.

At a news conference after the committee meeting, Federal Reserve chairman Jerome Powell said that the group “took this step to keep the economy strong.” He added that although the outlook for the national economy remains healthy, it is “a time of difficult judgments” and rates could see another cut this year if the economy shows further weakness. Fannie Mae, among others, projects another rate cut in December.

The cut already has one high-profile detractor in President Donald Trump, who has aggressively berated the Fed on Twitter for not cutting rates already. Trump lamented Wednesday’s action as not enough of a cut, haranguing Powell and the Fed in a tweet for having “no ‘guts,’ no sense, [and] no vision.” He also added a further jab at Powell — who Trump nominated to the chairman’s post in 2017 — calling him a “terrible communicator.”

Reprinted from the Scotsman Guide of September 18th, 2019

Waiting for that lowest rate?

September 9th, 2019

“Fixed mortgage rates could fall to 3.3% by the end of the year as the nation’s economy slows, according to Lawrence Yun, chief economist of the National Association of Realtors. That would put the rate just a smidge below the 3.31% seen in November of 2012 – the lowest average for a 30-year fixed mortgage in Freddie Mac data going back to 1971.”

ABBA First Mortgage quoted a 3.25%, 30 year fixed rate mortgages with a .5 discount point at that time back in 2012.  Incidentally, we closed a purchase loan recently for 3.375% with 0 points for a client with the right parameters when the rates had hit a low and he was prepared to lock in the rate with us for he had “set the table” by completing the application and had already been pre-approved.  Other clients also have done the same and have taken advantage of just having to lock in their rate because they had already “set the table” with us.  Please call us at 910-332-0650 so that you too can be ready to obtain the lowest rate available for your needs as well.  Or, if you’d rather,  complete the Full Online Application that is found on our site at:

https://5329129220.mortgage-application.net/WebApp/Start.aspx?oempage=1

We look forward to working with you and for you.

Excerpts in quotes taken from Housing Wire Newsletter Sept. 9 2019

Owning a home vs. renting? According to BOA study it’s no contest! Take advantage of ABBA First mortgage rate specials now! Call 910-332-0650

September 6th, 2019

Homeownership has been so positive for most owners, that they would never choose to return to renting.

A new study from the Bank of America found that 83% would never go back and 93% said that their lives have been happier because of homeownership.

The Homebuyer Insights Report also discovered that 88% said buying their home was the best decision they ever made while 79% said it has changed them for the better.

Emotional attachment and improved lifestyle both contribute to their happiness. And many said they have benefitted from new hobbies such as gardening/landscaping and interior design/remodeling.

“We know how much homeownership means, and we see examples every day of how owning a home gives our clients the power to build personal wealth and make memories,” said D. Steve Boland, head of Consumer Lending at Bank of America. “They’ve told us very clearly that homeownership is invaluable, and that’s why we’re actively providing assistance with down payment and closing costs to help people buy homes and create a new lifestyle.”

Being able to house the whole family under one roof (24%), a sense of pride (47%), and allowing them to entertain more (49%) were all cited as positive changes since buying a home.

Emotions vs. equity
While respondents said homeownership builds both emotional and financial equity, it is the emotional value that is most important.

More than half of current homeowners define a home as a place to make memories, compared to 42% who view a home as a financial investment.

Most Americans agree that owning one is a way to build lifelong memories with loved ones, and 70% say they are more emotionally attached to their homes than they anticipated. More than two-thirds believe it would be difficult to move from their home because of the memories made there.

Rates are still amongst the lowest ever

August 29th, 2019

For the week ending August 22, Freddie Mac announced that 30-year fixed rates fell to 3.55% from 3.60% the week before. The average for 15-year loans decreased to 3.03% and the average for five-year ARMs moved down to 3.32%. A year ago, 30-year fixed rates averaged 4.51%, almost 1.0% higher than today. “The drop in rates continues to stimulate the real estate market and the economy. Home purchase demand is up five percent from a year ago and has noticeably strengthened since the early summer months, while refinances surged to their highest share in three and a half years. Households that refinanced in the second quarter of 2019 will save an average of $1,700 a year, which is equivalent to about $140 each month. The benefit of lower rates is not only shoring up home sales, but also providing support to homeowner balance sheets via higher monthly cash flow and steadily rising home equity,” 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.

Staying low as Feds meet Thursday-Friday to discuss future actions

August 21st, 2019

Rates hold steady as we have seen these lows for a second straight week.  last year, the 30 year fixed rate mortgage averaged 4.53% while this year it has been averaging 3.60%, nearly 1.0% less than it was a year ago.

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.

Current Indices for Adjustable Rate Mortgages 
Updated August 16, 2019

  Daily Value Monthly Value
  August 15 July
6-month Treasury Security 1.86% 2.08%
1-year Treasury Security 1.72% 1.96%
3-year Treasury Security 1.44% 1.80%
5-year Treasury Security 1.42% 1.83%
10-year Treasury Security 1.52% 2.06%
12-month LIBOR   2.189% (July)
12-month MTA   2.447% (July)
11th District Cost of Funds   1.141% (June)
Prime Rate   5.25% (July)

With lower interest rates, the economy is picking up and refinancing of existing homes is strong

August 14th, 2019

It was the week of the “Feds,” as not only did our Federal Reserve Board lower rates by .25% last week, but also other Central Banks around the world weighed in. The Bank of Japan and Bank of England both kept their already low interest rates steady, one week after the European Central Bank also made the same decision. These actions served as a reminder that our economy is linked to the world economy.

One reason cited for our Fed lowering rates was the slowdown in the world economy, which could very well spill over into our own economic situation. Thus far, our economy has been performing decently this year, but the second quarter was definitely slower than the first. The question is–will the Fed’s decision to lower rates bolster our economy? The answer to this question is more complex than it would seem.

Interest rates had already moved down significantly in anticipation of the Fed’s action. Since there was no surprise .50% cut, rates may not have moved much further unless the Fed was expected to act again. And there was no clear-cut signal on that issue which came from the Fed announcement. However, within 24 hours, the Administration announced new tariffs which caused more commotion in the bond and stock markets than the Fed activity. Either way, the lower rates which preceded the Fed’s move and followed the tariff announcement, seem to already be having some positive effects — especially within the housing sector where purchases are picking up and refinances are strong.

So what’s your credit score?

August 7th, 2019
Any score between 700 and 749 is typically deemed “good,” while scores from 650 to 700 are “fair.” Excellent scores are usually those over 750.

 

Call ABBA First Mortgage for help in improving your credit score.  Although we may be able to do mortgages down to a credit score of 500, you may find it much easier to be approved for a loan with a score of 620+ and we can help you get there as quickly as possible if you’re interested.  Call 910-332-0650 and ask to speak to Rich allowing him to explain the process to bring your scores up no matter what your present scores may be.  There’s always HOPE.  Please never give up!

So if you’re thinking about buying a house now or in the next few years, you might want to work on improving your credit score. The Federal Reserve reports that 90% of U.S. home loans taken out in the first quarter of 2019 were by home buyers with a score of at least 650, and 75% had a score higher than 700. The average credit score this year sits at 759, the report found, and only 10% of borrowers had scores under 647. FICO credit scores range from 300 to 850, and the national average is 704.

While you can likely qualify for a home loan with a rate lower than the median, a higher score typically means better interest rates and loan options. A multitude of other factors can also influence the approval process, including the cost of the home, the size of the down payment and your income. But the score is a significant factor. Remember, raising your score won’t happen overnight. Paying your bills on time and lowering credit usage are long-term habits that need to be built and cultivated. To improve your score, patience is key.  The other key is to call ABBA First Mortgage and let them get to work with you and for you with their highly trained credit consulting team that will speak with you about your credit report and discuss the next steps of bringing your dreams to a reality by working with you on your credit scores,  your credit history, and your future credit possibilities.

 

 

Feds reduced the bank rate by .25%- Now what?

August 1st, 2019

We’ve been waiting to see what the Federal Reserve Board would do at their monthly meeting under the direction of Board Chairman Jerome Powell.  Would they hold the bank rate steady?  Or reduce it slightly?  Or lower the rate by a half point which would be a true stimulus to the economy and trigger a mini re-fi boom?  The answer came yesterday as the Feds met and played it safe and for the first time in years lowered the internal rate that the banks use to “exchange” money between banks.  It also affected the short term rates for adjustable rate mortgages, HELOCs, and all short term credit such as credit cards.  The mortgage interest rates will also feel the effect of this rate lowering, but not to the extent that it may have if there was a larger decrease as was hoped for by many in the mortgage industry.  However, the interest rates are close to being the lowest that they’ve ever been in the history of mortgages and the suggestion is to take advantage of this opportunity while the getting is good.  Call ABBA First for the up to the minute rates available for you as the market is always moving and you may catch it at the bottom when you call!  We’re waiting to hear from you at 910-332-0650.

Once again rates are down

August 1st, 2019

For the week ending July 25, Freddie Mac announced that 30-year fixed rates moved down to 3.75% from 3.81% the week before. The average for 15-year loans decreased to 3.18% and the average for five-year ARMs moved down slightly to 3.47%. A year ago, 30-year fixed rates averaged 4.54%, more than 0.75% higher than today. “Rates continued to hover near three-year lows and purchase application demand has responded, rising steadily over the last two months to the highest year-over-year change since the fall of 2017. While the improvement has yet to impact home sales, there’s a clear firming of purchase demand that should translate into higher home sales in the second half of this year,” 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.

After some ups and downs, steady is the name of the game.

July 16th, 2019

Rates were stable for the second straight week. For the week ending July 10, Freddie Mac announced that 30-year fixed rates remained at 3.75%. The average for 15-year loans increased to 3.22% and the average for five-year ARMs moved up one tick to 3.46%. A year ago, 30-year fixed rates averaged 4.53%, over 0.75% higher than today. Attributed to Sam Khater, Chief Economist, Freddie Mac — “The recent stabilization in rates on home loans reflects modestly improving U.S. economic data and a more accommodative tone from the Federal Reserve to respond to the rising downside economic risk from trade tensions and soft global economic data. On the housing front, the latest weekly purchase application data suggests homebuyer demand continues to rise, which is consistent with the slowly improving real estate data from the last two months.

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.