ABBA First Mortgage News

Rates poised for improvement

July 28th, 2015

Rates on home loans fell back last week to the level of two weeks ago. Freddie Mac announced that for the week ending July 23, 30-year fixed rates fell to 4.04% from 4.09% the previous week. The average for 15-year loans decreased to 3.21%. ARMs were higher, with the average for one-year ARMs moving to 2.54% and five-year ARMs rising to 2.97%. A year ago, 30-year fixed rates were at 4.13%, close, but still higher than today’s levels. Attributed to Sean Becketti, Chief Economist, Freddie Mac — “U.S. Treasury yields dropped following announcements that many blue chip companies’ earnings failed to meet expectations. This drove the 30-year fixed rate loan down 5 basis points to 4.04 percent this week. Housing continues to be the bright spot in the economic recovery. Existing home sales beat market expectations coming in at a seasonally adjusted annual rate of 5.49 million homes. This is up 9.6 percent from a year ago and the fastest pace since 2007. Also, housing starts jumped 9.8 percent responding to strong demand in the multifamily market.”  ABBA First Mortgage leads the way with better than market rates for better than market people.

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

The future of bank rates

July 27th, 2015

The Federal Reserve announces its latest interest-rate decision on Wednesday. Officials have indicated they could raise rates as early as September though many investors expect the Fed to wait until December. Last week, Chairwoman Janet Yellen said that moving too soon could threaten the recovery while waiting too long would risk overheating the economy and accelerating inflation. The central bank has pinned its benchmark federal funds rate near zero since December 2008 to spur the economy.  Our mortgage market is directly affected by the changes that may be initiated in the near future.  The prime rate will go up which in turn will increase short term lending and eventually see our long term mortgage rates increase as well.  This last two weeks of July have seen the pricing of rates improving which borrowers can take advantage by giving ABBA First Mortgage a call for a quote to benefit their financial situations with lower rates and or better terms.



Mortgage rates down says Freddie Mac

July 24th, 2015

Compare the national rates to ABBA First and recognize the savings! Our rates and or costs are less than the competition!
Freddie Mac’s primary mortgage market survey for the week ending July 23 shows that the average rate of a 30-year FRM dipped to 4.04 per cent from 4.09 per cent a week earlier. The ABBA First rate is 4.0% with a .25 pt credit back to the borrower. 15-year FRM’s averaged 3.21 per cent (from 3.25 per cent) while the 15 year rate for ABBA First was 3.125% with 0 points.; 5-year ARMs averaged 2.97 per cent (from 2.97 per cent); and 1-year ARM’s averaged 2.54 per cent (up from 2.50 per cent). Chief economist Sean Becketti commented: “U.S. Treasury yields dropped following announcements that many blue chip companies’ earnings failed to meet expectations. This drove the 30-year fixed rate mortgage down 5 basis points to 4.04 per cent this week.”

Buying a home instead of renting-

July 20th, 2015

Rents have been soaring across the country, even outpacing home values, according to a recent Zillow report. And it’s not just a big city problem. “Places that were more traditionally affordable are growing more quickly,” said Skylar Olsen, senior economist at Zillow. The reason? A shortage of available rentals. “Vacancy rates are at very low levels, which continues to push rents higher,” said Andrew Jakabovics, senior director, Policy Development & Research at Enterprise Community Partners. There’s a lot of pressure on the rental market: Millennials are renting longer, housing inventory is tight and Baby Boomers are downsizing. There’s also been a shift in people wanting to live in more urban areas, where renting is more common. But there just aren’t enough “For Rent” signs to keep up with the demand. Rental construction slowed in the aftermath of the housing crisis as confidence shrank. “We weren’t building enough so when the economy recovered, vacancy rates got very tight,” said Hans Nordby, a managing director with real estate research firm CoStar Group. “If you don’t build apartments, it pushes rents up.” Adding more supply will eventually ease some price pressure, she said. “It just takes time to creep down the distribution. People living in the older units now that aren’t as luxurious migrate over to the new luxury units, and that opens up more units.” But it takes about two years for rental buildings to become available in many markets, Nordby said, so the relief won’t be immediate. Source: CNN/Money

Rates worsening today due to Greece “deal”

July 13th, 2015

Stocks and bonds.  Bonds and rates.  Inconsistencies abound!  As for mortgage interest rates, stocks have long benefited from the super low rates that we have experienced . Now that rates may be rising in the long run due to a better economy, that benefit may be reduced. Of course, it is not like rates are high right now, especially from a historical perspective. Just keep in mind that rising rates do not affect only the real estate sector. They can have a profound influence on all markets. Right now rising rates are actually benefiting real estate as consumers rush to purchase homes to beat the rate increases.  We’ll see on Wednesday if the assistance that Greece was seeking is able to get through Parliament.  It may be too soon to tell if this “bailout” sticks.


Rates to rise before 2016

July 11th, 2015

Interest rates will almost certainly rise before the year is out, the head of the Federal Reserve said today.

Speaking in Cleveland, Fed chair Janet Yellen said that although the job market needs to improve first, she felt confident that the Fed would start “normalizing” monetary policy this year. If so, it would be the Fed’s first rate hike since 2008.

“I expect it will be appropriate at some point later this year to take the first step to raise the federal funds rate and thus begin normalizing monetary policy,” Yellen said. “But I want to emphasize tht the course of the economy and inflation remains highly uncertain.

“We will be watching carefully to see if there is continued improvement in labor market conditions, and we will need to be reasonably confident that inflation will move back to 2% in the next few years,” she added.

Can you get a mortgage?

July 7th, 2015

A lot of people are operating under the mistaken impression that getting a home loan has become impossibly strict, and that people with good credit scores are being denied loans. They mistakenly think you have to have 20 percent down, or that you have to have absolutely perfect credit, or that having student loans means you won’t qualify. That’s just not the case. The fact is that it has definitely gotten easier to qualify for a loan than it was right after the financial meltdown in 2008; standards are now relaxed back to where they were in the 1990s. You can’t get a loan just because you say you’re a nice person who makes a lot of money. But you most definitely do not have to have a 20 percent down payment saved. With FHA financing you only need 3.5 percent.  Fannie Mae and Freddie Mac both offer 3 percent down loans but with some requirements, while the VA has zero percent down.

When you apply for a loan, you’re going to have to jump through a fair number of required hoops by providing pay stubs, tax returns and bank statements. What can you do as a borrower to make the process smoother? Provide whatever documentation they’re asking for, as soon as they ask for it. The mortgage industry isn’t setting people up for failure. They’re in the business of making loans. They want to make loans. It’s important to remember that if you’re going to get to the finish line you just have to cooperate fully. As a borrower, you are an active participant in the process. If you do your part as best as you can, you’ll have the smoothest transaction possible. And it’s useful to familiarize yourself with the standards that loan processors follow. When a loan processor says they need two months of bank statements, if you don’t give them every single page of the statement, even the seemingly meaningless ones with boilerplate language on them, they can’t check off that they have received your bank statements.

Source: The Washington Post


Do you know your credit score?

June 30th, 2015

A new survey finds that house hunters who know their credit scores feel significantly more prepared to buy a home. Yet, just half of recent buyers say they have checked their credit as soon as they considered purchasing a home, according to the survey, commissioned by Experian, of 250 recent and 250 future home buyers.  A survey shows that when people interact with their credit by tracking it and learning more about the factors that affect it, they are more confident when considering a new home purchase.

However, more than two in five future home buyers are concerned that they will not qualify for the best home loan rate and have even delayed purchasing to improve their credit, the survey found. Fifty-eight percent of buyers surveyed say they are working to improve their credit to qualify for a better home loan rate, but 35 percent of future buyers say they are not sure what steps to take to qualify for a larger loan. For those who are working to improve their credit, the top actions respondents said they’ve taken are paying off their debt, paying bills on time, keeping balances low on credit cards, protecting credit card information from fraud or identity theft, and not applying for or opening new credit accounts.  ABBA First Mortgage has a program to assist buyers that are seeking to improve their credit scores and will walk alongside you each and every step of the way.  Give us a call today to find out how you too can own a home whether your credit is in need of repair or not.


Are rates going higher? See what Freddie Mac says-

June 29th, 2015

Mortgage rates were already hovering near 2015 highs as of Thursday last week.  Friday’s spike sent them easily above the previous annual high set on June 10th.  Normally, day to day market movement isn’t big enough to cause a change in the actual contract rates being quoted.  In other words, it’s usually the upfront costs (or rebate) that’s changing for any given rate.  Today’s movement was enough to make a new contract rate more prevalent when it comes to conventional 30yr fixed loans for top tier scenarios.  While there still are plenty of quotes going out for lower rates, 4.25% now takes over as the most common.

However, didn’t Freddie Mac just Thursday announce it’s weekly rate survey showing 4.02%?!  Indeed they did, and there’s no reason to doubt the long term accuracy of those numbers, but there are a few major caveats.  First of all, quoted rates often include points.  There’s nothing wrong or deceptive about that and Freddie clearly conveys associated points in its report.  But it’s important to understand that the presence of points can make comparisons between two sources of info much more difficult to make accurate assessments.

If we assumed that 0.7 points were charged in the Freddie survey, today’s most prevalent rate would easily be 4.125%, and the average effective rate would be around 4.09%.  If Freddie had the luxury of instantly re-conducting its survey this afternoon, the 4.02% reported yesterday would likely be very close to 4.09% today.  Herein lies the other caveat: Freddie’s data is from survey responses that come in from Monday through Wednesday.  That’s not a problem when markets are flat, but rates went higher all week.  All of Freddie’s survey responses from Monday were in a completely different reality compared to today.

The bottom line is that rates are not as low as they were earlier last week.  And for the average mortgage applicant with flawless credit, rates are never as low as most reports indicate. The bigger question always is: are they going higher?  Definitely a strong possibility and maybe sooner rather than later!  If you’ve been following along for any length of time, you know we’ve been in heavy ‘defense’ mode since early May, and even as early as late April.  Nothing about that has changed.  There continues to be more risk than reward when it comes to holding off on locking, and next week brings tremendously increased volatility.  In fact, much of today’s weakness was a defensive preparation on the part of financial markets for that potential volatility.


Mortgage trade group predicts a September lift off on interest rates

June 26th, 2015

The Federal Reserve will likely begin inching up interest rates in the early fall as anticipated, despite sending mixed signals about the timing at its June meeting, the Mortgage Bankers Association (MBA) predicted in its latest monthly report on the economy.

In a news conference with reporters last week, Fed Chair Janet Yellen said the specific date action on rates would be taken is undetermined and will be data-dependent. Some analyst took that as a signal that the move to raise the key federal funds rate would come later than expected.

MBA, however, said it was still expecting “a September 2015 lift off.”

“Rates are likely to be quite volatile through the remainder of the year given the uncertainty regarding the Fed’s path going forward,” MBA said in its June commentary.

The trade group also predicted that the economy would grow this year, despite a disappointing first quarter in which gross domestic product contracted by 0.7 percent.

“These are likely temporary hurdles to growth that will dissipate over the course of 2015,” MBA said. “While weak retail sales did provide some cause for concern from December through February, the data indicated encouraging increases in both March and May.”

This past week we have seen rates go up due to the predicament that Greece is experiencing overseas.  Until their economic issues are resolved, we will continue to feel the uneasiness as reflected in the US bond market and mortgage backed securities.  Consider the rates that are being published soon, for the chances are that they will continue to rise.