ABBA First Mortgage News

Increase in townhomes likely as a more affordable option for buyers

August 27th, 2016

In an effort to create more affordable housing options for entry-level buyers, home builders are increasingly turning to townhomes. In recent years, builders focused on constructing higher-end homes. Less than 20 percent of newly built single-family homes were priced below $200,000, and the size of a new home grew to an average of 2,700 square feet, according to Census Bureau data. The National Association of Home Builders say that rising regulatory costs – up about 30 percent over the past 5 years – means that it is more expensive to build a house today. As such, first-time home buyers have mostly been priced out of the new-home market. But builders think townhomes may change that. These homes tend to be smaller (the average size was 1,983 square feet, according to 2015 Census data). Townhouse starts totaled 94,000 in the last four quarters ending with the first quarter of 2016 – a 29 percent increase over the prior year, estimates Robert Dietz, chief economist for NAHB. In fact, the growth rate exceeds the total single-family building market, Dietz notes. “These trends will continue,” Dietz says. “As regulatory cost impacts persist and millennials enter the for-sale market, the cost of construction and the growing demand for medium-density housing in walkable neighborhoods in inner and outer suburbs will support townhouse development growth.” Source: Builder

No change for mortgage rates but Yellen could change that

August 26th, 2016

Average rates for a 30-year fixed rate mortgage were unchanged in the week ending August 25 at 3.43 per cent.  ABBA First Mortgage offered rates as low as 3.25 per cent.

Data from Freddie Mac shows that an average 15-year FRM was also unchanged from a week earlier at 2.74 per cent while a 5-year ARM was slightly higher at 2.75 per cent, up from 2.74 per cent.

Fed chair Janet Yellen is speaking at Jackson Hole Friday and is expected to give some indication on the pace of interest rate increases which is likely to impact on mortgage rates over the coming week.

“This marks the ninth consecutive week that mortgage rates have been below 3.5 percent. Markets are erring on the side of caution ahead of the second estimate for second-quarter GDP and Fed Chair Janet Yellen’s speech on Friday,” commented Freddie Mac chief economist Sean Becketti.

While rates are still low and before a market change is made that will affect the long term mortgage rates, set the table with ABBA First Mortgage and allow us to offer you the lowest rate available for you and your needs from more than 12 lenders in the wholesale market.   Call us toll free at 866-676-3349 and ask for Rich at extension 101.

What happened last week?

August 23rd, 2016
  • Rates fell slightly in the past week.
  • For the week ending August 18, Freddie Mac announced that 30-year fixed rates decreased to 3.43% from 3.45% the week before.
  • The average for 15-year loans eased down to 2.74% and the average for five-year adjustables rose slightly to 2.76%.
  • A year ago, 30-year fixed rates were at 3.93%, exactly one-half of one percent higher than today’s levels.
  • Attributed to Sean Becketti, Chief Economist, Freddie Mac — “Ahead of the release of the FOMC minutes for July, 10-year Treasury yields were little changed from the prior week. The 30-year fixed-rate home loan fell 2 basis points to 3.43 percent this week, erasing last week’s uptick. For eight consecutive weeks, rates on home loans have ranged between 3.41 and 3.48 percent. Inflation is not adding any upward pressure on interest rates as the Bureau of Labor Statistics reported that the Consumer Price Index was unchanged in July.”

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.

Roller coaster for mortgage rates going up!

August 19th, 2016

Rates Currently Trending:  Higher

Mortgage rates are moving higher today.  The MBS market improved by +14 bps yesterday. This was enough to slightly improve mortgage rates or fees.   However, mortgage rates are headed higher this morning wiping out all of the improvement from yesterday and then some. The market experienced moderate to low volatility yesterday.

 

Today’s Mortgage Rate Forecast:  Higher

Fed: Non-Voting member S.F. Fed President John Williams came out in support of raising rates. He said “In the context of a strong domestic economy with good momentum, it makes sense to get back to a pace of gradual rate increases, preferably sooner rather than later,” and “An earlier start to raising rates would allow a smoother, more gradual process of normalization.”

 

It’s all about perception- believing that  rates will eventually come back down and when they do, you’ll be able to catch them at the bottom.  If rates are lower next week, then you GUESSED right!  But in actuality, according to professionals in this business that have a much better read of global economics, oil prices, unemployment, etc., they are predicting a rate increase, “preferably sooner rather than later”.  If they have their way, rates will continue to go up.  Please act now and apply online with ABBA First to catch the rates where they are now before further deterioration and possible regret on your part for not having moved more quickly when prompted.  Call toll free 866-676-3349 ext 101 and ABBA First will work with you and for you to obtain the best financing for your needs. By the way if rates improve signficantly during your loan process, ABBA First will renegotiate your rate for you and offer you a better one than what you originally locked in your rate at!  A free “float down”!  Call soon or apply online by copying and pasting in your browerser:     http://www.abbafirst.com/online-mortgage-application.php

Buyers should beware! (Part 2 of 2)

August 19th, 2016

HOME BUYERS READING THIS ARTICLE: STOP. Think about this for just a minute. A home builder or for that matter any corporation, is not going to give you those concessions (closing costs or extra fancy upgrades) out of the goodness of their heart. What any corporation does is the corporation increases your price.

Whether you are buying a car, or a home the concept is the same… And builders do this too, for a very good reason. Builders must compete with each other’s new construction plats and older, existing homes. To get you to emotionally connect with their product, they offer something: 3 percent of the sales price for you to spend on closing costs, for example.

So here’s how it’s done:

The cost of the home has been raised by…how much would you guess?

Is your guess 3%? You are smart. But the builders are smarter. Here’s why: When that transaction closes, in the next few months, appraisers are going to use YOUR sold home as a future sales comparison in their appraisals. Now appraisers are supposed to check to see if there were any sales concessions in closed comps. Some appraisers check the multiple listing service which may or may not have that field in their software. Some appraisers call the builder’s real estate agent to check on pricing concessions but there is no rule that requires that Realtor to return the appraiser’s calls. So, sometimes the appraiser knows and sometimes he/she does not know about the slightly increased sales price. So the 3 percent higher sales prices not only support future sales, they support future sales at a value that is 3 percent higher than today’s sale. And the next future new construction sale is also 3 percent higher than yours. Builders love this because it helps sell more homes! At a higher price! So you end up financing more because your realtor and or the builder did not have YOUR best interest in mind. Ok, here is the ounce of prevention – don’t think with your heart, reason it out with your mind. Is it financially wise to finance, over the life of the loan, your closing costs or upgrades in the form of an increased purchase price? What you may want to consider

– Make the offer for an amount MINUS whatever the builder/ seller is

offering. So if the list price is $350,000 and the builder is offering 3% (10,500) but the buyer must

use the builder’s preferred lender, then the offer will be $339,500 with the home buyer using the home buyer’s preferred lender.

ABBA First Mortgage works closely with your realtors to ensure your purchase agreement is written with your finances and interest in mind.

Because it is not the Realtor’s job to advise and educate on matters relating to the loan. The Realtor will never go this far (OR SHOULD NOT GO THAT FAR) and it can be argued that it is unethical for realtors to advise in areas beyond the Realtor’s expertise. So by default, the education and comparison math must be done by the LO in advance.

When you find yourself in this situation trust your independent Loan Officer to be looking out for you. We don’t have a vested interest in any other company. We are invested in you!

Please note that italics are inserted by Maureen Biagini of ABBA First Mortgage, Inc.*.

Buyers should beware (Part 1 of 2)

August 17th, 2016

My mother taught me that an ounce of prevention is worth a pound of cure. Perhaps you have heard that too. Well I believe it is worth knowing that your realtor and or builder may not be fully aware that their decision to direct you to their lender may actually cost you more money in the long run. A short term choice with long term consequences…The following information is excerpted from an article by Jillayne Schlicke CEO of CE Forward, Inc. and the Executive Director of National Association of Mortgage Fiduciaries on Ethics in Mortgage Lending.

Question: Is it legal for a builder to offer something to the home buyer such as extra funds to use for closing costs, or extra upgrades to the subject property, but then take those extras off the table IF the home buyer refuses to use the builder’s affiliated lender?

Answer: Yes the above is legal.

*Yes, RESPA says it is legal, but is it ethical? Is it right? Is it in the BEST INTEREST of the buyers?

One of the main hallmarks of RESPA is to keep settlement costs low to the consumer, so more people could afford to become homeowners. So a builder having partial or full interest in a mortgage company was, and to some extent, still is seen as being “in the best interest of the consumer” while supporting the real estate industry’s desire for more profits. Affiliated business arrangements are legal and there are many rules involved in these including a mandatory disclosure form provided to the consumer. The reason why the builder can offer concessions (or credits toward closing costs) and then take those concessions away if the buyer chooses a different lender is because it is seen as being in the consumer’s best interest to have the option to use an affiliated company. (However, exercising this option more often than not costs you, the consumer more money in the long run.) There is one important rule regarding builders and their affiliated mortgage companies: IF the home buyer decides to select a lender that is NOT affiliated with the builder, the builder CAN take away the concessions but the builder cannot charge more for the home. I’m assuming the home buyer has been given the affiliated business arrangement disclosure form, so the home buyer then becomes informed about the shared business interests of the lender and the builder. We have disclosure forms for a reason and if the consumer decides to ignore it, then the consumer doesn’t get to complain later when the consumer learns that he/she has possibly been overcharged (or didn’t get the best mortgage financing).

Please note that italics are inserted by Maureen Biagini of ABBA First Mortgage, Inc.*.

“Buyers should beware” Part 2 of 2  tomorrow-

 

 

So many issues confront the Feds as they prepare to meet about interest rates

August 2nd, 2016

Political conventions, Brexit, terrorist attacks and more. Could we have anything else happening in the markets while the Federal Reserve Board’s Open Market Committee met on the future direction of interest rates? Being on that committee is a tough enough job as it is, but this year the factors influencing the world’s economies are just tremendous. Few were expecting the Fed to raise interest rates this month, but before we start thinking about the next meeting in late September, we must remember that there is a Presidential election coming up.

What does this have to do with the Fed? With only approximately six weeks between the next Fed meeting and the election, any move to take action or make any strong statements could be seen as a move which might affect the results of the election. Not that the Fed is all-powerful, but the Fed’s statements and actions affect the markets and the markets’ performance affects how voters feel. Therefore, it would be surprising if the Fed raised rates or gave a date for such at the next meeting. Surprising, but not out of the question.

Speaking of factors, another such factor coming up this week is the jobs report for July. Lately, the jobs numbers have been more volatile, with a very weak report for May and a very strong report for June. Every month the jobs report is analyzed with a microscope by the markets and July’s numbers will be no different in this regard. If the report is very strong, it will be harder for the Fed to hold off on a rate increase in September, regardless of the upcoming elections.

 

Rate rises may be coming soon

July 28th, 2016

Some Federal Reserve policy makers think the U.S. has at long last reached the promised land of full employment.

That’s a message hidden in yesterday’s statement by the Federal Open Market Committee.

In describing the jobs market, the FOMC chose not to refer to “underutilization of labor resources” — a phrase it’s used in the past to suggest the U.S. was still short of maximum employment. Instead, it pointed to “some increase in labor utilization.”

“Admittedly, this could be described as nit-picking, but I wonder if the change in orientation is an effort to refocus attention on the degree of labor market slack, or in this case the lack thereof,” Stephen Stanley, chief economist at Amherst Pierpont Securities LLC, said in a note to clients.

At 4.9 percent in June, the unemployment rate was within the 4.7 to 5 percent range that most Fed policy makers peg as being equivalent to full employment — or the long-term natural jobless rate.

Fed Chair Janet Yellen in the past has argued that the jobless rate did not present a full picture of labor market conditions because it did not capture slack evident elsewhere. In particular, she’s pointed to depressed levels of labor force participation and the large number of part-time workers who would prefer full-time employment.

Yet in a June 6 speech, Yellen said that “the economy is now fairly close to the FOMC’s goal of maximum employment.”

Other policy makers think that goal has been attained. “I believe the economy is basically at maximum employment,” Cleveland Federal Reserve Bank President Loretta Mester said in a July 13 speech in Sydney, Australia.

Whether or not the Fed has reached that objective is important because it’s one factor that will determine the speed at which the central bank raises interest rates. Yellen has said policy makers’ economic projections suggest that they want to push joblessness below the natural rate, though not by much.

In making its assessment that the jobs market has tightened in recent months, the Fed cited “payrolls and other labor market indicators.” Job gains have actually slowed since March, to a monthly average of 147,000, from a 230,000 pace in the 12 months prior  — but they remain at or above the levels many Fed officials say is needed to keep tightening the jobs market.

“We should expect to see some slowdown in the pace of job growth as the economy nears full employment” and companies find it harder to hire workers, Mester, a voting member of the FOMC this year, said. Recent payroll gains exceed the 75,000 to 125,000 monthly average that various economic models peg as the rate needed to keep the jobs market stable in the long term, she said.

“To simply provide jobs for those who are newly entering the labor force probably requires under 100,000 jobs per month,” Yellen told the Joint Economic Committee of Congress on Dec. 3.

Bloomberg

Rates on the rise

July 26th, 2016

Rates on home loans rose in the past week as stocks continued their record run.  Freddie Mac announced that, for the week ending July 21, 30-year fixed rates rose to 3.45% from 3.42% the week before.  The average for 15-year loans increased slightly to 2.75% and the average for five-year adjustables moved up to 2.78%.  A year ago, 30-year fixed rates were at 4.04%, more than one-half of one percent higher than today’s levels.  Attributed to Sean Becketti, Chief Economist, Freddie Mac — “Post-Brexit volatility tapered off over the last two weeks, allowing interest rates to bounce back a bit from their lows.  This week, the 30-year fixed rate increased 3 basis points to a still-quite-low 3.45 percent.  With the Federal Reserve on hold and the UK monetary authority taking at least a one-month breather, we don’t expect any significant movement in rates in the near-term.  This summer remains a favorable time to buy a home or to refinance an existing home loan.”

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 worsened slightly this past week

July 23rd, 2016

Mortgage rates ticked upward for the first time on Thursday since we experienced the immediate worsening over the next two days after the improvements of Brexit.  As the uncertainty of the post-Brexit era fades, mortgage interest rates are still far below levels at this time last year, according to new data from Freddie Mac.

“Post-Brexit volatility tapered off over the last two weeks, allowing interest rates to bounce back a bit from their record (10-year Treasury yield) and near-record (30-year mortgage rate) lows,” said Sean Becketti, chief economist at Freddie Mac. “This week, the 30-year fixed mortgage rate increased…to a still-quite-low 3.45 percent. With the Federal Reserve on hold and the UK monetary authority taking at least a one-month breather, we are not expecting any significant movement in mortgage rates in the near-term.  The increase in rates after Brexit took many by surprise and although the future looks bright for the direction of interest rates, many analysts suggest to exercise caution if waiting to get started with your financing.

This is just an FYI urging clients to set the table now by calling Rich at ABBA First Mortgage and take advantage of the great service that you deserve when work a company that has over 60 years of combined experience in the undustry.