ABBA First Mortgage News

Rates rose this past week

January 20th, 2017
Suggestion-LOCK your rates in now before the expected additional rate increases. ABBA First Mortgage has the ability to renegotiate the rate for you if the market improves significantly. This is great news for you as the borrower.

Comments from Fed officials and stronger than expected economic data were negative for mortgage rates this week. Renewed concerns about the United Kingdom’s exit from the European Union offset a little of the increase, but mortgage rates ended the week higher.

Brexit is back in the news. On Tuesday, British Prime Minister Theresa May spoke about the UK’s objectives in its negotiations for the United Kingdom to exit the European Union. According to May, the UK will not attempt to remain in the single market of the EU because it would require allowing the free movement of workers between the UK and the rest of the EU. Instead, the UK will negotiate trade agreements with the EU and other countries. It is difficult at this time to predict the effect Brexit will have on the economies in Europe. The uncertainty about the outlook for growth caused investors to shift to safer assets, including U.S. mortgage-backed securities. This added demand was good for mortgage rates.

On Wednesday, however, the Fed’s Kaplan expressed support for tighter monetary policy due to progress in meeting the Fed’s labor market and inflation goals. Of note for mortgage rates, he thinks that the Fed should soon begin to consider a reduction in the Fed’s large holdings of MBS and Treasuries. The prospect that this change may take place sooner than expected was negative for mortgage rates. Later that day, Fed Chair Yellen said that most Fed officials expect to raise the federal funds rate gradually until it reaches 3.00% by the end of 2019. This was a faster pace than many investors had expected, and Yellen’s comments also pushed mortgage rates higher.

 

Has the CFPB over extended it’s authority?

January 19th, 2017

The mortgage industry has sadly seen the departure of good small mortgage brokers due in part to the over regulation of rules and laws.  Big banks with deep pockets can offer other products and are able to stay afloat in this industry despite the binding restrictions put on this industry.  The Dodd-Frank ruling which was passed in 2010 is enforced by the CFPB.  This rule was meant to weed out the “bad guys” in the mortgage industry.  To some extent, it certainly accomplished that, but at the same time it restricted the entire industry with over zealous rules and guidelines which in turn partly caused many small mortgage brokers to fail.  The costs to close a loan went up considerably with having to meet the compliance regulations.  Hours upon hours of paperwork for compliance have been added to each loan transaction.  Having to cover these costs has caused many small mortgage brokers to raise their prices and then find themselves not being competitive in the marketplace.  On the other hand, many big banks were able to absorb these costs into their budgets.

In an article from MPA (Mortgage Professionals America):

House Republicans say that the director of the Consumer Financial Protection Bureau may have violated federal law that governs rule making procedures…

…Once again we see the CFPB is a dangerously out-of-control, unconstitutional and unaccountable bureaucracy,” said committee Chairman Jeb Hensarling (R-Texas). “It is a case study in the overreach and pathologies of the regulatory state run amok. The Bureau routinely abuses and exceeds its authority, robs consumers of their economic freedoms, increases consumer costs and often attempts to hide information from the public.”

Written by Ryan Smith for MPA 1-19-2017

Alternatives to 30 year mortgages are on the way?

January 17th, 2017

Alternatives for the 30-year fixed mortgage rate are possible, said Housing and Urban Development Secretary nominee Ben Carson last week.

At his confirmation hearing before the Senate Banking Committee, the former neurosurgeon said he would “carefully evaluate the Federal Housing Administration’s plan to cut annual premiums.”

This is after the HUD’s announcement last Monday that its planned 25-basis-point reduction of the annual premium would take effect on the 27th.  This reduced mortgage insurance payment will change the MIP from .85% to .60% on all FHA loans closed after 2/27/2017.  Call ABBA First for details on how you cvan take advantage of this improvement.

Carson also talked about the fate of Fannie Mae and Freddie Mac, emphasizing that he would not support a total market privatization.

Carson added that a 30-year mortgage sans a government guarantee is possible, but “you can’t do it overnight.”

“It has to be a gradual change,” Carson said. “I look forward to working with you and other members of this committee to figure out how we can shrink the liability of the taxpayer while still providing security to the individuals who want the loans.”

Carson said he plans on touring HUD offices.

“I want to hear from people with boots on the ground who are actually administering programs,” Carson said. “Who are benefiting from the programs. I want to see what actually works and does not work.”

What is happening in the markets which affect mortgage interest rates

January 11th, 2017

ABBA First wishes all a very happy and prosperous New Year!  We believe that mortgage rates will continue to rise while the Federal Reserve seeks to stave off inflation.  It’s a hard balancing act- one which can be beneficial for the country but at the same time we may see interest rates continue to go up.  This is certainly negative news for the home buyer who may also be afffected by rising home prices.  But if you’re in the market for a new home, instead of renting or paying someone else’s mortgage payment down, please contact us today, toll free at 866-676-3349 or on the web at www.abbafirst.com  We look forward to making your new mortgage through ABBA First the most beneficial decision that you may make in your lifetime.

The following is an overview of where rate have been and an average of where they are today.  ABBA First leads the way by offering you the best rates available from more than a dozen of the leading wholesale mortgage lendersin the country.  After reviewing and shopping for your next mortgage, give ABBA First a call and allow us to make you the best offer whether you’re purchasing or refinancing.

  • Rates opened the year lower for the first time since late October.
  • For the week ending January 5, Freddie Mac announced that 30-year fixed rates fell to 4.20% from 4.32% the week before.
  • The average for 15-year loans decreased to 3.44%, and the average for five-year adjustables moved up to 3.33%.
  • A year ago, 30-year fixed rates were at 3.97%, approximately 1/4% lower than today’s levels.
  • Attributed to Freddie Mac — “This marks the first time since 2014 that rates on home loans opened the year above 4 percent.
  • Despite this week’s breather, the 66-basis point increase in the 30-year fixed-rate since November 3, is taking its toll on refinances, as the Mortgage Bankers Association’s refinance index plunged 22% this past week.”

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.

Mortgage rates are higher than the last 2 years

December 23rd, 2016

Mortgage rates are now at their highest average rate since 2014, the Freddie Mac says.

Its weekly survey of the mortgage market reveals that a 30-year FRM with an average 0.5 point, averaged 4.30 per cent in the week ending Dec. 22, compared to 4.16 per cent a week earlier and 3.96 per cent a year ago.

The average rate for a 15-year FRM with an average 0.5 per cent was 3.52 per cent, up from last week’s 3.37 per cent and 3.22 per cent a year ago. The average rate for a 5-year ARM with an average 0.4 point was 3.32 per cent, up from 3.19 per cent last week and 3.06 per cent a year ago.

“A week after the only rate hike of 2016, the mortgage industry digested the Fed’s decision and this week’s survey reflects that response. Following Yellen’s speech last Wednesday, the 10-year Treasury yield rose approximately 10 basis points. The 30-year mortgage rate rose 14 basis points to 4.30 percent, reaching highs we have not seen since April 2014,” commented Sean Becketti, Freddie Mac’s chief economist.

Rates will rise in 2017 – but experts predict that access to mortgages will increase

December 14th, 2016

Housing market growth will slow and mortgage rates will rise in 2017 – but more people will have access to mortgage credit. That’s according to predictions from Redfin data scientists and thought leaders asked to project what the incoming administration of President-elect Donald Trump will hold for the housing market in the new year.

“The Trump administration ushers in three major policies that could significantly affect the trajectory of the U.S. real estate market: infrastructure spending, tax cuts and changes to immigration policy,” Nela Richardson wrote for Redfin. “Next year, as these policies begin to take shape, their effect will mainly play out in new construction and mortgage rates.”

Redfin projects that mortgage rates will increase in the new year – but to no more than 4.3% on the 30-year fixed-rate mortgage. The 30-year FRM has already seen rates spike from 3.5% at the end of October to more than 4% following the presidential election.

“The recent rise in rates is largely attributed to Wall Street optimism regarding Trump’s proposals for increased infrastructure spending and tax cuts,” Richardson wrote.

Investors, optimistic about higher economic growth in 2017, are moving their money from bonds to stocks. And when bond prices fall, mortgage rates generally go up.

Redfin also predicts that the housing market will continue to grow – but affordability issues will slow that growth. Redfin’s experts predicted that affordable housing – already on the decline in America’s largest cities – will continue to become more scarce in 2017. And many homeowners who might be thinking about putting their homes on the market will hold off in 2017, they projected. That’s because millions of homeowners are currently locked into a mortgage rate under 4%, and rising rates will act as an incentive to stay in their homes and hold onto the lower mortgage payment.

But despite rising rates and slowing market growth, Redfin also predicted that more people would have access to mortgage loans in 2017. Fannie and Freddie recently announced increases in their loan limits, and the Federal Housing Administration has solidified its financial footing. That means “an increased likelihood that the White House will further lower FHA fees,” Richardson wrote.

Finally, several large financial institutions introduced mortgage programs this year that required as little as a 1% to 3% down payment. “We expect increases in the availability of low down payment mortgages to draw more millennial buyers into the housing market,” Richardson wrote.

Rates posted are highest in all of 2016-and they’re going up!

December 9th, 2016

Mortgage rates were up again this week and reached their highest point of the year.

Freddie Mac’s Primary Mortgage Market Survey reveals that a 30-year fixed rate mortgage averaged 4.13 per cent with an average 0.5 point, up from 4.08 per cent a week ago.

A 15-year FRM averaged 3.36 per cent with an average 0.5 point, up from 3.34 per cent; and a 5-year ARM averaged 3.17 with an average 0.5 point, up from 3.15 per cent.

As rates continue to climb and the year comes to a close, next week’s Federal Reserve board meeting will be the talk of the town with the markets 94 percent certain of a quarter-point-rate hike,” commented Sean Becketti, Freddie Mac’s chief economist.

A year ago the rates averaged 3.95 (30-year FRM), 3.19 per cent (15-year FRM) and 3.03 per cent (5-year ARM).  However, the rates that ABBA First offers will always be lower than advertised for the qualified borrower.

How will Trump affect the financial industries?

December 8th, 2016

Blackstone Group Chairman and CEO Steve Schwarzman believes that Donald Trump’s presidency will bring a “very substantial reversal of regulations of all types” for the country’s financial sector, according to a Reuters report.

Schwarzman spoke at a Goldman Sachs-hosted investor conference this week and said the reversals would make the biggest impact in his 45-year career.

Trump picked Schwarzman to lead a group of presidential advisors comprised of business leaders. The CEO added that the regulatory changes would attract foreign investors, improve growth, cause a spike in inflation and rise in interest rates.

As one of the world’s largest investment companies, Blackstone’s lending field would benefit from the rising interest rates, while hedge funds and the real estate sector also have an assured future.

Please remember that what is good for the economy is not necessarily good for long term mortgage interest rates.  As our economic data improves, the likeliness of having higher interest rates is more plausible.

PMI is still on the table with choices

December 6th, 2016

There are two common choices that a borrower may consider when having to obtain mortgage insurance (PMI) and how to pay it back to the lender.  That is the choice between “lender-paid” and “borrower-paid” MI. Many times a client automatically picks the option which produces the lowest mortgage payment. And this may be the best choice. However, let us look at another aspect of the decision.

The borrower-paid MI may be cancelable when the loan reaches a certain loan-to-value in the future. And this could happen in as little as two years under certain scenarios. The lender-paid MI cannot be canceled. Lender-paid MI is often financed through a higher interest rate. Let’s say the buyer is planning a major renovation which, coupled with appreciation, would lower the loan-to-value of the loan below 78% in two years. The homeowner could then cancel the borrower paid MI, if all other conditions are met. But the homeowner could be paying on the lender-paid MI for many years longer via the higher interest rate.

On the other side of the equation, if the borrower makes over $110,000 per year, the borrower-paid MI may not be deductible, but the higher rate produced by the lender-paid MI could be deductible, if it is a primary residence or second home. Thus, just as comparing loan programs, comparing mortgage insurance alternatives are very important as well. Always be sure to to check with your tax advisor when considering the tax implications of these choices.

Will rates ever stop rising?

December 2nd, 2016

Rates continued their post-election climb last week. For the week ending December 1, Freddie Mac announced that 30-year fixed rates rose to 4.08% from 4.03% the week before. The average for 15-year loans increased to 3.34%, and the average for five-year adjustables moved up to 3.15%. A year ago, 30-year fixed rates were at 3.93%, approximately 1/8% lower than today’s levels. Attributed to Sean Becketti, Chief Economist, Freddie Mac — “The 10-year Treasury yield remained flat despite an upward revision to third quarter GDP. The rate on 30-year fixed home loans rose 5 basis points to 4.08 percent, rising a total of 51 basis points in three short weeks. With rates at the highest we’ve seen this year; borrowers are moving more slowly on refinances. The latest Weekly Applications Survey results from the Mortgage Bankers Association show refinance activity down 16 percent week over week.” 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.