ABBA First Mortgage News

Can we be too optimistic about the future?

February 17th, 2017

During the past few months we have had a very solid rally in the stock market, which has been accompanied by higher interest rates. Certainly, the economic results that have been released have not changed that much during that period, and thus we can conclude that the changes in the markets are not because of a change in fundamentals. This conclusion is not surprising, because often the markets trade on feelings rather than results.

We do know that the change in psychology is due to a change in leadership. New leadership and new policies bring a lot of uncertainty to the table. Generally, the markets do not like uncertainty. On the other hand, it is not unusual for optimism to trump uncertainty (excuse the pun). If the markets are optimistic that the changes will help the economy, high stock prices and higher rates are justified. Of course, it does help that the economy is already heading in the right direction.

As slow as it has been, the recovery has seen a precipitous drop in the unemployment rate and a net gain of several million jobs. Revving up an economy which is already growing requires much less energy, as opposed to turning around an economy. And that is what is likely making the markets more optimistic. It is unusual to apply stimulus to a growing economy, as opposed to moving an economy out of recession. On the other hand, too much stimulus to a growing economy could stimulate inflation, and this is the risk which is supporting higher rates. Remember, the markets are not always right regarding what will happen, because there is no way of accurately predicting the future.

We need affordable housing. Where’s the supply to meet the demand?

February 13th, 2017

The rising number of listings for luxury properties across the U.S. is at odds with the growing demand for homes in the low- and mid-priced ranges, real estate information firm Trulia said in a recent study.

The survey found that approximately 27% of searches in the fourth quarter were for starter properties, while only 21% of existing listings were for that housing type. On the other hand, 44% of online searches in the same time frame were for high-end offerings, but fully 55% of listings were for homes in that price range.

These developments might lead to an especially difficult year for both first-time buyers and high-end sellers.

“The big, high-level takeaway is that most Americans are looking for a starter or trade-up home but there are a ton of premium homes on the market,” Trulia housing analyst Felipe Chacon told The Wall Street Journal.

Improving economic fundamentals might also presage an increase in the number of first-time buyers, who nevertheless might not be able to afford the more expensive properties available.

“It’s squeezing the bottom end of the market, and that makes for a more competitive process and a less favorable market for premium home sellers,” Chacon said.

The National Association of Realtors said that while overall supply numbers have remained relatively steady, the dearth of affordable homes, along with climbing mortgage rates, led to a 2.8% month-over-month decline in housing sales across the U.S. in December.

What’s happening in the mortgage marketplace?

February 7th, 2017

Call ABBA First at 910-332-0650 or visit us at www.abbafirst.com for the lowest rate and terms for your needs!

  • Rates on home loans were largely unchanged from the previous week, an event which has been unusual for the past three months.
  • For the week ending February 2, Freddie Mac announced that 30-year fixed rates remained at 4.19%.
  • The average for 15-year loans increased one tick to 3.41%, and the average for five-year adjustables moved up to 3.23%.
  • A year ago, 30-year fixed rates averaged 3.72%.
  • “The 10-year Treasury yield fell 5 basis points this week following a tepid advanced estimate of fourth-quarter GDP and the Fed’s decision to leave rates unchanged. The 30-year rate remained flat at 4.19 percent, starting the month 47 basis points higher than this time last year. Despite the uncertainty in the market, the pending home sales index increased 1.6 percent in December, up from a decline of 2.5 percent the month prior.”

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.

Buy now if you’re thinking of purchasing a new home!

February 6th, 2017

Are you delaying listing your home until the season begins? Many believe sales and prices tend to peak in the spring and summer. However, this year is different. Jonathan Smoke, realtor.com®’s chief economist, stresses in his latest column that the conventional wisdom isn’t correct this winter. Here’s why: At the beginning of 2017, inventory levels plunged to multiyear lows. Sellers are currently facing very little competition, he says. Mixed with that, buyer demand is “abnormally strong for the off-season,” Smoke writes. “The climb in interest rates that started in October and accelerated in November and December has created a sense of urgency among buyers.” With interest rates largely forecasted to move higher this year, buyers are more in a rush to lock in a low rate sooner. Plus, sellers may have to worry about lending rates as well; Smoke estimates that 85 percent of sellers are planning to buy another home after they sell. Here’s the best tip, Smoke says: “If you are thinking of selling and buying in 2017, the early bird may get the worm. And the best new nest.” Source: National Association of Realtors®

Mortgage rate rises eased this week

February 3rd, 2017

Freddie Mac says that average mortgage rates have seen no significant rises in the past week despite uncertainty in the market.

“The 30-year mortgage rate remained flat at 4.19 per cent, starting the month 47 basis points higher than this time last year,” said Freddie’s chief economist Sean Becketti.

For 15-year FRM’s the average mortgage with an average 0.5 point was slightly higher at 3.41 per cent (compared to 3.40 per cent a week earlier) while an average 5-year ARM with an average 0.4 point was up to 3.23 per cent (from 3.20 per cent).

Are 1st time home buyers holding back? What’s keeping non-owners from buying?

February 2nd, 2017

Existing-home sales rose to a 10-year high in 2016, but optimism about buying a home has diminished among non-owners. So what’s holding prospective homebuyers back?

According to a new survey by the National Association of Realtors, non-owners are stymied in their quest to become homeowners by barriers both real and imaginary. Affordability pressures and student debt are very real issues that prevent many people from buying a house – but many balk because they have the wrong ideas about things like down-payment requirements.

That lack of knowledge can have a deleterious effect on prospective owners’ attitudes – and it’s reflected in the numbers. The percent of non-owners who believed it was a good time to buy a home stood at 63% in the first quarter of 2016. By the fourth quarter, it had dropped to 55%, according to the NAR. The percent of owners who thought it was a good time to buy, meanwhile, hovered near 80% throughout the year.

“Nearly all non-homeowners said they want to own a home in the future (87%), but it’s evident that higher rents and home prices — up 41% in the past five years — along with limited entry-level supply and repaying student debt have combined to make buying a challenging goal,” said NAR chief economist Lawrence Yun. “It’s also little surprise that non-owners in the West — where price appreciation has been the strongest — were the least optimistic about buying.”

Real issues
It’s not just mistaken beliefs about the homebuying process that stall would-be owners, according to the NAR’s data; there are some very real problems many non-owners face.

The top reason not to buy a home, of course, is being unable to afford it. Throughout 2016, more than half of non-owners said they simply couldn’t afford to buy, according to the NAR. Student debt is also causing many non-owners to put off buying; 59% of non-owners with student debt told the NAR that they weren’t comfortable with taking on a mortgage.

“In addition to having to postpone important milestones such as getting married and starting a family, many young adults are financially falling behind previous generations in part because of having to prioritize repaying their sizeable student loans over buying a home and saving for retirement,” Yun said.

Muddled ideas about mortgages
But many non-owners are also laboring under mistaken beliefs about the mortgage process, according to the NAR – beliefs that could keep them from even considering a home purchase. For instance, a staggering 87% of non-owners surveyed by the group thought a down payment of 10% or more was necessary to purchase a home.

The truth? The median down payment for first-time homebuyers has been 6% for the last three years running. That means many would-be homeowners could become actual homeowners, according to NAR President William E. Brown – if only they were educated about the facts of getting a mortgage.

“Current non-owners’ ultimate goal of owning a home may not be as far-fetched as they believe,” Brown said. “There are mortgage options available for creditworthy borrowers with manageable levels of debt and smaller down payments. Those interested in buying their first home in 2017 should review their finances, sit down with a lender to see if they qualify for a mortgage and find a realtor to help them get started on their home search.”

(From Mortgage Professional America 2-2-17)

ABBA First Mortgage offers mortgages for qualified home buyers with absolutely no money down.  In fact just Tuesday of this week closed a mortgage for a borrower that not only did not have to bring money to closing, but was given back every dollar that she had already put into the home for the earnest money, appraisal, and home inspection.  Talk about a sweet deal!  Please call us to see if you too can meet the requirements of closing on your home ourchase with very little money or as in some cases absolutely no money out of pocket.  Ask for the owner of ABBA First Mortgage, Rich Biagini at 910-332-0650 or extension 101 when prompted.

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.