ABBA First Mortgage, Inc. - Wilmington, NC

1/26-Home buying: new or existing

January 27th, 2015

Buyers who purchase new homes are paying much more than those who buy existing homes. The price gap between the two types of homes, which historically has been in the 15 percent to 20 percent range, has ballooned to between 30 percent and 40 percent in recent years, according to data from the National Association of Realtors®. “That suggests either existing-home prices are much cheaper in relation to the newly built homes and/or that there is just not enough new homes being produced,” notes NAR Chief Economist Lawrence Yun on NAR’s Economists’ Outlook blog. In November, the median home price of a new home was $280,900. In comparison, the median price of an existing home was $206,200, representing a gap of 36 percent. New-home construction has been at low levels the last few years. Single-family housing starts this year reached 650,000, but a more normal rate for the sector is considered to be 1 million. A shortage of new-home construction is putting higher premiums on new homes, Yun notes. “Persistent underproduction of new homes is one key reason for pushing up prices,” Yun writes on NAR’s blog. “From 2004 to 2014, the price of a typical newly constructed home will have risen by 27 percent.” The price premium could widen more if housing starts do not rebound soon. NAR projects single-family housing starts to rise to 820,000 in 2015, which is still under the historical average. Source: NAR

 

1/22- Rates unchanged this morning from our improved rates of yesterday.

January 22nd, 2015

Initial Jobless Claims was 307K vs est 300K; this is the second straight week of above 300K But this is taking a back seat to the European Central Bank. Mortgage Backed Securities are selling off (-33BPS) as the ECB leaves their rates unchanged and no QE announcement yet.

Heard yesterday one analyst saying interest rates will increase this year; I don’t argue that only because of the present very low rates but we see little ahead that will drive rates much higher. Rates should remain low this year, at least through the first half of the year. Central banks are impotent now and cannot muster anything that will hike the low inflation levels that are major drags on the bullish outlooks. The Fed after three years of stimulus failed to increase the level of inflation to the 2.0% target; why would anyone believe the ECBs stimulus? Not likely but the ECB had to do something.

Volatility is alive and well this morning with the 10 year treasury bond in a 10 basis point rate range, the stock indexes opened better but turned negative fifteen minutes into the day. MBS prices also in wide trading range so keep tuned in.  Better yet, call me at 866-676-3349 or email richsr@abbafirst.com for the latest in mortgage interest rates and how they are being effected by the national and global economies.

1/21- Low Rates = More jobs!

January 21st, 2015

American homeowners are quickly fulfilling their New Year’s Resolution to refinance their home loans. Residential finance applications rose nearly 50% in one week in January, the strongest weekly gain since November 2008, according to the Mortgage Bankers Association, which tracks housing market data. It’s a closely watched metric because applications are a key indicator of not just the real estate market, but the overall U.S. economy, says Diane Swonk, chief economist at Mesirow Financial.

“We’re looking for housing to come back this year,” Swonk says. “There’s no other single change in the economy other than home buying that has such a large effect on spending.” Rates are at their lowest levels since May 2013. Many homeowners rushed to refinance at these rates. People refinancing their home loans made up over two-thirds of the application surge, the MBA reported. In addition, the President announced that the Federal Housing Administration is lowering their mortgage insurance fees.

The low rates are also creating more jobs. Home-building employment increased 7% in December from a year ago. Looking ahead, Swonk sees 2015 as the year that many Millennials, long stuck with poor job prospects, will become home buyers. “We are at a tipping point where we’re finally going to see some of those Millennials leave their parents’ homes, grow some wings and leave the nest,” Swonk says. “They’ll either rent or buy, but the arbitrage is really to buy.”

 

1/16- Positive consumer confidence level causes rates to rise!

January 16th, 2015

With oil prices dropping, we have seen and were hoping to continue to see rates do the same.  But, lower prices at the pump have caused consumers to have more confidence in our economy.  This positive attitude in turn has caused an about face and we are watching rates to go up today- fast.  The improvements that we saw this past week were wiped out in one day.  Do not allow your rate to get away from you!  Lock in at your earliest convenience with our discounted rates through ABBA First Mortgage.  We look forward to doing business with you and for you!

1/15- Oil prices may be dictating interest rates.

January 15th, 2015

Crude oil prices are improving this morning on comments from OPEC that said it saw slightly stronger global demand for crude this year as well as slower supply growth. OPEC is lowering its supply estimates for non-OPEC producers for this year, highlighting indications that lower prices are already affecting investment in the sector. Talking the price higher? Yes they are. Early trading has crude prices up almost $2.00/barrel and back over $50.00. Crude oil is ripe for a huge short-covering rally not that prices are not going to decline more but the recent collapse may be overdone. The drop in crude has led the way for these present low interest rates.

 

1/12-Beginning the week on the right foot.

January 12th, 2015

Last week we touched down to the lowest published 30 year rate available since the beginning of recorded mortgages back in the 50’s.  Rates went up a little at the end of the week, but if you are hoping to capitalize on the lowest of the lows, my suggestion is to set the table by completing the full online application found on the ABBA First website or for easy reference at:

https://5329129220.secure-loancenter.com/WebApp/FullAppLogin.aspx?oempage=1

Today rates slightly improved.  We look forward to working with you and for you.

1/7- FHA monthly mortgage insurance rates slated to come down!

January 7th, 2015

U.S. President Barack Obama is set to announce a 50 basis point reduction of Federal Housing Administration (FHA) mortgage insurance premiums to 0.85% in a speech to be delivered Thursday in suburban Phoenix, according to Bloomberg.

Since the crisis, FHA fees have skyrocketed. The annual insurance premium paid by most FHA borrowers has risen to 1.35%, up from 0.55%  in 2010 — or more than $300 a month on a $300,000 mortgage. The higher premiums helped beef up the agency’s cash cushion when its finances took a hit after the housing bust.

1/6- Rents going up! Rates coming down!

January 5th, 2015

Landlords are quickly raising their rents as the national vacancy rate dips to the lowest level in two decades. Rents are rising at the fastest pace in six years, according to newly released data from the Bureau of Labor Statistics. The annual rent inflation reached 3.5 percent in November, the highest growth since November 2008, and up from 3.3 percent in October, according to the government’s report. “Rental vacancy rates have fallen to 20-year lows,” notes Ted Wiesman, an economist at Morgan Stanley. The vacancy rate plunged to 7.4 percent in the third quarter, the slimmest margin since early 1995, according to a U.S. Census Bureau report. Builders are increasing construction of apartments, but are still playing catch-up with regard to rising demand. The National Association of Realtors® recently forecast that 2015 will continue to be a “landlord’s market” as rent growth continues to run higher than overall inflation. However, NAR does project that rent growth will start to cool — though only slightly — next year: Rent growth is expected to reach 3.9 percent in 2015 compared with 4 percent this year. “Low housing inventory and the sizable demand for rentals will continue to spur multifamily construction as well as keep rents rising above inflation through next year,” Lawrence Yun, NAR’s chief economist, said in a recent statement. Vacancy rates for rental apartments are expected to remain low for at least two more years, NAR says. The vacancy rate for rental apartments in the fourth quarter is expected to be at 4 percent, and inch up to 4.1 percent in 2015 and 4.2 percent in 2016. Vacancy rates under 5 percent often are considered by housing analysts to be a “landlord’s market” and ripe conditions for landlords to continue upping rents. Source: MarketWatch

1/5- Lower mortgage rates and gas prices

January 5th, 2015

Interest rates continue to decline this morning, crude oil making another new low, and the early activity in US equity markets pointing to a weaker open. The 10 at 9:00 2.09% -3 bp and 30 yr MBS price +11 bps. The fall in energy prices is forcing other commodity prices down and bringing added concerns that deflation of prices is spreading; (regular unleaded in Indy $1.75). The Fed can’t muster anything that will get inflation to its 2.0% target. As long as inflation doesn’t increase, or the threat of it decreases the longer end of the yield curve has room to decline further pending investors’ appetite for risk in equity markets. Hard to shake the stock market bulls though, the best market in the world for possible profits.

 

1/2-Happy New Year

January 2nd, 2015

Interest rates have moved significantly in the past few months. Two major factors have influenced rates during this time. Stronger job growth has convinced the markets that the Federal Reserve Board will raise short-term interest rates during the first part of next year. At the same time, slower growth overseas and lower oil prices have contributed to a drop in long-term rates — including rates on home loans. Following the lead of the stock market, long-term rates have drifted when the stock market experienced their downturns and the drop in oil prices, but there has been a lot of volatility on the way. At the same time, short-term interest rates have risen steadily in anticipation of action by the Fed.  So welcome to the new year and ABBA First Mortgage hopes that we can be your mortgage broker of choice as we continue to offer better than market rates for all of our deserving clients!

 

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