Posted on 11/07/2006 11:46:28 AM PST by Brilliant
Mortgage rates plunged this week, and hardly anyone took advantage.
Business is dead, a mortgage broker laments, and the latest stats from the Mortgage Bankers Association bears out that assessment. The MBA says mortgage applications fell 3.3 percent last week and are 11.2 percent lower than the same week last year.
All while rates were rushing downhill as fast as a toboggan after a blizzard.
The benchmark 30-year, fixed-rate mortgage fell 15 basis points to 6.31 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.25 discount and origination points. One year ago, the mortgage index was 6.37 percent; four weeks ago, it was 6.31 percent.
The 15-year, fixed-rate mortgage fell 14 basis points to 6.02 percent. The 5/1 adjustable-rate mortgage fell 15 basis points to 6.13 percent.
Weekly national mortgage survey Results of Bankrate.com's Nov. 1, 2006, weekly national survey of large lenders and the effect on monthly payments for a $165,000 loan:
30-year fixed This week's rate: 6.31% Change from last week: -0.15 Monthly payment: $1,022.38 Change from last week: -$16.20
15-year fixed This week's rate: 6.02% Change from last week: -0.14 Monthly payment: $1,394.15 Change from last week: -$12.52
5-year ARM This week's rate: 6.13% Change from last week: -0.15 Monthly payment: $1,003.09 Change from last week: -$16.06
Rates fell at the same time that economic reports seemed to be signaling that the economy was going through an icy patch. Factory orders fell, construction spending was down and an index of future home sales showed that sellers will continue to have reasons to weep. When it looks like the economy is about to slow down, long-term interest rates tend to fall.
Balmy bulletin snubbed There was positive economic news, too -- such as a report that wages and benefits are rising at the fastest rate in two years -- but investors were paying attention to the lousy news. Then there's the upcoming elections.
There's a long-standing perception that Wall Street isn't happy when the Democrats wield power, and the Democrats look poised to win at least one chamber of Congress. If that bothers Wall Street firms and their employees, they have a weird way of showing it: In this midterm election cycle, 51 percent of their contributions have gone to the Democratic Party and its candidates, and 47 percent has gone to the Republican Party and its candidates, according to records compiled by The Center for Responsive Politics. In other words, it looks like this week's slide in mortgage rates isn't the result of a temper tantrum on Wall Street.
So what's going on? Bob Moulton, the broker who laments the lifelessness of the mortgage biz, says most of the signs are good. "The rates are great," says Moulton, president of Americana Mortgage in Manhasset, N.Y. "The stock market is at an all-time high. Gas prices are down." A year ago, he says, mortgage business was down and everyone was attributing that to high gasoline prices and rising long-term rates. Those excuses are gone, but the problem persists.
Moulton guesses that people are, believe it or not, too busy to pay attention to the daily and weekly gyrations of mortgage rates. They pay attention to the Federal Reserve's rate moves, "not really appreciating how long-term rates vary differently from what the Fed does."
And how. The Fed raised short-term interest rates 17 times in a row over two years and finally stopped at its Aug. 8 policy meeting, keeping rates steady at 5.25 percent. The federal funds rate has remain unchanged since then, while mortgage rates have slipped about 30 basis points. Moulton worries that a lot of homeowners don't know this and are missing opportunities to refinance.
[yawn]
I locked my 30 year in at 5.5%. Wake me up again when it gets down to 5% or lower.
So what's going on? Bob Moulton, the broker who laments the lifelessness of the mortgage biz, says most of the signs are good. "The rates are great," says Moulton, president of Americana Mortgage in Manhasset, N.Y. "The stock market is at an all-time high. Gas prices are down." A year ago, he says, mortgage business was down and everyone was attributing that to high gasoline prices and rising long-term rates. Those excuses are gone, but the problem persists.
Because people still think their homes are still worth more than they are and are asking too much for them
"And property prices are also down... So is this the time to buy?"
If you figure out the right timing, let me know. But I'm starting to get the itch.
Real estate prices don't adjust as quickly as the stock market. It may take years before we start to see positive growth in real estate prices. And that means that investors are not interested in borrowing money to buy them.
Christian news and commentary at: sacredscoop.com ...
Me too. I wanted to buy this fall but there's not much going on in real estate here right now.
Home sales have gone down in the area (like everywhere else) but prices have risen slightly. Strange.
That's true and the MSM is only interested in bad news.
Sounds like a perfect opportunity to BUY MORE GOLD!
Depends what market your looking to buy in.
The bubble markets of San Diego, Pheonix, Las Vegas, LA, SF, Miami, Boston, and NYC have more room to drop in prices and probably will over the next year.
I live in Seattle and this market is as frustrating for home buyers as you can get. You had years of massive appreciation, but now prices have just flatlined since May with no real signs of prices coming down. Inventory of homes for sale has double since May, but prices still won't budge. Real Estate prices here are just rediculous for what you get. When I hear realtors and home builders try to justify these prices by comparing Seattle to SF or NYC, I laugh. Yahh, like Seattle can compare to those cities when it comes to salaries and commerce. Dream on.
Nothing would give me greater pleasure to see all the flippers who bought pre-construction condos in this town recently thinking they were all Donald Trumps because prices at the time kept going up each month get ripped a new one. All these properties being bought with subprime and exotic loans the banks were only to happy to hand out like crack coccaine to buyers completely unqualified to get these loans. They deserve to get hammered financially as well. I hear Chase bank, along with Fannie and Freddie are sitting on porfolios of high risk subprime loans in the trillions of dollars, and nobody is going to buy these from them anytime soon. Even packaged as mortgage backed securities to reduce the risk.
Its becoming clear the Fed left rates too low for too long and are now figuring out how in the hell to fix this mess. The mortgage lenders have made this a million times worse with all the subprime and no money down/ teaser rate loans they push these days to the greedy morons. Its possible actual rate cuts could be coming in 2007 as the fed tries to orcestrate a soft landing for real estate.
Gold is trending down in price. Not time to buy yet. If it gets to $550, it might start looking good again.
I believe money that was going to originally go into real estate, is going to start flooding back into the equities market or investors will simply keep a lot of cash on the sidelines collecting decent rates of return.
Plus many of these would be real estate investors aren't using their own money to get these loans or putting much money down on these homes. They are borrowing everything from mortgage lenders. If prices even continue to flatline nationally for a couple years, your talking many of the flippers who bought the past year hitting the panic button. Then you'll start to see home prices coming down as they should be.
Check your gear, your sarcasmeter might be jammed.
More good news. Why anyone would pull the lever for a rat is beyond comprehension.
bttt
Too late Rove! Hah! / sarc
5.5%? Where'd you get that? I was feeling pretty smug about my 6.125% 30 year with 33% down I locked last week.
"The bubble markets of San Diego, Pheonix, Las Vegas, LA, SF, Miami, Boston, and NYC have more room to drop in prices and probably will over the next year.
I live in Seattle and this market is as frustrating for home buyers as you can get. You had years of massive appreciation, but now prices have just flatlined since May with no real signs of prices coming down. Inventory of homes for sale has double since May, but prices still won't budge."
I guess you should have included Seattle with the other "bubble markets."
The long anticipated adjustment is well underway. Each location has unique factors. Seattle is different than Phoenix, etc.
This is obviously a "puff" article to boost folks to refi or buy, and regenerate business for the bankers.
Otherwise they would not have used the words "plunged" and "dropped sharply", as that is obviously an exceeding exaggeration.
I think Seattle will flatline for longer, but then in 2007, probably by summertime, will start heading downward.
There is going to be a flood of new condos coming on the market in Seattle in 2007. There are construction cranes all over the Seattle and Bellevue city skylines right now. All of them highrise condo projects where the sq footage is apartment sized and priced median home price or higher.
All it takes is prices to continue to flatline to keep the flippers out of the market, and as inventory continues to rise, the condo/home prices will start droping quickly.
Then those that bought in the past 12 months will hit the panic buttons as well. Seattle is primed for a correction, but we are currently in the calm before the storm stage. Summer 2007. Thats when things get bad for this city.
"Maybe the best deals will be gone by springtime...."
That's what I'm starting to worry about. I was thinking to jump in May, but that may be holding the trigger too long.
I'm in Vegas, and have a real estate license. The thing is, there are 20,000 homes on the MLS, the last few years it was running 5,000. But I haven't seen the steep drop in prices yet. However, some commissions are through the roof. A little nerve wracking, waiting to see the whites of their eyes.
Its the mexican standoff stage between sellers and buyers. The sellers will blink first. They always do.
Just wait till trillions in arm, no money down, and teaser rate loans start adjusting.
Locked in like 2 years ago
Its the mexican standoff stage between sellers and buyers. The sellers will blink first. They always do.
Just wait till trillions in arm, no money down, and teaser rate loans start adjusting.
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