"Housing Market Healing with Stable Mortgage Rates" by Ed Ferrara

Housing Market Healing With Stable Mortgage Rates by Ed Ferrara With a housing recovery that is gaining momentum, the importance of where mortgage rates are now and where they will be heading becomes a significant factor. The inception of QE3 by the Federal Reserve in September 2012 has helped keep mortgage rates down which accelerated the housing market during the final quarter of last year. Realty Times is offering a free service to bring additional exposure and publicity to your listings with a full press release. CLICK HERE Last week, the January Federal Reserve meeting minutes were released and revealed that QE3 may end sooner than expected since there is concern about the costs of the program, as well as the risks involved. At this point in time, it is unknown where mortgage rates will head if QE3 is minimized or even ended. Currently, the housing market has been healing with the help of stable mortgage rates which have been at or near historic lows. Low mortgage rates are especially necessary at this time for both home purchases which keeps affordability high, and refinances which puts money back into the pocket of homeowners. According to the recent Freddie Mac's Primary Mortgage Market Survey, average fixed rates had a small increase, but have seen little change over the past four weeks. According to Frank Nothaft, Vice President and Chief Economist of Freddie Mac, "Mortgage rates have been relatively stable, hovering near record lows, for the past four weeks which is helping to spur new home construction. For instance, new construction on single-family houses rose to an annualized rate of 613,000 in January, the most since July 2008. In addition, single-family building permits were up to the highest issuance level since June 2008." According to the most recent survey of wholesale and direct lenders done by FreeRateUpdate.com, conforming 30 year fixed rates rose slightly this week by .125% and are now as low as 3.250%. Current 15 year fixed mortgage rates are as low as 2.375% and 5/1 adjustable mortgage rates are as low as 2.375%, both remaining the same. Low mortgage rates are available for borrowers who have maintained a history of good credit and can meet qualification guidelines. The Federal Housing Finance Agency (FHFA) released the November 2012 Refinance Report which showed that Fannie Mae and Freddie Mac, reached a new milestone with nearly 2 million HARP refinances. In November alone, approximately 130,000 homeowners refinanced through the HARP program which made it the second highest volume month in 2012. Between the period January and November 2012, nearly 1 million mortgages were refinanced with HARP loans which accounted for more than the volume that occurred in any single year since the program's inception. According to the report, record low mortgage rates and enhancements to the HARP refinance program are responsible for the continued high volume and success of HARP. The National Association of Realtors Existing Home Sales index reported that sales of existing homes rose 0.4% to a 4.92 million annual rate which is 9% higher than the same time last year. Home prices also increased 12.3% which was the biggest gain since January 2005. At the same time, inventory is down to approximately a four month supply and at the lowest level since 1999. First time home buyers often purchase existing homes with FHA mortgages due to the low down payment requirement and low interest rates. Current FHA 30 year fixed mortgage interest rates are as low as 3.250%, FHA 15 year fixed mortgage rates are as low as 2.750% and FHA 5/1 adjustable mortgage rates are as low as 2.250%. There is expected to be an increase in FHA mortgage applications in the next month prior to the rise in the annual mortgage insurance premium scheduled to begin April 1st. While FHA has been undergoing some changes to new originations in order to reduce its' risk, the FHA streamline refinance is still available for an easy and quick move to a better mortgage. With no cash out, the FHA streamline does not require an appraisal, a credit history or other documentation. Borrowers who have loans that were endorsed prior to June 1, 2009 have until the end of 2013 to refinance with the FHA streamline program to receive reduced upfront and annual mortgage insurance premiums. Current jumbo 30 year fixed mortgage rates are as low as 3.375% and jumbo 15 year fixed mortgage rates are as low as 2.700%. Decreasing by .125%, jumbo 5/1 adjustable mortgage rates are now as low as 2.375%. Excellent credit and strong qualifications are required in order to receive low jumbo rates. Even though the FHA loan limit is high enough for many borrowers to use this form of financing, many will be turning back to traditional jumbo mortgages when the insurance premium increases in April. Also to be considered is that coming in June, homeowners will no longer be able to cancel the FHA mortgage insurance premium when the loan to value reaches 78%, but will be paying MIP for the life of the loan. These changes will send many consumers back to regular jumbo loans provided they can qualify. Jumbo mortgages are known to have stricter guidelines due to the large amount of financing. Mortgage backed securities (MBS) are affected by market conditions and economic data. This weeks economic data included the following January PPI increased 0.2% from December which was below expectations of 0.3%; Core PPI, which is minus food and energy, also rose 0.2% which matched consensus; January CPI remained unchanged from December which was below expectations of 0.1%; Core CPI, excluding food and energy, increased 0.3% and was above expectations of 0.2%. Jobless Claims increased by 20,000 to 362,000 for week ending February 16th, according to the Labor Department. The Department of Housing and Urban Development (HUD) together with the Commerce Department released the January 2013 Construction Report today which shows that Building Permits hit the highest level since mid 2008. Permits for privately owned housing units increased 1.8% from December and 35.2% from January 2012; housing starts for single family homes in January were up 0.8% above December.