BY INMAN NEWS, DECEMBER 29, 2011
Inman News™
Mortgage rates surveyed by Freddie Mac bounced back from historic lows this week, but aren't expected to soar in the New Year.
Rates on 30-year fixed-rate mortgages averaged 3.95 percent with an average 0.7 point for the week ending Dec. 29. That's up from 3.91 percent last week -- an all-time low in records dating to 1971 -- but still well below the 2011 high of 5.05 percent seen in February.
The 30-year fixed-rate loan has averaged at or below 4 percent for the past nine consecutive weeks, Freddie Mac noted in releasing the results of its Primary Mortgage Market Survey.
Rates for 15-year fixed-rate mortgages averaged 3.24 percent with an average 0.8 point. That's up from 3.21 percent last week, an all-time low in records dating to 1991, but down from the 2011 high of 4.29 percent registered in February.
For 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans, rates averaged 2.88 percent with an average 0.6 point. That's up from 2.85 percent last week, an all-time low in records dating to 2005, but down more than 1 percentage point from the 2011 high of 3.92 percent seen in February.
Rates on 1-year Treasury-indexed ARM loans averaged 2.78 percent with an average 0.6 point. That's up from 2.77 percent last week, an all-time low in records dating to 1984, but� down from a 2011 high of 3.4 percent in February.
Freddie Mac's rate survey is based on loans offered to borrowers with good credit scores who will be making down payments of at least 20 percent. Borrowers with damaged credit or making smaller down payments can expect to pay higher rates.
Mortgage rates are largely determined by demand for mortgage-backed securities (MBS), bonds that fund the vast majority of home loans.
The Federal Reserve helped push mortgage rates down in 2009 and 2010 by buying $1.25 trillion in MBS. Since then, the European debt crisis has helped keep mortgage rates down, as investors seek the relative safety of government-backed mortgage bonds, whose payments are guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae.
In a Dec. 20 forecast, economists at Fannie Mae project that rates for fixed-rate mortgages will average 4.0 percent in 2012 and 4.3 percent in 2013, down from 4.5 percent this year and 5 percent in 2009.
The Mortgage Bankers Association predicts rates on 30-year fixed-rate loans will average 4.2 percent in 2012 before rising to 4.7 percent in 2013. The National Association of Realtors projects rates on 30-year fixed-rate loans will hold steady at 4.5 percent in 2012.
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Federal Reserve board writes to congress
In a letter to congress, the federal reserve board, led by chairman Ben Bernanke recommended a variety of steps the lawmakers could take to help housing recover, most notably, noting that Fannie mae and Freddie Mac could serve to aide the recovery of housing by providing less expensive mortgages to a broader pool of homeowners. Strong political opposition is expected immediately, especially in light of the paper being addressed to leaders like Barney frank, ranking member of the house committee on financial services who two years ago proposed abolishing Fannie and Freddie.
The timing of the recommendation has raised eyebrows as a growing number of politicians on both sides of the aisle are pushing to entirely shut down the two organizations after being seized by the government in 2008 to save them from failing. Recently, Fannie in taxpayer support from the treasury department while Freddie, which most leaders say is unacceptable. Click here for the entire article.
Fed advocates reo rental program
Daily real estate news | Thursday, January 05, 2012
The Federal Reserve called on lawmakers to do more to help the ailing housing market, which has been blamed for dragging down economic recovery. In a 26-page white paper, the fed told lawmakers that more aggressive action is needed in preventing home values from falling further and handling the large supply of foreclosures that continue to plague many markets.
One program the white paper suggested was a government program to start renting out single-family homes in foreclosure, even allowing the former owners who were foreclosed upon to rent the properties back. Click here for the entire article.
2012 home sales: positive on many fronts
Nar released its latest pending home sales index figure last week and for the second month in a row the index is up. But more than that, the index has broken 100. This is significant because the only time since the housing boom collapsed that the index has broken 100 is when the home owner tax credit was in effect. The fact that the index has returned to that level a year since the credit has been in effect means the housing market is strengthening completely on its own, without any stimulus. Click here to read the entire story
Home insurance rates likely to go higher
Homeowners insurance premiums are starting to rise after tornadoes, hail, winds and lightning slammed U.S. insurance companies' balance sheets throughout 2011. Storms along the east coast, tornadoes in the southeast and in Joplin, mo., and earthquakes in Japan and new Zealand wreaked havoc on insurance company finances, especially firms that might have too many policyholders in certain geographic areas, says bob skow, ceo of the independent insurance agents of Iowa. Click here to read the entire article.
My Wish for You in 2012!
May peace break into your home and may thieves come to steal your debts.
May the pockets of your jeans become a magnet for $100 bills.
May love stick to your face like Vaseline and May laughter assault your lips!
May happiness slap you across the face and may your tears be that of joy.
May the problems you had, forget your home address!
In simple words.
May 2012 be the best year of your life!!!
Happy New Year!!
~ Jarid P. Johnston
Please be careful everyone!
Real estate as being a definite asset class is actually one of many best and perfect approaches to build real wealth for people. All the way through the years, individuals who have invested in real estate regardless of whether it is property or land have commonly been in the richest groups. Property is certainly one asset you need to think about in order to create wealth as well as get rich.
Real estate could be a very profitable line of business for people who will be prepared to invest a lot of their time to figure out the way to be successful. Real estate investment is full of prospective landmines particularly in the current market. Investors have to take benefit of every single tool accessible to assist them to evaluate potential risks and also manage good income with investment properties. Real estate business is growing with all type of opportunity and increasing demands from residential purpose, corporation, as well as businesses.
Real estate is among the very few strategies of investment by which risk is straight proportional to knowledge. Property investors usually count on deterioration of improvements, a long holding period of time, as well as understanding of underlying land. Those aspects emphasize the necessity for a cost recovery system which balances properly along with the leverage measures for acquisitions. Matching of costs and income shows that both interest expense deductions and also depreciation are helpful to real estate investment.
The real estate and property businesses have a very important part in the economy of a country. Almost any fluctuation within this field may result in a huge impact in the country\'s economic system. The improvement in the country\'s economy has created needs for a number of commercial projects and homes that has resulted in the solid foundation of this particular business sector.
Currently there is a thirty to forty percentage of the present housing stock on the real estate market ticked in the foreclosure category and it seems that everywhere people turn there is either a short sale house, a foreclosure or bank owned. In the real estate world some people claim that in order for the housing market to be revived to what it once was, foreclosures might be the way to achieve that. In his article titled "24 / 7 Wall Street" Douglas McIntyre specifies that due to foreclosures, the recovery might come in the next quarters.
The Analysis
It\'s no doubt that foreclosures are a key factor in the recovery of the housing market. However, the recovery will also be affected in a positive way by the low prices (caused by foreclosures) and the great interest rates on the mortgage loans. Some other factors number the consumer confidence and of course, the low unemployment rate, but this article will approach the matter from the foreclosure point of view.
Buyer\'s Market
When inventory outpaces demand, then the buyer\'s market happens and the result is low house prices. Presently there are very low interest rates not the mortgages and they don’t show any signs of increasing soon. Now, the home prices are low at the moment and in the last years, the prices have always fluctuated from low to high. The double dip on home prices actually signals that the housing stock is still at a very low average. What this means is that those who\'re looking for a house, they should act now and buy.
Caution
It\'s been all good news for buyers, yet one thing to be kept in mind is that the foreclosure homes didn\'t really benefit from any maintenance, so this implies that some repairs will have to be considered. There is a loan called the FHA 203k that buyers can benefit from in this regard. What\'s best is that the repairs can be added to the mortgage for around six dollars monthly for ever one thousand dollars worth of work.
The advantage
While the housing market is certainly dependant right now on foreclosures, there is no doubt that the FHA 203k loan is mandatory for making them work for the buyer.
