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Mortgage Matters

There is a great blog you should read every day. There’s a link, below, plus I copied a whole entry into my journal, so you can see how good he is. You should add this to your “Favorites” folder. It’s useful advice…and where else are you going to get that on the Internet?

Throw Back to 2005.From one of my oldest posts:

Freddie Mac

Freddie Mac (Photo credit: Wikipedia)


NO FOOLIN': I’ll never knowingly mislead you (but I’m often wrong). Here’s one thing I’m confident in saying: Rates are dropping today, maybe enough to notice. Here’s something I’m not confident in saying, but I’ll say it anyway: With today’s dip in rates, this might be a good time to lock. Discuss it with your lender.

THE NUMBERS: The yield on the 10-year Treasury is down 5 basis points this morning, to 4.51 percent, and the yield on the five-year Treasury is 4.20 percent, down 6 basis points from Wednesday. Mortgage rates tend to move in the same direction as Treasury yields.

Freddie Mac’s required net yields, which are the rates that the financing giant requires on purchased mortgages, are down, too.

From todays Mortgage News:

Average long-term U.S. mortgage rates declined this week, with the 30-year loan rate hitting its low for the year. Mortgage company Freddie Mac says the nationwide average for a 30-year mortgage fell to 4.10 percent from 4.12 percent last week.


[affordability interest_rate="4.5" title="Affordability in the Boston Market" before_title="Affordability in the Boston Market" width="350"]

The new mortgage rules might actually help the housing market

Here’s a surprise: New mortgage regulations that were implemented last Friday might actually help consumers.

The bottom line, according to this Zillow report, is that many lenders have already adopted new practices now required by the recently established Consumer Financial Protection Bureau (CFPB).

As a result, not a whole lot will change in the mortgage market, Zillow claims.

Except, of course, there will be more required documentation. No new regulations would be true regulations without more documentation. Right?

File under: Bureaucracies — can’t live with ‘em, can’t live without ‘em

And beware of Grinches offering bogus mortgage modifications

This is depressing.

First, the fraudsters entangled people in ridiculously complex and costly mortgages. Then they turned around and hit up the same desperate people with bogus mortgage modifications schemes.

Keep in mind: This scheme, in which a West Newbury man allegedly played a central part, took place right as Lehman Brothers was collapsing and through the worst of the recession.

Yet it took this long to indict them, leaving you wondering how many other similar mortgage-modification schemes were (and probably still are) out there.

File under: Grinches

UpdateMore woes for those with underwater homes. This time, it’s taxes.

So much for those ever rising mortgage interest rates

Sure, interest rates started to rise last spring, as many predicted.

But they sure didn’t rise as much as predicted, with a weaker-than-expected economic recovery and with the Fed back-peddling from its previous vow that it would reduce its stimulus practices by the end of this year.

The result: Interest rate have actually been falling in recent weeks, or even months. And that might explain, partly, why the housing market has remained so strong of late.

Government shutdown hits mortgage applications

Oh great. Just what the housing market needs:

Before closing on a mortgage backed by Fannie Mae or Freddie Mac, banks must verify a borrower’s income with the IRS. But IRS operations are curtailed because of the shutdown, and the agency won’t be available to handle the paperwork the banks need to close on the loans.

Well, to look on the positive side, it could cool down the border-line overheating market here. It’s just that we didn’t think it would happen this way.

File under: Vote the rascals out

Here come the new lending rules

The new Consumer Financial Protection Bureau’s director is vowing a crack down on permissive lending practices.

Two immediate thoughts: 1.) “Oh, no. Here come the bureaucrats.” 2.) “Just what we said was needed.”

Handled right, the new rules are probably necessary, considering we got into the financial crisis largely due to absurd and shabby lending practices. But you almost shudder at the thought of the heavy hand of government getting too involved.

Fifteen-year mortgages gaining in popularity

It seems more and more people are using the low-interest-rate environment to take out or switch to 15-year mortgages, allowing people to pay off their houses earlier and to build up equity faster. The trend is the opposite of what normally happens when interest rates fall.

Though there are great arguments on both sides about whether it’s a smart financial move to go with a 15-year mortgage or a 30-year mortgage, we think there are a few other psychological reasons at work these days: a.) People no longer trust the stock markets, so they figure they might as well put their money to better use somewhere else. b.) People don’t know what the future holds and want those mortgages paid off ASAP, i.e. at least they’ll own something if economic armageddon happens.

Any thoughts?

Will mortgage interest rates stay low?

That mortgage loan prices are at historic lows is widely known (my email’s spam folder is full of reminders). What’s not as clear is why are rates so low and, more importantly, will they continue to stay low.

The Wall Street Journal has a fine article out today, Reasons Why Mortgage Rates Are Staying Low, which explains it all for us.

Basically, low rates are a reflection of the world’s economy. With continued uncertainty, investors are looking for safe, solid places to put their money, and US Treasuries are considered #1 in the world. Mortgage rates follow treasury bond rates (because, like 10-year bonds, mortgages tend to be paid off 7-10 years from origination).

A word of caution, however. Although new mortgage rates are expected to stay low (under 4.2% by year end), refinancing rates may rise. Keep that in mind if you’re looking to lock in a low rate.

What Will Happen with Massachusetts Mortgage Rates this Week? 3/12th

Good morning, I hope all is well.

Please let me know if you have any questions, 617-771-5021

Overall, look for Tuesday or Friday to be the most important day of the week due to the importance of those day’s reports and the FOMC meeting. Tomorrow will likely be the least active day for mortgage rates, but we could see plenty of movement in the markets and mortgage pricing several days this week. Therefore, please be attentive to the markets and maintain contact with your mortgage professional if still floating an interest rate.

If I were considering financing/refinancing a home, I would….

LOCK if my closing was taking place within 7 days…

FLOAT if my closing was taking place between 8 and 20 days…

FLOAT if my closing was taking place between 21 and 60 days…

FLOAT if my closing was taking place over 60 days from now…

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed

Please read the entire Blog Post here

Brian Cavanaugh
Senior Mortgage Banker
NMLS #441864

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