Boston Real Estate Blog

John Ford Realty
137 Charles Street, Boston
151 Tremont Street

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Mortgage Matters – daily mortgage advice from Holden Lewis

Interesting tid-bit.  Use this next time you’re at a cocktail party and someone (a blowhard) starts rambling on about mortgage loan rates.

Link: Mortgage Matters — Daily mortgage advice from Holden Lewis.

IN THE E-MAIL: Daniel from (I believe) Seattle writes: “I appreciate your effort to keep prospective home buyers apprised of what is occurring in the market. However, the 30-year fixed mortgage rate is not related to the 10-year Treasury. The correct index is the FNMA 30-year 5.5 percent mortgage bond. The two indexes may trade in similar fashions, but daily trading is centered on the yield for the later.”

I get this criticism occasionally. It is true that Treasury yields don’t directly affect mortgage rates. But Treasury yields and mortgage rates tend to move in the same direction and at roughly the same speeds. Also, when you watch the crawl on a cable news channel, or listen to Marketplace on the radio, you can easily find out what’s going on with Treasury yields. Not so with yields on Fannie Mae mortgage bonds or required net yields.

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?

Mortgage Matters — Daily mortgage advice from Holden Lewis

Thursday, March 31

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.

… etc.

Your Home: Quickly

Is your credit rating wrong?  You can probably get it corrected much faster than you think, with a new service called “rapid scoring”, according to this article in the New York Times.  Mention it to your mortgage broker.

Link: href=””>The New York Times > Real Estate > Your Home: Quickly Improving A Credit Rating.

Home buyers in search of a mortgage know that their credit history will play a key role in the outcome. And anyone who has tried to improve a credit score is probably aware that doing so can take months or years.

But it is sometimes possible for a borrower to raise his credit score in just a few days, using a strategy known as rapid rescoring.

“I’ve had a fair amount of success using rapid rescoring for clients,” said Oded Ben-Ami, a senior loan officer for Sterling National Mortgage in Great Neck, N.Y. “And the couple of hundred dollars it costs is negligible compared with the benefits of getting a better interest rate, quicker approval and a higher maximum loan amount.”

World economy overheat threatens US

Will the overheating world economy bring down the US?

Maybe, says Lou Barnes.

Fed foolish to raise rates now
Commentary: Despite U.S. problems, turmoil yet to unfold in Asia, Europe
By Lou Barnes, Inman News

The credit markets have concluded that inflation risk now forces the Fed into a sustained series of increases in its overnight rate, presently 2 percent.

Interest rates — all of them — spiked in the last 10 days. Lowest-fee 30-year mortgages to 6.625 percent (if you’re a shady character, FICO under 720, make that 6.75 percent), 10-year T-notes to 4.2 percent, and Fed-tied 2-year T-notes to 2.9 percent (up 0.55 percent this week).

The credit markets jumped to Fed conclusions after: oil hit $135; European Central Bank Chairman Jean-Claude Trichet indicated a tilt to tighten there; a string of inflation-centered speeches by Fed officials; and a rebate-bloated 1 percent pop in May retail sales.

It is folly to quarrel with a market move like this, but that’s what I’m going to do.

Continue reading

Getting a mortgage loan is easy … if you can find a loan officer


Now that they are required, state and mortgage industry officials expected 20,000 applications at the Division of Banks for existing loan officers by the initial deadline of May 27.

They received 5,643.

Source: Once Seen as ‘Hot’ Profession, Loan Officer Ranks Thinning – Banker & Tradesman

Recession? Yeah, I’ve heard that rumor

Lou Barnes plays World Economist, in his weekly column.

Will oil prices moderate? Is there a “commodities bubble” happening? I don’t know.

All roads lead to global recession
Commentary: Layoffs, oil, foreclosures sustain credit crunch
By Lou Barnes, Inman News

In the general chaos Friday, oil in the largest single-day spike ever, near $140/bbl, Dow off 394 points, the only market that did not move was credit.

Mortgages are still near their 90-day high, 6.375 percent, and the 10-year T-note is still in its trading range at 3.92 percent. Long-term rates have held in belief that economic rebound, or inflation, or a weak dollar would force the Fed to raise its rate, and soon.

OK, group: a show of hands, please. We’ve got a million homes in foreclosure right now, delinquencies rising fast; we shed 45,000 jobs in May; gasoline is on the way to five bucks, $100 per fill-up; the purchasing managers’ indices were zero-growth for May; overall vehicle sales in May fell 14 percent; credit ratings were cut for Merrill, Lehman, Morgan, WaMu, Wachovia, Ambac, MBIA, MGIC, and PMI, all with negative outlook, and you think the Fed should raise the cost of money? Really?

I suppose a case could be made for quick suicide by Fed bullet instead of all that time burning expensive gas, waiting for carbon-monoxide to get me, but I’d rather take my time. If energy markets do not break, all roads lead to global recession: here, directly; other places in the aftermath of a losing fight with inflation.

Continue reading

Economy at a standstill, for another week

This week, Lou Barnes sees more of the same. Not worse, not better.

I’ll be happy with not worse, my friends.

Will the “global economy” be enough to keep the US out of more trouble? I don’t know.

Lousy numbers escape recession dunce cap
Commentary: Global economy gives us a jolt
By Lou Barnes, Inman News

After six weeks in a narrow range, a little not-so-bad economic news blew long-term rates to the highs of 2008: the 10-year Treasury to 4.13 percent (the first time above 4 percent since New Year’s) and low-fee mortgages to 6.375 percent. Both of those yields are better this morning, but we will not see five-something mortgages again without a new round of bad economic reports.

The psychology-reversing news came in two pieces. The rout started on Wednesday with the report of April orders for durable goods: down 0.5 percent, overall, but ex-transportation (airplanes and autos) up 2.5 percent, and “non-defense capital goods” plus 4.5 percent. Yesterday’s coup de grace: First-quarter GDP was revised to plus 0.9 percent from 0.6 percent.

If these two reports seem like less-than-spectacular signs of resurrection, you are well on your way to a degree in economics. These are lousy figures describing an economy with hardly any forward momentum. However, they are not recession numbers. For three-something Treasurys and five-something mortgages to look good to investors, recession fear must return.

The bond market is a binary place: The economy is either going to hell and it’s a great time to buy bonds, or the economy is OK and everybody who bought a bond is a greasy spot in the road.

Continue reading

FHA loans more popular; tight credit still a problem

Shopping for a loan? You should be able to find one, fairly easily. FHA loans have made a comback.

According to one mortgage broker:

“If you put down 5 percent, you’ll need a credit score of at least 660 [to qualify for a FNMA or FHMLC loan]. But if you go with an FHA loan, you can put down [as little as] 2.25 percent and allegedly they’ll take a 580 credit score.”

According to Bank of America:

In the calendar year 2006, Bank of America originated $1.5 billion of FHA loans. In April 2007, [they] originated $1.1 billion in FHA loans. In 2008, Bank of America expects to fund $5 billion in FHA loans.

FHMLC and FNMA loans require 10-15% down, while FHA loans can be written for up to 97% of home value.

Source: FHA loans make comback – By Ilyce Glick, Inman News

Housing is so cheap

The Economist reports: “Monthly payments on a typical house with a 30-year mortgage and 20 percent downpayment were 18.5 percent of the median family’s income in February, down from almost 26 percent at the peak — and close to the historical average.”

FNMA and Freddie Mac seeing the light?

Are you going to be able to get your jumbo loan at a good interest rate?

According to Holden Lewis, the answer is yes, finally.

Lenders just might be getting serious about underwriting the new conforming jumbo mortgages for more than $417,000. Word is that the new conforming jumbos sport a rate about three-eighths to half of a percentage point higher than rates for conforming loans …

… The new conforming jumbo mortgages officially became available at the beginning of April. But they weren’t priced differently from regular jumbo loans. The lack of a rate differential defeated Congress’s purpose in creating the jumbo conformings. Teeth were gnashed.

On Friday afternoon, Fannie Mae announced that it would buy jumbo conforming mortgages for the same prices as conforming loans. Some investors, and therefore lenders, immediately dropped their rates on conforming jumbos. From what I hear, the new jumbo conforming rates are about three-eighths to half a point higher than conforming rates.

The spread previously was as much as half a percentage point higher, a difference of $300 on a monthly payment, for every $100,000 borrowed (at 6%).

Start spending, now!

Source: Mortgage Matters – By Holden Lewis,

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