New Home Sales Slip In October

New Homes Sales (Oct 2009-2010)After posting a strong September, the number of newly-built homes sold nationwide slipped in October.

Total units sold on an annual basis dropped by 25,000 from September; supplies of new homes climbed 0.7 months. Home supply is back to its rolling, 6-month average of 8.6 months.

Like everything else in real estate, however, the October's New Home Sales results varied by location.

For example, except for the South, each U.S. region posted a loss. In the South, there was a 3 percent gain. This is statistically significant because more new homes are sold in the South than in all other U.S. regions combined.

In October, the South accounted for 58 percent of all homes sold.

The dip in New Home Sales did not surprise Wall Street. New Home Sales is closely correlated to Housing Starts, and Housing Starts fell in July and August. Furthermore, it seems home builders expected the dip and are brushing it off.

In a poll taken 2 weeks ago, builders reported higher confidence in housing, and their respective prospects for the future. Home builder confidence is at its highest point since June.

For buyers in Marietta , the effects of New Home Sales data are unknown. In a normal environment, falling sales volume and rising home supplies would help shift negotiation leverage away from the seller and toward the buyer, resulting in lower sales prices.

However, in this market, the "sellers" (i.e. home builders) are more confident about housing, and that offsets a buyer's statistical edge.

With home prices stagnant and mortgage rates rising, therefore, the best "deals" may come between now and the New Year.


What's Ahead For Mortgage Rates This Week : November 29, 2010

Unemployment Rate 2007-2010In a holiday-shortened week on Wall Street, mortgage markets improved on 3 of 4 days, but still posted its fourth consecutive losing week.

Unfortunately for rate shoppers and home buyers in Georgia , last week's 3 days of gains were mild improvements; the one day of deterioration was among the Top 10 worst days for mortgage bonds this year.

Mortgage rates in Marietta are at their highest levels since mid-July. The Refi Boom is unwinding quickly.

Last week underscores the importance of the global community to the future of the U.S. mortgage market. Two of the main reasons why mortgage rates increased were non-domestic.

  1. Concerns for a full-blown North Korea/South Korea conflict lessened quickly
  2. The likelihood of a speedy, $85 billion bailout Ireland increased

The two events stemmed the typical safe-haven buying patterns that accompany geo-political and economic uncertainty, and drive down mortgage rates.

This week, mortgage rates may rise again.

First, Ireland's bailout package was signed Sunday morning and that relieves some pressure on the European Union.  Second, this week's economic releases should show that the U.S. economy is still expanding, and that U.S. consumers are still spending -- both are tied to higher rates.

A sampling of the week's releases include:

  • Tuesday : Case-Shiller Index; Consumer Confidence surveys
  • Thursday : Initial and Continuing Jobless Claims; Pending Home Sales
  • Friday : Non-Farm Payrolls; Unemployment Rate

If you haven't locked a mortgage rate and are waiting for "the bottom", remember that the mortgage market waits for no one. Rates are much higher since the start of November and look ready to rise even higher.  Call your loan officer and get your application in process this week.

The longer you wait, the higher that rates could go.


Breaking News Loan up to 125% on the HARP or Home Affordable program set to expire June 2011

H.A.R.P. Home Affordable Program
The Home Affordable Program is designed for homeowners who pay their mortgage on time but are not able to refinance because they have little or no equity in their home. But hurry this program is set to expire and many lenders do not understand the program or are too busy with the REFI boom to help you close your loan.

You must meet the following criteria to qualify for the Home Affordable Program:
  1. Your current loan must have been sold to Fannie Mae or Freddie Mac.  To find out, contact your current loan servicer or visit: http://www.makinghomeaffordable.gov/loan_lookup.html

  2. During the last 12 months, all of your mortgage payments must have been made within 30 days of the due date.

  3. Your new loan amount may not exceed 125% of the current appraised value of your home. 
To view rates and obtain a good faith estimate for a Home Affordable refinance with ATLRATES.com.

Frequently Asked Questions
If I have a first and a second mortgage, do I still qualify?
As long as the balance due on the first mortgage is less than 125% of the value of the home, you may qualify.  The lender on the second would have to agree to subordinate their loan to the new first mortgage, thereby remaining in second position.
Can I get cash out to pay off debts?
No.  However, provided the new loan amount will not exceed 125% of the value of the home, you may include all closing costs in the new loan so you don’t have to come out of pocket with any cash.
If I’m delinquent on my mortgage, will I still qualify?
No.  Borrowers who are currently delinquent on their mortgage should contact their current lender/servicer and ask about a loan modification.
Will I need mortgage insurance?
If your existing loan does not have Private Mortgage Insurance (PMI), it will not be required as part of your HARP refinance either. If your existing loan has PMI, your HARP refinance will also require it. PMI for this program will only be available through your existing PMI company.
Below are the HARP PMI guidelines of the major PMI companies:
Existing PMI Company Refinance with New Lender Refinance with Existing Lender
(Formerly GEMICO)
Max 105% LTV Max 125% LTV
45% Max DTI Per AUS Approval
New Premium Same Premium
MGIC Max 105% LTV Max 125% LTV
45% Max DTI Per AUS Approval
Same Premium Same Premium
.5% Upfront Fee 
PMI Max 125% LTV Max 125% LTV
Per AUS Approval Per AUS Approval
Same Premium Same Premium
Radian Max 105% LTV Max 125% LTV
45% Max DTI Per AUS Approval
New Premium Same Premium
UGI Not Available Max 125% LTV
   55% Max DTI
   Same Premium
RMIC Max 105% LTV Max 125% LTV
55% Max DTI (41% if Mtg payment increases) No DTI Requirement
New Premium Same Premium

How long will the Home Affordable Program be available?
The program expires on June 30, 2011. Your refinance transaction must be closed and funded on or before that date.

Fed Minutes Help Push Mortgage Rates To 4-Month High

FOMC November 2010 MinutesThe Federal Reserve released its November 2-3, 2010 meeting minutes Tuesday afternoon. Mortgage rates in Georgia have been on the move since.

The Fed Minutes is a comprehensive review of Federal Open Market Committee meetings; a detailed look at the debates and discussions that shape our country's monetary policy. The report is published 3 weeks to-the-day after the FOMC adjourns.

Fed Minutes add depth to the briefer, more well-known "statement" to the markets which is issued upon adjournment. As a comparison:

If the Fed Statement is the executive summary, the Fed Minutes is the novel. And, the extra words matter.

When the Federal Reserve publishes its minutes, it gives clues about the groups next policy-making steps.  For example, in November's minutes, it's revealed that the Fed discussed setting inflation targets for the economy; holding occasional policy briefings for the press; and, working to set yields on instruments such as the 10-year Treasury note.

In addition, the Federal Reserve acknowledged a video conference hosted October 15, the second such "unannounced" meeting of the year.  The other was May 9, 2010.

Bond markets have not taken kindly to the Fed Minutes. The minutes show a propensity toward Fed "action", most of which markets believe to be inflationary. Inflation leads to higher mortgage rates and that's exactly what we've seen.

As compared to Tuesday morning, mortgage applicants in Atlanta are finding conforming and FHA mortgage rates to be higher by as much as 0.375 percent. In "real life" terms, assuming a 30-year term, that's an extra $264 in annual mortgage payments per $100,000 borrowed.

If you're still rate shopping, consider getting locked today. As a result of the recent shift, mortgage rates are now at a 4-month high.


October Existing Home Sales : Buyers And Sellers In Balance

Existing Home Supply (Oct 2009-2010)After two months of surging sales, home resales fell by 100,000 units last month to 4.4 million homes nationwide.

October's Existing Home Sales tally is slightly below the report's 6-month rolling average, according to the National Association of REALTORS® -- a time span which includes this year's $8,000 federal home buyer tax credit's tail end.

Housing statistics have been wildly inconsistent during that period.

For the future of Atlanta housing markets, though, it's encouraging that first-time and investment property buyers were both outnumbered by "move-up" buyers; buyers that have sold their respective homes in favor of larger ones. It's the move-up buyers that power housing.

In October, buyer profiles broke down as follows:

  • First-time buyers : 32 percent of all buyers, unchanged from September
  • Repeat home buyers : 49 percent of all buyers, down one tick from September
  • Investors : 19 percent of all buyers, up one tick from September

As a point of comparison, first-timers represented 50 percent of all purchases in October 2009.

For Vinings home buyers, October's Existing Home Sales report is neither weak nor strong. It signals that, with mortgage rates low and home affordability high, housing may be reaching some form of balance. Because -- although home sales are down -- home supplies are down, too.

We can infer that buyers outnumber sellers, but probably not by much. In most areas, negotiation leverage is still up for grabs.

At the current pace of sales, the complete housing stock would be depleted in 10.6 months.


Applying For A Mortgage Soon? Don't Open New Credit Cards On Black Friday.

FICO recipeBlack Friday is 3 days away. It's the official start of the 2010 Holiday Shopping Season.

Sales are expected to top $111 billion this year and, already, businesses are vying for shoppers and their dollars. Newspaper circulars are getting larger, and in-store discounting is more prevalent.

But one discount that shoppers should think twice about is the popular "Open A Charge Card, Save 20%" promotion. The short-term savings may be tempting, but the long-term costs may be huge.

It's because of how credit scores work.

According to myFICO.com, "new credit" accounts for 85 out of 850 possible credit scoring points, with new credit defined by such traits as:

  • Number of recently opened accounts
  • Number of recent credit inquiries
  • Time since recent credit inquiries
  • Proportion of new accounts to all accounts

These traits are negatives against a FICO score so with each new, in-store credit card application, a person's credit score will fall. The fall will be especially pronounced for persons lacking credit "depth", or who have made a disproportionately large number of new credit applications recently.

For soon-to-be homeowners, or would-be refinancers in Kennesaw , credit scores are worth keeping high. This is because credit scores change the mortgage rates and/or loan fees for which an applicant is eligible.

As an illustration, assuming 20% equity on a $200,000 conforming loan:

  • 740 FICO : No added loan costs
  • 720 FICO : 0.250% increase in loan costs, or $500
  • 700 FICO : 0.750% increase in loan costs, or $1,500
  • 680 FICO : 1.500% increase in loan costs, or $3,000
  • 660 FICO : 2.500% increase in loan costs, or $5,000


It's expensive to have a low credit score -- more expensive than the money saved by opening a card at the mall, anyway.

That said, if you know you won't need your credit for a mortgage within the next 6 months, the risk of applying for in-store credit cards is likely small. But if you'll need your FICO soon, consider paying for your gifts full price.


Georgia conforming loan limits for 2010 and 2011

For 2010, the conforming loan limits remain unchanged from last year.

One-Family Two-Family Three-Family Four-Family

Georgia (except Greene) $417,000 $533,850 $645,300 $801,950

Greene County $662,500 $848,100 $1,025,200 $1,274,050

Loan limits are set equal to 115% of local median house prices and they cannot exceed 150% of the standard limit. The standard limit is $625,500 for one-unit homes in the continental US.

We have loans for this counties

Providing financing for cities across Georgia including: Acworth, Albany, Alpharetta, Athens, Atlanta, Augusta, Austell, Avondale Estates, Blairsville, Bloomingdale, Blue Ridge, Bogart, Brunswick, Buckhead, Buford, Canton, Carrollton, Cartersville, Chatsworth, Clayton, College Park, Columbus, Commerce, Conyers, Covington, Cumming, Dahlonega, Dacula, Dalton, Dawsonville, Decatur, Doraville, Douglasville, Duluth, Dunwoody, East Point, Fayetteville, Flowery Branch, Gainesville, Greensboro, Hampton, Hapeville, Hinesville, Hiram, Jackson, Jefferson, Jonesboro, Kennesaw, Lagrange, Lawrenceville, Lilburn, Lithia Springs, Macon, Madison, Metter, Morganton, Morrow, Newnan, Norcross, Oakwood, Peachtree City, Pooler, Richmond Hill, Riverdale, Rome, Roswell, Sandy Springs, Savannah, Scottdale, Statesboro, Stockbridge, Stone Mountain, St Marys, Sugar Hill, Suwanee, Thomasville, Thunderbolt, Tucker, Tybee Island, Valdosta, Waleska, Warner Robins, Waycross, Wilmington Island, Winder, Woodstock, and many more.

What's Ahead For Mortgage Rates This Week : November 22, 2010

CPI Oct 2009-2010Mortgage markets worsened last week as the U.S. dollar gave up ground in currency markets, and inflation concerns mounted. In response to the events, conforming mortgage rates in Georgia rose for the third straight week.

Mortgage rates have now climbed by as much as half-percent since the start of the month, and Freddie Mac reports average loan fees to be higher, too.

The 7-month rally in rates may be nearing its end. The 30-year fixed rate mortgage is at a 4-month high after reaching an all-time low just 3 weeks ago.

The abrupt change in rates makes for an interesting study in expectations, and how they can influence a market.

Remember, inflation is bad for mortgage rates. Inflation devalues the dollar which, as a consequence, devalues repayments made to mortgage bond holders. As a result, when inflation is present, mortgage bonds tend to sell-off which causes mortgage rates to rise.

This is what's been happening these past 3 weeks. However, we're not in an inflationary environment. To the contrary:

  1. The Federal Reserve has said inflation is too low to be economically healthy
  2. Last week, the Cost of Living posted its lowest year-over-year gain in history

But mortgage rates are rising anyway. This is because global investors believe the Fed's most recent market intervention -- a $600 billion bond purchase program -- will later lead to inflation. Just on the expectation, markets are behaving like inflation is already here.

This week is holiday-shortened, and rates should remain volatile. There's a bevy of data including the Existing and New Home Sales reports, consumer confidence data, and the FOMC Minutes from the November 3 meeting.

If you haven't locked a mortgage rate, consider locking one today. Rates have farther to climb than the fall.


Mortgage Rates Still Rising. Is This The End Of The Refi Boom?

Freddie Mac mortgage rates (January - November 2010)

Rock-bottom mortgage rates may be gone for good.  This week's Freddie Mac Primary Mortgage Market Survey shows in numbers what Georgia rate shoppers have learned the hard way -- mortgage rates are spiking.

During the 7-day period ending November 18, the average 30-year, conforming fixed rate mortgage jumped to 4.39 percent, an increase of 0.22% from the week prior.

And it's not just rates that are soaring. The average number of points charged to consumers increased to 0.9 percent last week. For most of the year, that cost had been 0.7 percent.

One "point" is equal to 1 percent of your loan size.

With the sudden rise in mortgage rates, we have to question whether the Refi Boom is ending. Between April and early-November, conforming mortgage rates dropped more than a full percentage point and, during that time, a lot of Atlanta homeowners capitalized on the market. Refinance activity was strong; rates cut new lows each week.

Today, however, Wall Street sentiment is different. There's a growing concern for the future of the U.S. dollar, and that's making mortgage bonds less attractive to investors. As demand drops, so does the underlying bond's price which, in turn, causes mortgage rates to rise.

Buy-sell patterns like this are common. The speed at which they're changing is not.  Mortgage lenders can barely keep up with the volatility, issuing up to 4 separate rate sheets in a day.

Therefore, if you're shopping for mortgage rates, or wondering whether it's finally time to join the Refi Boom, the time to lock is now. Mortgage rates should remain volatile through the New Year, at least. At what level they'll be then, though, is anyone's guess.


Housing Starts Data Much Better Than The Headlines Would Have You Believe

Housing Starts (Nov 2008-Oct 2010)Newspaper stories can be misleading sometimes -- especially with respect to real estate. We saw a terrific example of this Wednesday.

A "Housing Start" is a privately-owned home on which construction has started and, according to the Commerce Department's October 2010 data, Housing Starts data dropped by nearly 12 percent as compared to September.

The media jumped on the story, and its negative implications for the housing market overall.

A sampling of the headlines included:

  • Housing Starts Plunge: Market's 'Pulse is Faint' (WSJ)
  • Housing Starts Tumble (Reuters)
  • Housing Starts Sink 11.7 Percent In October (NPR)

Although factually correct, the headlines are misleading. Yes, Housing Starts fell sharply in October, but if we strip out the volatile "5 or more units" portion of the data -- a grouping that includes apartment buildings and condominiums -- Housing Starts only fell 1 percent.

That's a big difference. Especially because most new construction buyers in Marietta and around the country don't purchase entire condo buildings. They buy single-family residences.

As an illustration, 84% of October's Housing Starts were single-family homes. The remaining starts were multi-units.

This is why the headlines don't tell the whole story. The market that matters most to buyers -- the single-family market -- gets completely glossed over. The Housing Starts reading wasn't nearly as awful as the papers would have you believe.  Furthermore, it's never mentioned that single-family Housing Permits climbed 1 percent last month, either.

According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance. Therefore, we can expect December's starts to be higher, too.


Homebuilders Expect A Surge In New Home Sales

NAHB Housing Market Index November 2008-2010Homebuilder confidence is higher for the third straight month this month.

According to the National Association of Home Builders/Wells Fargo Housing Market Index, a combination of shrinking new home inventory plus higher-quality foot traffic is boosting builder optimism.

November's confidence reading of 16 is the highest since June 2010.The Housing Market Index is now above its 3-year trendline, too.

The purpose of the Housing Market Index is to measure "the pulse of the single-family housing market". The survey is sent to home builders in Georgia and around the country, asking them to report on their business.

The survey is 3 questions:

  1. How are market conditions today?
  2. How do market conditions look 6 months from now?
  3. How is the prospective traffic of new buyers for new homes?

Responses are then collected, and seasonally-weighted.

It's no surprise that builder confidence is rising. The sales of new homes spiked in September, and the jobs market is moving in the right direction. Low mortgage rates help attract new buyers, too. Altogether, the outlook in the New Home market is as rosy as it's been in months.

The downside for new home buyers in Marietta , though, is that, because of their improved outlook, builders may be unwilling to offer free upgrades or other discounts to buyers. Certainly not with sales are expected to return to "federal tax credit" levels, anyway.

Therefore, if you're in the market for a new home, or expect to be "buying new" in early-2011, you may want to move up your time-frame. Not only are low mortgage rates not likely to last, but neither are low home prices.


Mortgage Rates Spike On Strong Retail Sales Data. Could 4 Percent Rates Be Done?

Retail Sales vs Consumer Confidence (2008-2010)

If consumer spending is a key to economic recovery, the nation is on its way.

Monday, the Census Bureau released national Retail Sales figures for October and, for the second straight month, the data surged past expectation. Last month's retail figures jumped 1.2 percent -- the largest monthly jump since March -- as total sales receipts climbed to a 2-year high.

Consumer confidence is rising, too. Though still below the long-term trend, confidence in the future up-ticked in October.

The current confidence reading is now double the low-point from February 2009.

It's no surprise that both Retail Sales and Consumer Confidence are higher. They correlate in a common-sense-type manner. When consumers are more confident in the economy, they're more likely to spend their money. This, in turn, leads to more purchases and rising retail receipts.

Unfortunately, for home buyers and rate shoppers in Atlanta , it also leads to rising mortgage rates.

Because consumer spending accounts for two-thirds of the economy, spending growth leads to economic growth. But it's been a lack of growth that's kept mortgage rates this low.

When the growth starts, the low rates end. It's why mortgage rates have added as much as 1/2 percent over the past 10 days. Consider the recent "good news":

The days of 4 percent, 30-year fixed rate mortgages may be nearing its end.  If you're still floating a mortgage rate or thinking of buying or refinancing, consider the impact of rising rates on your budget.

The time to act may be sooner than you had planned.


What's Ahead For Mortgage Rates This Week : November 15, 2010

Inflation and mortgage ratesIn a holiday-shortened trading week, mortgage markets tanked last week, casting doubt on whether the bond market's 7-month bull run will continue. Fears of inflation caused conforming mortgage rates to rise in Georgia.

Last week marked the first sizable mortgage rate increase over the course of 7 days since April.

The biggest reason why rates rose last week was because of concerns that the Federal Reserve's latest round of stimulus will devalue the U.S. dollar.

The Fed pledged an additional $600 billion to the bond markets two weeks ago and, to meet this obligation, the group will have to, quite literally, print new money.

It's Supply and Demand. With more dollars in circulation, every existing dollar is worth less.

It's also inflationary.

As the Fed's pledge ties back to mortgage rates, remember that mortgage bondholders are paid in U.S. dollars. So, if those dollars are expected to be worth less in the future, we would expect mortgage bond demand to fall. And that's exactly what happened last week -- investors rarely clamor for assets whose value drops over time.

The falling demand dropped down prices, and pushed up yields. Mortgage rates spiked.

This week, the trend could continue. There's a lot of inflation-signaling data on tap:

  • Monday : Retail Sales
  • Tuesday : Producer Price Index; Consumer Confidence; Housing Market Index
  • Wednesday : Consumer Price Index; Housing Starts
  • Thursday : Initial and Continuing Jobless Claims

Analysts are calling for lukewarm data this week; none of the releases is expected to show strong growth. If the analysts are wrong, look for rates to rise again.

Momentum is moving away from rate shoppers. If you've yet to lock in a rate, consider doing it now.


October 2010 : 5 States Account For Half Of The Nation's Foreclosure Activity

Foreclosures, cumulative by state (October 2010)

According to October data from foreclosure-tracking firm RealtyTrac, foreclosure filings topped 300,000 for the 20th straight month last month as 1 in every 389 U.S. homes received a foreclosure filing.

The generic term "foreclosure filing" is defined to include default notices, scheduled auctions, and bank repossessions. Versus the month prior, filings fell 4 percent, and as compared to October 2009, filings were essentially the same.

As usual, foreclosure density varied by region last month, with just 5 states accounting for close to half of the nation's repossessed homes.

  • California : 14.8 percent of all bank repossessions
  • Florida : 14.4 percent of all bank repossessions
  • Michigan : 7.3 percent of all bank repossessions
  • Texas : 6.6 percent of all bank repossessions
  • Arizona : 6.0 percent of all bank repossessions

The other 45 states accounted for the remaining half.

It reminds us that, like everything else in real estate, foreclosures are local.

For today's Atlanta home buyers, though, foreclosures represent an interesting opportunity. 

Homes bought in various stages of foreclosure are often less expensive than other, non-foreclosure homes and it's one of the reasons why distressed home sales now represent 35 percent of all home resales.  But don't confuse less expensive for less costly.  Foreclosed homes may also be in various stages of disrepair. Getting them into living condition can be expensive.

Your best real estate "deal", therefore, may be that non-distressed home that's in sound, move-in ready condition.

If you're buying foreclosures -- or even just thinking about it -- make sure you talk with a real estate agent first. Buying distressed property is different from the "typical" home purchase. You'll want somebody experienced in your corner.


Fed Survey : Mortgage Guidelines Tighten Further, Freeze Out Would-Be Refinancers

Senior Loan Officer Opinion Survey on Bank Lending Practices

It's getting tougher to get approved for a mortgage. Still.

In its quarterly survey of senior loan officers around the country, the Federal Reserve asked whether "prime" residential mortgage guidelines" have tightened in the prior 3 months.

A "prime" borrower typically carries a well-documented credit history with high credit scores, has a low debt-to-income ratio, and uses a traditional fixed-rate or adjustable-rate mortgage.

For the period July-September 2010, 52 of 54 responding loan officers admitted to tightening their prime guidelines, or leaving them "basically unchanged".

Just 4% of banks loosened their lending standards.

If you've applied for a home loan lately -- for either purchase or refinance -- you've likely experienced the effects of the last 4 years. Because of delinquencies and defaults, today's mortgage underwriters are forced to scrutinize income, assets and credit scores, among other facets of an home loan application.

Mortgage applicants in Marietta have higher hurdles to clear:

  • Minimum credit scores are higher versus last year
  • Downpayment/equity requirements are larger versus last year
  • Debt-to-Income ratios must be lower versus last year

In other words, although mortgage rates are the lowest they've been in history, qualification standards are not.  Minimum eligibility requirements are tougher, and appear to be toughening still.

If you're among the many people wondering if now is the right time to join the Refinance Boom, or to buy a home, consider that, while mortgage rates may fall further, eligibility standards may not.

Low mortgage rates don't matter if you can't qualify for them


Pending Home Sales Slip In September, Suggesting A Buyer's Market Until January

Pending Home SalesAfter 3 straight months of improvement, the Pending Home Sales Index slid lower in September. As compared to August, September's reading fell 2 percent.

A "pending home sale" is a home under contract to sell, but not yet closed. The data is drawn from a combination of local real estate associations and national brokers, and represents 20 percent of all purchase transactions in a given month.

Because of the large sample set, and because 80 percent of homes under contract close within 60 days, the Pending Home Sales Index is a terrific future indicator for the housing market. A high correlation exists between the Pending Home Sales Index and the NAR's monthly Existing Home Sales report issued two months hence.

Expect home sales to idle into the New Year, therefore.

For home buyers in Kennesaw , this is good news. Over the last two months, housing markets have overwhelmingly favored home sellers.

Consider than, since June, the volume of both new home sales and existing home sales has increased, causing the available home inventory to fall by months. Meanwhile, helped by low interest rates, demand from buyers has remained relatively stable.

As with everything in economics, falling supply with constant demand leads to higher prices.

Therefore, the Pending Home Sales Index's fading September figures suggest a more balanced supply-and-demand curve in the months ahead, a move that should suppress rising home prices and shift negotiation leverage back to the buy-side. 

So long as mortgage rates remain rock bottom, the autumn season is looking like a terrific time to buy.


What's Ahead For Mortgage Rates This Week : November 8, 2010

Mortgage rates changing quicklyMortgage markets took a roller coaster ride last week, powered by the dual-force of the Federal Open Market Committee, and the government's monthly Non-Farm Payrolls report.

As standalone events, both releases would have ranked among the top market movers of the year anyway, but throw in the rest of the week's data --including the release of key inflation figures and the midterm elections -- and it's no wonder the bond markets were so bumpy.

Huge gains and losses characterized day-to-day trading last week. Overall, however, conforming mortgage rates in Georgia improved; fixed-rate mortgage rates fell slightly less than adjustable-rate ones.

Recapping last week's economic news:

  • Core PCE, the Fed's preferred inflation gauge, posted a lower-than-expected 1.2% annual growth
  • The Federal Reserve announced a $600 billion package to support the economy; more than most estimates.
  • According to the government, 151,000 new jobs were created last month. Economists expected 61,000.

Additionally, the Institute for Supply Management's Manufacturing Index showed strong sector growth.

With each new surprise, Wall Street's expectations adjusted for the future and, therefore, mortgage rates changed. 

This week, the direction that rates take is anyone's guess. First, there's no substantive economic data due for release and, second, markets are closed Thursday for Veteran's Day. The absence of data coupled with lower volume expected overall may mean that market momentum rules the week.

In other words, if mortgage markets open the week better, they may close the week better, too. Conversely, if rates start rising, they could rise by a lot.

If you're still floating a mortgage rate or have yet to call your loan officer about a potential refinance, there's no better time than the present. Mortgage rates are on a 6-month rally and most eligible homeowners stand to save a lot of money.

Make that call this week -- just in case market momentum carries mortgage rates higher.


Today's Jobs Report Will Keep Mortgage Rates Highly Volatile

Net Job Gains Oct 2008 - Sept 2010Mortgage rates have been falling since April, shedding more than 1 percentage point since the Refi Boom began. Today, that momentum could lose some steam.

The Bureau of Labor Statistics releases the October jobs report at 8:30 A.M. ET. With a stronger-than-expected reading, mortgage rates should rise, harming home affordability in Georgia and nationwide.

As cited by the Fed earlier this week, jobs are a key part of economic growth and growth affects mortgage rates.

Looking back at jobs, starting in January 2010, after close to 24 consecutive months of job loss, the economy added jobs for the first time since 2007. It started a small jobs winning streak. By May -- boosted by the temporary census workers -- monthly job growth reached as far north as 431,000 jobs.

That figure then slipped negative in June and has yet to turn-around.

This month, economists expect 61,000 jobs lost and 9.6% Unemployment Rate.

Jobs matter to the U.S. economy. Among other reasons, employed Americans spend more on everyday goods and services, and are less likely to stop payments on a mortgage. These effects spur the economy, stem foreclosures, and promote higher home values.

The reverse is also true. Fewer workers means fewer disposable dollars and, in theory, a slowing economy. Weak jobs data should spur a stock market sell-off which should, in turn, help lead to mortgage rates lower.

Strong jobs data, on the other hand, should cause mortgage rates to rise.

The stronger October's employment figures, the higher mortgage rates should go.

Mortgage rates have been jumpy this week because of the Federal Reserve and its new support for bond markets. Today's employment report should add to the volatility.


A Simple Explanation Of The Federal Reserve Statement (November 3, 2010 Edition)

Putting the FOMC statement in plain EnglishToday, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged within in its target range of 0.000-0.250 percent.

In its press release, the FOMC noted that, since September's meeting, the pace of economic and job growth "continues to be slow".  Housing starts are "depressed", income growth is "modest" and commercial real estate investment is "weak".

With respect to its prior economic stimuli, the Fed deemed the recovery "disappointingly slow", while, at the same time, noting that growth will come.

The Fed also noted that inflation is running lower that what's optimal, hinting at the potential for deflation.

Lastly, the Fed re-acknowledged its plan to hold the Fed Funds Rate near zero percent "for an extended period", and also announced a new, $600 billion support package for the bond market. In most instances, a move like this would drive mortgage rates lower, but the Fed's stimulus had been widely telegraphed, and $600 billion isn't too far from the initial package estimates.

Mortgage market reaction has been muted thus far. Mortgage rates in Atlanta are unchanged post-FOMC, but looked poised to worsen.

The FOMC's next scheduled meeting is December 14, 2010. It's the last scheduled meeting of the year.

Mortgage Rate Lock Alert : Expect Rate Changes Wednesday Afternoon

Comparing 30-year fixed mortgage rate to Fed Funds Rate since 2000The Federal Reserve ends a scheduled, 2-day meeting today. It's the seventh of 8 scheduled Fed meetings in 2010, and the eighth overall this year.

The Fed held an unscheduled meeting May 9, 2010.

When today's meeting adjourns, Fed Chairman Ben Bernanke & Co. will publish a formal statement within which the Fed is expected to announce "no change" to the Fed Funds Rate. But that doesn't mean that mortgage rates won't change.

To the contrary, expect mortgage rates to move by a lot this afternoon. Here's why.

The Fed's mission is to preserve stability within banking and the economy and, to achieve that goal, the Fed was bequeathed a number of powers by the U.S. government.

The most well-known of those powers is to right to set the Fed Funds Rate, the rate at which banks lend money to each other overnight. 

Since December 2008, the benchmark Fed Funds Rate has been held in a range of 0.000-0.250 percent, the lowest possible range without going negative.

Now, when the Fed Funds Rate is low, it's meant to loosen credit; to push the economy forward. And, by all accounts, the near-zero Fed Funds Rate is working. The recession ended and the economy is recovering.

However, the Fed has other stimulus-providing tools at its disposal and Wall Street expects the group to use them.  This is where mortgage rates come into play. 

Investors think the Fed will announce a new stimulus in its press release this afternoon and, dependent on the size of package, mortgage rates in Georgia will either rise, or fall.

  • If the package is worth more than $500 billion, rates are expected to fall
  • If the package is worth less than $250 billion, rates are expected to rise

If the stimulus is somewhere in between, rates should idle.

Predicting mortgage rates is an inexact science, and guessing the Fed even moreso. Therefore, if you're shopping for a mortgage rate right now, the prudent move is to lock it up prior to today's 2:15 PM ET adjournment because, after to 2:15 PM ET, we can count on the Fed Funds Rate staying flat, but the same can't be said for mortgage rates. 

Call your loan officer this morning.


Better Credit Scores Get Better Mortgage Rates

This week marks the start of the Refi Boom's 7th month across Georgia ; rates have been falling since early-April 2010. Whether you're looking to refinance or buy a home, however, know that not everyone will qualify for today's low rates.

Mortgage approvals are primarily based on good income, good equity and strong credit, and, without all three, the best rates of the day remain out of reach. Now, you can't always ask for a raise and equity is a function of the housing market, but you can do something about your credit score.

In this 4-minute segment from NBC's The Today Show, you learn some credit basics to help propel your score higher:

  • There's no "quick fix" for credit. Time + Good Credit Behavior = Better FICOs.
  • Pay every bill when it comes due. Even one late payment can damage your score.
  • Don't close old credit cards

Also among the segment's advice is to stop worrying about whether rates have bottomed. Refinance today if it makes financial sense. Then, if, by chance, rates fall in the future, just refinance again.  Don't be greedy, we're told.

Better Credit Scores Get Better Mortgage Rates

This week marks the start of the Refi Boom's 7th month; rates have been falling since early-April 2010. Whether you're looking to refinance or buy a home, however, know that not everyone will qualify for today's low rates.

Mortgage approvals are primarily based on good income, good equity and strong credit, and, without all three, the best rates of the day remain out of reach. Now, you can't always ask for a raise and equity is a function of the housing market, but you can do something about your credit score.

In this 4-minute segment from NBC's The Today Show, you learn some credit basics to help propel your score higher:

  • There's no "quick fix" for credit. Time + Good Credit Behavior = Better FICOs.
  • Pay every bill when it comes due. Even one late payment can damage your score.
  • Don't close old credit cards

Also among the segment's advice is to stop worrying about whether rates have bottomed. Refinance today if it makes financial sense. Then, if, by chance, rates fall in the future, just refinance again.  Don't be greedy, we're told.


What's Ahead For Mortgage Rates This Week : November 1, 2010

FOMC meets this weekMortgage markets remained highly volatile for the second straight week last week. Yet, over the course of 5 days, mortgage bonds ended the week relatively unchanged.

Conforming rates in Georgia worsened Monday, Tuesday and Wednesday -- rising as much as 3/8 percent as compared to the week prior -- before settling lower through Thursday and Friday.

On the week overall, 30-year fixed rates worsened, 15-year fixed held steady, and 5-year ARMs improved.

And despite all the data released last week, it wasn't the fundamentals that were causing rates to move. Instead, Wall Street was firmly focused on the Federal Reserve's scheduled 2-day meeting this week; preoccupied with the likelihood of new Fed stimulus program.

The Fed's meeting adjourns Wednesday and the group is widely expected to announce a new round of bond market support at that time.  Uncertainty over how big that package will be, however, is what's causing rates to jump.

Market estimates range from $250 billion to over $1 trillion and when Wall Street expectations shifts toward the lower end of that range, mortgage rates have been rising. When expectations shifts toward the upper range, mortgage rates have been falling.

This is why it's all eyes on the Fed this week. Once the Fed adjourns, there's no more "expectation" -- there's only Fed commitment.

Other than the Federal Reserve's get-together, there isn't much new data due for release. The week's calendar looks like this:

  • Monday : Personal Income and Spending reports
  • Wednesday : FOMC adjourns from its 2-day meeting
  • Thursday : Initial and continuing jobless claim data
  • Friday : Pending Home Sales, Jobs Report, Unemployment Rate

It's unlikely that data will swing mortgage rates until after the Fed's Wednesday adjournment, but, once that happens, expect bond market attention to shift to the October jobs report set for 8:30 AM ET release Friday morning.  If jobs data is strong, mortgage rates should rise.

All things considered, it's dangerous to float a mortgage rate this week. If you're not already locked, talk to your loan officer prior to Wednesday afternoon.