Posts Tagged Bail out

Salt Lake City Mortgage Market Update for January 13, 2009

Stocks are trading a bit higher today, particularly the NASDAQ which historically has been a good indicator of what mortgage rates will do: when the NASDAQ is down rates are down; when the NASDAQ is up, rates are up.  This is because of the inverse actions of Stocks and Bonds.  When Stocks look bad investors move their money to lower yield, yet safer Bonds thus adding strength to them and lowering interest rates also on Mortgage Bonds.  When  Stocks look good investors transfer their money from safer, lower return Bonds to riskier but higher earning Stocks.

So far this morning the +0.49% uptick in the NASDAQ hasn’t had any real effect on Mortage Interest Rates though with rates at the same point they were at closing yesterday.

The Senate votes on the Stimulus Plan today and we’ll see what effect that has on the Stock Market.  One modification from Obama’s plan that I’m not happy about is changing the original plan’s tax credit for homebuyers from $15,000 for all home buyers this year  that does not have to be paid back to an $8,000 tax credit for first-time home buyers that only has to be repaid if the home is resold within 36-months of purchase.  This isn’t much different than the current $7,500 tax credit, and as many real estate industry advisors have stated isn’t helping much anyway because many first-time home buyers don’t have the initial downpayment to buy a home in the first place to take advantage of the tax credit 10 months from now.

If the government really wants to do something to stimulate home sales they need a credit that can be used at the closing table for down payment purposes or to pay closing costs, and they need to make it available to all home buyers for the next 12 months, or so.

But what do Realtors and loan officers know?  We’re just the one’s in the trenches dealing with home buyers everyday, so we must be way more out of touch with the market than some congressman that has never represented a home buyer in a purchase transaction.

With mortgage bonds facing resistance and stocks on the cusp of a rally today the market favors locking if you have a loan closing soon that isn’t locked yet.

For Salt Lake City, UT today’s average mortgage rates are as follows:

30-year fixed: 5.125%

15-year fixed: 4.625%

Conforming Jumbo 30-year fixed: 5.625%

FHA 30-year fixed: 5.50%

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Congress looking at increasing tax credit up to $15,000

Congress is considering a new tax credit that would modify the current $7,500 tax credit for first time home buyers to $15,000 for any home buyer.  This could really help a lot of people.

Here’s how it will work: Home buyers would get 10% of the purchase price of the home as a tax credit when they file their 2009 tax returns.  The maximum amount of the credit is $15,000.  If the tax payer usually pays less than $15,000 in taxes the credit can be split over two tax years, so the home buyer would get a $7,500 in 2009 and another $7,500 in 2010.  And this is a true tax credit, not a tax deduction, so the home buyer gets $7,500 deducted from thier tax liability, not from their gross income.  For someone owing some money this could mean they owe less or nothing at all.  For someone already getting a tax return this would add up to $15,000 on top of it.

I’m sure for most middle-class home buyers this could mean a nice surprise at the end of the year.

The only way they could make it better?  Make 90% to 100% of the rebate available at the closing table to be used as the down payment.  $15,000 would be more than 6% down on the average home in Salt Lake City.  Fannie Mae and Freddie Mac require 5% down payment and FHA requires 3%, so 6% would give the average FHA borrower the required 3% down plus an additional 3% to cover any closing costs not accounted for by seller concessions (which on short-sales there are no seller concessions to cover closing costs).

Let’s hope the Feds figure this out and either do something like that, or maybe the State of Utah could front the rebate money and make it due upon filing of taxes or in the case of those not getting a refund, repayable over, say, 10 years at a minimal amount of interest (such as not exceeding the note rate of the loan).

For Salt Lake City, UT today’s average mortgage rates are as follows:

30-year fixed: 5.25%

15-year fixed: 4.625%

Conforming Jumbo 30-year fixed: 5.75%

FHA 30-year fixed: 5.50%

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Salt Lake Mortgage Market Update for December 11, 2008

More than half of all homeowners who had their loans modified to make the payments more affordable in the first half of the year are already in default again, banking regulators said Monday.

The new data raise questions about whether government money may be better spent on creating jobs, rather than averting foreclosures, said John Reich, director of the federal Office of Thrift Supervision office at a housing industry forum sponsored by his agency.

That was the word from Forbes the other day.  Which echoed what I’ve been squawking all along, although there are some bad mortgages out there, the real problem, the biggest problem is in the fact that unemployment is at it’s highest level since 1973.  It’s not that people can’t afford their mortgage if (and I emphasize “if”) their interest rate reset, they can’t afford any mortgage.  That is why the loan modifications aren’t working.  All it did was buy unemployed and underemployed (those who’ve had their hours dramatically cut) a few more months in their house.

Until our elected officials pull their heads out of their collective butts and do something about the loss of jobs in this country (maybe not reward U.S. companies for sending jobs over seas?) this problem is not going to go away.

Mortgage applications for home purchases is down 36.8% from this same time last year.  The consensus is that purchases are forestalled due to public uncertainty about their employment and the economy.  It seems nobody wants to make such a large commitment when things seem so shaky.  And again, the news media only makes it worse by reporting only half the story; the sensational part of the story.

That said, refinances only fell 0.9% last week and are actually up over last year, partially due to the current low interest rates.  In fact we opened yesterday at 5.00% for a 30-year fixed mortgage.  These kind of rates haven’t been seen in nearly 5 years now.

We’ll see what happens in the coming weeks.  Home prices are good, and rates are great.  The big banks may be sitting on that $700 Billion bailout, but smaller lenders are not, they are funding loans left and right.  Call me if you have any questions about market conditions, current rates or to apply for a loan.

Well, on to the important stuff.

For Salt Lake City, UT today’s average mortgage rates are as follows:

30-year fixed: 5.00%

15-year fixed: 4.875%

Conforming Jumbo 30-year fixed: 5.00%

FHA 30-year fixed: 5.00%

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