According to the National Bureau of Economic Research, the average rate on a 30-year, fixed-rate, FHA-insured mortgage was 5.15 percent in December 1956. That appears to be the last time that rates were lower.
This might be the low
People in the mortgage industry say they hear from a lot of people who say they won’t refinance until mortgage rates fall to 4.5 percent or even 4 percent. Few lenders think rates will drop that low.
“It is ridiculous for somebody to hold out for 4 percent because there’s no evidence that we’re going to see that immediately,” says Barry Habib, CEO of Mortgage Market Guide. It would be better, he says, to refinance now to take advantage of lower rates — and if rates unexpectedly drop even further, refinance again.
Another reason to act now, instead of waiting, is that lenders keep tightening their standards — and, at the same time, house prices are falling. The combination of more stringent lending and falling prices can push homeowners out of the category of people who are eligible for loans and into the category of people who are ineligible.
Here’s the most recent example: Until this month, the Federal Housing Administration would insure a loan for a cash-out refinance to 95 percent loan to value. “They just lowered that to 85 percent. That was a big change,” says Matt Hackett, underwriting manager for Equity Now.
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Mortgage rates at 50 year lows
Rate Trend Index
This week (March 26 - April 1) the experts say: The likeliest outcome: Higher rates.
Last week, a little more than half of the panelists believed mortgage rates would fall over the next 35 to 45 days. Just 6 percent thought rates would rise, and 41 percent believed rates will remain relatively unchanged. This week, half of the panelists believe mortgage rates will rise over the next 35 to 45 days. The other half are split equally among those who think rates will fall and those who believe they will remain relatively unchanged (plus or minus 2 basis points). Percentages reflect all votes, and not the subset of voters who write comments.
Panel:
Up: 50% Down: 25% Unchanged: 25%
Despite last week’s massive rally in the bond market, mortgage-backed securities soon returned to the range we’ve seen them trading in for months now. Those who were well positioned to take advantage of the temporary dip in rates can be congratulated. However, it is impossible to time to the market. Interest rates remain very attractive and should be taken advantage of today when possible. What the Fed announcement did last week is extend the time period that rates will remain low. Please do not allow the talking heads on TV to convince you that this means rates will go down even further. Market conditions and capacity issues will prevent this.
Unchanged David Kuiper, mortgage planner, First Place Bank, Holland, Mich.
Mortgage rates will drift lower due to Fed purchases of Treasuries and mortgage-backed bonds.
Down Holden Lewis, senior reporter, Bankrate.com
Dude, when the mortgage hits a record low, it’s a pretty safe bet that it will be higher than that record low a few weeks hence. I mean, duh!Down Greg McBride, CFA, senior financial analyst, Bankrate.com
To see the experts’ comments click on the link below.
Rate Trend Index
Home prices rise for first time in a year On the heels of positive existing-home sales numbers, the Federal Housing Finance Agency reports that U.S. home prices jumped 1.7% in January. Is it too soon to call this a turnaround?br> By MarketWatch
U.S. home prices rose 1.7% in January compared with December, the Federal Housing Finance Agency reported Tuesday. It was the first monthly increase in a year.
Home prices were down 6.3% for the past year and were down 9.6% from the peak in April 2006, the FHFA said. In December, the year-over-year decline was 8.8%.
Falling home values have helped plunge the global financial system into chaos because of mortgage-backed securities. Homeowners have lost trillions of dollars of wealth.
December’s index, originally reported as a 0.1% increase, was revised down to a 0.2% decline.
“While this is certainly good news, in our view it is too soon to call a turnaround in the cycle,” wrote Charmaine Buskas, a senior economist for TD Securities. “We will have to see several consecutive months of improved prices before a true turnaround can be called, and a significant inventory overhang remains.”
For the full story click on the link below Home prices rise1=35000>
A ‘crazy complex’ credit for homebuyers
The federal stimulus law has sweetened the tax credit for first-time homebuyers, making it as much as $8,000. But deciphering the changes is far from easy.
By The Wall Street Journal
The recently enacted economic stimulus law contains an unusually attractive new tax break for many homebuyers — if only they can figure out how it works.
The new law sweetens a provision known as the first-time-homebuyer credit. In essence, if you meet certain qualifications, you may be eligible for a tax credit of up to $8,000. You also have a choice of claiming the credit on your federal income tax return for 2008 or 2009.
A credit is typically more valuable than a deduction because it eliminates your taxes on a dollar-for-dollar basis — and in this case, you may get it even if you don’t owe taxes.
But Congress made the homebuyer credit’s fine print so devilishly tricky that many Americans are likely to have to pay an expert for help in deciphering it.
“We’ve had numerous calls because people are confused,” says Claudia Hill, the owner of Tax Mam, a tax-services firm in Cupertino, Calif. “The problem is when things are this com
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FOR ALL YOUR LOCAL RATE AND MORTGAGE INFORMATION, CONSULT MELINDA POTCHER, MORTGAGE MAVEN. 505-259-6397, Melinda@TrinityMtg.biz
