Your weekly dose of San Jose Mortgage Rates, Real Estate Trends and top Economy news.
The week that was:
- Freddie Mac in its Primary Mortgage Market Survey® reported that the 30-year fixed-rate mortgage (FRM) averaged 4.93 percent with an average 0.7 point for the week ending February 18, 2010. The 5-year adjustable-rate mortgage (ARM) averaged 4.12 percent this week, with an average 0.5 point.
- The National Association of Realtors® (NAR) reported that existing home sales rose in 48 states and the District of Columbia between the third and fourth quarters of 2009; 32 states experienced double-digit growth.
- New home construction is also slowly improving. One-family housing starts rose to an annual pace of 484,000 homes in January, which is up almost 36 percent from January 2009, based on the U.S. Census figures. Moreover, homebuilder assessments of market conditions over the first half of 2010 improved in February, according to National Association of Homebuilders/Wells Fargo Housing Market Index.
- The Fed increased the discount rate to 0.75% from 0.50%. It in itself is not going to increase lending rates, but it once and for all signals the Fed is finished supporting banks and other recipients of government largesse.
The Week that will be:
- Jan housing statistics this week with new and existing home sales, both expected to have increased from Dec. The Dec Case/Shiller home price index also out.
- And there is more; two consumer sentiment indexes (the Conference Board’s consumer confidence index and the U. of Michigan consumer sentiment index).
Interest rates are headed higher, in a choppy pattern but up. As for any potential for a sizeable decline in rates; it will take a solid break in the equity markets which at this point doesn’t seem likely.
Your weekly dose of San Jose Mortgage Rates and Market Commentary.
The Week That Was:
- Freddie Mac in its Primary Mortgage Market Survey® reported that the 30-year fixed-rate mortgage averaged 5.01 percent with an average 0.7 point for the week ending February 4, 2010, up from last week when it averaged 4.98 percent. The 5-year adjustable-rate mortgage (ARM) averaged 4.27 percent this week, with an average 0.6 point, up from last week when it averaged 4.25 percent.
- Pending existing home sales rebounded by 1 percent in December from a record drop in November that was due in part to the original expiration of the homebuyer tax credit, according the National Association of Realtors®.
- More recently mortgage applications for home purchases jumped 10 percent at the end of January, according to figures from the Mortgage Bankers Association.
- The employment report dominated trade last week; once again the headlines don’t accurately reflect the true state of unemployment. 9.7% unemployed in Jan with non-farm job losses of 20K.
- Consumers continue to slow spending; Dec consumer credit fell again by $1.73B. The 11th month in a row consumer credit has declined.
Read more..
The Mortgage Rates for a 5 Year adjustable rate mortgage (ARM) sank to 4% (and lower in some cases)* yesterday for Bay Area homes. Freddie Mac average rates released on yesterday reported 5 Year ARM at 4.27% at 0.6 points. But the rate improvements later in the day has opened up great opportunities for home owners and First Time Home Buyers. This could be great news if:
- You already own a home but plan to move out by 2016.
- You are a First-Time Home buyer and would like to move up in next 5-6 years.
- You plan to pay off or substantially pay down your mortgage in the next 5 years.
Assumption for the chart: 30 Year Fixed rate at 5.25% and the 5 Year ARM at 4%.
On a 5 Year ARM loan, the rate remains fixed for first 5 years and may adjust after that to a higher rate. In the chart above you could save more than $16,000 in next 5 years on a $417,000 balance even after accounting for a small closing cost to refinance. On a $700,000 balance that number is a whopping $28,000 and for $300,000 it is $12,000. There are no cost refinances available as well.
Don’t get me wrong. 30 Year Fixed rate is still a great option if you want a stable rate mortgage and plan to live in the house for a longer term. And the 30 year fixed rate continues to be at a historically lowest levels in low 5s.
Call me at 408.905.6261 or email me at shashank@arcuslending.com if you would like a free evaluation of your mortgage to see if an ARM loan is right for you. Since I am a mortgage broker approved with more than 100 lenders, I can shop for the best rates for you.
* The rates are subjected to change any time without notice. Credit, Income, Equity and other eligibility required to qualify.
Related Post - Rates set to go up after March 2010
Some major changes went into effect today for FHA loans on San Jose & rest of the Bay Area Condominiums.
I. Elimination of “Spot Loan” Approval Process
If a condo project was not approved by FHA, a “spot approval” was allowed just for financing one unit. This process has been eliminated as of today. Now the entire project has to be approved either directly by HUD (process called HRAP) or by a Direct Endorsed Lender (process called DELRAP). With all the liabilities involved around the process most of the direct endorsed lenders would prefer HUD to directly approve the project. This can cause major delays at 2 ends:
- Collecting all the required documents from Home Owner’s association (HOA)
- HUD’s review of those documents to approve/reject the project
Dont be surprised if FHA loans on un-approved condominium projects take 60 days or more to close at least till the time HUD comes up with faster turn times or a more efficient process.
II. FHA Concentration Requirements
- The FHA concentration (Percentage of units which has FHA loans in a project) requirement will be increased temporarily to 50 percent.
- Exceptions to 50 percent Concentration Level - The FHA concentration may be increased up to 100 percent if the project meets all of the basic condominium standards plus some of the additional items.
III. Owner-Occupancy Requirements
- At least 50 percent of the units in a project must be owner-occupied or sold to owners who intend to occupy the units. For proposed, under construction, or projects still in their initial marketing period, FHA will allow a minimum owner occupancy amount equal to 50 percent of the number of presold units.
- Vacant or tenant-occupied real estate owned (REOs), including properties that are bank owned, may be excluded from the calculation of the required owner-occupancy percentage (should be removed from both the numerator and denominator).
IV. Pre-Sale Requirements
- In the case of new construction, the pre-sale requirement will be reduced temporarily to 30 percent.
As of today, 45 condominium projects are approved in San Jose. If you are a buyer or a seller and would like to know if a certain project is approved or not, call me at 408.905.6261 or email me at Shashank@ArcusLending.com
Also read - FHA is changing guidelines for condominiums
Your weekly dose of San Jose Mortgage Rates and Market commentary.
The Week that was:
- Freddie Mac reported in its Primary Mortgage Market Survey® that 30-year fixed-rate mortgage (FRM) averaged 4.98 percent with an average 0.6 point for the week ending January 28, 2010, down slightly from last week when it averaged 4.99 percent. The 5 year adjustable-rate mortgage (ARM) averaged 4.25 percent this week, with an average 0.6 point, down from last week when it averaged 4.27 percent.
- Q4 advance GDP was stronger than expected at +5.7% but will likely be revised lower when we get the preliminary revision next month.
- Treasury once again was able to get strong demand for $118B of notes sold last week.
- In my humble opinion, Obama’s State of the Union speech was more fluff than substance in the aftermath of voter rebellion in Massachusetts; cost cutting and more job growth help but not specifics.
The Week that will be:
- This is going to be employment week with Jan data coming on Friday.
- No Treasury borrowing this week, however, on Wednesday Treasury will announce the following week’s auctions for 3 yr notes, 10 yr notes and 30 yr bonds; likely about $80B in total.
Market volatility this week will likely be up a little with interday swings that will keep markets in check until the employment data on Friday morning.
If you are in the market to buy or refinance a San Jose home and want to find out how economy news can affect your mortgage rates call me at 408.905.6261 or email me shashank@arcuslending.com.
Some other related posts on Mortgage Rates - http://lendingexpertblog.com/blogs/?cat=44
