About Government Refinance and Home Purchase Programs

With the US Congress finally agreeing on a deal to avoid defaulting on US debts, demand for US bonds picked up again this week. As a result of that increased demand the yields on the 10 year T-note have been dropping and as usual mortgage interest rates are dropping as well. The upshot of it all is that rates on government-backed mortgages are very close to 50 year lows again this month.

But with so much uncertainty in the world economy right now there is no telling how long these low interest rates will be available. If you have considered refinancing your mortgage contact us in the sidebar this week to see if there are government-backed mortgage programs that could benefit your family.

If you are tracking mortgage interest rates here is a useful trick that could help. It is not widely known among the public, but mortgage interest rates tend to track to the yield on the 10-year treasury note. When the yield on the 10-year T-Note goes up mortgage interest rates tend to go up, and vice versa. So if you are wondering about mortgage interest rate trends a quick and easy way to gauge things is to look at the trends on the 10-year treasury notes. See here for an example of the last three months of that 10-year T-Note. Mortgage interest rates on 30 year fixed loans tend to be between 1.5% and 2.25% higher than the yield on this 10-year note. (Although that can vary depending on other market factors). Still in terms of macro trends on rates this is a useful tool.

As of this week yields on the 10-year note have been dropping for more than a month so interest rates have generally followed suit. That means now would be a great time to contact us in the sidebar to learn which government-backed mortgage programs might work for your family.

Mortgage interest rates began dipping again in recent weeks as bad news economic news has continued to surface. With the disappointing jobs numbers that came out recently and continuing economic struggles in Europe more and more investors have been fleeing to the relative safety of US bonds, which in turn has been lowering the yield on those bonds. As we have discussed in the past, when yields on the 10-year treasury note drop mortgage interest rates normally follow. The end result is that rates on conventional and government-backed mortgages are continuing to slowly drop this week.

Of course such trends are always temporary so contact us in the sidebar this week if you have considered a refinance. With the debates over the debt ceiling still raging in Washington DC there is no telling how long it will be before rates move higher again.

The short answer to this question is: Not much so far. Mortgage interest rates on government-backed and conventional loans have remained near historic lows over the last few weeks as demand for the 10 year T-Note remains high and thus the yield remains low. But if a deal is not reached between Congress and the White House by August 2nd it is feasible that the demand for US bonds will dry up and that in turn could lead to a spike in interest rates.

If you have been considering locking in a lower rate on your mortgage it might be safest to lock in your rate soon. There is a lot riding on the debates between the GOP and the Democrats right now in Washington. All sides seem to believe a deal will get done but in the off chance it doesn’t rate could potentially go significantly higher in August. Contact us in the sidebar for more information on refinance programs that might apply to you.

There was a pretty good article over on Foxbusiness.com with some housing market predictions for the second half of 2011. One of the predictions that we think is likely is that while mortgage interest rates are likely to remain low by historical standards, they are unlikely to remain as low as we have seen in the recent dip that has from May to June. In fact, in the last week of June we already saw a small sell off in bonds which caused mortgage interest rates to start rising again for the first time since April. We expect that rates will rise somewhat in the coming months for all mortgage types, including government-backed mortgages.

If you have been rate watching as you consider a refinance now is probably a good time to contact us in the sidebar to learn which programs might work for you and to get some estimates put together.

Here is a quote from that article mentioned above:

Mortgage rates are near record lows, but some mortgage experts say the party won’t last long as they expect rates to climb in the next few months. They don’t foresee a major spike, but rather an adjustment to bring them back to “normal” levels.

Have mortgage interest rates already bottomed out? That is the question as we head into the summer of 2011. The bad economic news that has been appearing lately has not been all bad. As the stock market has staggered in recent weeks demand for bonds has increased. That in turn has compressed yields on bonds which has further compressed mortgage interest rates across the board. As a result mortgage interest rates are again approaching all time lows.

If you have considered refinancing to a lower interest rate or would just like to lower your mortgage payments now is a great time to do some research. Contact us in the sidebar to get more information on the various government-backed mortgage programs available.

New reports out are suggesting that housing prices in the US might not see a bounce back until 2014. Here is an excerpt from the recent HousingWire article on the subject:

A lack of demand may keep house prices from a consistent rise until 2014, according to analysts at Capital Economics.

Home prices double-dipped in the first quarter, according to the Standard & Poor’s/Case-Shiller index. While other indices measured some improvement since, analytics firm Altos Research forecasted an up-and-down market for some time. In the near term, Capital Economics said foreclosure sales should keep house prices down 3% in 2011, resulting in another 5% for the year as a whole.

Easing the flow of foreclosures on the market may stabilize prices to 35% below the peak in 2006.

“But while prices tend to rise rapidly in the years after downturns, this time a chronic lack of demand means that they will probably be unchanged in both 2012 and 2013,” Capital Economics said.

The upshot of that is that if you were thinking about selling your home as soon as housing prices bounced back you are probably going to have to wait a few years before that happens. With that in mind, it might make sense to consider refinancing into a lower rate mortgage now while rates are flirting with all time lows.

Contact us in the sidebar to learn more about the programs that are available.

After increasing for much of April interest rates on government-backed mortgages have been decreasing again for a several weeks and are now approaching new lows for the calendar year. Interest rates tend to track the 10 year treasury note so recent decreases in 10 year treasury yields have translated into 30 year mortgage rates below 5% in the last couple of weeks. Mortgage interest rates are volatile though so there is no telling how long this current dip will last.

Here is a quote from a recent WSJ article on this topic:

The average rate on the 30-year mortgage matched its lowest level since mid-January this week, according to Freddie Mac’s weekly survey released Thursday. …

“Weaker economic data reports reduced Treasury bond yields and allowed mortgage rates to drift lower for the third consecutive week,” said Frank Nothaft, vice president and chief economist at Freddie Mac, in a news release. “For instance, real economic growth in the first quarter fell short of the market consensus forecast and represented the slowest pace since the second quarter of 2010. In addition, both the manufacturing and service sectors exhibited growth at a slower rate in April.”

If you have an interest rate that is higher than you want contact us in the sidebar to see which programs might apply to your family.

The heads of Fannie Mae and Freddie Mac have recently indicated they are not high on the idea of principal write downs at all. This should come as no surprise to anyone. The problem with principal write-downs is that they are a Pandora’s Box for banks and investors. If lenders started forgiving principal for borrowers they would open a massive flood that could bury them. There are millions of underwater homeowners in the US. The majority of those homeowners are not willing to consider walking away from their homes. A foreclosure or short sale severely damages credit scores and that is something most borrowers would like to avoid. The banks benefit greatly from this fact. If banks and investors started offering principal write-downs they would certainly be overrun with requests and would have to deal with billions of losses that they currently are avoiding.

So while politicians like to make noise about principal reductions, banks and investors like Fannie and Freddie will continue to show zero interest in the concept in most cases.

However there are several refinance programs available that do help families. Contact us in the sidebar to learn more about those.

After slowly rising for more than four straight weeks interest rates on government-backed and conventional mortgages finally dipped again over the last week or so. The dip in rates is a welcome development to folks looking into refinancing. Rates on mortgages largely track the the yields on the 10 year treasury bond and with the recent dip in the stock market, yields on the 10-yr note have dropped as well. If you have been thinking about refinancing to a lower interest rate contact us in the sidebar right away to learn more about the programs available. Drops in interest rates sometimes don’t last long so now might be a good time to lock in a better rate than you currently have.

The FHFA, the organization responsible for the Home Affordable Refinance Program (HARP) recently announced that the HARP program will be extended another year and is now set to expire June 30, 2012 rather than that same date this year.

The HARP program is designed to help people with conventional mortgages backed by Fannie Mae or Freddie Mac refinance to lower interest rates even if the value of their homes have dropped. With a HARP loan a conventional mortgage can be refinanced at up to 125% of the current value of the home. This is obviously useful to people who are underwater on their mortgages, but the program is also very useful to people who owe 80-100% of the current value of their home because with the HARP program borrowers can refinance to a lower Fannie/Freddie loan without having to add mortgage insurance.

Contact us in the sidebar to learn which programs will best assist your family.

Thanks to the efforts of the federal government mortgage interest rates are still near historic lows. But over the last week or two rates have begun inching upward again. This may, ironically, be partially due to the positive employment news that has been surfacing recently.

The good news is that rate are only inching higher lately rather than rocketing higher. It is inevitable that we will eventually see 30-year mortgage rates at more than 6% like we saw just a few years ago — it is only a question of how long before that happens. When rates increase like that many people with adjustable rate mortgages will see their payments go up by hundreds of dollars per month. But in the meantime rates are still very low.

If you have an adjustable rate mortgage or if you have a fixed rate mortgage that is higher than you want, contact us in the sidebar right away before interest rates get much higher. One of our counselors can point you in the right direction to take advantage of the government-backed refinance programs that are available.