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Aptos, California

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Mortgage Rate Outlook

Posted at Santa Cruz Real Estate by Lauren Spencer

Nov. 21, 2008

Tagged with: lauren spencer, market trend report, mortgage rate outlook, santa cruz real estate

October 31, 2008 --The overall cost of mortgage money, as gauged by HSH's Fixed-Rate Mortgage Indicator (FRMI), spiked 34 basis points (.34%) higher, making it the third consecutive week of at least a 30-basis-point movement in rates. However, the swings from week to week are becoming somewhat smaller; they've moved 40 basis points up, then 37 down, and now 34 up again. Five-one Hybrid ARMs jumped 11 BP, leaving the most popular alternative to the traditional 30-year fixed rate at 6.80%.

The price of a conforming 30-year fixed-rate mortgage nudged 33 basis points higher, while private-market 30-year Jumbo fixed rates finished the week at 7.90%.

There's plenty of negativity to go around these days, and October will finish as one of the most difficult months ever for financial markets. That said, the sheer volume of new programs put in place by regulators, as well as the attempts to re-liquify the financial markets by the Treasury and Federal Reserve, means that we may just be enduring the worst period at the moment, with better things to come.

There are encouraging signs here and there which get pushed out of the headlines, downplayed, or outright ignored. Take home sales, for example: last week, Existing Home Sales popped much higher than expected, only to have detractors claim that they would have fallen if not for discounted prices for foreclosures. That's equivalent of saying

"That store would have closed except for that big half-off sale!" The point here is that even good news -- in this case, that home sales are rising -- is too often treated with scorn.

Such was the case this week for sales of New Homes. The unexpected lift in sales to an annualized 464,000 in September was, in part, explained away by the 9% year-over-year decline in the cost of a new house. We prefer to focus on the fact that despite challenging financing conditions and a troubled economy, homes are being sold. Better yet, inventory levels are now well below the present rate of sale, and this in turn suggests that at least some life in the building trades may be coming before long.

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1. RE: Mortgage Rate Outlook

Written by: Peter

Dec. 23, 2008

"the sheer volume of new programs put in place by regulators, as well as the attempts to re-liquify the financial markets by the Treasury and Federal Reserve, means that we may just be enduring the worst period at the moment, with better things to come."

In a few years maybe, big maybe. Japan has still not recovered after a decade or more and we have more problems than they did. If the regulators don't stop trying to kick the problem down the road with these "solutions", the housing recession will take even longer to remedy. They need to sit back and let free markets decide which means lower and lower pricing of homes.

"That store would have closed except for that big half-off sale!" The point here is that even good news -- in this case, that home sales are rising -- is too often treated with scorn.

Selling homes is not an end in and of itself. People were led to believe real estate never goes down, bought at prices that were not fundamentally sound and now are eating their retirement and nest eggs. Certainly you can still sell, just keep lowering the price until someone buys it, but most people can't afford to do that.

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