Realty Times, September 1, 2006
McLEAN, VA -- Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey (PMMSSM) in which the 30-year fixed-rate mortgage (FRM) averaged 6.44 percent with an average 0.4 point for the week ending August 31, 2006, down from last week's average of 6.48 percent. Last year at this time, the 30-year FRM averaged 5.71 percent. This is the lowest the 30-year FRM has been since the week ending April 6, 2006, when it averaged 6.43 percent.
The average for the 15-year FRM this week is 6.14 percent, with an average 0.4 point, down from last week when it averaged 6.18 percent. A year ago, the 15-year FRM averaged 5.32 percent. This is the lowest the 15-year FRM has been since the week ending April 6, when it was 6.10 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) fell to 6.11 percent this week, with an average 0.5 point, down from last week's rate of 6.14 percent. A year ago, the five-year ARM averaged 5.30 percent. This is the lowest the five-year ARM has been since March 30, 2006, when it was 6.02 percent.
One-year Treasury-indexed ARMs averaged 5.59 percent this week, with an average 0.7 point, was down from last week when it averaged 5.60 percent. At this time last year, the one-year ARM averaged 4.48 percent. This is the lowest the one-year ARM has been since April 6, 2006, when it was 5.57 percent.
"Mortgage rates continued to drift lower this week in large part because of the cooling in the housing market and in consumer confidence, thus giving financial markets reason to believe that economic growth will moderate and inflation
will remain in check," said Frank Nothaft, Freddie Mac vice president and chief economist. "As a matter of fact, the 30-year FRM is nearly 40 basis points lower than its peak of 6.8 percent in July of this year."
"By some indicators, personal incomes are growing faster than the cost of housing. Combined with the still historically low mortgage rates, this will help to support the housing industry as it levels off from the record highs of the last few years."
02 September 2006
Most Buyers Begin by Looking on Web
Washington Times, September 1, 2006
By M. Anthony Carr
The latest buyer survey by the National Association of Realtors reveals that 80 percent of all buyers now begin their search online for real estate.
That's quite a surge in just a few years, when only about 7 percent of all buyers looked online when real estate and the Internet first met.
If any industry benefits the consumer online, it's real estate. There are millions of houses advertised online for buyers to peruse. They can view floor plans and watch video tours. It's all there, and it's free.
We take for granted what it takes to create such a system.
Today's electronic multiple listing service (MLS) began years ago on paper. Realtors across the country would turn in listings with a picture to the processing manager, who then handed them off to the local Realtor association.
Associations would then print up a book or cards and then hand-deliver them to real estate offices -- usually one per agent -- either weekly or biweekly. The MLS book was one of the most highly sought-after commodities in the Realtor's toolbox.
The MLS serves as a co-op between competing real estate agents so they can sell each others' listings.
The electronic MLS also starts and ends with these agents. Without the brokerages that gather data on millions of homes and pay billions in fees and programming costs, there would be no Internet-based real estate database.
There would be places online for homeowners to advertise their homes for sale, but there would not be a pure database, where buyers and sellers could come together with secure data updated daily.
I can't think of any other databases of homes for sale online that operate like the MLS.
The For-Sale-by-Owner-type Web sites are not databases. They are advertising, much like what you would find in a newspaper Web site.
Often, even after the property is sold, the ad for that property remains online for some time. Buyers don't really know if what they're clicking through is still on the market.
The Realtor-operated MLS systems are internally regulated. Agents can be fined for registering erroneous information or not updating information soon enough.
In fact, the information is so good that other Web site operators have taken aim at these online services. They want the information for their own sites.
NAR's Center for Realtor Technology has released two programs to help op "scraping" of the data by online predators.
"NoScrape" is a program that places the data into a rendering, or graphic file, from which data cannot be copied. Computers aimed at scraping data from real estate sites cannot strip the information from this type of Web page.
A second anti-piracy program is "reCaptcha," which "is a way to tell computers and humans apart and is based on CAPTCHA technology." CAPTCHA stands for Completely Automated Public Turing test to tell Computers and Humans Apart.
It identifies the party trying to access your site as a human or a computer program by generating questions that only a human can answer correctly. The reCaptcha program displays a distorted image of a word that a user must identify correctly and retype to gain passage to parts of the Web. This type of program is also used by financial, ticketing and Web log sites to ensure humans are using the site rather than computers.
By M. Anthony Carr
The latest buyer survey by the National Association of Realtors reveals that 80 percent of all buyers now begin their search online for real estate.
That's quite a surge in just a few years, when only about 7 percent of all buyers looked online when real estate and the Internet first met.
If any industry benefits the consumer online, it's real estate. There are millions of houses advertised online for buyers to peruse. They can view floor plans and watch video tours. It's all there, and it's free.
We take for granted what it takes to create such a system.
Today's electronic multiple listing service (MLS) began years ago on paper. Realtors across the country would turn in listings with a picture to the processing manager, who then handed them off to the local Realtor association.
Associations would then print up a book or cards and then hand-deliver them to real estate offices -- usually one per agent -- either weekly or biweekly. The MLS book was one of the most highly sought-after commodities in the Realtor's toolbox.
The MLS serves as a co-op between competing real estate agents so they can sell each others' listings.
The electronic MLS also starts and ends with these agents. Without the brokerages that gather data on millions of homes and pay billions in fees and programming costs, there would be no Internet-based real estate database.
There would be places online for homeowners to advertise their homes for sale, but there would not be a pure database, where buyers and sellers could come together with secure data updated daily.
I can't think of any other databases of homes for sale online that operate like the MLS.
The For-Sale-by-Owner-type Web sites are not databases. They are advertising, much like what you would find in a newspaper Web site.
Often, even after the property is sold, the ad for that property remains online for some time. Buyers don't really know if what they're clicking through is still on the market.
The Realtor-operated MLS systems are internally regulated. Agents can be fined for registering erroneous information or not updating information soon enough.
In fact, the information is so good that other Web site operators have taken aim at these online services. They want the information for their own sites.
NAR's Center for Realtor Technology has released two programs to help op "scraping" of the data by online predators.
"NoScrape" is a program that places the data into a rendering, or graphic file, from which data cannot be copied. Computers aimed at scraping data from real estate sites cannot strip the information from this type of Web page.
A second anti-piracy program is "reCaptcha," which "is a way to tell computers and humans apart and is based on CAPTCHA technology." CAPTCHA stands for Completely Automated Public Turing test to tell Computers and Humans Apart.
It identifies the party trying to access your site as a human or a computer program by generating questions that only a human can answer correctly. The reCaptcha program displays a distorted image of a word that a user must identify correctly and retype to gain passage to parts of the Web. This type of program is also used by financial, ticketing and Web log sites to ensure humans are using the site rather than computers.
Good Time to Shift as Rates Drop
Washington Times, September 1, 2006By Henry Savage
The advertisements are increasing. The media has picked up on it. The bloggers are talking about it. And yes, mortgage rates have dropped more than many of us realize.
After almost two years of gradually rising rates, there are signs that long-term mortgage rates may have ebbed. The 10-year Treasury bond, the best benchmark to gauge the direction of 30-year fixed-rate mortgages, is showing signs of a downward trend.
The question is whether the latest drop in rates is the beginning of a long-term trend or a mere blip.
On June 30, 2005, the 10-year Treasury bond yielded 3.94 percent. Since then, the yield has risen slowly, peaking on June 28 at 5.25 percent. Since then, the T-bond has dropped to 4.79 percent.
Likewise, 30-year mortgage rates have dropped, some would say significantly. Back in early July, refinancing with zero points and zero-closing-costs might carry a rate of 7.125 or 7.25 percent. Today, the same zero-closing-cost option has dropped to almost 6.50 percent.
In the old days when the consumer's only choice was to take a rate that carried thousands of dollars in points and closing costs, a 1/2-percent or 3/4-percent drop in rates would have little effect.
Today, with the zero-closing-cost option, even a 1/2-percent drop can save the homeowner some money. The principal and interest (P&I) payment on a $350,000 loan at 7.25 percent, for example, is $2,388 per month. At 6.75 percent, the P&I drops to $2,270, a difference of $118.
Whether saving $118 a month is significant depends upon how you look at it. Think of it this way: Shaving 1/2 a percent off your mortgage rate will buy you almost 40 gallons of gas every month at $3 a gallon. Now I have your attention.
Homeowners are beginning to respond to the drop in rates and the incessant stimuli provided by mortgage advertisers. The Mortgage Bankers Association recently reported that refinancings, while down more than 25 percent from the same period last year, are at a recent five-month high.
But it's not just the drop in long-term rates that's creating the rush to refinance. Adjustable rate mortgages (ARMs), as most folks know, have skyrocketed in recent months. ARM rates as low as 3 percent a few years ago have, or will soon be, adjusting to new fully indexed rate of somewhere between 7 and 8 percent, depending upon the ARM's index and margin.
The newest trend in the media is to warn homeowners carrying adjustable rates about the pending increase in rate and payment. These warnings should be heeded. The sharp acceleration in home values created a sharp demand for low-payment mortgages, such as ARMs, interest only programs, and the so-called "option ARMs."
My advice on what to do differs depending on the type of program you have. Let me try to summarize.
• Folks who are carrying a long-term ARM with an interest-only payment option: These are programs with a fixed rate for seven or more years that allows a low, interest-only payment. Compare your current rate with market rates. Since the rate is fixed for a significant period, you may not be in a rush to refinance unless the current rate is well above market rates.
• Folks holding an ARM that's due to be reset anytime within the next 48 months: My advice is to consider refinancing now, unless your plan is to sell prior to the rate adjustment. Rates may, indeed, fall more in the next few months, but there's certainly no guarantee. The recent drop in long-term rates, coupled with low- and no-closing-cost options, provide a window of opportunity.
• Folks carrying an option ARM who are making the minimum payment and negatively amortizing the loan: Negative amortization means that the minimum payment allowed doesn't cover the interest charged, thereby increasing the balance each month. These folks need to get out now, not necessarily because of the negative amortization feature, but because the rates on these programs are now well north of 7 percent. If you think you can't afford more than the minimum payment, speak with an experienced loan officer about a long-term interest-only program that carries a low rate.
Whatever your current situation, it certainly doesn't hurt to pull out your mortgage note and make sure that there are not products available in the market today that can improve your overall financial picture.
The advertisements are increasing. The media has picked up on it. The bloggers are talking about it. And yes, mortgage rates have dropped more than many of us realize.
After almost two years of gradually rising rates, there are signs that long-term mortgage rates may have ebbed. The 10-year Treasury bond, the best benchmark to gauge the direction of 30-year fixed-rate mortgages, is showing signs of a downward trend.
The question is whether the latest drop in rates is the beginning of a long-term trend or a mere blip.
On June 30, 2005, the 10-year Treasury bond yielded 3.94 percent. Since then, the yield has risen slowly, peaking on June 28 at 5.25 percent. Since then, the T-bond has dropped to 4.79 percent.
Likewise, 30-year mortgage rates have dropped, some would say significantly. Back in early July, refinancing with zero points and zero-closing-costs might carry a rate of 7.125 or 7.25 percent. Today, the same zero-closing-cost option has dropped to almost 6.50 percent.
In the old days when the consumer's only choice was to take a rate that carried thousands of dollars in points and closing costs, a 1/2-percent or 3/4-percent drop in rates would have little effect.
Today, with the zero-closing-cost option, even a 1/2-percent drop can save the homeowner some money. The principal and interest (P&I) payment on a $350,000 loan at 7.25 percent, for example, is $2,388 per month. At 6.75 percent, the P&I drops to $2,270, a difference of $118.
Whether saving $118 a month is significant depends upon how you look at it. Think of it this way: Shaving 1/2 a percent off your mortgage rate will buy you almost 40 gallons of gas every month at $3 a gallon. Now I have your attention.
Homeowners are beginning to respond to the drop in rates and the incessant stimuli provided by mortgage advertisers. The Mortgage Bankers Association recently reported that refinancings, while down more than 25 percent from the same period last year, are at a recent five-month high.
But it's not just the drop in long-term rates that's creating the rush to refinance. Adjustable rate mortgages (ARMs), as most folks know, have skyrocketed in recent months. ARM rates as low as 3 percent a few years ago have, or will soon be, adjusting to new fully indexed rate of somewhere between 7 and 8 percent, depending upon the ARM's index and margin.
The newest trend in the media is to warn homeowners carrying adjustable rates about the pending increase in rate and payment. These warnings should be heeded. The sharp acceleration in home values created a sharp demand for low-payment mortgages, such as ARMs, interest only programs, and the so-called "option ARMs."
My advice on what to do differs depending on the type of program you have. Let me try to summarize.
• Folks who are carrying a long-term ARM with an interest-only payment option: These are programs with a fixed rate for seven or more years that allows a low, interest-only payment. Compare your current rate with market rates. Since the rate is fixed for a significant period, you may not be in a rush to refinance unless the current rate is well above market rates.
• Folks holding an ARM that's due to be reset anytime within the next 48 months: My advice is to consider refinancing now, unless your plan is to sell prior to the rate adjustment. Rates may, indeed, fall more in the next few months, but there's certainly no guarantee. The recent drop in long-term rates, coupled with low- and no-closing-cost options, provide a window of opportunity.
• Folks carrying an option ARM who are making the minimum payment and negatively amortizing the loan: Negative amortization means that the minimum payment allowed doesn't cover the interest charged, thereby increasing the balance each month. These folks need to get out now, not necessarily because of the negative amortization feature, but because the rates on these programs are now well north of 7 percent. If you think you can't afford more than the minimum payment, speak with an experienced loan officer about a long-term interest-only program that carries a low rate.
Whatever your current situation, it certainly doesn't hurt to pull out your mortgage note and make sure that there are not products available in the market today that can improve your overall financial picture.
Future Home Demand Drops
Dow Jones Newswires, September 1, 2006
By Benton Ives-Halperin
A gauge for future home demand fell sharply during July, the largest monthly drop since the index was created, indicating that the rate of home sales will be leveling out a lower pace in the months ahead.
The National Association of Realtors' index for pending sales of existing homes decreased at a seasonally adjusted annual rate of 7.0% to 105.6 from June's 113.5, the industry group said Friday.
July's index level is the lowest since February 2003, when it was 99.3.
And July's index reading was 16.0% below the level of July 2005.
David Lereah, NAR's chief economist, said the year-to-year numbers have been a good predictor of the actual pace of home sales.
"Based on recent changes from a year ago, the index shows existing-home sales should continue to ease after a stronger-than-expected decline in July, but are likely to flatten in the months ahead," Lereah said in a statement.
By region, the index showed a 7.7% drop in the Northeast in July from June - and a 15.5% decrease since July 2005.
In the West, the index dropped 5.5% in July and 20.3% below a year prior.
The South fell 6.4% in July and was 11.3% below July 2005. The Midwest decreased 9.0% in July and was 20.1% below the level a year earlier.
Lereah attributed much of the drop in the July index to "psychological factors."
"We've never seen a general decline in the housing market against a healthy economic backdrop where jobs are being created, the economy is growing and interest rates are favorable," he said.
"Psychological factors are causing some buyers to remain on the sidelines, waiting for prices to stabilize or for more favorable news about the market and the economy...in the end we believe that underlying market fundamentals will prevail," Lereah added.
The NAR's pending home sales index was designed to try measuring the direction of the housing market in the future.
It is based on pending sales of existing homes, including single-family homes and condominiums. A home sale is pending when the contract has been signed but the transaction has not closed. Pending sales typically close within one or two months of signing.
By Benton Ives-Halperin
A gauge for future home demand fell sharply during July, the largest monthly drop since the index was created, indicating that the rate of home sales will be leveling out a lower pace in the months ahead.
The National Association of Realtors' index for pending sales of existing homes decreased at a seasonally adjusted annual rate of 7.0% to 105.6 from June's 113.5, the industry group said Friday.
July's index level is the lowest since February 2003, when it was 99.3.
And July's index reading was 16.0% below the level of July 2005.
David Lereah, NAR's chief economist, said the year-to-year numbers have been a good predictor of the actual pace of home sales.
"Based on recent changes from a year ago, the index shows existing-home sales should continue to ease after a stronger-than-expected decline in July, but are likely to flatten in the months ahead," Lereah said in a statement.
By region, the index showed a 7.7% drop in the Northeast in July from June - and a 15.5% decrease since July 2005.
In the West, the index dropped 5.5% in July and 20.3% below a year prior.
The South fell 6.4% in July and was 11.3% below July 2005. The Midwest decreased 9.0% in July and was 20.1% below the level a year earlier.
Lereah attributed much of the drop in the July index to "psychological factors."
"We've never seen a general decline in the housing market against a healthy economic backdrop where jobs are being created, the economy is growing and interest rates are favorable," he said.
"Psychological factors are causing some buyers to remain on the sidelines, waiting for prices to stabilize or for more favorable news about the market and the economy...in the end we believe that underlying market fundamentals will prevail," Lereah added.
The NAR's pending home sales index was designed to try measuring the direction of the housing market in the future.
It is based on pending sales of existing homes, including single-family homes and condominiums. A home sale is pending when the contract has been signed but the transaction has not closed. Pending sales typically close within one or two months of signing.
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