Archive for September, 2010
Existing Home Sales rebounded last month after a lackluster July. New Lake Geneva Real Estate Home Sales data, by contrast, did not.
After an upward revision to July’s data, New Home Sales remained unchanged at 288,000 units in August. It marks the second-lowest number of units sold in a month since 1963, the year government started its record-keeping.
At the current pace of sales, the newly-built home inventory would be depleted in 8.6 months.
The August New Home Sales was weaker-than-expected, but both Wall Street investors and Main Street economists are shrugging it off. The numbers were foreshadowed by weakening housing figures from earlier this summer.
- Building Permits dropped between March and June
- Housing Starts dropped between April and July
- Homebuilder confidence continues to sag
Together, these three data points suggest that the market for new homes will be soft through at least this month.
With New Home Sales fading and colder months ahead, it may be an opportune time for home buyers of Lake Geneva real estate to look at new construction. Builders are eager to move inventory and the cost of materials remains low.
Buying “new” may never be cheaper — especially with mortgage rates as low as they are. The 0.750 percent drop in rates since January has shaved $188 off of a $200,000 mortgage’s monthly cost. That’s $2,250 per year in savings.
As home supplies dwindle and mortgage rates rise, finding “great deals” in new construction will undoubtedly get tougher. Take advantage of today’s market conditions, combined with builder pessimism. It may be the right combination at the right time to get that new home for cheap.
Lake Geneva mortgage markets improved last week as markets digested a bevy of data from the housing sector, plus the scheduled Federal Open Market Committee meeting.
In back-and-forth trading, conforming Lake Geneva mortgage rates bottomed out Wednesday before rising through Friday’s afternoon close. Rates still managed to eke out improvement on the week overall.
According to Freddie Mac, Lake Geneva real estate mortgage rates remain near their lowest levels of all time.
Despite low rates, however, rate shoppers are finding it a challenge to lock the “best price.” This is because Wall Street is conflicted about the future of the U.S. economy and, as a result, mortgage pricing has been extra volatile.
For as much data that points to economic growth, there are numbers that suggest a pullback, too. Traders are undecided in either direction and mortgage pricing reflects it. It’s not uncommon for mortgage rates to vary by as much as 3/8 percent in a given week.
This week, without much new data due for release, prepare for even swifter swings in Lake Geneva rates. In the absence of “numbers,” momentum- and trend-trading should amplify the market’s normal drops and spikes.
A sampling of the week’s economic data includes Tuesday’s Consumer Confidence report and Case-Shiller Index, Thursday’s Jobless Claims and Gross Domestic Product data, plus Friday’s consumer income and spending figures.
Notably missing from the week’s economic calendar is the jobs report which is typically issued on the first Friday each month. The release is delayed a week to October 8.
If you’re still floating a Lake Geneva mortgage rate or have yet to commit to a refinance, consider that mortgage rates are primed to rise. They’ve been falling for 22 weeks and when the market turns, it’s expected to turn quickly.
Talk to me about your refinance options while mortgage rates are still low.
Sales of existing homes in recovered in August, perhaps the result of a post-tax credit normalization.
As compared to July, Existing Home Sales rose 8 percent in August, buoyed by falling interest rates and slow-to-rise home prices. There’s lot of “good deals” out there and home buyers of Lake Geneva real estate are taking advantage.
The housing gains are relative, however. August’s total units sold barely crossed 4 million and still trails the average figures of the last few years by close to 1 million units.
Despite that, the August Existing Home Sales report can be considered a strong one. This is for several reasons:
- Sales volume increased in August without tax credit or government intervention
- Sales growth is not limited by geography. All 4 regions — Northeast, Southeast, Midwest, and West — showed improvement last month.
- Repeat buyers are driving the market, representing 48 percent of sales, up from forty-three percent in July.
And, perhaps most important to the housing market market, the number of available home resales dropped by almost one full month last month. At the current sales pace, the national inventory would be depleted in 11.6 months.
For Lake Geneva home buyers, the data presents an interesting opportunity. With average Lake Geneva mortgage rates rising from their best levels ever and home affordability cresting , this autumn may represent the turn-around point for the housing market nationwide.
If you’re planning to move in early-2011, consider moving up your time frame.
Today, in its 7th meeting of the year, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged.
The Fed Funds Rate remains at a historical low, within a Fed’s target range of 0.000-0.250 percent.
In its press release, the FOMC said that the pace of economic recovery “has slowed” in recent months. Household spending is increasing but remains restrained by high levels of unemployment, falling home values, and restrictive credit.
For the second straight month, the Federal Reserve showed less economic optimism as compared to the prior year’s worth of FOMC statements dating back to June 2009. However, the Fed still expects growth to be “modest in the near-term.”
This outlook is consistent with recent research showing that the recession is over, and that growth has resumed — albeit at a slower pace than what was originally expected.
The Fed also highlighted strengths in the economy:
- Growth is ongoing on a national level
- Inflation levels remain exceedingly low
- Business spending is rising
As expected, the Fed re-affirmed its plan to hold the Fed Funds Rate near zero percent “for an extended period.”
There were no surprises in the Fed’s statement so, as a result, the mortgage market’s reaction to the release has been neutral. Lake Geneva mortgage rates in Wisconsin are thus far unchanged this afternoon.
The FOMC’s next meeting is a 2-day affair scheduled for November 2-3, 2010.
The Federal Open Market Committee adjourns from its 6th scheduled meeting of the year today, and 7th overall.
Upon adjournment, Federal Reserve Chairman Ben Bernanke will release a formal statement to the market. In it, the Fed is expected to announce “no change” to the Fed Funds Rate.
Currently, the Fed Funds Rate is within a target range of 0.000-0.250 percent. It’s been at this same level since December 2008.
Note that the Feds Funds Rate is not “a mortgage rate” — nor is it a a consumer rate of any kind. The Fed Funds Rate is a rate that defines the cost of an overnight loan between banks. And, although the Fed Funds Rate has little direct consequence to everyday Lake Geneva real estate homeowners, it is the basis for Prime Rate, the interest rate on which most consumer cards are based, plus many business loans, too.
Therefore, because the Fed Funds Rate won’t change today, neither will credit card rates. Mortgage rates, however, are a different story. Lake Geneva mortgage rates should change today — regardless of what the Fed does.
It’s more about what the Fed says.
In its statement, the Federal Reserve will highlight strengths and weaknesses in the economy, and threats to growth over the next few quarters. Depending on how Wall Street interprets these remarks, Lake Geneva real estate mortgage rates may rise or fall.
If the Fed’s comments signal better-than-expected growth, bond markets should lose and mortgage rates should rise. Conversely, if the Fed’s comments signal worse-than-expected growth, mortgage rates should fall.
If you’re actively shopping for a Lake Geneva mortgage, it may be prudent to lock your rate ahead of the Fed’s announcement today. The Fed adjourns at 2:15 PM ET. Call me to lock your rate.
The Fed meets 8 times annually.
Lake Geneva mortgage markets were highly volatile, yet relatively unchanged last week in back-and-forth trading on Wall Street. Global investors are grappling with the state of U.S. economy and unable to discern whether it’s growing, or slowing.
As an real-world illustration, the government’s August Retail Sales report showed strong growth nationwide. However, in looking at a subset of that same data that accounted for rising gas prices, and excluded automotive-related sales, the results were far more tame.
In other words, despite the winning headlines, there was no clear conclusion in August’s Retail Sales.
As another example, consumer confidence dropped to its lowest level since August 2009, it was reported last week. Now, on most days, this statistic would lead Lake Geneva mortgage rates lower, but the figures happened to be offset by improving employment report that suggests a looming jobs recovery.
Again, markets got confused and without clear direction, Lake Geneva mortgage rates have been dancing.
Last week, conforming rates carved out a range close to 0.375 percent, making it difficult for Lake Geneva real estate rate shoppers to zero-in on pricing. 30-year fixed rates worsened, 15-year fixed held steady, and ARMs improved overall.
This week, expect rates to be equally jumpy. There’s a lot of housing data due for release and the Federal Open Market Committee is meeting.
- Monday: Homebuilder Confidence Survey
- Tuesday: Housing Starts, Building Permits, FOMC Meeting
- Wednesday: FHFA Home Price Index
- Thursday: Existing Home Sales
- Friday: New Home Sales
That’s one housing-related release per day, and a Federal Reserve meeting to boot. Today’s low rates could be vanished by Friday.
Therefore, if you haven’t already, it may be time to contact me for a refinance. Rates could certainly fall further, but they’re looking more likely to rise.
Is it better to rent a Lake Geneva home, or to buy one? The answer may not be as clear-cut as you think. In this balanced, 3-minute joint interview from NBC’s The Today Show, you’ll hear the case for both sides.
From the pro-renting part of the talk, there’s valid points about the economic impact of low credit scores and/or no cash for downpayment, and the ongoing, annual cost of home maintenance — estimated at 2% of a home’s value. Plus, renters have the ability to “follow a job” to a new town or region whereas a homeowner may be restricted, somewhat.
From the pro-purchase part, however, there’s excellent points that were made, too:
- Lake Geneva mortgage rates are low and each 1% drop to rates equates to a 9% drop to home price.
- Buyers can zero in on a particular area with particular schools or walkability, for example, better than renters.
- A home can a piggybank over the long-term; a place for “forced savings” for families that want it
The segment then closes with 5 of the best cities in which to rent, and 5 of the best cities in which to buy.
Whether buying or renting, don’t try to go at it alone. There’s lot of resources online, and an email to a local real estate or mortgage pro can set you in the right direction.
The recent rise in Lake Geneva mortgage rates was slowed this week after the government released its Retail Sales report for August.
Prior to Tuesday, mortgage rates had been spiking across Wisconsin on the resurgent hope for U.S. economic recovery. The sentiment shift was rooted in reports including the Pending Home Sales Index and Initial Jobless Claims, both of which showed surprising strength last week.
August’s Retail Sales, though, after removing motor vehicles, auto parts and gasoline sales, failed to maintain the momentum. Its figures were actually in-line with expectations — it’s just that expectations weren’t all that high.
Wall Street now wonders whether the weak Back-to-School shopping season will trend forward into the holidays.
The doubt spells good news for Lake Geneva mortgage rates and home affordability.
Because Retail Sales is tied to consumer spending and consumer spending accounts for two-thirds of the economy, a weak reading tends to drag down stock markets and pump up bonds, and when bonds are in demand, mortgage rates fall.
This is exactly what happened Tuesday. The soft Retail Sales data eased stock markets down, and generated new demand for mortgage bonds. This demand caused bond prices to rise, which, in turn, caused mortgage rates to fall.
Lake Geneva real estate mortgage rates did not cut new lows this week, but they’re very, very close.
With mortgage rates at historical lows, it’s an excellent time to look at a refinance, or gauge what financing a new home would cost. Low rates like this can’t last forever.
Want a lower mortgage rate on your upcoming Lake Geneva real estate home buy? Think about moving up the closing date.
The reason is rooted in “rate locks,” a bank’s guarantee to honor a specific mortgage rate for a specific, finite period of time. Rate locks allow home buyers to reserve mortgage rates today even though their respective closings may be scheduled as far as a year into the future.
A rate lock is a contract. No matter what the “current market rate” is at the time of closing, the bank will honor the terms of the original rate lock.
It would be like making an agreement to buy Microsoft stock at a specific price 60 days from now. No matter what the price, you already know what you’re paying for it.
In this sense, rate locks are predictions about the future and, meanwhile, as we all know, the future can be a challenge to forecast. Lenders know this, too, of course, so it’s easy to understand why longer rate locks tend to be more expensive than shorter ones.
The longer the rate lock, the more risk to the bank.
To compensate for this “time risk,” therefore, lenders typically step-up pricing for rate lock guarantees as lock period lengthen.
- 15-day rate lock: The best of all pricing
- 30-day rate lock: 1/8 percent extra cost versus the 15-day rate lock
- 45-day rate lock: 1/4 percent extra cost versus the 15-day rate lock
- 60-day rate lock: 3/8 percent extra cost versus the 15-day rate lock
One percent of “extra cost” is defined as one percent of the borrowed amount.
Now, this incremental price chart is just a rough guideline; exact spreads vary from lender-to-lender. Overall, however, it’s fairly close.
That’s why it’s important to manage your closing date vis-a-vis your Lake Geneva mortgage rate. Closing in 30 days versus 31 can save you an eighth-percent in closing costs. Assuming a loan size of $200,000, that’s $2,500 saved.
So, when negotiating a closing date on a contract, keep in mind the math of mortgage rate locks. The shorter its length, the more money you might save.
When Lake Geneva adjustable-rate mortgages are on the verge of adjusting, a common concern among homeowners is that their mortgage rates will adjust higher.
Well, this year, because of the math of how ARMs adjust, homeowners of Lake Geneva real estate and around the country are seeing that mortgage rates on ARMs can sometimes adjust lower, too.
Adjusting conforming mortgages are adjusting to as low as 3 percent.
As a quick review, here’s the timeline for most conforming adjustable-rate mortgages:
- There’s a “starter period” in which the interest rate remains fixed. This can range from 1-10 years.
- There’s a rate change after the starter period. It’s called the “first adjustment”.
- Subsequent, annual adjustments follow until the loan “ends”. This is usually after Year 30.
The adjustments each year are based on a math formula that’s included in the contract with your lender. It’s surprisingly basic. Each year, your new, adjusted mortgage rate is equal to the sum of some constant — usually 2.25 percent — and some variable. The variable is most commonly equal to the 12-month LIBOR.
As a formula, the math looks like this:
(Adjusted Mortgage Rates) = (12-Month LIBOR) + (2.250 Percent)
LIBOR is an acronym standing for London Interbank Offered Rate. It’s an interest rate at which banks borrow money from each other — very similar to our Fed Funds Rate here in the United States. And also like our Fed Funds Rate, LIBOR has been low lately.
As a result, adjusting mortgage rates have been low, too.
In 2009, 5-year ARMs adjusted to 6 percent or higher. Today, ARMs are adjusting to 3.000%.
Based on the math, you may want to let your ARM adjust with the market year. Or, if you plan to keep your home long-term and have concerns about adjustments in 2011 and beyond, it may be a good time to open a new ARM. The same forces that are driving down LIBOR and helping to keep Lake Geneva mortgage rates low overall, too.
Consider talking to me and making a plan. With Lake Geneva mortgage rates as low as they’ve been in history, most homeowners have options. Just don’t wait too long. LIBOR — and mortgage rates in general — are known to change quickly.