OK, rates have now officially hit a low point. They got this low for a few days in Dec of 2008 and Jan of 2009 before racing back up but have never been lower, at least not in my lifetime. Anyone with a fixed rate of 5.375% or higher should look into refinancing and soon. Also, 15 year rates are now lower than 4% and offer an incredible opportunity to pay off a home on an accelerated schedule. The biggest issue right now with refinances is declining home values. Many find themselves upside down and can't refinance. This is unfortunate but you touching base with past customers offering insight into what similar homes have recently sold for is immensely valuable to them and a great excuse for a touch-point for you. I have also attached a Refinance Worksheet that you can forward to anyone that may need to look at refinancing. Completing this and sending back to me enables me to create an estimate and send to them for their review and consideration. In addition, we will always do a refinance for our super referral sources at a discount as well!
Weak Economic Data + Low Inflation = Low Rates
The combination of weaker than expected economic data along with low inflation continues to keep mortgage rates super low. Worth noting, in recent weeks, investors have started modifying their consensus outlook to reflect weaker economic growth for the second half of the year. The Fed has also revised its forecast for 2010 economic growth lower as well. The manufacturing and retail sales data released last week reinforce this view.
Meanwhile, last week's CPI and PPI data continued to show that inflation is not a concern in the short-term. As you can see in the chart below, June Core CPI inflation increased at a very low .9% annual rate.
Tax Bills Now Out
The 2010 DeKalb and Gwinnett County tax bills have now been released. Since these are outstanding liens against the property, these bills will have to be paid at either a refinance or purchase closing. In addition, most of the MLS tax info will now be outdated so be careful to do your research and find out the 2010 info before you do any quoting. Also, expect Gwinnett bills to be higher as they now include sanitation fees as well. Here are the county websites to help you look up taxes as needed:
DeKalb County Property Taxes http://web.co.dekalb.ga.us/TaxCommissioner/tc-home.html#
Gwinnett County Property Taxes http://gwinnetttaxcommissioner.manatron.com/Tabs/ViewPayYourTaxes.aspx
Briefly
• Good news to report as last week the weekly Jobless Claims dropped to the lowest level since August 2008!
• Also last week, Congress passed the comprehensive Financial Regulations bill and President Obama is expected to sign it into law soon. The bill provides a framework for oversight of the financial services industry, and certain aspects of the bill will affect mortgage lending and the home buying process. The bill calls for various regulatory agencies, some of which will be newly created, to determine the details. Implementation of most of the new mortgage-related rules is expected to take 18 to 24 months to complete. This is scary stuff and could further hamper our ability to make loans.
• The U.S. House has voted to revamp the National Flood Insurance Program by increasing premiums, deductibles, and coverage while phasing out subsidies for vacation homes and for people living in flood-prone areas. The Senate will now take up the bill for the NFIP, which is saddled with debt due to billions of dollars of losses from Hurricane Katrina and population growth in flood zones and which has not been updated by Congress since 1994.
• Bad news to report as FHA published a notice this week that it plans to follow through on moves announced earlier this year to cap seller paid closing costs at 3% of the price of the home (down from 6%). The 3% cap has been in effect on Conventional loans with less than 10% down for some time. This is going to require buyers to come up with more money at closing, especially on lower priced homes.
Rate Update
It's official. Rates are now as low as they have ever been. Get the word out to everyone you know. We may never see this again!
The above rates are for purchase loans for a primary residence and are intended to give you an overall idea of how rates are changing from week to week. Other factors such as credit score, down payment, and number of days the rate is locked all contribute to the exact rate, which is subject to change at any time and without notification. The Conforming rates above apply to purchase loan sizes $150,000 - $417,000 and carry zero discount points. Rates for lower loan amounts are slightly higher. Lower rates are also available for all programs with discount points. Qualification is subject to credit and property approval and other restrictions may apply.
Looking Ahead
Its a slow week. Reports on Existing Home Sales and Leading Indicators are both due out on Thursday. Also on Thursday, the Treasury will announce the size of upcoming auctions.
Mortgage Updates are brought to you courtesy of James Williamson with Fairfield Mortgage.
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