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Mortgage Payments Fall To All-Time Lows

June 12, 2012 by Jeff Cost

Mortgage payments

It’s a money-saving time to be a Columbus home buyer. Historically, mortgage rates of all types — conventional, FHA, VA and USDA — have never been lower and low mortgage rates make for low monthly payments.

According to Freddie Mac’s weekly mortgage rate survey, the average 30-year fixed rate mortgage fell to 3.67% nationwide last week for borrowers willing to pay 0.7 discount points at closing, plus a full set of closing costs. 0.7 discount points is a one-time closing cost equal to 0.7 percent of your loan size, or $700 per $100,000 borrowed.

Today’s mortgage rates are a bargain as compared to just 1 year ago.

In early-June 2011, the average 30-year fixed rate mortgage nationwide was higher by 88 basis points, or 0.88%. If you are among the many U.S. homeowners who bought or refinanced a home around that time, refinancing to today’s mortgage rates could save you 10% or more on your payment.

Home buyers have measurably more buying power, too.

Here is how mortgage payments on a typical 30-year fixed rate mortgage have changed in 12 months :

June 2011 : $509.66 principal + interest per $100,000 borrowed
June 2012 : $458.59 principal + interest per $100,000 borrowed

Setting the math to a real-life example, a homeowner whose $350,000, 30-year fixed rate mortgage dates to last June would recognize monthly savings of at least $179 per month just by refinancing into a new 30-year fixed rate mortgage at today’s current levels. That’s more than $2,145 in payment savings per year.

Even after accounting for the required loan discount points and closing costs, the “break-even point” on a refinance like that can come quickly.

Mortgage rates have been dropping but there’s no promise they’ll fall forever. Once rates reverse higher, they’re expected to rise sharply. Therefore, if you’re planning to buy a home or refinance one in Ohio , consider locking in a mortgage rate while mortgage rates are low.

The market looks good for that today.

What’s Ahead For Mortgage Rates This Week : June 11, 2012

June 11, 2012 by Jeff Cost

Spain Bailout USD$125 billion Mortgage markets worsened last week, halting a multi-week mortgage rate winning streak in Ohio and nationwide. With little economic news on which to trade, investors took their cues from the world’s central banks.

Fed Chairman Ben Bernanke neither dismissed nor promised new market stimulus in the near future, nor did leaders in the Eurozone. China, however, did cut its interest rates for the first time since the start of the global financial crisis.

Conforming mortgage rates edged higher amid a series of volatile trading sessions. Mortgage bonds moved more sharply as compared to prior weeks and analysts expect volatility to continue.

Last week, the biggest story was the ongoing deterioration of confidence within the Eurozone. While Greece continues to struggle under its national debt load, Spain emerged as the area’s newest bailout candidate. Then, on Saturday, the bailout was confirmed.

In seeking up to 100 billion euros ($125 billion), Spain becomes the fourth European Union nation to seek bailout funds since the debt crisis began nearly three years ago.

The Spain bailout temporarily overshadows investor concern for Greece and the nation-state’s June 17 election.

Sunday, the citizens of Greece will vote to elect a new government, the outcome of which may determine whether Greece remains a member of the European Union. If Greece leaves the EU, it would likely make a negative impact on equities markets, and would benefit U.S. mortgage rates.

This week, mortgage markets will take their cues from the political and economic developments abroad. Initially, investors are looking favorably upon the Spain resolution, and mortgage rates are rising as a result. As the Greek election nears, however, that trend may change.

With little or no data set for release, this week’s mortgage rates are subject to investor sentiment. Expect volatility.

Phoenix Leads Annual Home Price Gains, According To Case-Shiller Index

June 8, 2012 by Jeff Cost

Case-Shiller Index

Standard & Poors released its March 2012 Case-Shiller Index last week. The index is meant to measure changes in home prices from month-to-month, and from year-to-year, in select U.S. cities.

According to the report, home values rose in 12 of the Case-Shiller Index’s 20 tracked markets, and one market remained unchanged.

Of the Case-Shiller markets, Phoenix, Arizona posted the largest one-year gain, climbing 6.1 percent. Atlanta, Georgia posted the largest one-year loss. Values falling more than seventeen percent there year-over-year.

Overall, the Case-Shiller Index was relatively unchanged in March as compared to the month prior, but down nearly 3 percent on an annual basis. Nationwide, says Standard & Poor’s, home values are back to the levels of late-2002.

Don’t be overly concerned, however. Though widely-cited, the Case-Shiller Index is a flawed and misleading metric. It’s methodology almost guarantees it.

The first flaw in the Case-Shiller Index is its limited geography. Despite there being more than 3,100 municipalities nationwide, the Case-Shiller Index tracks just 20 of them. They’re not the 20 largest ones, either. Houston, Philadelphia, San Antonio, San Jose are specifically excluded from the Case-Shiller Index and each is among the Top 10 Most Populous Cities in the United States.

Minneapolis (#48) and Tampa (#55), by contrast, are included.

The Case-Shiller Index’s second flaw is that only tracks the sales of single-family, detached homes. Sales of condominiums and multi-unit homes carry no weight in the index whatsoever — even in cities such as Chicago and New York in which condos can account for a large percentage of the overall real estate market.

And, lastly, when the Case-Shiller Index is published, it’s published on a two-month delay. Buyers and sellers in Cincinnati don’t need housing data from two months ago — they need data from today. The Case-Shiller Index tells us what housing was, in other words. It doesn’t tell us how housing is.

Buyers and sellers need real-time, actionable information. You can’t get that from the flawed Case-Shiller Index. For more accurate, relevant real estate data, talk to your real estate professional instead.

Mortgage Payments Fall To All-Time Lows

What’s Ahead For Mortgage Rates This Week : June 11, 2012

Phoenix Leads Annual Home Price Gains, According To Case-Shiller Index

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