What’s Ahead For Mortgage Rates This Week – July 6, 2015

Whats Ahead For Mortgage Rates This Week July 6 2015

Last week’s housing-related economic events included the Case-Shiller Home Price Index reports for April, the Commerce Department’s Pending Home Sales report and a report on Construction Spending. In other economic news, Non-Farm Payrolls, the ADP Employment report and Consumer Confidence reports were released. Freddie Mac’s mortgage rates summary and the weekly unemployment claims report were released as usual.

Case-Shiller: Home Price Growth Slows in April

The Case-Shiller 20-City Home Price Index reported that year-over-year home prices slowed in April with a reading of 4.20 percent as compared to the March reading of 4.30 percent. David M Blitzer, chairman of the S&P Dow Jones Indices Committee, said that home prices continue to grow, but are not accelerating. According to the 20-City Index, home prices rose 1.10 percent from March to April and were bolstered by the onset of the spring selling season.

The Department of Commerce reported that pending home sales increased to their highest level in more than nine years in May. Pending home sales were 10.40 percent higher than they were in May 2014, which is a further indication of a stronger housing sector. Analysts consider pending home sales as an indicator of future closings and mortgage originations.

Construction Spending Lower, Mortgage Rates Higher

Construction spending dipped in May to 0.80 percent as compared to April’s reading of 2.10 percent; analysts had expected a reading of 0.50 percent in May. The outstanding news is that construction spending for manufacturing building is up by 70 percent year-over-year in May. While not directly connected to housing, this reading suggests that manufacturers are expanding their businesses and will likely expand hiring as well. Concerns over the labor market have kept many would-be home buyers on the sidelines, but improved hiring reports and wage increases are expected to compel more buyers to enter the housing market.

Freddie Mac’s weekly Primary Mortgage Market Survey brought another increase in average mortgage rates; the average rate for a 30 year fixed rate mortgage rose six basis points to 4.08 percent. The average rate for a 15-year fixed rate mortgage rose by three basis points to 3.24 percent and the average rate for a 5/2 adjustable rate mortgage rose by one point to 2.99 percent. Discount points for a 30-year fixed rate mortgage dropped from 0.70 percent to 0.60 percent and were unchanged for 16-year fixed rate mortgages at 0.60 percent and 0.40 percent for a 5/1 adjustable rate mortgage.

Non-Farm Payrolls Lower; ADP Employment

The Bureau of Labor Statistics reported that Non-farm Payrolls dropped to a reading of 223,000 new jobs added as compared to expectations of 225,000 new jobs added and 254,000 new jobs added in May. The ADP employment report, which tracks private-sector hiring, fared better with 237,000 new jobs posted as compared to 203,000 new private sector jobs added in May.

Weekly Jobless Claims Rise to Highest Level in Five Weeks

New claims for unemployment reached their highest reading in five weeks with 281,000 new claims filed against expectations of 275,000 new claims filed and the previous week’s reading of 271,000 jobless claims filed. The four week rolling average of new claims filed showed an increase of 1000 more claims filed for a reading of 274,750 new claims filed. Analysts said that new jobless claims remained below the 300,000 benchmark for the 17th consecutive week.

The Commerce Department reported that the National Unemployment Rate was lower at 5.30 percent as compared to an expected reading of 5.40 percent and May’s reading of 5.50 percent. June’s national unemployment rate was the lowest reading since 2008 and is a good sign that labor markets are steadily if slowly improving.

No economic reports were released Friday due to the Fourth of July holiday.

3 Reasons Why the Lowest Mortgage Interest Rate Isn’t Always Your Best Option

3 Reasons Why the Lowest Mortgage Interest Rate Isn't Always Your Best Option One of the more common methods that home loan applicants use to find the best loan program available is to compare interest rates, but choosing the lowest rate possible is not always the best option available. In fact, in some cases, it may be one of the least advantageous options when all factors are considered. With a closer look, home mortgage applicants may decide to review other factors in combination with the interest rate to make a more informed decision when applying for a new loan.

The Closing Costs Impact The Rate

It is important to note that lenders can increase or decrease the interest rate with adjustments to closing costs, and this means that some of the lowest interest rates available may also have some of the higher closing costs. In some situations, choosing the lowest interest and paying more in closing costs is acceptable. However, a loan applicant should be aware of this and should compare interest rates along with closing costs in order to find the best loan program available.

The Loan Term Affects The Rate

Generally, a shorter loan term will have a lower interest rate. However, even with the lower interest rate, the mortgage payment may be higher due to the shorter term. A higher mortgage payment can impact affordability as well as loan qualification in some cases, and there are instances when the higher interest rate associated with a longer term is most desirable.

The Interest Rate May Adjust

Adjustable rate mortgages typically have lower interest rates than fixed rate mortgages, but the interest rate with an ARM may adjust higher in the future. For those who only plan to own the home or to retain the mortgage for a short period of time, this may be acceptable and even desirable. However, for those who plan to own the home or retain the mortgage for a longer period of time, the potential for a rate adjustment in the future may not be preferable.

For individuals who are shopping around to compare interest rates and to find the best deal on a mortgage, there may be a desire to opt for the lowest interest rate, but this is not always the best strategy. The interest rate can reflect many aspects of the loan, and each of these points should be analyzed to find the best loan program. A mortgage broker can provide assistance comparing loan terms and helping loan applicants determine which is the best solution for their needs.

Case-Shiller: Home Price Growth Slower in April

Case Shiller Home Prices San Francisco Denver see Double Digit Increases

According to the Case-Shiller 20-City Home Price Index for April, home prices slowed from the March reading of 4.30 percent year-over-year to 4.20 percent year-over-year. David M Blitzer, Chairman of S&P Index Committee, said that home prices are not accelerating and characterized slower home price growth as “sustainable as compared to double-digit appreciation in home prices seen in 2013.”

The disparity between wage increases and home price growth was keeping would-be-buyers on the sidelines; so slower gains in home prices may bring more buyers into the market.

Denver Claims Top Spot for Year-Over-Year Home Price Growth

Denver, Colorado led home price appreciation in April according to Case-Shiller. The mile-high city posted a reading of10.30 percent year-over-year home price growth in April. San Francisco, California followed closely with a reading of 10.00 percent. Miami, Florida rounded out the top three price gains with a reading of 8.80 percent.

The lowest reading for year-over-year home price growth in April was posted by Washington D.C. with a reading of 1.10 percent. This was followed by Cleveland, Ohio with a reading of 1.30 percent and Boston, Massachusetts with a reading of 1.80 percent year-over-year home price growth.

Of the nine cities reporting higher year-over-year price gains, Las Vegas Nevada reported a gain of 6.30 percent in April as compared to a gain of 5.70 percent in March. Las Vegas was one of the hardest-hit housing markets during the recession.

Seattle Tops Month-to-Month Home Price Growth

Month-to-month price gains in April were led by Seattle Washington, which reported a home price gain of 2.30 percent. This reading was followed by San Francisco, California where home prices increased by 2.00 percent from March to April.

Denver rounded out the top three month-to-month price gains with a reading of 1.90 percent. Boston, Massachusetts reported the lowest month-to-month price growth with a reading of 0.30 percent followed by New York City’s reading of 0.50 percent and San Diego, California’s month-to-month gain of 0.60 percent.

In unrelated reports, the Commerce Department reported that pending home sales rose to their highest reading in more than nine years. Pending home sales rose by 10.40 percent year-over-year in May. Pending home sales are seen as a reliable indicator of future closings.

Buying a New Home? 3 Tips for Being Approved for a Second Mortgage – and How to Manage It

Buying a New Home? 3 Tips for Being Approved for a Second Mortgage - and How to Manage It Applying for a second mortgage is a great way to keep your down payment amount to a minimum and to keep more of your cash in your bank account. It can also help you to avoid making PMI payments, and some lenders may even waive escrows for taxes and insurance if you use a second mortgage instead of a higher first loan amount. Whether you want to enjoy some or all of these benefits, you may be wondering what it takes to set up a second mortgage. With a focus on these tips, you can more easily get the financing structure that you desire.

Make Your Request Up-Front

Financial circumstances can change over the course of the loan process, but it is usually best to request a second loan up-front. A second mortgage will change how the first loan request is underwritten, and it may change the terms that you qualify for. In addition, there is often a different underwriting process for the second mortgage. By making both loan requests at the same time, you can save time and minimize the need to backtrack through underwriting.

Work With a Mortgage Broker

Some mortgage lenders will provide you with both a first and a second loan, but it is far more common for these two mortgages to come from different financial institutions. Some banks and direct lenders will only work with a handful of second loan companies, but a mortgage broker may be able to shop around to get the best overall deal on your second mortgage terms. Therefore, if you plan to apply for a second mortgage, there may be benefit with working with a mortgage broker.

Consider Paying Off Debts

You will need to qualify for both your first and second loans separately, but the payment for both will be considered during underwriting. If you have a high debt-to-income ratio, you may consider applying for a higher second mortgage to pay off some outstanding debt. You can work with your trusted lender or mortgage company to think creatively with regards to the best overall structure of your financing and to determine if any debts need to be paid off prior to or at closing.

A second mortgage provides you with many benefits when buying a home. Speak with your trusted loan officer or broker today regarding the options available for a second mortgage for your home buying plans.