Mortgage applications rose 8.1% and refinancing applications surged. The 30-year fixed rate mortgage fell 15 basis points to 5.98% last week which was the lowest since October 2005.
Home builder stocks rose on the data which was further fueled by a Toll Bros., the luxury home builder. Report that they anticipate a market bottom. Additionally, Citigrop upgraded the home builder stock sector.
Good news for those applying for mortgages. Mortgage rates sunk to 6.18% with the benchmark 3-year fixed rate mortgage indicator, ending November 22. The rate had been 6.24% one week earlier and a year ago it stood at 6.8%.
Applications for new home buyers slid 2.8% and applications for all mortgages fell 3.7% for the week of November 17th.
“Mortgage borrowers continue to refinance their mortgages at a higher frequency than historically would have occurred given the rise in mortgage rates over this year,” said Frank Nothaft, Freddie Mac vice president and chief economist.
“But the wide proliferation of adjustable-rate mortgages (ARMs) originated in the past few years that are nearing their first interest-rate adjustment provides borrowers an incentive to refinance into a lower-cost ARM or fixed-rate mortgage. In addition, borrowers who might have considered a prime rate home equity loan for a home improvement or other need are turning to cash-out refinance options now that the prime rate is above 8 percent.
The Cash-Out Refinance Report also revealed that properties refinanced during the third quarter of 2006 experienced a median house-price appreciation of 33 percent during the time since the original loan was made, down from a revised 34 percent in second quarter 2006. For loans refinanced in the third quarter of 2006, the median age of the original loan was 3.4 years, about two months older than the median age of loans refinanced during the second quarter of 2006.
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Lender's spread is the fly in the ointment and it varies significantly from lender to lender.
The interest rate for a commercial property is comprised of an index, such as the 10-year T-bill, and the lenders spread. Lenders spread variance in pricing is due to the lack of three critical issues that need to be addressed about the property:
These three issues will apply and vary from one property to another. Every commercial property type, including office, retail, industrial, self storage, mobile home park, mixed use, hotel, healthcare, and 5+ unit multifamily need to address these 3 issues in their loan package in order for the lender to narrow down the pricing into the most favorable rate.
If the mortgage broker does not address these three issues in their loan package, then there is no way for a lender to narrow down the pricing or lock your borrower into the most favorable rate.
For more information and/or quotes from multiple lenders click here: http://1stop-mortgage.com/commercial-loans.htm
A 3% drop in weekly mortgage applications apparently attributed to a slight rise in interest rates. Long-term rates rose as mirrored by the index increasing to 570.8 in the week ending October 27 from the prior week. The average 30-year rate hit 6.36 percent October 20 as compared to a 6.18% rate in mid September.
Mortgage applications are beginning to rise, however existing home sales are lackluster. The number of homes available for sale is decreasing which is a positive indication that the market is stabilizing. The 16% drop in mortgage activity for the first half of 2006 was heavily influenced by non-traditional loans. Strong demand for interest only options was an influence.
The Federal Reserve FOMC (federal open market comittee) meeting left interest rates unchanged at their meeting Tuesday, October 26, 2006. Not withstanding Lehman Brothers prediction that the Fed will have to tighten by at least another quarter point to stem inflation pressures, Federal funds futures give no indication of any coming rate hike or cut for the next several meeting. The cooling of the housing market was indicated a prime factor in the no change vote.
On the defensive side, one of the largest mortgage lenders is cutting 2,500 jobs to weather out the housing slump. Hoping to save $500 million, Countrywide is cutting down its labor force.
However, the second home market has seen activity with the baby boomers. A recent survey shows future growth in second homes due to the sheer size of the baby boom generation.
