Premiere Mortgage Services Inc. - Dana Bain

Hope of a Sept Fed Stimulus Fades Fixed Mortgage Rates Move Higher

August 16th, 2012 2:50 PM by Robin Bain


TREASURIES-U.S. debt yields rise on fading Fed stimulus bets

Thu, Aug 16 2012

LONDON, Aug 16 (Reuters) - Ten-year U.S. T-note yields edged higher in Europe on Thursday as investors scaled back bets the Federal Reserve will launch a new stimulus programme in September after a raft of upbeat economic data.

* Data showed on Wednesday industrial output rose in July, fuelling expectations for a stronger economic recovery in the third quarter compared with the second. The report followed forecast-beating retail sales and employment data.

* Ten-year yields were last 1 basis point higher at 1.83 percent, having risen as high as 1.857 percent earlier in the session, a three-month high. This compares with a record low of 1.38 percent hit on July 25. T-note futures were 5/64 lower at 132-16/32.

* "The market is reducing its bets of further QE (quantitative easing) by the Fed at its September meeting as data surprised on the upside," said Nick Stamenkovic, bond strategist at RIA Capital Markets.

* The sell-off was slower on Thursday than in previous sessions as some investors booked profits before a slew of data releases later in the day, including U.S. housing starts and building permits for July, weekly jobless claims and the Philadelphia Federal Reserve's August business activity survey.

* RIA's Stamenkovic said 10-year yields could establish a new range around 1.7-1.9 percent in the near term, after breaking above the roughly 1.4-1.7 percent range of the past 10 weeks.

* A slowdown in the pace of the euro zone debt crisis has also curbed safe haven flows, contributing to the recent rise in U.S. yields.


Freddie Mac: Mortgage Rates Jump UP!!


RATE NEWS SUMMARY: From Freddie Mac’s weekly survey the average 30-year fixed rate rose for the third week in a row to 3.62 percent and .6 point. This is up from last week’s 3.59 percent. Ditto for the 15-year fixed rate mortgage moving up to 2.88 percent and .6 point compared to last week’s 2.84 percent. The 5-year ARM brought better news, trending down slightly to 2.76 percent from last week’s 2.77 percent.

BOTTOM LINE: In the past year---assuming a borrower received the average 30-year conforming fixed rate on $417,000 the savings would be $126.49 on his new monthly payment of $1,900.56 compared to one year ago when rates were 4.15 percent.

APPLICATION NEWS SUMMARY: Mortgage Bankers Association weekly survey indicates loan application volume decreased 4.5. This is a significant drop considering we are still near all-time lows on interest rates. Refinance applicants remain at 81 percent of all borrowing.

WHAT I SEE: From rate sheets hitting my desk that are not part of Freddie Mac’s survey: Locally, for well qualified borrowers, a 30-year conforming fixed rate is available at 3.375 percent and 1 point or 3.875 percent and no-cost. Even though the 3.375 rate sounds better as the payment is $117 less, it will take you roughly 5 years for the cost to buy that rate down compared to the no-cost at 3.875 percent. The 15-year is 2.75 percent at 1 point and 3.375 percent at no-cost. The 10-year fully amortized fixed rate is available at 2.75 percent and zero points or 3 percent at no-cost. True jumbo loans (over $625,500) are available at 4.25 percent for the 30-year fixed and 3.625 percent for the 15-year fixed, both at 1 point.

WHAT I THINK: The other day one of my clients said he didn’t know whether to smoke a cigarette or give me a hug after his loan funded. What drove his comment was the loan processing experience. Government standards have gone completely off the deep end in what we are required to paper trail on each and every loan. Any unusual deposit (more than a paycheck) needs to be explained with accompanying backup documentation. More than one name on a bank account? We need written authorization from the other parties on the bank statement that this person has full access to the funds. Own property with another party besides your spouse? If it’s not paid out of a separate bank account you get hit for all of the payments as it’s counted against you in your income and debt ratios. And, you only get the credit for the portion of the rent reported on your tax returns, not all of the rental income. Does this paint a good picture for you? The average thickness of a closed loan file in paper form has gone to about 3 inches thick. Back in the day, it was maybe half that in terms of file size. The good news is mortgage hell only lasts for a month or 2 and then you can enjoy your mortgage savings any way you want.


Mortgage Rates Moving Up

Dana Bain

Premiere Mortgage Services Inc.



Posted in:General
Posted by Robin Bain on August 16th, 2012 2:50 PM


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