Home Sales Up While Refinance Rates Little Changed on Week

Sales of newly constructed homes rose in September, according to the monthly report from the U.S. Census Bureau, moving up 2.7% from August. You might think this is a good sign for our ailing housing market, and maybe it is, but sales are up where prices are the lowest. At least bargain hunters are now entering the home purchase market and that is a welcome change. On average, home prices are down almost 10% nationwide and still weighing heavy on the refinance and home purchase mortgage lending business.

Mortgage refinance lenders are still not stepping up to the plate and all indications are that increased lender participation for mortgages will remain flat until housing stabilizes.

For the week, mortgage rates have been somewhat stable as the 10 year treasury yield continued it's yo-yo movement, but in the end remains constant.

The future of home sales is really uncertain, but is now becoming affected by job losses. One of the most important factors affecting home sales is of course jobs, but with current economic conditions, it may be some time before level out on the job front.

Look for continued volatility for refinance rates as we finish up with 2008, and good riddance! Again, if you are considering a refinance now that will provide you with solid benefit, look to lock on the dips. Mortgage refinance rates are still in great shape on a historical perspective.

May the Mortgage Refinance Rates be with You!

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Refinance Rates Dip On the Week

Refinance rates dipped on the week, mainly due to the drop in the 10-year treasury yield. The yield dropped almost one-half percent since last week and is being reflected in mortgage refinance rates.

The mortgage markets have been a see-saw all year and this weeks action is just a continuance of business as usual. I have harped on this before, but if you are considering a refinance or out and out need to refinance, it's a good idea to lock on the dips.

If this year is any indication, rates could go up and down in significant percentage moves for some time to come.

The short term credit markets have opened up a bit, which is good news for everyone, yet long term credit lending such as mortgages, are still tight. Some very good news for the economy and possible refinance rates is the reduction in oil prices by 50 percent. This deflationary event could bring more investors to long term treasuries and help to stabilize low interest rates on mortgages.

Housing prices are still deteriorating and new construction is down big time due to the excess inventory of homes. We really need a stimulus for home buying to truly bottom out, not only in home values, but the economy as a whole.

May the Mortgage Rates be with You!

Refinance Tool Box

Refinance Rates Nudging Upward for Week

Refinance rates have increased steadily over the past week by an average of about one quarter point. The stock market chaos has sent the 10-year treasury yield up and down like a yo-yo, but the real driving force behind rates as of late continues to be the mortgage spread risk premium.

Refinance lenders are becoming tighter and tighter with their cash and are bumping up the mortgage interest rates to account for the risk.

Again, most of the lender risk is derived from housing values. The goverment bailouts of financial institutions for bad debts and the direct cash infusion for banks will not do anything to lower the spread premium though, not until home prices stabilize.

In my opinion, the government should be focusing on real measures to help people to retain their homes and also get people purchasing homes. Yes, mortgage application guidelines should be met, but we need a stimulus to get homebuyers buying. Downpayment assistance, lowered rates, something with teeth that will actually jumpstart the home buying. My guess is that we may hear of some goverment action in this area, but hopefully the sooner than later.

May the Mortgage Rates be with You!

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Bailout Bill Passes - Keeps Refinance Rates a-Rollin

The crazy mortgage refinance rates ride continues before, during, and after the government bailout bill finally passed and was signed by President Bush last Friday.

Money is pouring out of stocks and into treasuries, decreasing the 10-year treasury yield. The flucuation in refinance rates has been in the quarter point range, but the yield spread has dropped almost a half-point since September 22. Looks like the risk premium is coming into play again as refinance lenders are asking for a bigger return for perceived risk.

Really, the major risk at this point boils down to home prices. There is still no housing stabilization in sight, so bunker in and wait for the Fed to open up the gates to Fannie and Freddie. The government has done a great deal to open up credit liquidity, but lenders are still hoarding cash. A loosening of the belt on Fannie and Freddie underwriting quidelines is all that is left to spurn willing and "ABLE" homebuyers to the closing table. This would help to decrease home inventories and reverse the declining home price trend. Until housing prices stabilize, the hoarding may continue.

May the Mortgage Rates be with You!

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