Dennis' Mortgage Blog

Our Christmas Eve and New Year’s Eve Rate and Market Updates will be abbreviated for the Holidays.  As such no “Question of the Week” or in depth economic analysis and commentary.  However to retain the consistency of tracking rates for over 5 years every Friday mortgage rates as usual will be provided. 

Have a question for me?  Ask me!

Year in review snapshot:

• Housing markets looked to be pulling out of their slumps with home sales and prices climbing through the first quarter, but much of it was an artificial market created by up to $8000 tax credit from the IRS for home buyers.  When the incentive expired so did home sales, and prices followed.  S&P/Case Schiller Home Prices Index for October showed third month of price declines in 20 major markets.
• Starting at 5.125% on January 1, 2010 conforming rates saw a brief uptick in April and then began steady decline to all-time lows in early October, almost 1.5% below the January 1^st mark.  Following the Fed announcement of QE2 rates have climbed steadily putting a damper on refinances and new home purchases.
• Economy shrugged off signs of continuing growth in the 3^rd Quarter and began to crawl.  Continued job losses are still the focal point of recovery, based on economic data throughout the last two quarters we have a long way to go to start having steady employment growth and a reduction in the national 9.8% unemployment rate.
• Cash continued to accumulate on the balance sheets of corporations and personal savings as uncertainty reigned through much of the year.   Wary of being cash-poor should another credit crunch hit in the coming year(s), CFOs in the boardroom and kitchen table advised holding and accumulating cash to meet what needs may arise in 2011.
• The federal deficit continued to climb and the national debt ends the year at $13.9 Trillion, up 30% from the end of 2008.  This debt combined with massive infusions of money into the economy has investors very skittish on bonds which has caused our rates to jump the last 60 days of the year.
• My prediction of the economy beginning to grow and pull out of the recession in late 2009 and early 2010 was a miss, primarily due to the uncertainty of future fiscal policies and regulations from Washington that led to the cash hoarding.  Over-reaching by the government with multi-thousand page regulatory bills seized up expansion and capital investments.  As 2011 begins and increasing chances of gridlock in Washington appear I expect more investment and borrowing in the private sector.
• My prediction of rates between 5-5.5% for the year was way off as we spent almost the entire year below 5% for conventional 30 year fixed rates, due to the lack of investment and spending by the private sector.
• This is the 52^nd Weekly Rate & Market Update for 2010, I predict another 52 next year!

2011 will see rates staying above 4.5%, most likely once the 1^st Quarter is past above 4.75% and as high as 5.5% depending on inflation numbers in the 1^st Quarter.  Housing will remain sluggish until employment starts to turn around and private sector hiring grows.  It will be a challenging year for the mortgage and real estate industries.  I will be actively involved throughout the year to keep you informed of what is happening in the mortgage industry and economy.  And of course available to assist you, your family, co-workers, clients and friends with their mortgage needs.

Rates for December 31, 2010  A very big rally in the bond markets yesterday led to Friday to Friday drop in rates, especially for FHA mortgages.  Will the trend continue in 2011?

FIXED RATE MORTGAGES AT COST OF 1 POINT*

30 year conventional                             4.625%             Down 0.125%

30 year conforming-jumbo                    4.875%             Flat

30 year FHA                                         4.25%               Down 0.25%

30 year FHA jumbo                              4.625%             Down 0.25%

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. 

Please note that rates quoted are based on average of several lenders for a purchase transaction with 20% down payment with an impound account for taxes and insurance and a minimum FICO score of 740; APR is not quoted as it is dependent upon specific loan amounts, lenders and services selected.  Numbers provided are for comparative purposes only.

Early release this week of the Weekly Rate & Market Update as we are headed south to Long Beach after spending the week relaxing in Northern California as sister/aunt Sharon’s home.  We’ll be road travelled and weary as we ring in the New Year at home tonight (probably ringing in East Coast New Year and in dreamland when midnight hits California!).

Cheers to 2010 that presented many interesting challenges for our industry, and here’s to a happy, healthy and prosperous 2011 for all Weekly Rate & Market Update readers (and writer!).

Happy New Year,

Dennis