Dennis' Mortgage Blog

Question of the week:  I was asked the following this morning from Marilyn Kalfus, writer and blogger for the Orange County Register (her blog here):  Did you see that DQ came out with numbers today showing sales in HB are up 12 % year over year for most of Jan.? I am interested in your opinion of why if an anomaly.  Answer:  As we have discussed before, the increase in sales numbers are not a surprise, as well any corresponding decline in median prices.  There is significant activity at the lower end of the market throughout Southern California.  First time buyers are flocking to market to take advantage of the lower prices and rates that have resulted from the credit crisis that began in 2007.  Last December and January we had no financing over $417,000 and FHA loan limits were capped about $100,000 below the median price levels for coastal California counties.  The subsequent increase of loan limits for conforming and FHA loosened up the markets and allowed the increase in buyers for markets $600,000 and below.  When we see value in jumbo mortgage rates we will see the same phenomenon in the upper ranges as well.  The local real estate markets are very active and we are seeing multiple offers on a significant number of our transactions.  This is not an anomaly --it is a real trend and solidifying of our housing market from the bottom up.

If you have a question you would like me to answer send it to me!

As politics continued to play out in Washington (and Sacramento) on the massive spending bill (i.e. “stimulus”), bonds had a down and up week.  Early in the week as the stock market reacted unfavorably to early negotiations on the bill mortgage rates benefited, hitting bottom on Wednesday.  Yesterday and today as the bill took more shape and neared possible passage—the House passed it today and if President Obama can keep three Republican Senators as his “bi-partisan” support it should pass the Senate later today or this evening for the President’s signature over the weekend—back to our story, as passage nears the bond markets have reacted unfavorably and we have lost all our gains and finish the week where we started. 

The bottom skipped off of on Wednesday equaled our December lows for conforming mortgages (i.e. below $417,000) but we seen little to no corresponding drops in the hi-balance conforming rates nor the FHA rates.  Until Fannie and Freddie eliminate the penalty they are charging lenders who have over 10% of their fundings in the hi-balance mortgages (as discussed here last week) we will not see a corresponding drop in the hi-balance mortgage rates. 

As mentioned above rates are flat from last Friday after dipping into Wednesday.

FIXED RATE MORTGAGES AT COST OF 1 POINT*

30 year conventional at 1 point 5.00%                       FLAT

30 year conforming-jumbo at 1 point 5.875%            FLAT

30 year FHA at 1 point 5.5%                                      FLAT

Please note that rates quoted are based on average of several lenders for a purchase transaction with 20% down payment 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.

I hope no one is experiencing triskaidekaphobia (thank goodness for spell check!) today!  Happy Valentines Day to every one—Be Mine!

Have a great weekend,

Dennis

Remember this update is posted weekly on My Blog at www.DennisCSmith.com ; feel free to forward the link to family and friends who may be interested in past commentaries.