Austin Mortgage Update – Week Ending 2/20/09

What Did Interest Rates Do This Week?
** according to Freddie Mac **

30-yr Fixed – Lower
This Week:  5.04%
Last Week:  5.16%
1yr Ago:  6.04%

15-yr Fixed – Lower
This Week:  4.68%
Last Week:  4.81%
1yr Ago:  5.64%

5/1 ARM – Lower
This Week:  5.04%
Last Week:  5.23%
1yr Ago:  5.37%

Highlight of This Week’s Major Economic Reports

Headlines were dominated by the new stimulus bill and the newly-announced housing rescue plan, neither of which was positively received by the stock market and helped mortgage rates ease a bit.

In addition to first-time homebuyer tax credits presented in the stimulus bill, President Obama unveiled a plan to help stabilize the housing market by enabling the refinance of Fannie Mae and Freddie Mac owned mortgages into lower-cost loans.  This new initiative is aimed at helping up to nine million homeowners who either (1) owe more than their homes are worth or (2) are struggling to afford their monthly mortgage payments.  As controversial as these plans are, we’ll just have to see if they are effective in resolving the foreclosure epidemic plaguing our country.

On the economic front, so much for talks of deflation … at least for now.  January showed a reversal of trends in prices as the Producer Price Index rose a surprising 0.8%, while the Consumer Price Index ticked up 0.3%.  No need to worry about a resurgence in inflation just yet; however, we’ll need to keep an eye on these reports in the coming months, since inflation will mean bad news for mortgage rates.

What to Look for Next Week

The housing market takes center stage again with the release of the latest Existing and New Home Sales figures.   We’ll also get a final look at last quarter’s GDP.  Fed Chairman Ben Bernanke’s latest report to Congress will surely draw attention as well, as we’ll get a better idea (we hope) of when the Fed may start buying up more securities, which would drive mortgage rates down.

Short-Term Rate Outlook

Stable

Stay Informed:  What’s in the News

Builder Magazine Names Five Texas Cities Healthiest Housing Markets

Five Texas cities swept the top spots on Builder magazine’s list of “Healthiest Housing Markets for 2009.”

Houston ranked first, Austin second, Fort Worth third, San Antonio fourth and Dallas fifth.

Rounding out the top ten were Raleigh, N.C., Seattle, Indianapolis, Ind., Fayetteville, Ark., and Washington D.C.

To compile the list, Builder analyzed the top 75 housing markets in the country, ranking them based on population trends and job growth, perennial drivers of housing demand. They also looked at home prices and the number of building permits.

First American CoreLogic Finds Highest Home Appreciation in Texas

Texas continues its trend of weathering the recession better than most other states. The state’s major metros top the nation in home price appreciation over the last year.

Austin–Round Rock leads the country’s largest core-based statistical areas (CBSA) in home price appreciation with a 3.7 percent increase in 2008, according to First American CoreLogic.

Houston–Sugar Land–Baytown experienced a price appreciation of 3.3 percent over the last year, putting it right behind Austin–Round Rock.

Dallas-Plano-Irving homes appreciated 1.92 percent and San Antonio’s homes 0.17 percent, putting them third and fourth in the nation.

Overall, Texas homes saw an appreciation of 1.83 percent in 2008, putting the Lone Star State sixth among all state rankings.

Fannie, Freddie Increasing Fees

Effective April 1, Fannie Mae and Freddie Mac will increase the “delivery” fees they charge lenders based on FICO scores, down payment amounts and other loan characteristics.

Under the new guidelines, even applicants who assumed that their FICO credit scores would get them favorable rates will be charged more unless they can come up with down payments of 30 percent or more.

For example, a buyer with a 699 FICO score who brings a down payment of about 25 percent to the table will be hit with a 1.5 percent delivery fee at closing under the new guidelines. A buyer with a FICO score between 700 and 720 will pay an extra three-quarters of a point. Someone with a 739 FICO — once considered a platinum guarantee of the best rates available — will get dinged with a quarter-point add-on.

Condominium buyers who cannot come up with a 25 percent down payment will be hit with a three-quarter point add-on penalty, no matter how high their credit score.

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Stimulus Plan First-Time Homebuyer Tax Credit Update

A Special Update from MBSQuoteline

The Stimulus Plan was signed into law by President Obama today. It contains a new tax credit for first-time homebuyers. Essentially, first-time homebuyers within certain income limits who purchase a home in 2009 before December 1, 2009 will receive a tax credit of up to $8,000. The program is similar to the $7,500 tax credit which applied to home purchases made in 2008 after April 9. A comparison of the two credit programs is outlined below.

While the Stimulus Plan was still being debated, the Senate version originally included a $15,000 tax credit for all homebuyers. To lower the cost of the Stimulus Plan, the final version of the Plan contained this smaller tax credit, and this tax credit is applicable only to first-time homebuyers.

To qualify as a first-time home buyer as defined in the programs, the purchaser (and the purchaser’s spouse) may not have owned a home in the three years prior to the purchase date of the home. Single family homes qualify for the program. The home must be the primary residence.

Both tax credits are subject to the same adjusted gross income limitations (full credit for AGI less than $75,000 single/$150,000 joint, phased out for AGI up to $95,000 single/ $170,000 joint).

The amount for either credit is the lesser of 10% of the home purchase price or $7,500 or $8,000, as applicable.

While a purchaser still owns the home, the $7,500 credit must be repaid in equal payments over a period of 15 years, starting with the 2010 tax filing. The $8,000 credit will not need to be repaid. Again, the $7,500 credit needs to be repaid, while the $8,000 credit does not!

Upon sale of the home, any portion of the $7,500 credit not yet repaid is due in full.  No portion of the $8,000 credit is due upon sale of the home, if the home is owned for more than three years.  If the home is sold within the first three years, the full amount of the credit is due upon sale.

The $7,500 credit was not available to any purchaser utilizing state/local revenue bond money to help finance the home purchase. There is no such restriction on the $8,000 credit.

Under both the $7,500 and the $8,000 programs, the credit will be claimed on the purchaser’s income taxes. Any amount in excess of taxes owed will be refunded to the purchaser.

Additional information about the tax credit can be found on the websites of the National Association of Realtors (www.realtor.org) and the National Association of Home Builders (www.nahb.org).

Please feel free to call me with any questions.

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Austin Mortgage Update – Week Ending 2/13/09

What Did Interest Rates Do This Week?
** according to Freddie Mac **

30-yr Fixed – Slightly Lower
This Week: 5.16%
Last Week: 5.25%
1yr Ago: 5.72%

15-yr Fixed – Slightly Lower
This Week: 4.81%
Last Week: 4.92%
1yr Ago: 5.25%

5/1 ARM – Slightly Lower
This Week: 5.23%
Last Week: 5.26%
1yr Ago: 5.19%

Highlight of This Week’s Major Economic Reports

After much anticipation and ongoing debate, Congress finally passed a stimulus bill that is aimed at reviving the economy and creating 3-4 million jobs for American workers. The slimmed-down $789 billion economic recovery plan includes a $8,000 tax credit available only to first-time homebuyers who meet the income requirements, and the credit has been extended for purchases through the end of November.  An exciting twist to this tax credit is the removal of the repayment feature as long as the home is not sold within three years.

And, while the stimulus plan also extended the higher loan limits for Fannie Mae and Freddie Mac, this won’t have an impact on us, since Texas is not considered a “high cost region,” thereby leaving our conforming loan limits at $417,000.

Additionally, the newly minted Treasury Secretary announced plans (with details to be laid out in the coming weeks) to utilize the remaining $350 billion TARP money to combat the foreclosure crisis and help banks remove “toxic assets” from their balance sheets. We’ll all be anxious to learn more about the specifics behind these plans, as they will undoubtedly determine the direction of mortgage rates in the near term.

Short-Term Rate Outlook

Stable

Stay Informed: What’s in the News

“Texas Tops in Job Growth” from BizJournals and Texas A&M Real Estate Center

Texas was top in job growth last year, according to a recent analysis by bizjournals.com.

Five Texas cities ranked among the top ten, with three securing the top three spots.
Houston added 57,300 jobs in 2008, giving it the best year of any U.S. market. Dallas–Fort Worth was next with 43,300 additional jobs, then San Antonio, which was up by 14,900 jobs.

Austin ranked fifth with 9,600 jobs added, and El Paso’s 5,300 additional jobs landed the city at ninth.

Bizjournals.com examines markets that have at least 250,000 nonfarm jobs and compares employment figures for the final month of the past two years. Seventy-two of the 88 markets studied suffered declines in employment in 2008.

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Austin Mortgage Update – Week Ending 2/6/09

What Did Interest Rates Do This Week?
** according to Freddie Mac **

30-yr Fixed – Higher
This Week: 5.25%
Last Week: 5.10%
1yr Ago: 5.67%

15-yr Fixed – Higher
This Week: 4.92%
Last Week: 4.80%
1yr Ago: 5.15%

5/1 ARM – Relatively Unchanged
This Week: 5.26%
Last Week: 5.27%
1yr Ago: 5.21%

Highlight of This Week’s Major Economic Reports

The hot topic of the week centered on the ongoing debate in the Senate regarding the stimulus package, which may have reached a compromise totaling $780 billion. The final vote in the Senate is expected in the next few days, and it would then go back to the House of Representatives for approval.

One key aspect of the proposed bill is a revision to the home-buyer tax credit. Currently a first-time buyer $7500 tax credit to be paid back over 15 years, the new proposal eliminates the repayment requirement, doubles the amount to $15,000, and would be available to all home-buyers.

On the labor front, the latest figures revealed that another 598,000 jobs were lost in January, sparking the biggest monthly job loss figure since 1974. The unemployment rate now sits at 7.6% — the highest since 1992.

What to Look for Next Week

With the economic calendar lacking any notable headliners, both the stock markets and bond markets will be directed by the results of – and reaction to – the stimulus package. It is expected that a final bill will be voted on by both houses of Congress before the end of the week.

Short-Term Rate Outlook

Stable to Slightly Higher

Stay Informed: What’s in the News

“Texas Economy Still Ahead of Nation’s” from Texas A&M Real Estate Center

The Texas economy is cooling but continues to create jobs. While the U.S. economy lost more than 2.8 million jobs from December 2007 to December 2008, Texas gained 154,600 jobs over the same period.

The state’s seasonally adjusted unemployment rate rose from 4.2 percent in December 2007 to 6 percent in December 2008. By comparison, the U.S. seasonally adjusted unemployment rate rose from 4.9 percent to 7.2 percent during the same period.

“Fed: Banks Still Tightening Loan Standards” from USA Today

U.S. banks were miserly with credit through mid-January, as the economy plunged and loan demand deteriorated, the Federal Reserve said Monday in a quarterly lending survey. Banks continued to impose tight conditions on borrowers, even as the Treasury Department provided about $200 billion in capital infusions under a special $700 billion financial rescue law. Treasury officials have pressed lenders to make loans to good clients to get the economy moving. The Fed has begun buying up to $500 billion in mortgage-backed securities to unfreeze lending.

“Fannie Mae and Freddie Mac prevent the extension of eviction” from Ecommerce Journal

Fannie Mae and Freddie Mac, the largest holders of U.S. mortgages, announced on Friday that they intend to extend the eviction cessation until March. They are also launching a new strategy to offer qualified owner-occupants and tenants’ leases so they can rent the properties on a month-to-month basis after foreclosure at market rates. This is the third extension of eviction suspensions. Both Fannie Mae and Freddie Mac started a program to suspend foreclosures evictions on Nov. 26. Those policies were set to expire on Jan. 9, but they were extended until Friday.

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Austin Mortgage Update – Week Ending 1/30/09

What Did Interest Rates Do This Week?
** according to Freddie Mac **

30-yr Fixed – Slightly Lower
This Week: 5.10%
Last Week: 5.12%
1yr Ago: 5.68%

15-yr Fixed – Unchanged
This Week: 4.80%
Last Week: 4.80%
1yr Ago: 5.17%

5/1 ARM – Slightly Higher
This Week: 5.27%
Last Week: 5.24%
1yr Ago: 5.32%

Highlight of This Week’s Major Economic Reports

Thanks in large part to falling prices and 50-yr-low interest rates, Existing Home Sales rebounded 6.5% in December to yield the biggest one-month increase since 2002. On the other hand, despite astounding offers for 3.99% fixed rates, New Home Sales didn’t fare as well, with inventories now at a whopping 12 months.

The state of the economy obviously hasn’t helped with home sales. GDP in the 4th quarter contracted 3.8%, which was the steepest decline in 27 years, and weekly unemployment claims continue to hover in the 500k range.

With the economy still weak and inflation in hibernation, the Fed not surprisingly kept short-term rates unchanged. They did, however, provide some assurance to the markets by proclaiming their intent to buy Treasuries and mortgage-backed securities to keep interest rates steady.

What to Look for Next Week

February will be rung in with all eyes on the latest jobs report. Not much optimism lies with these figures, so mortgage rates will be more likely driven by the stock market than these results.

Short-Term Rate Outlook

Stable to Slightly Higher

Stay Informed: What’s in the News

“Texas Attracts International Investors” from Austin Business Journal

Despite increasing global real estate turmoil, Texas remains an attractive play for foreign investors looking for opportunities in the United States, a report shows.

The Association of Foreign Investors in Real Estate ranks members’ top cities for U.S. and global investment in 2009. Houston ranked fifth, while Austin ranked 11th, tying with Las Vegas, Phoenix, Orlando, Atlanta, San Diego and San Jose, Calif.

Washington D.C. claimed the first spot.

The United States ranked first among nations in terms of opportunities for capital appreciation.
Conducted in fourth quarter 2008, the survey polled the association’s members who collectively hold about $1 trillion in real estate worldwide.

“Freddie Mac to Let Residents Rent Homes After Foreclosure” from USA Today

Freddie Mac on Friday plans to announce a first-of-a-kind plan that lets homeowners and tenants temporarily stay in homes in foreclosure by renting them back, an effort to stop many of the sudden evictions that have come along with the housing crisis. The program will let thousands of qualified former homeowners, as well as families renting from landlords, enter into a monthly lease on their homes after they have been acquired by Freddie Mac through foreclosure.

“More Foreclosures Coming” from CNNMoney.com
A large number of bank-owned homes that have yet to be listed for sale indicate that even more excess housing inventory is queuing up, and the long line waiting to hit the market is cause for concern.

RealtyTrac, the online marketer of foreclosed properties, recently discovered that it has far more foreclosed properties listed in its database, which the company compiles using courthouse records, than there are listed in the Multiple Listing Services (MLS) maintained by real estate agents.

“It’s not surprising that RealtyTrac has more listings. MLSs traditionally focus on individuals selling their own homes,” said Dr. Jim Gaines, economist at the Real Estate Center at Texas A&M University.

RealtyTrac found that MLS listings for four states contained only a third of the foreclosures RealtyTrac has in its database. One problem may be system overload. Gaines says that, historically, the foreclosure market has not predominantly used local MLSs to market repossessed homes. But because of the surge in the volume of foreclosures, the banks need to move homes quickly, so MLSs are now being leaned on more heavily.

Gaines adds that, anecdotally, real estate experts report that as much as 40 percent of overall listings on MLSs in major metro areas are foreclosures. The trouble with discerning what these findings really mean for the market, however, is that no one maintains specific foreclosure sales data. The government doesn’t keep up with it, and neither does any real estate service.

Looking for more information about the Austin Real Estate Market? If so, please do not hesitate to contact me directly.

Kevin Wilhelm, ABR GRI
Coldwell Banker United, Realtors
512-417-3915