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Tuesday, June 25, 2013

WARNING: Mortgage Rates Jump Almost 1% In One Week!

If you have not heard, over the past 5 days, mortgage rates have skyrocketed!  In the past week, from Thursday 6/13  to Friday 6/21, interest rates have jumped one half to three quarters in RATE with eight mid-day price changes.  To give you an idea how dramatic that is, on Thursday 6/13, I could have locked in a buyer for 30 days on an FHA loan with no loan origination fee at 3.75%.  Today, that same rate would cost the buyer 1% origination plus 2.375% in a buy-down fees.  Or to put it another way, on a $200,000 loan that’s a difference of $6750 in additional loan fees to obtain the same rate from last week!   Now, the same “no origination fee” FHA loan interest rate is sitting at 4.5%.  So on a 200,000 loan amount, a 4.5 rate versus a 3.75 rate, the monthly payment increases by nearly $90/mo.  This is equivalent to almost $18,000 lower purchase price to keep the same monthly payment.
 
Do you have a trusted lender helping you with your purchase?  Consider one of the best lending teams in town, James Nesbit and Jeff Bohl of Republic Mortgage Home Loans.

REPUBLIC MORTGAGE HOME LOANSTumwater Branch |  NMLS# 3148
360.236.9777   office
jnesbit@republicmortgage.com
jbohl@republicmortgage.com

300 Deschutes Way SW, suite 315
Tumwater, WA 98501
 
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Jun 21 2013, 3:49PM

Mortgage News Daily


Nightmare for Mortgage Rates: Way Worse Than Freddie Told You

Mortgage rates have had a far worse week than you've been told anywhere else, and today was even more freakishly destructive than the previous two days. Taken together, this is the worst week for mortgage rates we have on record. Today is one of two times in the past 10yrs where the average borrowing rate for top tier scenarios moved up by at least a quarter of a point. A quarter of a point may not sound like much, but in terms of day-to-day movements in 30yr fixed mortgage rates, it's catastrophic. That leaves best execution rates at a stomach-churning 4.625% today.

PLEASE UNDERSTAND, this is real. Freddie Mac may have been out yesterday with the industry's most commonly cited benchmark for weekly rate movements, but this is merely an average that's tallied through Wednesday. Thursday took rates another eighth to quarter higher and today took rates another quarter higher again. If you're a consumer staring at a rate quote in disbelief, or a Loan Originator who doesn't happen to be a member of MBS Live, please know that today's movements are very real and very justified based on the price movements in MBS.

This movement will eventually end. It could be Monday or rates could go higher all next week. The assessment today is exactly the same as it was yesterday: We'd like to say "we've moved high enough, fast enough that we'll probably be able to dig in and hold some ground here," but that's not safe yet. Market participants themselves, let alone mortgage lenders, are still feeling out the post-Fed-Announcement environment. There's no reason rates can't go even higher just because they've moved so high, so fast.

On a personal note, I know the emotions that tend to accompany times like this can border on overwhelming. If the perspective helps, try to look at your options in terms of payments and costs instead of rates themselves. If you're a consumer, understand that your loan originator is actually every bit as traumatized by this week as anyone, and that no one saw a move quite this big happening quite this fast. Work together to quickly examine what the options are and assess the trade-offs between scenarios.

Look at different terms, different loan types, different levels of buy down (contrary to misguided popular belief, "points" are not a bad thing. Just understand that they amount to a choice between paying interest now or later). Some borrowers may want to pay more closing costs right now in order to get to the payment they can afford. Ultimately it's your choice as to what works best for you, but the message is that we're all in this together, and we're all ultimately working toward the same goals.

Loan Originator Perspectives

"If you are a consumer, and you are shopping rates between lenders, I'd advise you to pick the lender you are most comfortable with, move forward with them and lock your rate in. I have a customer that has been going back and forth between another lender and myself since last week, over a few hundred dollars, and his rate has now gone from 4.125%, with a $1500 credit, to 4.5% with no credit! Find someone you like and that is giving you a competitive offer, and lock it in. Who knows where things ride stops!" -Jason York, VP of VA Operations, Prime Mortgage Lending

"We continue to see constant capitulation in longer term treasuries and complete annihilation of MBS. It would be nice to paint a picture of a possible rebound but obviously all bets are off. The free capitalistic market has to work its way through layers of artificial technical and determine where it needs to be. It's similar to the concept of a fire in a movie theater, everyone gets trampled during the stampede. Floating is a losers game if closing within 30 days, 45-60 should consider locking as well, as time value has not been an element of success." -Constantine Floropoulos, Quontic Bank

"As of this afternoon, rates are up about 1.25% from record lows, but if this levels off for awhile, it won't choke off housing or a broader recovery. It's been a brutal week, but not time to panic yet about the rate spike causing broader economic turmoil. " -Julian Hebron, Branch Manager, RPM Mortgage

"I picked a good week to go on a short vacation. Big Ben has not helped mortgage rates or bond markets at all. Stock market isn't thrilled either. My advice to any consumer is lock now because rates aren't coming back down without a total melt down in stocks and some sort of tape bomb from left field. If you were on the fence for a refinance, you can climb down and go home because whatever you were waiting for is never coming back. Purchasers would be wise to lock asap too." -Mike Owens, Partner, Horizon Financial Inc.

Ongoing Lock/Float Considerations

  • After rising consistently from all-time lows in September and October 2012, rates challenged the long term trend higher, but failed to sustain a breakout
  • Uncertainty over the Fed's bond-buying plans is causing immense volatility in rates markets and generally leading rates quickly higher
  • Fears about the Fed's bond-buying intentions were proven well-founded on May 22nd when rates rose to 1yr highs after the Fed indicated their intention to taper bond buying programs sooner vs. later
  • The June 19th FOMC Statement and Press Conference confirmed the suspicions. Although tapering wasn't announced, the Fed made no move to counter the notion that they will decrease bond buying soon if the economic trajectory continues
 



Jun 20 2013, 6:30PM


Worst 2-Day Move For Mortgage Rates in 4 Years

Mortgage rates are reprising past trauma, now matching the scope of the late 2010 sell-off, with the past two days matching the scope of Black Wednesday's sell-off. "Selling" in this case, refers to the Mortgage-Backed-Securities (MBS) that most directly affect rates. As MBS prices fall, rates rise. The faster this happens, the worse it is for rate sheets, and despite the month and a half of selling, the past two days have been surprisingly abrupt for lenders. Rate sheets have taken the most profound hits we've seen on back to back days (past examples were more concentrated on one of the two days). Conventional 30yr Fixed best-execution is quickly up to a staggering 4.375%-4.5%, though we'd note that there's even more variation between lenders as volatility magnifies the effects of different pricing strategies.

Today's economic data had precious little effect on trading levels, adding to the sense that it's going to take official employment data on July 5th, a change in tone from the Fed, or an unexpected tape-bomb style headline to convince markets that the Fed won't begin curtailing asset purchases in September. While that continues to be the case, interest rate movements continue to be a risk. We'd like to say "we've moved high enough, fast enough that we'll probably be able to dig in and hold some ground here," but that's not safe yet. Market participants themselves, let alone mortgage lenders, are still feeling out the post-Fed-Announcement environment. There's no reason rates can't go even higher just because they've moved so high, so fast.

Ongoing Lock/Float Considerations

  • After rising consistently from all-time lows in September and October 2012, rates challenged the long term trend higher, but failed to sustain a breakout
  • Uncertainty over the Fed's bond-buying plans is causing immense volatility in rates markets and generally leading rates quickly higher
  • Fears about the Fed's bond-buying intentions were proven well-founded on May 22nd when rates rose to 1yr highs after the Fed indicated their intention to taper bond buying programs sooner vs. later
  • The June 19th FOMC Statement and Press Conference confirmed the suspicions. Although tapering wasn't announced, the Fed made no move to counter the notion that they will decrease bond buying soon if the economic trajectory continues
  • (As always, please keep in mind that our Best-Execution rate always pertains to a completely ideal scenario. There are many reasons a quoted rate may differ from our average rates, and in those cases, assuming you're following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).

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Wednesday, June 19, 2013

5 unsightly red flags that drive home buyers away

In many places, home prices are heading up and more buyers are hitting the market. If you're selling, you obviously want to get the best price, but don't want to spend a lot on renovations. Fair enough! However, studies show there are five issues you really should address, because they turn off home buyers right away. Fix these and you have your best shot at selling your home in less time for more money. Best of all, you can tackle these issues yourself for not very much money.

1. Paint problems. Peeling paint on siding and trim makes a house look uncared for and results in lower offers from buyers. Inside, walls painted colors that are dark, like navy, or unusual, like hot pink, are a complete buyer turnoff. But painting is an easy and inexpensive do-it-yourself fix.



2. Unkempt landscaping.
Your home's curb appeal can make or break a sale. Get out the clippers, pruning shears, and rake, and weed and mulch the beds. It doesn't take that long to spruce up your landscaping, but it can pay big dividends.


3. Wallpaper and paneling
Outdated wallpaper can really throw buyers. It takes time to strip and repaint, but it's worth it. Have a wallpaper stripping party, or hire a company to do the stripping and repaint the walls yourself. Paneling is tougher because removing it can uncover problems. Painting it may or may not work. Talk to your realtor to decide the best route.


4. Mirrored walls.
Big walls of mirrors or mirror tiles just don't fly with most buyers who think removing them is a major project. Take them down yourself; repairs shouldn't be that difficult, and then just repaint. To avoid paint matching problems, either use an accent color or repaint the whole room.


5. Closet doors.
Buyers lose their enthusiasm for a place when closet doors are missing, out of adjustment, or if they've been replaced with drapes or beads. Make sure all closets have doors installed, adjusted, and properly working. 

As a buyer, when you see these problems in a home you otherwise like, realize that you could be looking at a bargain. Walk away if exterior paint issues indicate severe moisture problems. But the rest of these conditions are minor issues that you can fix yourself for not much money.

Friday, June 14, 2013

12 Gifts for Handy Dads

A truly rich man is one whose children run into his arms when his hands are empty.  ~ Author Unknown
 
Mark your calendar to celebrate Father's Day this Sunday. I'm so lucky to have an amazing father myself along with an exception father to my children.  Be sure to show the men in your life some extra love this weekend!

My dad & my husband on the High Hunt, September 2009
 
 
Most fathers appreciate a new tool to use around the family abode. Here are a dozen ideas for a range of budgets.

1. Stud Finder.
Locating studs in a wall helps with everything from hanging pictures to attaching handrails. There are many models to choose from.


2. Knife Sharpener.
Quickly, easily, and accurately keep blades working at their best.

3. Floating Waterproof LED Flashlight. LEDs are super bright and the waterproof floating design is great if the light is dropped in a clogged bathtub or puddle on the driveway. 

4. Multi-Tool. These handy devices can include a wide variety of tools from wire strippers, files, different sized pliers to screwdrivers. Prices increase with the number of options.

5. Drill Bit Set.A new set of drill bits can be appreciated if Dad had his power drill a while and some of the original drill bits have dulled.

6. Packaged Tool Set. Typically the case contains dozens of tools for basic household projects. Keep handy in a closet. Look for sets that include a hammer, tape measure, and level.

7. Hearing Protector with AM/FM Radio and Music Player Compatibility. This is for operating power tools and garden equipment. The design lets Dad listen to his favorite radio station or connect to an MP3 music player through the built-in input jack.

8. Tool Belt. Convenient for carrying tools to the place Dad will use them. Consider adding some items like a big set of pliers or vise grips.

9. Cordless Power Drill. These are great for lots of jobs around the house. Good home units are reasonably priced.

10. String Trimmer. This is perfect for edging lawns and cutting areas too small for the mower. Choose from gas, battery powered, or corded electric models.

11. Leaf Blower. Cleans up leaves and grass clippings, but also terrific for keeping the garage floor clean. There are gas, battery, and corded electric options.

12. Tool Box. Choose between portable models or cabinets with drawers that can swallow a whole workshop.

Thursday, June 6, 2013

Competition among home buyers “still fierce;” rising interest rates adding to fury

Well-priced homes continue to draw multiple offers and sell at a brisk pace around Western Washington as buyers react to increases in interest rates and asking prices. Northwest Multiple Listing Service reported double-digit gains in several key indicators it tracks for the 21 counties in its service area. Compared to a year ago, the number of new listings climbed 16 percent, pending sales increased about 10 percent, closed sales jumped nearly 22 percent, and prices rose more than 13 percent. Despite gains in listing activity, inventory remains tight.

Commenting on the latest report, brokers said the fast pace is frustrating some buyers -- and surprising sellers with unrealistic expectations. One broker cautioned against an overheated market. “We do not want a market that escalates too fast and topples again,” commented Frank Wilson, Kitsap district manager at John L. Scott Real Estate and branch managing broker for its Poulsbo/Kingston office.

“Overly aggressive sellers find themselves disappointed when no or low offers are presented,” remarked Northwest MLS director Kathy Estey, the managing broker at John L. Scott in downtown Bellevue.

With inventory apparently improving, some would-be buyers are staying on the sidelines. The increased inventory is “cooling some buyers,” reported George Moorhead, managing broker at Bentley Properties in Mill Creek and a member of the MLS board of directors. “We also have buyers who are stepping back as they are frustrated with current inventory and multiple offers going well above asking price,” he added.

Inventory showed signs of improving with the addition of 11,445 new listings during May, the highest number since April 2010. May’s total outgained the year-ago figure of 9,861 new listings for a 16 percent gain.

“It has been refreshing to see more listings coming on the market, but with overall inventory remaining low the competition among buyers is still fierce for homes that are priced properly,” commented Estey.

At month end, there were 21,943 total active listings in the Northwest MLS database, a drop of 4,248 from the same time a year ago for a decline of more than 16 percent.

Buyers looking for condominiums will find slim pickings. Condos currently account for only about 10 percent of the available inventory. The area-wide selection, which numbers 2,253 listings, is down more than 26 percent from a year ago.

Closed sales continue to track well ahead of a year ago. During May, member’s tallied 7,349 completed transactions, outpacing the year ago total of 6,027 by nearly 22 percent.  Prices jumped 13.4 percent from twelve months ago, rising from an area-wide median selling price of $242,500 to last month’s price of $275,000. The median price for homes and condos that sold in both King County and San Juan County was $375,000 ($100,000 higher than the area-wide figure). In King County, that represented a gain of 15.4 percent, while for San Juan County prices edged up only about 1.8 percent compared to a year ago.

“We're seeing the trajectory of home prices beginning to soften and the number of days on the market decline,” observed Mike Grady, president and COO of Coldwell Banker Bain, adding, “The trends suggest inventory levels are slightly more sustainable, but we're still clearly in a seller's market. For the foreseeable future, buyers will continue to pay more the longer they wait to purchase a home.”

Frank Wilson, who is also a board member for Northwest MLS, said recent market activity is affecting home values. In Kitsap County, where his office is located, brokers added 575 new listings to inventory during May, improving on the year-ago total of 515. During the same period, MLS members reported 567 pending sales to soar past the year ago figure of 414 sales for an increase of nearly 40 percent. Median selling prices in Kitsap County rose 5.3 percent, from the year-ago figure of $228,000 to $240,000.

“Slow and steady is the key here,” Wilson cautioned, while also raising concern about low appraisals, which he described as the “inchworm effect” of the market. “As prices begin to appreciate we will continue to see challenges with low appraisals,” he predicted.

Moorhead said increased activity is very noticeable, with mixed outcomes. “We are seeing multiple offers at 5-to-12 percent over list price in highly sought-after areas,” he reported, but also noted “there are other homes on the market that are not selling with no real reason why.”

Some brokers also commented on rising interest rates. Wilson said the biggest effect of the upswing in the real estate market has been the erosion of a buyer’s buying power. In May alone, interest rates jumped almost 0.75 percent, he noted, which reduces a buyer’s ability to purchase a $350,000 home by almost $31,000. Coupled with an increase in price, he said it “creates a compounding affect, which will frustrate buyers in today’s market.”  Estey said interest rate increases are “adding fury to the already frenzied buyers who must finance their purchase.” A one-half percentage point increase in interest rates reduces buying power by 5 percent, she explained, adding, “so as prices increase about a percentage a month, the feeling of urgency mounts too.”

Commenting on the challenges buyers are encountering, Estey said, “The joy of buying a home in today’s market is in the long-term result of settling in, but the competitive process is sometimes not so joyful! Hiring the right broker who can add some fun elements and insights while wisely guiding buyers through the decision process can make a huge difference,” she suggests.

Federal officials are downplaying rising interest rates. In a recent interview, Frank Nothaft, Freddie Mac’s chief economist, commented on the latest rise that marked three consecutive weeks of increases. “While this may slow some of the refinance momentum, rates are nonetheless low and home-buyer affordability high, which should further aid home sales and construction in coming weeks,” he remarked, adding, “The rates are also lower today than they were a year ago at this time.”

 

Statistical Summary by Counties: Market Activity Summary – May 2013 Single Fam. Homes + Condos
LISTINGS
PENDING SALES
CLOSED SALES
MONTHS
SUPPLY
New Listings
Total Active
# Pending Sales
# Closings
Avg. Price
Median Price
King
4,352
4,832
4,041
3,122
$457,903
$375,000
1.20
Snohomish
1,564
1,777
1,487
1,131
$309,112
$285,000
1.20
Pierce
1,576
3,025
1,648
1,116
$234,875
$210,000
1.84
Kitsap
575
1,426
567
345
$286,870
$240,000
2.51
Mason
206
759
94
71
$178,045
$149,900
8.07
Skagit
245
785
226
149
$238,902
$220,020
3.47
Grays Harbor
165
807
114
68
$143,411
$139,000
7.08
Lewis
187
700
90
74
$150,977
$134,500
7.78
Cowlitz
164
455
134
83
$174,330
$169,000
3.40
Grant
145
547
92
76
$169,412
$157,840
5.95
Thurston
506
1,121
482
332
$241,093
$225,500
2.33
San Juan
67
415
25
19
$519,047
$375,000
16.60
Island
279
834
199
117
$281,624
$240,000
4.19
Kittitas
150
447
66
60
$285,393
$217,995
6.77
Jefferson
123
466
53
40
$308,200
$298,750
8.79
Okanogan
114
447
48
28
$193,686
$147,950
9.31
Whatcom
552
1,448
398
279
$290,196
$250,000
3.64
Clark
83
149
69
54
$255,812
$229,000
2.16
Pacific
91
436
36
27
$136,736
$121,000
12.11
Ferry
11
76
4
5
$139,600
$151,000
19.00
Clallam
104
415
68
62
$191,923
$181,000
6.10
Others
186
576
104
91
$217,902
$179,900
5.54
MLS TOTAL
11,445
21,943
10,045
7,349
$343,639
$275,000
2.18

Source: NWMLS KIRKLAND, Wash. (June 5, 2013)  Northwest Multiple Listing Service, owned by its member real estate firms, is the largest full-service MLS in the Northwest. Its membership includes more than 21,000 real estate brokers.