New changes to Conforming Loans for San Jose

Fannie Mae will change underwriting guidelines for conforming loans for San Jose and rest of the Bay Area. They are doing this to reduce their overall risk. Some of the changes announced recently and going into effect on the weekend of December 12, 2009 further tightens some of the guidelines. Here are the highlights: Credit Score: All Fannie Mae loans whether underwritten electronically or manually will now require a 620 credit score minimum. There are very few exceptions. Mortgage Insurance coverage: Borrowers loan-to-value exceed 80 percent of the property value now have a…continue reading →

San Jose Weekly Mortgage Market Commentary 10/4/2009

The week that was: A volatile but good week for the rate markets. Mortgage rates fell to their lowest levels since last April. Treasuries continue in demand from foreign central banks and domestic investors; likely some of the buying is associated with new concerns that the economy isn't on the fast track of recovery as markets were expecting recently. Economic data flowing last week were generally worse than estimates, shaking the confidence that the V shaped economic bottom may be more a W shaped recovery. Unemployment nationwide rose to 9.8 percent in September from 9.7 percent the previous month. That's a 26-year high. Freddie Mac's Primary Mortgage Market Survey® reported that 30-year fixed-rate mortgage (FRM) averaged 4.94 percent with an average 0.7 point for the week ending October 1, 2009, down from last week when it averaged 5.04 percent. Last year at this time, the 30-year FRM averaged 6.10 percent. The last time the 30-year FRM was below 5 percent was the week ending May 28, 2009, when it averaged 4.91 percent. The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.42 percent this week, with an average 0.6 point, down from last week when it averaged 4.51 percent. A year ago, the 5-year ARM averaged 6.00 percent. Note that these rates are for conforming loan amount up to $417,000. Loan amounts higher than that typically have higher interest rates. (more…)

San Jose Weekly Mortgage Market Commentary 9/27/2009

The week that was: FNMA 4.5% coupon went up 53 bps for the week, improving mortgage rates. August durable goods orders fell 2.4%, largest decline for this series since January. Existing home sales dropped 2.7% in August on a seasonally-adjusted basis the first decline in five months; but the University of Michigan final index of consumer sentiment increased to 73.5 in September, the highest level since January 2008.
FOMC Policy Statement: Information received since the Federal Open Market Committee met in August suggests that economic activity has picked up following its severe downturn. Conditions in financial markets have improved further, and activity in the housing sector has increased. Household spending seems to be stabilizing, but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. With substantial resource slack likely to continue to dampen cost pressures and with longer-term inflation expectations stable, the Committee expects that inflation will remain subdued for some time.
Treasury successfully sold $112B of notes with relatively strong demand. Demand for US securities, particularly US Treasuries, is the global bet the economies of the world are on the recovery path. No one is completely sure; so the best bet in uncertain times based on historic thinking is to park money in the safest conceivable place; US bond markets. (more…)

San Jose Weekly Mortgage Market Commentary 9/20/2009

The week that was: Markets were treated to comments all through the week that the recession is over; Bernanke and Warren Buffet got the ball rolling at mid-week and added more conviction that worst is behind the economy. Even though Bernanke and many others have repeatedly said growth will be slow and likely the "new normal" will keep unemployment high for the next couple of years. Freddie Mac weekly results of its Primary Mortgage Market Survey® reported that 30-year fixed-rate mortgage (FRM) averaged 5.04 percent with an average 0.7 point for the week…continue reading →

San Jose Weekly Mortgage Market Commentary 9/13/2009

The week that was This week didn't have much in the way of economic data; weekly claims declined 26K. U. of Michigan consumer sentiment index jumped to a stronger read than expected but somewhat ignored as recently it has become more volatile. In my view the most significant data this week was the July consumer credit data on Tuesday; credit was expected to have shrunk by $4.1B, it crashed $21.6B and June consumer credit was revised lower, from -$10.3B to -$15.5B. Consumer credit has been declining now for five months and we expect it to continue; markets however, took a look and ignored the potential impact for economic growth. Mortgage markets as reported by the MBA had a very good week last week; the overall applications index jumped 17.0% as mortgage rates worked lower. Freddie Mac weekly Primary Mortgage Market Survey® for 30-year fixed-rate mortgage (FRM) averaged 5.07 percent with an average 0.7 point for the week ending September 10, 2009, down from last week when it averaged 5.08 percent. Last year at this time, the 30-year FRM averaged 5.93 percent. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.51 percent this week, with an average 0.5 point, down from last week when it averaged 4.59 percent. A year ago, the 5-year ARM averaged 5.87 percent. Note that these rates are for loan amounts under $417,000. Higher loan amounts typically have higher interest rates. (more…)

San Jose Weekly Mortgage Market Commentary 9/7/2009

The week that was This week markets were bolstered by generally better economic data; the manufacturing sector based on the August ISM report on Tuesday showed much more strength that was expected, July factory orders were up, and the minutes of the 8/12 FOMC meeting continued to see a small light at the end of what would be defined as a very long tunnel. Seven of the top eight most affordable months occurred during this year, according to the National Association of Realtors® (NAR) Housing Affordability Index, which dates back to 1971. As a result, pending sales of existing homes rose for the sixth straight month in July, a trend not seen since the NAR began reporting data in 2001. Moreover, July sales were the strongest since June 2007. However, in August unemployment rate jumped 0.3% to 9.7%. Also, for the month of August the government insured share of purchase mortgage application was 40.4% - up from 38.3% in Jul & 31.7% in Aug 08. Share was the highest since Feb 91, further documenting growing clout of FHA loans. Mortgage rates for the week ended marginally better than last week. (more…)

Weekly Mortgage Market Commentary 8/30/2009

The week that was A little better in the rate markets; the 10 yr note yield fell 12 BPs and mortgages down about 8 BPs. Choppy trade once again characterized the action last week. Treasury had little trouble selling $109B of notes while new home sales increased 9.6 % in July. July durable goods orders increased 4.9%, the biggest monthly increase since July 2007, consumer confidence increased, and weekly jobless claims declined. Nice week but the stock market barley held on. Freddie Mac weekly results of its Primary Mortgage Market Survey® reported 30-year fixed-rate mortgage (FRM) averaged 5.14 percent with an average 0.7 point for the week ending August 27, 2009, up from last week when it averaged 5.12 percent. Last year at this time, the 30-year FRM averaged 6.40 percent. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.67 percent this week, with an average 0.6 point, down from last week when it averaged 4.57 percent. A year ago, the 5-year ARM averaged 6.03 percent. (more…)

China to buy US Mortgages and what it means for you

CNN Money reported that China's $200 billion sovereign wealth fund, which suffered big paper losses on stakes in Morgan Stanley and Blackstone, is set to invest up to $2 billion in U.S. mortgages as it eyes a property market recovery. Under the Public-Private Investment Plan (PPIP) launched earlier this year, the U.S. government plans to seed a number of public-private investment funds that would combine taxpayer money with private capital to buy as much as $40 billion in toxic securities from banks. Compared with TALF, the new and smaller PPIP program focuses on…continue reading →

San Jose Weekly Mortgage Market Commentary 8/23/2009

The week that was Mortgage loan delinquency, borrowers 60 or more days past due, increased for the tenth straight quarter, hitting an all-time national average high of 5.81% for the second quarter of 2009, according to the latest data from TransUnion.com. This statistic is up 11.3% from the first quarter's 5.22% average. Sales of existing homes in July jumped at the fastest rate in 10 years. Sales of single-family homes increased 7.2% in July from a month earlier to a seasonally adjusted annual rate of 5.24 million units, the National Association of Realtors…continue reading →

San Jose Weekly Mortgage Market Commentary 8/16/2009

The week that was Continued market volatility; the mortgage market regained some losses from the week before as interest rate markets swung wildly from one economic report to the next. Freddie Mac Primary Mortgage Market Survey® for 30-year fixed-rate mortgage (FRM) averaged 5.29 percent with an average 0.7 point for the week ending August 13, 2009, up from last week when it averaged 5.22 percent. Last year at this time, the 30-year FRM averaged 6.52 percent. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.75 percent this week, with an average 0.6 point, up…continue reading →

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