Overnight interest rates down, benchmark bond up
30-year fixed rate at 5.25%; 10-year Treasury yield at 3.57%
Thursday, January 24, 2008Inman News
Long-term mortgage interest rates continued lower Wednesday, and the benchmark 10-year Treasury bond yield rose to 3.57 percent.
The 30-year fixed-rate average sank to 5.25 percent, and the 15-year fixed rate fell to 4.79 percent. The 1-year adjustable rate dropped to 5.15 percent.
The 30-year Treasury bond yield was up at 4.27 percent.
Rates and bonds are current as of 7:15 p.m. Eastern Standard Time.
Mortgage rate figures are according to Bankrate.com, which publishes nightly averages based on its survey of 4,000 banks in 50 states. Points on these mortgages range from zero to 3.5.
In other economic news, the Dow Jones Industrial Average surged 298.98 points, or 2.5 percent, finishing at 12,270.17. The Nasdaq gained 24.14 points, or 1.05 percent, closing at 2,316.41.
Stock figures are current as of 7:30 p.m. Eastern Standard Time
Thursday, January 24, 2008
Sunday, September 30, 2007
So Close, Yet So Far Away-On Pricing
So Close, Yet So Far Away – On Pricing
September 28, 2007 -- Realty Times Feature Article by M. Anthony Carr
If I've heard it once, I've heard a bazillion (which, according to www.AntiMoon.com is an actual English word, but not necessarily a real number) times: "I want to leave in some negotiation room in my price."
We have statistical evidence (at least in the local MLS here in the Washington, D.C., area, which is the largest multiple listing system in the country) that those who "leave in some negotiation room," never have to worry about negotiating their price because they never have to face the grueling exercise of lowering their price -- because they never sell.
In the real estate world, we have a classification for those type listings: expireds and withdrawns. Pretty much it means they don't sell because they never hit where the buyers are biting.
A quick search of the MLS reveals that in the last 30 days the Northern Virginia market had 7,915 houses for sale; 876 went to settlement; 820 went under contract; and 1,614 came off the market by either expiring or being withdrawn.
(Granted, many of the withdrawns went from company A to company B, but it still points out that sellers are overpriced and expecting too much for their houses even in the midst of a buyers market. Once they switch companies it is almost always accompanied with a price improvement.)
The sellers who move on down the line with pricing and incentives become "former" owners and move on with their lives. Case in point:
A buyer recently told me her builder representative said the company had a weekend sales bonanza simply to move as much inventory as possible. I checked into it and sure enough, they wanted to sell 1,000 sales over a three-day period. Their prices dropped across the board (already down $36,000 from their base price) and the builder had authorized ANOTHER $10,000 for settlement costs per transaction.
Instead of 1,000 sales, the buyers came in and chewed away 2,100 properties that had been sitting for months nationwide. This particular buyer had walked away from one of their speculation houses three weeks earlier. By waiting, she picked up an additional $22,000 in savings.
Negotiation room? I think not. By biting the bullet, bringing the prices where the fish were biting, they made their money back through doubling their unit sales. It surpassed their goals and surprised everyone on the grassroots level.
So when a seller tells me s/he wants to leave enough room in the asking price for negotiation room, I tell them to take another gander at the statistics. The rationale goes something like this: if home sales are consummating at 3 percent below asking price, then I need to be up 3 percent to get the price I really want. Think about it -- if I can price it so that several buyers want it, then I don't' have to give up my price. (Review last week's column.)
If you price right, actually you don't have to come down at all. Many of the houses in our market area are selling for the asking price. In addition, about 40 percent are selling without the seller providing any closing costs as well. These are the houses belonging to sellers who dared to meet the buyers in the market instead of hoping the buyers would come up out of the market to make an offer.
Forget nudge room, fudge factor, and space for negotiation. Place the house on the market at a bold price -- then hold the line. Then, if the buyer wants closing costs -- negotiate upward.
There's always a good market in any market -- it's where the sellers focus on price and condition, rather than their personal bottom line.
September 28, 2007 -- Realty Times Feature Article by M. Anthony Carr
If I've heard it once, I've heard a bazillion (which, according to www.AntiMoon.com is an actual English word, but not necessarily a real number) times: "I want to leave in some negotiation room in my price."
We have statistical evidence (at least in the local MLS here in the Washington, D.C., area, which is the largest multiple listing system in the country) that those who "leave in some negotiation room," never have to worry about negotiating their price because they never have to face the grueling exercise of lowering their price -- because they never sell.
In the real estate world, we have a classification for those type listings: expireds and withdrawns. Pretty much it means they don't sell because they never hit where the buyers are biting.
A quick search of the MLS reveals that in the last 30 days the Northern Virginia market had 7,915 houses for sale; 876 went to settlement; 820 went under contract; and 1,614 came off the market by either expiring or being withdrawn.
(Granted, many of the withdrawns went from company A to company B, but it still points out that sellers are overpriced and expecting too much for their houses even in the midst of a buyers market. Once they switch companies it is almost always accompanied with a price improvement.)
The sellers who move on down the line with pricing and incentives become "former" owners and move on with their lives. Case in point:
A buyer recently told me her builder representative said the company had a weekend sales bonanza simply to move as much inventory as possible. I checked into it and sure enough, they wanted to sell 1,000 sales over a three-day period. Their prices dropped across the board (already down $36,000 from their base price) and the builder had authorized ANOTHER $10,000 for settlement costs per transaction.
Instead of 1,000 sales, the buyers came in and chewed away 2,100 properties that had been sitting for months nationwide. This particular buyer had walked away from one of their speculation houses three weeks earlier. By waiting, she picked up an additional $22,000 in savings.
Negotiation room? I think not. By biting the bullet, bringing the prices where the fish were biting, they made their money back through doubling their unit sales. It surpassed their goals and surprised everyone on the grassroots level.
So when a seller tells me s/he wants to leave enough room in the asking price for negotiation room, I tell them to take another gander at the statistics. The rationale goes something like this: if home sales are consummating at 3 percent below asking price, then I need to be up 3 percent to get the price I really want. Think about it -- if I can price it so that several buyers want it, then I don't' have to give up my price. (Review last week's column.)
If you price right, actually you don't have to come down at all. Many of the houses in our market area are selling for the asking price. In addition, about 40 percent are selling without the seller providing any closing costs as well. These are the houses belonging to sellers who dared to meet the buyers in the market instead of hoping the buyers would come up out of the market to make an offer.
Forget nudge room, fudge factor, and space for negotiation. Place the house on the market at a bold price -- then hold the line. Then, if the buyer wants closing costs -- negotiate upward.
There's always a good market in any market -- it's where the sellers focus on price and condition, rather than their personal bottom line.
Tuesday, September 18, 2007
Bush Opposes Raising Loan Limits
Bush opposes raising FHA loan limits past $417,000
Administration also wants more flexibility on risk-based pricing
Tuesday, September 18, 2007
By Matt Carter Inman News
The Bush administration says it's "strongly opposed" to a proposal to allow the Federal Housing Administration to guarantee loans of up to $500,000, saying the program should be used to help low- and moderate-income families.
In a policy statement on HR 1852, a "modernization bill" aimed at allowing FHA to serve more borrowers, the administration also warns that the bill creates too many restrictions on a plan to expand the pool of FHA-eligible borrowers by introducing risk-based pricing.
The administration supports provisions of the bill that would raise FHA loan limits to $417,000 in high-cost areas and $271,000 in lower-cost areas. The limits are currently $200,000 in lower-cost areas and $362,000 in high-cost areas.
But that's far enough, the administration argues, responding to an announcement by Rep. Barney Frank, D-Mass., that he plans to introduce an amendment to the bill that would raise the limit to $500,000.
Some critics have argued that FHA has become almost irrelevant to home buyers in high-cost areas, because the median home price often exceeds its loan limits.
But the administration maintains that the FHA should not be allowed to insure loans larger than the $417,000 conforming loan limit -- the maximum loan eligible for repurchase by Fannie Mae and Freddie Mac -- because the program "should remain targeted to traditionally underserved homebuyers, such as low- and moderate-income families."
FHA loan guarantees -- which can lower the cost of borrowing by helping home buyers obtain better interest rates -- are the centerpiece of the administration's plan to help troubled borrowers who may have trouble making mortgage payments when their interest rates reset.
On Aug. 31, the administration rolled out its FHASecure loan program, which gave FHA the authority to insure refinance loans for delinquent borrowers.
The administration also supports provisions of the modernization bill that would allow the FHA to adopt risk-based pricing on a wide-scale basis, allowing some borrowers who would not previously have qualified for such programs to participate by paying higher premiums.
FHA will introduce risk-based pricing on a limited basis in January, and HR 1852 would allow the program to be expanded to serve a wider pool of borrowers with lower credit score and down payment requirements.
While the Bush administration supports risk-based pricing, it claims that HR 1852 doesn't give the FHA enough flexibility to implement it. As written, the bill would leave in place a statutory cap on annual premiums and require FHA to refund the extra amount charged borrowers with FICO scores below 560 if they make loan payments for more than five years.
The administration also objects to a proposal to establish a new Affordable Housing Grant Fund linked to the expected increase in FHA receipts, saying FHA receipts are already credited toward HUD appropriations and that diverting that revenue would reduce resources available for other HUD programs that assist low income families. FHA receipts, the administration said, also tend to fluctuate with housing market conditions "and bear little relation to any potential program funding needs."
The administration also argues that lower down payment requirements should not be limited to first-time home buyers, saying that could make it harder for homeowners to refinance existing mortgages into an FHA-insured loan.
The bill would also remove the statutory cap on reverse mortgages FHA is allowed to insure, and permit home equity conversion mortgage (HECM) program to be used for condominium units and purchase transactions, moves supported by the administration.
***
What's your opinion? Send your Letter to the Editor to matt@inman.com.
Copyright 2007 Inman News
Top
Administration also wants more flexibility on risk-based pricing
Tuesday, September 18, 2007
By Matt Carter Inman News
The Bush administration says it's "strongly opposed" to a proposal to allow the Federal Housing Administration to guarantee loans of up to $500,000, saying the program should be used to help low- and moderate-income families.
In a policy statement on HR 1852, a "modernization bill" aimed at allowing FHA to serve more borrowers, the administration also warns that the bill creates too many restrictions on a plan to expand the pool of FHA-eligible borrowers by introducing risk-based pricing.
The administration supports provisions of the bill that would raise FHA loan limits to $417,000 in high-cost areas and $271,000 in lower-cost areas. The limits are currently $200,000 in lower-cost areas and $362,000 in high-cost areas.
But that's far enough, the administration argues, responding to an announcement by Rep. Barney Frank, D-Mass., that he plans to introduce an amendment to the bill that would raise the limit to $500,000.
Some critics have argued that FHA has become almost irrelevant to home buyers in high-cost areas, because the median home price often exceeds its loan limits.
But the administration maintains that the FHA should not be allowed to insure loans larger than the $417,000 conforming loan limit -- the maximum loan eligible for repurchase by Fannie Mae and Freddie Mac -- because the program "should remain targeted to traditionally underserved homebuyers, such as low- and moderate-income families."
FHA loan guarantees -- which can lower the cost of borrowing by helping home buyers obtain better interest rates -- are the centerpiece of the administration's plan to help troubled borrowers who may have trouble making mortgage payments when their interest rates reset.
On Aug. 31, the administration rolled out its FHASecure loan program, which gave FHA the authority to insure refinance loans for delinquent borrowers.
The administration also supports provisions of the modernization bill that would allow the FHA to adopt risk-based pricing on a wide-scale basis, allowing some borrowers who would not previously have qualified for such programs to participate by paying higher premiums.
FHA will introduce risk-based pricing on a limited basis in January, and HR 1852 would allow the program to be expanded to serve a wider pool of borrowers with lower credit score and down payment requirements.
While the Bush administration supports risk-based pricing, it claims that HR 1852 doesn't give the FHA enough flexibility to implement it. As written, the bill would leave in place a statutory cap on annual premiums and require FHA to refund the extra amount charged borrowers with FICO scores below 560 if they make loan payments for more than five years.
The administration also objects to a proposal to establish a new Affordable Housing Grant Fund linked to the expected increase in FHA receipts, saying FHA receipts are already credited toward HUD appropriations and that diverting that revenue would reduce resources available for other HUD programs that assist low income families. FHA receipts, the administration said, also tend to fluctuate with housing market conditions "and bear little relation to any potential program funding needs."
The administration also argues that lower down payment requirements should not be limited to first-time home buyers, saying that could make it harder for homeowners to refinance existing mortgages into an FHA-insured loan.
The bill would also remove the statutory cap on reverse mortgages FHA is allowed to insure, and permit home equity conversion mortgage (HECM) program to be used for condominium units and purchase transactions, moves supported by the administration.
***
What's your opinion? Send your Letter to the Editor to matt@inman.com.
Copyright 2007 Inman News
Top
Friday, September 14, 2007
Fed Rate Cut Likely Next Week
Fed rate cut likely next week
Commentary: Credit crunch's effect on housing could intensify
Friday, September 14, 2007
By Lou Barnes Inman News
The credit panic appeared to stabilize on Wednesday, interest rates rising a bit, but the crunch found new legs today on news of sinking retail sales. At week's end conforming mortgages are a hair under 6.5 percent, the gap to vanilla jumbos closing to roughly a 0.5 percent premium, half of the worst in August. Everything else -- even high-quality off-brand loans -- is as-was: pricey or gone.
The Fed meets Tuesday, will cut its overnight rate a bit, will have something murky and inane to say about following developments as they develop and taking appropriate action when appropriate -- all completely as expected by the markets and built into the current rate structure.
The next big move in long-term rates will depend on economic data weeks away: We won't get trend confirmation of last Friday's weak employment data until the next report on Oct. 5. Thursday's report of no change in early September unemployment claims says that hiring may have slowed, but we're not yet facing a spike in layoffs.
We won't get comprehensive housing data until well into October, and even then, news of deepening trouble will not push rates lower unless companion reports show weakness spreading into the larger economy. The preliminary data says that the credit crunch didn't push housing off a table, but the July slope of deterioration steepened in August and is doing so again in September. Just not quite vertical.
The astonishment here continues at the absence of grip and clarity among the authorities about the extent and character of the credit crisis. Simon Johnson, director of International Monetary Fund research, told the Herald Tribune that the subprime crisis has not been resolved, and the IMF doesn't understand why.
The European Central Bank poured $100 billion in 90-day money into its banks -- an extraordinary throwing-in-of-towel, as central banks typically inject liquidity only overnight or for a few days. On that same day, Bank of England governor Mervyn King derided all of these liquidity injections as "... ex-post insurance for risky behavior" that would only encourage more. Two days later, last night, the BOE had to bail out the UK's largest mortgage lender -- the first bank bailout there in 30 years.
Federal Reserve Chair Ben Bernanke traveled all the way to Europe to deliver a re-print of a 2-year-old speech on the "savings glut," and offered not a syllable of insight into current matters. He cannot tip his policy intentions; however, in a moment crying for leadership he might have had descriptive things to say, defining the edges of the crunch. He employs the largest group of economists anywhere, and they must have some clues. I hope.
The Secretary of the Treasury, Hank Paulson, late Grand Poobah of Goldman Sachs, said he is focused on the commercial paper evaporation (I will sleep so much better tonight), and on Wednesday gathered a group of mortgage wholesalers, asking them to offer more products to help prevent foreclosures. He knows perfectly well that the Structured Finance department at Goldman and its cousins are the source of such products and are paralyzed in the credit panic, able to wiggle only a single finger to the crowd, pointing blame for this fiasco at somebody else.
Paulson of all officials has the capacity to find out what and where the trouble is, and to understand it, and to offer measures to repair it and to prevent its recurrence. "Playing dumb" hardly describes his contributions in public in six weeks of crunch.
The very worst of the blame-shifting profiteers, led by commercial bankers, claim that the whole problem here is the practice of selling loans, the maker immune to the pain of the ultimate holder (this theory joined, incredibly, by Bernanke). Loans have been sold since the beginning of banks, and securitized and sold in vast quantity for 50 years -- successfully, an essential component of economic growth, so long as properly underwritten at transfer, not merely at origination. Who, Mr. Paulson, failed at that?
The call here continues for blanket-yanking and sunshine: Re-underwrite to discover who sold what to whom, where it is now, and who has loaned how much against it.
Lou Barnes is a mortgage broker and nationally syndicated columnist based in Boulder, Colo. He can be reached at lbarnes@boulderwest.com.
***
What's your opinion? Send your Letter to the Editor to opinion@inman.com.
Copyright 2007 Lou Barnes
Commentary: Credit crunch's effect on housing could intensify
Friday, September 14, 2007
By Lou Barnes Inman News
The credit panic appeared to stabilize on Wednesday, interest rates rising a bit, but the crunch found new legs today on news of sinking retail sales. At week's end conforming mortgages are a hair under 6.5 percent, the gap to vanilla jumbos closing to roughly a 0.5 percent premium, half of the worst in August. Everything else -- even high-quality off-brand loans -- is as-was: pricey or gone.
The Fed meets Tuesday, will cut its overnight rate a bit, will have something murky and inane to say about following developments as they develop and taking appropriate action when appropriate -- all completely as expected by the markets and built into the current rate structure.
The next big move in long-term rates will depend on economic data weeks away: We won't get trend confirmation of last Friday's weak employment data until the next report on Oct. 5. Thursday's report of no change in early September unemployment claims says that hiring may have slowed, but we're not yet facing a spike in layoffs.
We won't get comprehensive housing data until well into October, and even then, news of deepening trouble will not push rates lower unless companion reports show weakness spreading into the larger economy. The preliminary data says that the credit crunch didn't push housing off a table, but the July slope of deterioration steepened in August and is doing so again in September. Just not quite vertical.
The astonishment here continues at the absence of grip and clarity among the authorities about the extent and character of the credit crisis. Simon Johnson, director of International Monetary Fund research, told the Herald Tribune that the subprime crisis has not been resolved, and the IMF doesn't understand why.
The European Central Bank poured $100 billion in 90-day money into its banks -- an extraordinary throwing-in-of-towel, as central banks typically inject liquidity only overnight or for a few days. On that same day, Bank of England governor Mervyn King derided all of these liquidity injections as "... ex-post insurance for risky behavior" that would only encourage more. Two days later, last night, the BOE had to bail out the UK's largest mortgage lender -- the first bank bailout there in 30 years.
Federal Reserve Chair Ben Bernanke traveled all the way to Europe to deliver a re-print of a 2-year-old speech on the "savings glut," and offered not a syllable of insight into current matters. He cannot tip his policy intentions; however, in a moment crying for leadership he might have had descriptive things to say, defining the edges of the crunch. He employs the largest group of economists anywhere, and they must have some clues. I hope.
The Secretary of the Treasury, Hank Paulson, late Grand Poobah of Goldman Sachs, said he is focused on the commercial paper evaporation (I will sleep so much better tonight), and on Wednesday gathered a group of mortgage wholesalers, asking them to offer more products to help prevent foreclosures. He knows perfectly well that the Structured Finance department at Goldman and its cousins are the source of such products and are paralyzed in the credit panic, able to wiggle only a single finger to the crowd, pointing blame for this fiasco at somebody else.
Paulson of all officials has the capacity to find out what and where the trouble is, and to understand it, and to offer measures to repair it and to prevent its recurrence. "Playing dumb" hardly describes his contributions in public in six weeks of crunch.
The very worst of the blame-shifting profiteers, led by commercial bankers, claim that the whole problem here is the practice of selling loans, the maker immune to the pain of the ultimate holder (this theory joined, incredibly, by Bernanke). Loans have been sold since the beginning of banks, and securitized and sold in vast quantity for 50 years -- successfully, an essential component of economic growth, so long as properly underwritten at transfer, not merely at origination. Who, Mr. Paulson, failed at that?
The call here continues for blanket-yanking and sunshine: Re-underwrite to discover who sold what to whom, where it is now, and who has loaned how much against it.
Lou Barnes is a mortgage broker and nationally syndicated columnist based in Boulder, Colo. He can be reached at lbarnes@boulderwest.com.
***
What's your opinion? Send your Letter to the Editor to opinion@inman.com.
Copyright 2007 Lou Barnes
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