| We saw a little bit of improvement this week in the Mortgage Backed Securities or bond market which is trending interest rates lower. Hopefully this will continue. Interest Rates have generally moved down about one-quarter of a percentage point in the last week. Great news for buyers!!!!!
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For more information about Financing your purchase of a home on the Palos Verdes Peninsula, visit my website at http://www.maureenmegowan.com
The following are interest rate quotes from Al Hermann of American/California Financial Services :
| Conforming 30 Yr Fixed up to $417,000 |
| 5.250% Rate |
| 5.393% APR |
| Pricing based on 740 credit score, 65% Debt to Income Ratio, 80% Loan to Value Ratio, $417000 Loan Amount, 30 Lock Days, Qualified Borrowers Only. When Mortgage Insurance is applicable, it is not calculated in the APR |
| Conforming 30 Yr Fixed $417,001 – $625,500 |
| 5.750% Rate |
| 5.889% APR |
| $729,750 limit available |
| Pricing based on 740 credit score, 55% Debt to Income Ratio, 80% Loan to Value Ratio, $625500 Loan Amount, 30 Lock Days, Qualified Borrowers Only. When Mortgage Insurance is applicable, it is not calculated in the APR |
| FHA 30 Year Fixed |
| 5.500% Rate |
| 5.655% APR |
| Pricing based on 680 credit score, 55% Debt to Income Ratio, 96% Loan to Value Ratio, $417000 Loan Amount, 30 Lock Days, Qualified Borrowers Only. |
| Jumbo 7 Year ARM |
| 6.000% Rate |
| 6.096% APR |
| Pricing based on 740 credit score, 39% Debt to Income Ratio, 70% Loan to Value Ratio, $950000 Loan Amount, 30 Lock Days, Qualified Borrowers Only.
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The following quotes are from Michael Cordova: michaelc@milestonemtg.com from Milestone Mortgage:
| June 22, 2009 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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For more information about Financing your purchase of a home on the Palos Verdes Peninsula, visit my website at http://www.maureenmegowan.com
The following are interest rate quotes from Michael Cordova of Milestone Mortgage at michaelc@milestonemtg.com :
| June 8, 2009 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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For more information about Financing your purchase of a home on the Palos Verdes Peninsula, visit my website at http://www.maureenmegowan.com
In a weekly survey of 20 Los Angeles and Orange County lenders, conducted by HSH Associates for the week ended 5/27/09, the average interest rate for conforming loans of less than $417,000 increased about two-tenths of a percentage point to 5.13% ( +.35 points), up from 4.93% (+.30 points) the previous week. Interest rates on loans over $417,000 increased even more, by approx. three-tenths of a percentage point.
The increase in interest rates, as speculated by HSH Associates, was “a combination of unclear goals in Federal Reserve quantitative easing programs, floods of new sovereign debt and shoddy treatment of GM bondholders.” “Yields on the influential 10-year Treasury bond had lifted by just over a half a percentage point in a few days’ time, rising from the low- to the upper-3% range and taking conforming fixed mortgage rates along for the ride. After standing at a familiar 5.03% on Tuesday, Conforming 30-year FRMs leapt to 5.29% on Wednesday and then 5.44% on Thursday before finally settling back some on Friday to 5.30%.” (Note, these are nationwide averages ).
HSH associates concludes ” After an unexpected flare higher this week, mortgage rates should settle back, with a probably decline of perhaps 10 basis points. The improvement in conforming 30-year fixed rate mortgages at week’s end should hold, leaving us perhaps a quarter-percentage point above Spring lows.”
For more about Financing your purchase of a home on the Palos Verdes Peninsula , visit my website at http://www.maureenmegowan.com
The mortgage meltdown and huge volatility in the stock markets has obviously had a significant impact on the sale of homes. The average price per sq. ft. for homes sold in the first quarter 2009 compared to the first quarter 2008, has fallen much less in the South Bay beach cities, however, than in most markets in Southern California. We are just now getting some news reports indicating that prices are beginning to stabalize in Southern California.
| Location | 2009 1st Qtr. Sales |
2009 1st Qtr. Sales
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%Change 1st Qtr. 2008
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% Change 1st Qtr. 2008
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| Sales Price Per Sq. Ft. | # of Houses | Sales Price Per Sq. Ft. | Sales Volume | Days on Market
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Months Inventory
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| Palos Verdes Estates | $560 | 18 | ( 14% ) | 29% | 66 | 16 |
| RPV and RHE | 425 | 39 | ( 16%) | ( 30%) | 81 | 11 |
| Manhattan Beach/Hermosa | 626 | 51 | ( 20% ) | ( 24% ) | 96 | 11 |
| Redondo Beach | 432 | 37 | ( 10% ) | ( 2% ) | 73 | 4 |
| Torrance | 378 | 81 | ( 13% ) | ( 12% ) | 62 | 3 |
| San Pedro | 325 | 48 | ( 18% ) | 23% | 100 | 6 |
There were no sales in Rolling Hills during the last two quarters. Properties, on average, in the South Bay are selling for approx. 95% of list price.
For most of the last two decades, Los Angeles County has averaged an 8 month inventory, therefore for most of the South Bay; the number of months of inventory is not unusually high. The number of months of inventory of homes in Redondo Beach, Torrance and San Pedro has shrunk significantly in the last 2 quarters. This is indicative of the fact that the lower priced homes tend to be selling faster. Homes in the lower end of the price range in the higher priced market of the Palos Verdes Peninsula and Manhattan Beach are also selling faster than the higher priced homes. The sale of higher priced homes has been severely impacted by the lack of funding available for jumbo mortgages. .
Communities where homes were primarily financed with no down payment variable rate loans, have seen the most loan defaults and resulting price declines, such as San Bernardino, where median home prices are down 40% compared to a year ago.
WHAT ARE MORE IMPORTANT LOWER PRICES OR LOWER INTEREST RATES? Hypothetically, if a homes price fell an additional 10% from $500,000 to $450,000, but interest rates went up 1% point, your mortgage payment would be the same. Any advantage gained by waiting for prices to fall can easily be offset by a rise in interest rates. Inflationary pressures continue to increase, due to increases in gas and food prices. With increased inflation, come higher long term interest rates.
How can you get prepared to buy or sell in this market?
Hire a Realtor with strong internet presence both locally and across the country. Dont miss this very important sales tool. Most buyers begin their search on the internet today.
Maximize your homes best attributes for an optimal selling price and fewer days on the market. Use my website which is filled with ideas to get your home ready, or it can be professionally staged. Email or call me with questions. If you are thinking of selling your home, now may be the best time in the foreseeable future to list your property for sale, while interest rates are low. Qualified buyers are definitely out there and activity has picked up substantially since mid September. In 2009, with a new administration, new tax reform measures may be passed, the market may continue to cool and interest rates may rise.
FINANCING :
BUYERS AND SELLERS TAKE HEART! There is financing available for well qualified buyers due to the Federal Reserves aggressive action in purchasing Fannie Mae and Freddie Mac securities. Many buyers may have been severely affected by the drop in the stock market which may impact the amount of money they may have available for a down payment. There are new guidelines for Fannie Mae and Freddie Mac loans, and 3.5% down payment loans are available with tight restrictions. Recent passage of the Financing Bail-out bill will help provide additional capital in the market for new mortgage loans, but this will take time to implement. Interest rates have also fallen significantly.
BUYERS with good credit, an adequate down payment and 2 years or more employment history will qualify for Full Documentation loans. There are no Stated Loans ( no documentation) offered now. More programs will become available. If the property will be your home, not a speculative investment, you should be buying for the long term. Todays market gives buyers and sellers the opportunity to negotiate a reasonable deal for both parties.
Interest rates on jumbo 30 year fixed rate mortgages (loans in excess of $625.500) have decreased substantially over the last several quarters to an average rate (as of 4/15/09/) of approx. 6.5% but still are significantly higher than 30 year fixed rate conforming loans (loans of less than $417,000) which are at approx. 4.75%. Rates for loans between $417,000 and $625,500 are about one-quarter of a percentage point higher. Conforming loans generally require a 10% down payment (less for FHA loans)
This large spread between jumbo loans and conforming loans is amazing considering that prior to the mortgage loan melt down, spreads between conforming and jumbo loans were only approx. two-tenths of a percentage point.
Jumbo Loans – Because of this high interest rate for 30 year jumbo loans, most jumbo loans are being done for fixed rates of only 5 to 7 years, in the range of 5.5% (with 1 point), with a 25% to 30% down payment.
Thanks for reading this. We hope it helps your decision making. Call us for more in depth help for your property.
For more Market Reports with information about individual sub markets, visit my website at http://www.maureenmegowan.com
The following are general levels of interest rates for various loan terms for both conforming and Jumbo loans as provided by Al Hermann at al@american-california.com .
| Conforming 30 Yr Fixed up to $417,000 |
| 4.875% Rate |
| 5.015% APR |
| Pricing based on 740 credit score, 65% Debt to Income Ratio, 80% Loan to Value Ratio, $417000 Loan Amount, 30 Lock Days, Qualified Borrowers Only. When Mortgage Insurance is applicable, it is not calculated in the APR |
| Conforming 30 Yr Fixed $417,001 – $625,500 |
| 5.250% Rate |
| 5.385% APR |
| Pricing based on 740 credit score, 45% Debt to Income Ratio, 80% Loan to Value Ratio, $625500 Loan Amount, 30 Lock Days, Qualified Borrowers Only. When Mortgage Insurance is applicable, it is not calculated in the APR |
| Jumbo 7 Year ARM |
| 5.625% Rate |
| 5.714% APR |
| Pricing based on 740 credit score, 39% Debt to Income Ratio, 80% Loan to Value Ratio, $1000000 Loan Amount, 30 Lock Days, Qualified Borrowers Only. |
| Jumbo 30 year fixed |
| 6.25% Rate |
| 6.5% APR |
| Pricing based on 740 credit score, 39% Debt to Income Ratio, 80% Loan to Value Ratio, Up to $1500000 Loan Amount, 30 Lock Days, Qualified Borrowers Only. |
For additional information about Financing , buying or selling a home, visit my website at http://www.maureenmegowan.com
Jumbo mortgage rates (those in excess of $729,750) are now in the 6.25% to 6.5%range, which many people consider to be too high, when compared to the extremely low rates for conforming mortgages (those less than $417,000) which are below 5%. What potential borrowers need to consider is that these rates, although high compared to conforming loans, are still quite low compared to the last 10 years.
HSH Associates (http://www.hsh.com/. ) notes in their latest newsletter that “Jumbo 30-year FRMs continued to decline; the week’s 6.44% puts us back at rates last seen two years ago this week.Since the turn of the decade, some 480 weeks have elapsed. Those contending that jumbo rates are “too high” would do well to learn that only 166 of those 480 weeks have featured an average interest rate below this week’s value — and that the remaining 314 have not only been above (but often well above) today’s figure. As a reference point, we are only about 89 basis points from the decade’s low average for Jumbos, but 253 below the high.’
The one significant thing affecting jumbo loans, however, is the limited number of lenders making jumbo loans. Many jumbo loans are limited to only a maximum of $1,000,000, must have a FICO score in excess of 750. These loans also require a large down payment.There are several lenders making jumbo loans, and a good mortgage broker should be able to arrange one for you.
For more about bying or selling real estate on the Palos Verdes Peninsula, visit my website at http://www.maureenemgowan.com
The following are general levels of interest rates for various loan terms for both conforming and Jumbo loans as provided by Al Hermann at al@american-california.com . Interest rates for conforming loans are down about a 1/4 point from 2 weeks ago due to the Federal Reserve program to purchase mortgage backed securities. Loan rates for Jumbo mortgages are also becoming more attractive as lenders re-enter the market.
| Conforming 30 Yr Fixed up to $417,000 |
| 4.625% Rate |
| 4.763% APR |
| Pricing based on 740 credit score, 65% Debt to Income Ratio, 80% Loan to Value Ratio, $417000 Loan Amount, 30 Lock Days, Qualified Borrowers Only. When Mortgage Insurance is applicable, it is not calculated in the APR |
| Conforming 30 Yr Fixed $417,001 – $625,500 |
| 5.125% Rate |
| 5.259% APR |
| Pricing based on 740 credit score, 45% Debt to Income Ratio, 80% Loan to Value Ratio, $625500 Loan Amount, 30 Lock Days, Qualified Borrowers Only. When Mortgage Insurance is applicable, it is not calculated in the APR |
| Jumbo 5 Year ARM |
| 5.25% Rate |
| 5.5% APR |
| Pricing based on 740 credit score, 39% Debt to Income Ratio, 80% Loan to Value Ratio, $1000000 Loan Amount, 30 Lock Days, Qualified Borrowers Only. |
| Jumbo 30 year fixed |
| 6.25% Rate |
| 6.5% APR |
| Pricing based on 740 credit score, 39% Debt to Income Ratio, 80% Loan to Value Ratio, Up to $1500000 Loan Amount, 30 Lock Days, Qualified Borrowers Only. |
For additional information about Financing , buying or selling a home, visit my website at http://www.maureenmegowan.com
The Federal Reserve Bank announced yesterday its intentions to pump in an additional $1.25 Trillion dollars into the economy in an attempt to lower long term interest rates. This program will include $300 billion to purchase 10 year term Treasury securities, fund an additional $725 billion (in addition to a previusly announced $500 billion) to purchase mortgage backed securites issued fy Fannie Mae and Freddie Mac, as well as buying an additional $100 billion in Fannie Mae and Freddie Mac debt. The intent is to lower market interest rates for new mortgages and other long term interest rates.
In the short term, this strategy has proved to be effective in lowering mortgage rates, currently in the high 4% to low 5% range, for conforming mortgages (less than $417,000) purchased by Fannie Mae and Freddie Mac. It is expected that this additional impetus by the Federal Reserve may lower interest rates an additional 1/2 to 1/2%.
The major concern raised by this program is the potential effect this will have on future inflation. The Federal Reserve at this time seems to be more concerned with limiting the risk of deflation and a deeper recession. The Federal Reserve program is tantamount to simply printing money.Substantially increasing the money supply faster than the economy is growing would normally be highly inflationary.
I would advise anyone considering buying a home or refinancing their mortgage to do so as soon as possible. Historically low interest rates and substantially reduced prices make this an extraordinary time to buy a home.
I think that there is a high degree of risk of interest rates rising substantially over the next year. This is due to two reasons. As soon as the Federal Reserve Bank is no longer able to continue to pump such vast amounts of money into supplying capital to the mortgage markets, interest rates could rise substantially as the private sector is simply not investing in mortgage backed securities at this time. As capital dries up, interest rates could rise substantially. In addition, as the economy recovers, the huge increase in the money supply could lead to inflationary pressures and expectations, also significantly increasing long term interest rates.
I really believe that in 12 to 18 months, we will look back upon this time as one of the best times to have bought a home in our lifeetimes.
For more information on Financing a purchase of a home on the Palos Verdes Peninsula, visit my website at http://www.maureenmegowan.com
The following are general levels of interest rates for various loan terms for both conforming and Jumbo loans as provided by Al Hermann at al@american-california.com
| Conforming 30 Yr Fixed up to $417,000 |
| 4.875% Rate |
| 5.015% APR |
| Pricing based on 740 credit score, 65% Debt to Income Ratio, 80% Loan to Value Ratio, $417000 Loan Amount, 30 Lock Days, Qualified Borrowers Only. When Mortgage Insurance is applicable, it is not calculated in the APR |
| Conforming 30 Yr Fixed $417,001 – $625,500 |
| 5.375% Rate |
| 5.511% APR |
| Pricing based on 740 credit score, 45% Debt to Income Ratio, 80% Loan to Value Ratio, $625500 Loan Amount, 30 Lock Days, Qualified Borrowers Only. When Mortgage Insurance is applicable, it is not calculated in the APR |
| Jumbo 7 Year ARM |
| 5.750% Rate |
| 5.840% APR |
| Pricing based on 740 credit score, 39% Debt to Income Ratio, 80% Loan to Value Ratio, $1000000 Loan Amount, 30 Lock Days, Qualified Borrowers Only. |
For additional information about Financing , buying or selling a home, visit my website at http://www.maureenmegowan.com
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