Getting approved for a home loan isn't getting easier, but it doesn't appear to be getting much more difficult, either. In its quarterly survey to member banks, the Federal Reserve asked senior bank loan officers whether "prime" residential mortgage guidelines had tightened in the last 3 months. Nearly 50 percent of banks said guidelines tightened last quarter, a much lower figure than during all of 2008 and a signal that mortgage lending may be turning a corner. Guidelines remain restrictive, however.  Versus 18 months ago, lenders subject would-be borrowers to all of the following: Higher minimum credit score thresholds. Larger minimum downpayments. Lower debt-to-income requirements. Mandatory fees based on certain loan traits. In addition, the availability of subordinate financing ha... 05/15/2009

Home affordability improved again Wednesday after the government reported worse-than-expected results for April's Retail Sales report. Mortgage rates edged lower for the third consecutive day. The impetus for the rate rally this week may be a long-awaited stock market correction.  After touching multi-year lows in mid-March, the Dow Jones added 30 percent going into last Friday.  It has since lost close to 300 points and as those dollars leave the stock market, they're finding their way toward bonds.  The demand is pushing bond prices up which, in turn, causes rates to fall. Yesterday morning, the rally in rates picked up steam on the heels of April's Retail Sales report.  With figures off a half-percent from March and roughly 7 percent from 2008, investors are concerned that consumer s... 05/15/2009

For the second month in a row, the country's foreclosure activity was dominated by a small number of states. As shown by the latest stats from RealtyTrac.com, more than half of the country's foreclosure actions from April were concentrated in just 3 states: California Florida Nevada Those 3 states are home to but 19 percent of the U.S. population. No matter in which state you live, however, it's important to understand the far-reaching ramifications of foreclosures. Although real estate is local, mortgage lending is not.  Fannie Mae and Freddie Mac insure loans in all 50 states and when those mortgages go into default, the government entities often take losses.  This is the primary reason both Fannie and Freddie asked for government aid to the tune of $19 billion and $6 billion, respect... 05/15/2009

After a series of increases starting April 30, mortgage rates finally took a dip Monday.  It was a welcome surprise for home buyers that went under contract over the weekend.  Same for homeowners looking to pull the refinance trigger. Versus mortgage rates on Friday afternoon, many lenders were already showing lower rates Monday morning before a late-afternoon rate sheet reprice even lower. The drop in rates lowered annual mortgage payments by roughly $180 per $100,000 borrowed. Rate dips like this aren't expected, of course, bringing us to the one of the most important axioms of shopping for a mortgage rate: You can't shop for good luck. This is because mortgage rates are inherently unpredictable.  On some days, rates are higher On some days, rates are lower On some days, rates are unc... 05/12/2009

Mortgage markets hit their worst levels since March last week, sending mortgage rates higher for the second week in a row. Today's conforming mortgage rates are much higher than from the registered low point of April 30, 2009. There are a few reasons why mortgage rates were up last week.  Stress test results weren't as bad as originally feared. The pace of job loss appears to be slowing. The Dow Jones Industrial Average gained another 4 percent. Separately, bullet points like these can move markets and change rates.  Together, though, they're a force.  The combination of events reinforces Wall Street's belief that the U.S. economy is on the mend. Even Fed Chairman Ben Bernanke remarked in his testimony to Congress that the economy should "turn up later this year". As a result, this week... 05/12/2009

The economy shed 539,000 jobs in April, raising the 6-month total to nearly 4 million jobs lost. And while the April data may look bad, it's actually 10% better than what was expected. As a result, it's turning into a bad day to be shopping for mortgage rates. After bottoming out early last week, conforming, 30-year fixed rate mortgages have risen in cost by as much as three-quarters of a percent. Today's good-for-the-economy report may push costs higher still. Now, it may seem odd to categorize 539-thousand lost jobs as "good-for-the-economy", but it's important to remember that on Wall Street, expectations are everything.  Investors are constantly buying and selling securities based on what they think will happen in the future. And, up until this morning, there was an expectation that... 05/11/2009

For the second consecutive month, the number of homes under contract to sell increased -- further evidence that housing markets may have already bottomed. As reported by an industry trade association, the Pending Home Sales Index rose by 3-plus percent last month. A "pending" home is one that's under contract but has yet to close.  This is one reason why the Pending Home Sales Index is an imperfect statistic. Just because a home is under contract doesn't mean it will actually sell.  A lot can go wrong between the date of agreement and the date of closing.  Deals fall apart all the time.  But, when the number of pending contracts rises, we can infer that buy-side demand for homes is strong. It's likely that the number of homes under contract is being influenced by a combination of low mo... 05/11/2009

Mortgage markets faced a broad sell-off last week, sparked by the Federal Reserve and consumer sentiment.  This caused mortgage rates to spike from Wednesday to Friday and it caused the "lowest rates of all-time" to seem like an opportunity lost. It's the first time in 4 weeks that mortgage rates rose overall. Last week was a strange week, to say the least. Aside from the large docket of economic data, there was also: A Federal Reserve meeting. 160 of the S&P 500 firms reporting earnings. A global public health emergency. It all combined to make for a volatile week in mortgages and the biggest losers were the people that hadn't yet locked a mortgage rates. Based on the current market, each quarter-percent that mortgage rates rose added $32 per month per $100,00 borrowed. This week, the ... 05/11/2009

The Case-Shiller Index is a popular reporting tool for the nation's home prices.  Each month, researchers measure home values in 20 large cities, compile their findings, and then publish them to the public. The Case-Shiller Index is not a perfect measurement by any means.  It gives more weight to expensive homes than inexpensive ones, for example, and its sample set includes just 37 states.  But that doesn't diminish its importance to the housing sector.  Because the Case-Shiller Index comes from the private sector, it's an excellent counter for the U.S. government's home value reporting tool -- the House Price Index. In this current market, the Case-Shiller Index tends to report housing in a more negative light than does the government.  This doesn't make either method more accurate, ... 05/11/2009

The Federal Reserve adjourns from its two-day meeting this afternoon.  It's one of 8 scheduled meetings each year for the Federal Open Market Committee. Like all FOMC get-togethers, the purpose of the meeting is to discuss financial and economic conditions in the U.S., and to make new policy to stimulate or retard economic growth, when necessary. The Federal Reserve's main tool for reaching this goal is the Fed Funds Rate. When the Fed lowers the Fed Funds Rate, growth is stimulated. When the Fed raises it, growth is slowed. The Fed has other tools at its disposal, of course, but the Fed Funds Rate is the most common and most well-known. Fed meetings are highly anticipated events to markets because the central bank's can change the course of the U.S. economy with just a statement. As a ... 05/07/2009

Monday, mortgage markets improved with news of new Swine Flu cases.  It's a classic example of Safe Haven buying and today's rate shoppers will see the benefits. Mortgage rates improved about 0.125 percent Monday. It's not an official term, but "Safe Haven buying" describes the trading patterns in which large numbers of investors move money away from risky investments and toward safer ones.  As a general rule in Safe Haven buying, stocks sell off and bonds make gains, including mortgage-backed bonds. Fears that a global Swine Flu outbreak would slow the global recovery is a major reason why mortgage rates improved Monday. Dumping risk is a common reaction on Wall Street when unexpected events occur.  Because the future is uncertain, traders prefer to play it safe.  Hence the jargon-like... 05/05/2009

Last week, like the 3 weeks prior, mortgage markets were all over the place from day-to-day.  But, also like the 3 weeks prior, when the week ended Friday, rates were right back where they started from Monday. For the 4th straight week, mortgage rates started and ended the week essentially unchanged. Whether or not this is good news depends on your perspective.  For active home buyers who have yet to find the "right home", long-term flatness like this is terrific. While interest rates stay even, buyer purchasing power holds flat and pre-approval letters stay valid.  For buyers under contract or homeowners looking to refinance, though, the market's pattern is a little more rough. Although rates are holding steady week-to-week, the day-to-day action is quite different. Bond markets are vo... 05/05/2009

The days of rock-bottom housing prices may be reaching an end. According to the National Association of REALTORS, the number of Existing Home Sales fell by a modest 140,000 units last month. It's the fifth straight month in which home sales straddled the 4.5 million mark. The national housing inventory is down 900,000 from its July 2008 peak. These are two encouraging signs. Meanwhile, in a separate report, the Commerce Department said the supply of newly-built homes for sale is at a 7-year low.  This, too, is a positive signal for housing. Home values are based on supply and demand. If the number of homes for sales falls while the number of buyers stays constant, home prices will rise. This is because the same number of buyers are competing for fewer properties. It's basic economics an... 05/05/2009

If falling home values is what prompted Fannie Mae and Freddie Mac to tighten mortgage guidelines in 2007 and 2008, America's mortgage applicants may get their long-awaiting loosening within the next 18 months. According to a government report, the values of homes financed with conforming mortgages rose for the third straight month in February. This is an important piece of data because as values rise on the homes against which conforming mortgages are made, Fannie Mae and Freddie Mac's respective loan portfolios get less risky. With less risk related to home values, there's an opening for the agencies to assume more risk on individual borrowers.  A guideline loosening would help home loan applicants that currently find themselves ineligible for conforming mortgage financing -- often t... 05/05/2009

National real estate data helps economists identify trends in the housing market. It shapes policy and influences markets. For active home buyers and home sellers, though, national real estate data is irrevelant.  This is because national data says nothing for the factors determining home prices in any given zip code. See, national real estate news is mash-up of data.  It's 128,203,000 homes from all 50 states.  Each of these states has its own economy and there are different factors that drive home values in each Most Americans understand this. But, if we dig deeper, we see that within those states, there are more than 19,000 incorporated cities -- plus thousands of unincorporated ones.  And like the 50 states, city-to-city home values vary by economy, too.  Furthermore, each city is c... 05/04/2009

The Federal Reserve meets next week for a policy-setting meeting.  It's one of 8 scheduled Fed meetings this year in which the Federal Open Market Committee votes on whether to raise, lower, or leave unchanged the Fed Funds Rate. Based on data compiled by the Federal Reserve Bank of Cleveland, Wall Street's expectations of the Fed Funds Rate post-meeting are as follows: 97 percent probability that the Fed Funds Rate holds at 0.000 to 0.250% 3 percent probability that the Fed Funds Rate is raised to 0.750% There is no expectation for a 0.500% Fed Funds Rate. The Fed Funds Rate influences the economy by changing borrowing costs for banks, businesses, and consumers.  When the Fed Funds Rate is lowered, "cheaper money" is meant to speed the economy forward.  When the Fed Funds Rate is rais... 05/04/2009

For the third week in a row, mortgage markets improved early in the week, only to give back the gains before Friday's close. Mortgage rates ended last week exactly where they started.  However, if you locked your mortgage rate Tuesday, you got a rate decidedly lower than someone who waited until Friday. Last week, one of the biggest mortgage rate drivers was a series of surprisingly strong corporate earning reports, including those from financial firms Goldman Sachs and Citigroup.  The positive reports pushed the Dow Jones Industrial Average to its 6th consecutive weekly gain.  This is the market's longest winning streak in two years and its best 6-week rally since 1938, in percentage terms. In part, the rally is boosting Consumer Sentiment, too.  According to a survey, Americans are fe... 04/20/2009

With respect to housing data, news is rarely positive or negative on a universal level. There's always two perspectives to consider, after all. The home buyer's perspective. The home seller's perspective. Usually, when data is beneficial to one group, it's less beneficial to the other.  This is true for rising home prices, average days on market and so forth. Today, the group that gets the most benefit from data is the home seller group. Published Thursday, a government report showed that Housing Starts fell 11 percent nationwide in March and also fell short of analyst expectations.  A "Housing Start" is a new housing unit on which construction has started. The press is calling this a stumbling block for the economy, but that's not exactly true. Fewer Housing Starts last month means tha... 04/20/2009

Since 2007, foreclosures have dominated real estate news.  You can't turn on the news or open a paper without some foreclosure-related story.  But for all of the discussion, foreclosures continue to be geographically concentrated.  Adding up the latest stats from RealtyTrac.com, more than half of the country's foreclosure actions from March occurred in just 3 states -- California, Florida and Nevada. Those 3 states represent just 19 percent of the nation's population. Despite the local concentration of foreclosures, however, they remain a national problem.  This is because mortgage lenders lend in all 50 states -- not just 3 of them -- so the impact of mortgage defaults in one region can quickly spread to others. In part because of foreclosures are higher, the following has happened: Mo... 04/20/2009

It's Tax Day today and who among us doesn't love a legitimate tax deduction? The IRS expects to process 138 million tax returns this year and accompanying those returns will be a melange of tax deduction requests.  Most will be run-of-the-mill including such staples as mortgage interest, vehicle mileage, and child care deductions. Others, however, will be less ordinary. On its website, TurboTax pays homage to some of the most off-the-wall, offbeat tax deductions through the years permitted by the IRS.  Among the "weirdest deductions allowed": A bodybuilder's body oil so his muscles would glisten in competition. A private airplane for owners of investment properties. Landscaping for a sole proprietor that meets clients at home. A swimming pool for a man with emphysema. Tax deductions are... 04/15/2009