As of the week ending June 13, 2008 mortgage application volume dropped 8.7% on a "seasonally" adjusted basis. On an "unadjusted" basis the index was down 9.6% from one week earlier and over 21% compared to this same week one year ago. This all comes when the industry is already "waist deep" in a slump!
Refinance applications really took a beating falling a ridiculous 15% for the week. Any guesses as to why? That's right mortgage rates have "skyrocketed" over the last 2.5 weeks. However, purchase applications rose 4.3% and FHA loans were up 4%.
Prior to the end of January refinance applications accounted for 75% of all application volume. However, that portion of mortgage related transactions now only accounted for 37.4%. On the same note the ARM portion of the index fell to just 9.7% of all mortgage activity.
Rates and the application volume are "at times" and "more often than not" tied directly to mortgage rates and as they have recently increased we have seen the "total" application volume decrease. All of this en light of a struggling national housing slump, increased inventory of homes and much tighter lending standards. Have you seen the movie "The Perfect Storm"? Well hopefully we end up better than the brave men aboard that vessel?
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
Thursday, June 19, 2008
Monday, June 16, 2008
Will Mortgage Rates Retreat Back to Respected Levels?
The honest answer to the above question is "I don't know"; however I am very much leaning toward yes! But with that being said we have a lot of factors working against us right now. For instance;
1) A weakening dollar vs. other currencies (Our money is buying less goods)
2) Record Oil Prices (Ridiculous pain at the pump)
3) Continued struggles by financial firms ("Wobbling" views among investors)
4) National housing issues are very much alive and well (Less confidence in a "timely" recovery)
5) Inflation, inflation, inflation (This kills the "value based asset" of the MBS)
6) Overnight lending rate still VERY low (This has done nothing but help BIG business!)
There are a few issues working in our favor right now, however none of them are a "clear and distinct" advantage for Mortgage Backed Securities! For Instance;
1) Hopefully we are closer to a financial markets recovery (Confidence back in this sector)
2) Hopefully rising "short term" lending rates in the Fall (Adds value to the dollar and reduces inflationary risks)
3) Increased confidence in the housing sector recovery (Adds faith in MBS with strong performance and less delinquency)
4) Hopefully a decline in oil prices (This will be a direct reflection of a stronger dollar and financial systems recover)
As you can see from the list and the verbage included in the list that optimism in the "near-term" is lackluster. Hopefully over time the financial systems sector will recover and that will lead to a rising value of the dollar, weakening inflation and decreased oil prices all of which would be great for the economy and in-turn should translate into better interest rates!
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
1) A weakening dollar vs. other currencies (Our money is buying less goods)
2) Record Oil Prices (Ridiculous pain at the pump)
3) Continued struggles by financial firms ("Wobbling" views among investors)
4) National housing issues are very much alive and well (Less confidence in a "timely" recovery)
5) Inflation, inflation, inflation (This kills the "value based asset" of the MBS)
6) Overnight lending rate still VERY low (This has done nothing but help BIG business!)
There are a few issues working in our favor right now, however none of them are a "clear and distinct" advantage for Mortgage Backed Securities! For Instance;
1) Hopefully we are closer to a financial markets recovery (Confidence back in this sector)
2) Hopefully rising "short term" lending rates in the Fall (Adds value to the dollar and reduces inflationary risks)
3) Increased confidence in the housing sector recovery (Adds faith in MBS with strong performance and less delinquency)
4) Hopefully a decline in oil prices (This will be a direct reflection of a stronger dollar and financial systems recover)
As you can see from the list and the verbage included in the list that optimism in the "near-term" is lackluster. Hopefully over time the financial systems sector will recover and that will lead to a rising value of the dollar, weakening inflation and decreased oil prices all of which would be great for the economy and in-turn should translate into better interest rates!
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
Thursday, June 12, 2008
When It Rains It Pours
To put it bluntly this has been the worst two week period for mortgage rates that I have seen! Ben Bernanke pulled the "Inflation Boogie Man" out from behind the curtain (as if it wasn't there already or since August of 2007' for that matter) and what has happened? Two FULL weeks of rising mortgage rates. As stated in earlier posts inflation kills any fixed income asset/coupon and MBS (Mortgage Backed Securities) are no different.
It seems traders are more apt to find other avenues to put their money. Even as I type this the DOW is up 170 points, oil is down over $4.50 and gold is down over $20.00. What is surprising to me is that inflation more often than not triggers buying of commodity items such as gold and oil. So why is it trading lower? The honest answer is "I don't know"; to often "experts" feel the need to rattle off verbage when in actuality it would be much more realistic and true if they simply stated "I don't know".
The markets and traders in particular seem to be operating on emotion, physcology, and "scared" buying and selling. An irrational market place (much like we have seen for the past several months) is almost impossible to put a pulse on. So in essence everything is an educated guess because "technical" factors no longer can be relied upon and we have come to that point in time today and for that matter yesterday! Only time will tell if some sort of rational thinking will begin to take place.
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
It seems traders are more apt to find other avenues to put their money. Even as I type this the DOW is up 170 points, oil is down over $4.50 and gold is down over $20.00. What is surprising to me is that inflation more often than not triggers buying of commodity items such as gold and oil. So why is it trading lower? The honest answer is "I don't know"; to often "experts" feel the need to rattle off verbage when in actuality it would be much more realistic and true if they simply stated "I don't know".
The markets and traders in particular seem to be operating on emotion, physcology, and "scared" buying and selling. An irrational market place (much like we have seen for the past several months) is almost impossible to put a pulse on. So in essence everything is an educated guess because "technical" factors no longer can be relied upon and we have come to that point in time today and for that matter yesterday! Only time will tell if some sort of rational thinking will begin to take place.
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
Monday, June 9, 2008
Getting Hit Hard by Rising Rates
The Dow on Friday lost over 400 points and all the while; that's right you guessed it we had zero change in mortgage rates. This is quite disturbing as usually with a swing like we saw on Friday in the DOW we would have seen a big swing in mortgage rates (usually for the better). However, there was very little movement in MBS (Mortgage Backed Securities) and that scares me! Where were investors putting their money? Well I can tell you without reservation that it was Oil ($11 gain on Friday), Gold (also up over $23.00 on Friday) and more than likely (under the mattress) a money market account.
Mortgage Backed Securities have definitely lost their "glow". Investors are less likely to buy MBS when the value of the dollar continues to hurt, mortgage delinquencies continue to rise and financial firms who are having to continue to sell stock to raise capital in order to weather the storm. I believe in the long term rates will get better however my view on short and mid-term rates have definitely changed. Unfortunately for a person looking to purchase in the next 30 days they may be forced to bare the bad news of rising mortgage rates. Let's hope I'm wrong!
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
Mortgage Backed Securities have definitely lost their "glow". Investors are less likely to buy MBS when the value of the dollar continues to hurt, mortgage delinquencies continue to rise and financial firms who are having to continue to sell stock to raise capital in order to weather the storm. I believe in the long term rates will get better however my view on short and mid-term rates have definitely changed. Unfortunately for a person looking to purchase in the next 30 days they may be forced to bare the bad news of rising mortgage rates. Let's hope I'm wrong!
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
Thursday, June 5, 2008
Another Downturn in Mortgage Rates
Well you might have noticed (if not you will when rates get released today) but we have taken a dive off a cliff the last two days as it relates to mortgage rates. Mortgage Backed Securities have dropped over 120 bps points since open yesterday morning or 1.2% in the Fannie Mae required yield. What does all of this mean? Look for the 30 year fixed rate (when released this morning) to be 6.375% or perhaps even higher.
Why the huge increase in such a short time span? I could point to numerous reasons or influences as to why but the raw reality is simple; continued losses by big financial firms (i.e. Lehman Brothers Holdings) and a ever growing inflation concern. Combine these to negative factors with MBS and you will have a "fire sale" for Mortgage Backed Securities and therefore higher mortgage rates. This comes all while the DOW has traded sideways or even down. Some of you may have even heard reports that mortgage applications are at a 6 year low. Coming from the mortgage bubble and refinance boom that does not surprise me but you would think that mortgage applications would have at least held steady over April? This just goes to show what tightening lending standards, continued negativity in the media and volatile mortgage rates will do to an already fragile housing market.
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
Why the huge increase in such a short time span? I could point to numerous reasons or influences as to why but the raw reality is simple; continued losses by big financial firms (i.e. Lehman Brothers Holdings) and a ever growing inflation concern. Combine these to negative factors with MBS and you will have a "fire sale" for Mortgage Backed Securities and therefore higher mortgage rates. This comes all while the DOW has traded sideways or even down. Some of you may have even heard reports that mortgage applications are at a 6 year low. Coming from the mortgage bubble and refinance boom that does not surprise me but you would think that mortgage applications would have at least held steady over April? This just goes to show what tightening lending standards, continued negativity in the media and volatile mortgage rates will do to an already fragile housing market.
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
Tuesday, June 3, 2008
VA Loans Coming Soon!
We wanted to inform our readers and our clients that it won't be too long before we are able to offer VA loans. We at PMG are constantly trying to add to our product offerings and this is one way of doing it. While we do not run across a high amount of eligible borrowers for VA loans, we do from time to time. In the past we have had to refer them to other lenders, but no more!
We will no doubt update this blog and our program offerings on our website once it is official, but it should be any day now. If you are in the market for a VA loan and have been referred to PMG, please go ahead and apply. This is just one of the many enhancements to our program offerings that PMG hopes to make in the coming months. Continue to check back from time to time for any additional changes, but for the time being PMG is very excited to be able to serve you in the near future for all your VA loan needs!
Brought to you by:
Professional Mortgage Group, Inc.
"Your Columbia, MO Mortgage Broker"
We will no doubt update this blog and our program offerings on our website once it is official, but it should be any day now. If you are in the market for a VA loan and have been referred to PMG, please go ahead and apply. This is just one of the many enhancements to our program offerings that PMG hopes to make in the coming months. Continue to check back from time to time for any additional changes, but for the time being PMG is very excited to be able to serve you in the near future for all your VA loan needs!
Brought to you by:
Professional Mortgage Group, Inc.
"Your Columbia, MO Mortgage Broker"
Monday, June 2, 2008
Way to go Boone County Missouri!!
Well in case your not a number watcher I thought I would go ahead and give you some good news in the real estate market for a change. First, Boone County Missouri currently (at least as of Monday June 2nd at 8:15am) has 1,493 listings of single-family residences and condominiums. In connection with this approximately 23% of our listing base or 345 properties are currently under contract!
I periodically review this number with agents and appraisers and can say that we have slowly climbed between 1-2% per month for the past 3-4 months. Boone County Missouri also had 228 closed transactions within the last 30 days. What a turn around from a year ago? We really seem to be getting a firmer grasp on our real estate market with the movement of inventory, less desperate sellers, and more apt buyers. I know we are just kicking off the 2008' real estate season, however I am already looking forward to see what 2009 has to offer! Our local real estate agents, title companies, appraisers and yes lenders have really done well working together to educate our builders, market politicians, and community on our real estate market and what makes it "tick".
We still have 3 solid months left to buy and sell real estate, at least according to past statistics for the most opportune time to dive into the market. What will the future hold? Well based on our already "pending" sales and my conversations with other sellers and buyers I believe the best is yet to come. Only time will tell but when you get a free moment be sure to spread the word and pat yourself on the back!
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
I periodically review this number with agents and appraisers and can say that we have slowly climbed between 1-2% per month for the past 3-4 months. Boone County Missouri also had 228 closed transactions within the last 30 days. What a turn around from a year ago? We really seem to be getting a firmer grasp on our real estate market with the movement of inventory, less desperate sellers, and more apt buyers. I know we are just kicking off the 2008' real estate season, however I am already looking forward to see what 2009 has to offer! Our local real estate agents, title companies, appraisers and yes lenders have really done well working together to educate our builders, market politicians, and community on our real estate market and what makes it "tick".
We still have 3 solid months left to buy and sell real estate, at least according to past statistics for the most opportune time to dive into the market. What will the future hold? Well based on our already "pending" sales and my conversations with other sellers and buyers I believe the best is yet to come. Only time will tell but when you get a free moment be sure to spread the word and pat yourself on the back!
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
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