Greece still roiling U.S. mortgage marketsMortgage markets gained last week, picking up momentum into the weekend. Global demand for mortgage-backed bonds helped push mortgage rates to new lows, and closing costs eased somewhat, too.

According to Freddie Mac’s weekly mortgage rate survey, the average 30-year fixed rate mortgage rate fell to 3.89% nationwide. In order to get access to 3.89% mortgage rates, Freddie Mac said, mortgage applicants should expect to pay a full set of closing costs plus 0.7 discount points.

1 discount point is equal to 1 percent of your loan size.

Loans with “low closing costs” or “no closing costs” will be at higher rates than Freddie Mac’s published, average rate.

The biggest reason why mortgage rates fell last week is because — once more — concerns over European sovereign debt resurfaced on Wall Street. This has been an ongoing story for more than a year, and one that won’t likely end soon.

Several Eurozone nations saw their respective credit ratings downgraded last week, a move that sparked safe haven buying of U.S. mortgage bonds. France was stripped of its top credit rating. Slovakia, Italy and Austria were each downgraded, too.

Markets were also influenced by a conflict between Greece’s creditor banks and the nation-state’s government. The breakdown in talks increases the likelihood of the Eurozone’s first sovereign default.

Meanwhile, domestically, in-line Retail Sales figures and rising consumer confidence helped to prop up the U.S. dollar, a move that’s linked to lower mortgage rates.

This week, the markets were closed for the federal holiday Monday, and re-open Tuesday without much data on which to trade. Several inflationary reports are set for release including the Producer Price Index and the Consumer Price Index; and, in housing-related data, we’ll see the Housing Starts report and Existing Home Sales figures for December.

Date Time (ET) Statistic For Market Expects Prior
01/18/12 08:30:00 AM PPI Dec 0.10% 0.30%
01/18/12 08:30:00 AM Core PPI Dec 0.10% 0.10%
01/18/12 09:15:00 AM Industrial Production Dec 0.50% -0.20%
01/18/12 09:15:00 AM Capacity Utilization Dec 78.10% 77.80%
01/19/12 08:30:00 AM Initial Claims 01/14/12 385K 399K
01/19/12 08:30:00 AM CPI Dec 0.10% 0.00%
01/19/12 08:30:00 AM Core CPI Dec 0.10% 0.20%
01/19/12 08:30:00 AM Housing Starts Dec 673K 685K
01/19/12 08:30:00 AM Building Permits Dec 680K 681K
01/19/12 10:00:00 AM Philadelphia Fed Jan 10 10.3
01/19/12 01:15:00 PM 10-year Treasury TIPS Auction n/a n/a n/a
01/20/12 10:00:00 AM Existing Home Sales Dec 4.55M 4.42M

Expect mortgage rates to follow the Eurozone story this week. Pessimism and weak data will be good for mortgage rates in Virginia and nationwide. Strength will lead mortgage rates higher.

If you’re still floating a mortgage rate or have otherwise yet to lock, mortgage rates are lower than they’ve been in history. It’s an ideal time to make aan interest rate commitment.

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Conforming Loan Limits lowered in 2011

For homeowners in high-cost areas nationwide, conforming and FHA loan limits have dropped by as much as 14 percent.

The following are FHA and Conforming (enhanced) mortgage loan limits for purchase and refinance transactions in VIrginia:

– Richmond Area: $535,900

– DC Metro (N Va including Fredericksburg): $625,500

– Norfolk / VA Beach Area:  $458,850

– Charlottesville Area:  $437,000

Effective October 1, 2011, the temporary mortgage loan limits that allowed for non-jumbo loan sizes of up to $729,750 are no longer.

$729,750 is above the “normal” loan limit of $417,000.

The elevated limits were put in place in 2008 as the economy and financial sector entered its crisis. At the time, there was little private money to serve buyers and would-be refinancers whose loan sizes exceeded Fannie Mae and Freddie Mac’s maximum $417,000 loan limits.

For most people whose loan sizes exceeded that threshold, mortgage financing was unavailable. There were no lenders to back the loan size.

This was of particular importance in places such as New York City, Los Angeles and Washington, D.C. where home prices routinely top $1 million. For people in these areas, unless they had a downpayment that could lower their respective loan sizes to $417,000 or lower, mortgages were mostly unavailable.

Congress recognized this and, as a result, gave Fannie Mae and Freddie Mac temportary authorization to purchase and securitize home loans of up to $729,750 in value, depending on where the subject property was located.

The program helped housing, leading Congress to pass more permanent, location-specific loan limits. Later that same year, Congress passed the Housing and Recovery Act of 2009 which, in part, made high-cost loan limit pricing permanent, albeit at $625,500.

The $729,750 temporary limits expired Friday, September 30, 2011. Today, the maximum allowable conforming loan size is $625,500.

If you live in a high-cost area, therefore, take note. Mortgage rates may be low, but the amount of loan for which you qualify may be less than you expect, and you may find yourself ineligible.

The complete list of high-cost areas is available online.



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FOMC meeting on TuesdayMortgage markets were especially volatile last week, taking rate shoppers in Virginia on a roller-coaster ride. The week’s news schedule was full. It included debt ceiling debates, jobs figures, and ongoing maneuverings within the Eurozone.

Each story a material impact on mortgage rates and, as a result, rates varied wildly from day-to-day.

Throughout the early part of the week, mortgage rates fell.

Monday, bond markets improved as leaks of the congressional debt ceiling agreement surfaced. Investors approved of the accord’s general terms and bought U.S.-backed debt to prove it. Tuesday, when the final agreement was reached and the terms were made public, mortgage rates dropped again.

This is because the debt ceiling agreement is based on spending cuts and tax increases. In response, analysts revised lower their respective growth estimates for the United States, benefitting bonds.

By Thursday, markets were in full rally mode.

On the eve of the July jobs report, traders flocked to the ultra-safe bond market; “whispers” put the net jobs created figure at a negative. Wall Street feared the worst. By Thursday’s close, mortgage pricing was at its best levels since November 2010.

Friday morning, though, markets recoiled. When the Non-Farm Payrolls report showed much-better-than-expected growth, it triggered a bond market sell-off and rates reversed higher. Rates rose more Friday than on any single day since November 30, 2010.

If you were quoted a mortgage rate on Thursday, on Friday, the same mortgage rate cost 1 discount point more.

This week, rates may rise or fall — it’s too soon to tell.


Time (ET)

Statistic For

Market Expects



08:30:00 AM

Productivity-Prel Q2




02:15:00 PM

FOMC Rate Decision Aug




10:00:00 AM

Wholesale Inventories Jun




02:00:00 PM

Treasury Budget Jul




08:30:00 AM

Initial Claims





08:30:00 AM

Trade Balance Jun




08:30:00 AM

Retail Sales Jul




08:30:00 AM

Retail Sales ex-auto Jul




09:55:00 AM

Mich Sentiment Aug




10:00:00 AM

Business Inventories Jun




Friday afternoon, after markets closed, S&P downgraded the long-term debt of the U.S. government a notch. Typically, lower credit ratings means higher borrowing costs which leads to higher mortgage rates, among other things. However, it’s unclear how markets will react to the S&P decision.

Plus, the Federal Open Market Committee meets Tuesday and that, too, can affect markets.

As always, the prudent move is to lock your mortgage rate if its payment and terms are sensible. There’s too much volatility to know what markets might do tomorrow.

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The S&P / Case Shiller Report released today for April indicates increasing home values.:


Data through April 2011 … show a monthly increase in prices for the 10- and 20-City Composites for the first time in eight months. The 10- and 20-City Composites were up 0.8% and 0.7%, respectively, in April versus March. Both indices are lower than a year ago; the 10-City Composite fell 3.1% and the 20-City Composite is down 4.0% from April 2010 levels.

Six of the 20 MSAs showed new index lows in April – Charlotte, Chicago, Detroit, Las Vegas, Miami and Tampa. Thirteen of the cities and both composites posted positive monthly changes. With index levels of 152.51 and 138.84, respectively, both the 10- and 20-City Composites are above their March 2011 levels, which had been a new crisis low for the 20-City Composite.


This may be a sign that we have seen or are close to the bottom of the housing market.  Now is a good time to look at buying a home as a primary residence or investment property.  Apply Now to pre-qualify for a purchase.

(804) 433-1510


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CNBC has created a 1o tips for surviving the current housing market:


1)  Buyer sentiment has improved – Be Encouraged

2)  Less competition due to less new construction

3) Home prices are up in are up in many markets

4)  If you don’t sell now you are not loosing money

5)  Downurns seem long but recovery may be quick

6)  Make those improvements while costs are down

7)  Make the improvements timeless (no avocado toilets)

8)  Trade-up.  Savings on the larger home will outshine losses on current home.

9)  Buy a vacation home.  Prices are down.

10)  Be smart about selling.


Real Estate and Economy: 10 Tips for Surviving the Housing Market – CNBC.

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Yesterday HUD (FHA) released their monthly report for December 2010.  This report shows REO (Real Estate Owned / Foreclosed properties) up 9.5% from November.

Combined REO for for Fannie Mae Freddie Mac & FHA was at 293,171 units at the end of 3rd quarter for 2010.  Fannie Mae & Freddie Mac have not yet reported 4th Quarter numbers.

Take a look at this graph.

This means homes are on sale for discounted prices.  Thinking about buying a home?  Now is a good time to look, it is a buyer’s housing market.

To get pre-approved for a purchase Click here.

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Mortgage rates improved last week as the price of mortgaged backed securities rose.  The price of a rate for thirty-year fixed rate mortgages improved by about ½ of a discount point.  However, the long term outlook for mortgage rates continue to be bearish.  The near term outlook has shifted from solid bearish reads to a more neutral pattern. This week both existing and new home sales in Jan are expected to have declined from Dec but whatever slippage we see will likely be seen as weather related distortions.

US financial markets are closed Monday for President’s Day. The week has two housing reports, existing and new home sales, Jan durable goods orders and the weekly jobless claims as the main data points. Treasury will auction $99B of notes; Tuesday $35B of 2 yrs, Wednesday $35B of 5 yrs and Thursday $29B of yr notes totaling $99B the same as the past four months.

Date Time (ET) Statistic For Market Expects Prior
02/22/11 09:00:00 AM Case-Shiller 20-city Index Dec -2.40% -1.59%
02/22/11 10:00:00 AM Consumer Confidence Feb 67 65.6
02/23/11 10:00:00 AM Existing Home Sales Jan 5.23M 5.28M
02/24/11 08:30:00 AM Initial Claims 02/19/11 410K 410K
02/24/11 08:30:00 AM Durable Orders Jan 3.00% -2.30%
02/24/11 10:00:00 AM New Home Sales Jan 310K 329K
02/25/11 08:30:00 AM GDP – Second Estimate Q4 3.30% 3.20%
02/25/11 09:55:00 AM Michigan Sentiment – Final Feb 75.1 75.1


Tuesday morning brings us the first of this week’s data with the release of February’s Consumer Confidence Index (CCI) during late morning trading. This Conference Board index measures consumer confidence in their personal financial situations, giving us a measurement of consumer willingness to spend. If consumers are feeling good about their own financial situations, they are more apt to make large purchases in the near future. Since consumer spending makes up two-thirds of the economy, related data is considered important in terms of gauging economic activity. It is expected to show an increase in confidence from 60.6 in January to 65.0 this month. A lower reading would be considered good news for bonds and mortgage rates.

The National Association of Realtors will post January’s Existing Home Sales report late Wednesday morning. It tracks home re-sales, giving a measurement of housing sector strength. It is expected to show a small decline in sales of existing homes, meaning the housing sector remained fairly flat during the month. Ideally, the bond market would like to see a sizable decline in sales because weak housing is one of the hurdles that the economy must overcome to recover from the recession. The longer it takes for the housing market to recover, the longer it will take the economy to do the same.

Thursday’s first of two releases is January’s Durable Goods Orders data will provide a measurement of manufacturing sector strength by tracking orders at U.S. factories for items expected to last three or more years. A smaller increase than the 3.0% that is expected would be good news for the bond market and mortgage rates. This data is quite volatile from month-to-month, so large swings are fairly normal.

The economy based on recent data continues to improve, all but employment and housing. Inflation concerns are slowly mounting as global inflation ticks higher. The outlook for inflation remains on the minds of investors, who are not likely to sit and wait for confirmation, putting pressure on long term rates. Both the improving economy and inflation concerns however are being overlooked to some extent with increasing violence and protests spreading across the Mideast. After Tunisia and Egypt over through their rulers people in most of the region are taking to the streets. Safety moves into US treasuries are countering inflation worries and strengthening economic data points.

January’s New Home Sales report will be posted late Thursday morning. This is one of the least important reports of the week, and is the sister report to Wednesday’s Existing Home Sales release. They measure housing sector strength and mortgage credit demand, but usually do not have a significant impact on bond trading or mortgage rates unless they show significant surprises. This report is also expected to show a decline in sales.

The first of two revisions to the 4th Quarter GDP reading is scheduled for release Friday morning. Analysts’ forecasts currently call for an annual rate of growth of 3.3%, indicating that the economy was slightly stronger in the last quarter of the year than initially thought. It will be interesting to see where this figure falls and what its impact on the markets will be. Generally speaking, higher levels of activity are bad news for the bond market, while a sizable downward revision would be good news and could lead to improvements in mortgage pricing

The last piece of data scheduled for release this week is the University of Michigan’s revision to their Index of Consumer Sentiment for February. Current forecasts show this index not changing much from its preliminary estimate of 75.1. This index is fairly important because it helps us measure consumer confidence that translates into consumer willingness to spend.

Look for continued volatility in bond prices and mortgage rates this week, especially Tuesday, Thursday and Friday. This would be a very good week to maintain contact with your mortgage professional.

To find out about applying for a mortgage call Paul Cantor (804) 719-1515 or click here.

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FHA announced the extension of the anti-flipping wavier through the end of 2011.  This will help stabilize the market and make financing foreclosed homes easier..

FHA regulations typically prohibit insuring a mortgage on a home owned by the seller for less than 90 days.   FHA today posted a notice extending this waiver through the remainder of 2011.  The wavier allows buyers to continue to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales..

Read the full notice.


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Here are some interesting Home sales statistics for 2010 in the metro Richmond, Virginia market:

•        Homes sales under $250,000 were down 7%.

•        Homes sales priced between $250,000 and $500,000 were down 15%.

•        Homes sales priced between $500,000 and $750,000 were up 4%.

•        Homes sales priced above $750,000 were up 24%.

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