Mortgage Blog

New home sales plunged in 2007 by the largest amount on record while home prices tumbled sharply in December. Analysts forecast a continues snide in 2008 as the housing market braces for anticipated recession.

National reports per msn.com reported Monday that “sales of new homes dropped by 26.4 percent last year to 774,000. That marked the biggest decline on record, surpassing the old mark of a 23.1 percent plunge in 1980.”

The government is currently reporting that the average price of a new home barely budged last year, edging up a slight 0.2 percent to $246,900, the poorest showing since prices fell by 2.4 percent during the 1991 housing downturn.

While sellers are taking it on the chin right now, it is a buyers market thus keeping the mortgage industry in busy times. With refinance, mortgage cash outs and investment property being a hot commodity the mortgage industry is prepared to report record numbers in 2008.

The prolonged slump in housing is raising concerns that the weakness could be severe enough to push the country into a full-blown recession. In an effort to guard against that threat, the Federal Reserve cut a key interest rate last week by the largest amount in more than two decades with a further rate cut expected on Wednesday when the Fed completes a two-day meeting.
President Bush and House leaders reached agreement on a $150 billion economic stimulus package last week which included items to boost housing by increasing the size of the mortgages that Fannie Mae and Freddie Mac and the Federal Housing Administration can handle. But critics said the continued plunge in housing showed that more dramatic action is needed.

Following the market over the next few weeks could provide for quiet a roller coaster ride and the stimulus bill will probably not have the effect that most legislators are hyping.
 

The Texas mortgage market continues to bounce back with another surprise cut by the FED today.  Fed delivered a three-quarter rate cut on Tuesday, making rates the lowest they have been since 9/11. MBS prices are up +13/32 (FNMA 30yr 5.5 at 101.24), which is about 15/32 higher than Friday at this time. The 30 yr fixed FNMA required net yield (60 day) is now at 5.35%, the lowest level of the month. World equity markets followed US stock markets lower over the long weekend, and this morning the Fed responded. In a surprise move, the Fed lowered the Fed Funds rate by three quarters of a point to 3.50%, the largest rate cut since 1984. Citing increased risks of slower economic growth, the Fed cut rates between meetings for the first time since just after the 9/11 attacks in 2001. With the next Fed meeting just over a week away on January 30, today’s action was a very unusual move, indicating the severity of the conditions in financial markets. In addition to today’s cut, investors are also expecting another half point cut in the Fed Funds rate at next week’s meeting. The Dow was down as much as 464 points earlier this morning, before bouncing back and recovering almost half  of the losses. No economic data will be released today.

The FED cuts has sent Texas mortgage brokers in a frinzy trying to keep up with the phonelines. Brandon Tully, Elite Financing of Austin, Texas, Reported a sharp increase in phone activity this week and expects the activity to continue as people take advatage of the low rates for home refinancing in Texas.  

My name is Rachel McGuire and I work for Lonestarfinancing.com.  I have recently taken the helm of Loanbark and will be blogging here now along with other mortgage brokers.

Since so much time has passed since the last post, let’s get down to business and discuss the market.  What market you say?  Exactly!  People come strutting into my office asking me to time the market for them.  Here is the deal; I can time the market just about as good as the next guy.  No one really knows what is going to happen but I will give you my take on the whole situation and you can do with it what you will.

In the early 2008 year, I think the economy will continue in the direction of a recession.  With this said, the housing market will continue to decline.  In an effort to jump-start the economy out of this recession, I believe the Fed’s will drop interest rates.

On that note, this will be a great opportunity to refinance.  Many experts agree that if you can lock into a fixed rate at about 2% lower than your current rate, go for it.  Keep in mind that a refinance can bring unexpected closing cost that you need to be prepared for.  But in my opinion you will save money in the end.  I’m a big advocate of fixed rate mortgages.

Now I want to bring up the dreaded question of:  Should I buy a house now or should I wait?  Here is what I think; buy it now!  If you plan on buying a new home, plan on being in that home for a few years, and can qualify for that new home without over extending yourself, then I think you should do it.  Many brokers don’t agree saying that you could lose a lot of money.  For instance, if you put 30% down on your home and the housing market falls 15%, you have lost half your investment.  Yes, this is true, but if you plan on staying in your home for a few years, you can wait out this down turn.  If you are scarred of this happening, offer 10% - 15% below asking price to compensate for any lose you feel you may consume.  It is important to remember that the market is constantly fluctuating and today your house may be worth a little less than it did yesterday or vice-versa.

These days’ homes on average tend to be on the market for a longer period of time.  This is a huge advantage to the buyer in that the seller will often consider your offer and most likely counter do to the fact that their home has been sitting on the market for some time now and they are ready to move it.  This creates a situation in which the buyer and seller end up with a deal that makes them both happy.

Like I mentioned earlier if you are buying a house in the market today, you are probably going to get an remarkable deal on the house and in the future, the home will increase in value as the market goes back up. 

I can’t tell you what the market is going to do or if you should buy a new home today or tomorrow.  A good deal to one person is not necessarily a good deal to the next.  Everyone has their own opinion of GOOD and if you feel you have a GOOD deal, run with it.  In the end you are the one who has to be happy and I can’t tell you what you want to hear to make yourself happy.