Mortgage Calculator

Ten days ago after the Fed calmed the markets' credit panic with a 1/2 point cut in the Discount rate, I postulated that home buyers will come back this fall when the Fed finally drops the Fed Funds rate, and mortgage rates drop. It's now almost certain to happen. Here are the parameters in play now:

Credit scores, along with your overall income and debt, are a big factor in determining if you’ll qualify for a loan and what loan terms you’ll be able to qualify for.

I first heard of the term “equity management” in 2003. I heard Barry Habib discuss this concept at a seminar at the Del Mar Racetrack (critics, please refrain from pointing out the obvious irony). My first thought was “Cool, they have a name for it now!” You see, I am an ARMs dealer and have been since 1996.

For you folks out there in Nevada and Washington, one good example would be to check out this Mortgage Rates calculator. Based on your credit history as well as other demographic information, your quote will be determined accordingly of course through easy online navigation on the calculator.

Calif. median home price - January 07: $559,640

FreddieMac.com has reported a lowering of interest rates for a second week in a row, according to its weekly Primary Mortgage Market Survey. Rates on a 30-year fixed-rate mortgage averaged 6.18 percent, down from last week’s 6.22 percent.

Both purchases and refis broke their downtrends as rates collapsed in the second half of 2006. But rates are rising again. If the rise in mortgage rates continues, the “recovery” in housing will reverse into an unmistakable death spiral, exposing the fact that on this issue, as with so many others, the emperor (Wall Street) has no clothes.

News last week that confidence in the housing sector among young people has dipped recently is not surprising. Housing affordability for first home buyers is at its lowest level on record, lower even than in the late 1980’s when mortgage rates were at 16 and 17%.

The endless chatter about “low mortgage rates” is pure granfalloonery.

But, in general, putting down 20% or more of the house's purchase price as a down payment will give the lender a good impression. They will start you off with their lower mortgage rates and eliminate many unnecessary fees. But if you're disciplined financially, your lender will find a way to allow you to make a smaller down payment, either through a "piggy-back" loan or PMI, which can give you more financial flexibility.

As a result investors, rather than mortgage brokers and bankers, are in control of the rates. When economic news suggests the economy is heating up, investors demand higher yields from the lenders. This happens because they don’t want to buy low yield bonds now, in case the Fed raises rates to cool the economy, which would mean they will make higher yield bonds later. The only way that lenders can get their loans sold in this situation is to raise the yields they offer investors. In turn, this drives the rates higher for consumers.

The rub is that prices rose far more than could ever be justified by declining mortgage rates. That’s where the bubble kicked in. Today’s relatively low rates are not, and never were, a reason why prices would keep rising. Once real rates drop and stabilize, the impetus goes away - again, the gain is a one-time, not a recurring, phenomenon.

Freddie Mac says it expects 30-year fixed rate mortgage rates to average 6.8 percent for the remainder of 2006 and that consumer prices will rise 3.1 percent before softening to 2.5 percent in 2007.

Think about this: Mortgage companies made a lot of money in the past decade on sub-prime mortgages, balloon mortgages and other creative devices for parting people from the maximum amount of profit up front and then leaving them dangling over the financial cliff.

Remember those all-time low mortgage rates from the last few years? Following the stock market correction the Federal Reserve dropped interest rates making credit dirt cheap. Between that and heavy deficit spending (to the tune of about $2 billion a day since September 2005), US dollars are not in short supply.

Mortgage rates have raised and we are waiting for them to come down. We just bought a house (’cept the loan isn’t closed yet so we’re still not yet sure when to celebrate). We will be moving soon out of a house that we have lived in for 5 years (that’s a lot of shit to acquire…)

More disturbing for us all is the federal deficit. It’s draining money from our economy, and raising interest rates. So, housing will cost more in the future, as will your mortgage loan.

I think we will start to see a greater uptick in mortgage rates and a a couple more Fed rate increases.

Lots of buyers in this area used ARM's with low rates in order to get themselves into homes during the recent boom. Now that ARM rates are rising and fixed loans are still fairly low, it might be worth checking into refinancing if you bought on an ARM. Before it ends up costing you and ARM and a leg.

Normally this would not be such a bad thing, because it makes our exports cheaper and our imports more expensive, thus reducing the trade deficit. But a fall in the dollar could set off a spike in long-term interest rates here, including mortgage rates, which could burst the housing bubble. It could also cause the Federal Reserve to raise short-term interest rates more than it should, since rising import prices add to inflation. This would also slow the economy.

While the Fed has recently hinted that it may soon change its stance regarding interest rates to a more neutral posture, there appears to be at least a quarter to half percentage point upward adjustment left. Expect new homes sales to continue to soften in 2006; the $64,000 question is by how much?

The number to look for here isn't necessarily the number of new homes sold last month. The number that is the interesting one is the number of unsold houses on the market. And that number is a disturbing one.

This morning, the better-than-expected housing starts and building permits numbers caused the currency markets to start viewing the dollar favorably again. Big selloffs in euros and gold happened, as the Federal Reserve hiking cycle is extrapolated into the future. Since the Fed has openly targeted housing, the idea is that if it's not slowing down due to low mortgage rates, they'll keep hiking the fed funds rate into oblivion. I don't know about that, but the short-term currency players think so.

4. Pacesetter Mortgage Blog: The Truth about Online Mortgage Rates Comments: Here is an article that explains to the consumer the truth and history of Online Mortgage Rates.

Mortgage rates slipped 1 percentage point over the past week after 3 banks lowered the cost of borrowing for home buyers, the central bank reported on Tuesday, November 1.

People associated with home building wonder how much longer buyers will be able to absorb the increase in building materials and mortgage rates.

Industry observers say mortgage rates are climbing due to fears that rising energy prices are causing inflationary pressures as well as concerns that the Federal Reserve will continue to raise interest rates.

An apartment complex going up in Shanghai. With mortgage rates around 5 percent, energetic foreign investment, rising income and official approval, the nation is making up for years of inattention to construction.

Mortgage rates have risen for the fourth week in a row as investors gradually realize that the Federal Reserve is going to keep raising interest rates.

Average mortgage rates for single-family homes in the 10 largest metropolitan areas as of June 1 as compiled by bankrate.com. The rates are for 30-year, fixed-rate mortgages for 80 percent of the value of the house. A point is a one-time fee equaling one percent of mortgage.

r Treasury-indexed adjustable-rate mortgages (ARMs) averaged 4.26 percent this week, with an average 0.7 point, up from last week when it averaged 4.23 percent. At this time last year, the one-year ARM averaged 3.99 percent. It’s remarkable how mortgage rates have remained so low for so long, according to Frank Nothaft, vice president and chief economist. “But as long as inflation is held in check, there is little or no pressure to push mortgage rates higher. And at the moment, despite high fuel prices, core inflation does indeed seem...

Me: “Or, you could re-finance like many of your neighbors, and take out extra money to pay for college or buying another property… or anything you decide to do. Mortgage rates are as low as I’ve seen them in 40 years. In fact, cranking the new equity out of their homes is exactly what kick-started the economy out of the doldrums a year or so ago, no matter what Bush claims about his tax cuts.”

But even as the Fed has steadily lifted its benchmark short-term interest rate, mortgage rates have remained low. The average interest rate for a 30-year fixed loan is now 5.71 percent, down from 6.30 percent a year ago, according to Freddie Mac, the government-sponsored mortgage buyer.

While the jump in wannabe real estate investors smacks of a "bubble-icious" market, it "is not a portent of imminent demise," says Bob Barbera, chief economist at ITG/Hoenig. "What you need to temper things is a full percentage point rise in mortgage rates." That is all it needs?

This may be the only time in maybe 30 years I can recall that homebuilding growth continues unabated as mortgage rates rose. So for the homebuilders that cater to the very upscale market, there may be some very short-term trades on the long side, putting a smile on Larry Kudlow’s face, but historical market correlations cannot be dismissed for long.

"Long-term mortgage rates, which dropped again for the fifth consecutive week, remain low enough to keep refinancing activity a viable option for many," said Frank Nothaft, vice president and chief economist at Freddie Mac. "Not only can homeowners take some equity out of their home, many may also be able to lower their mortgage rate at the same time," he said.

Until the release of the open market committee's minutes, rates and yields had been flat for a week and a half, with the 10-year Treasury yield ranging from 4.44 percent to 4.50 percent. But when the minutes came out, the 10-year yield fell. Mortgage rates tend to move in the same direction as Treasury yields.

Other economists, however, say rising house values in many metropolitan areas, including Washington, are supported by changing demographics, job creation and still-attractive mortgage rates. Federal Reserve Chairman Alan Greenspan has said the central bank does not think there's a national problem.

Mortgage rates fell for the second straight week, on signs of little inflation concern.

Comments by The Fed (accompanying the .25% rate hike) signaling that they are paying closer attention to inflation, ["Pressures on inflation have picked up in recent weeks"] especially as it relates to rising energy prices, sent bond prices tumbling and spiked mortgage rates. For the week, interest rates on most mortgages rose by about 5/8 of a discount point.

"The economy will continue to have healthy growth, with only moderate inflation. Home construction will decline and competition within the real estate sector may intensify. Mortgage rates will trend upward. But a financing program that uses adjustable rates for a few years and a fixed rate thereafter may be attractive. A housing price bubble is unlikely."

Applications for U.S. home mortgages eased last week amid weaker refinancings and purchases despite a dip in 30-year mortgage rates, an industry group said on Wednesday.

The decrease in refinancing came despite weaker mortgage rates, but an economist said the one-week decrease in rates was a bit of an anomaly in an overall environment of rising rates.

So are Americans begging to borrow money, including from foreigners? Or are foreigners begging to lend to Americans? If it's the former then interest rates should have increased substantially since 2001, especially longer term rates given the FED's 30% increase in liquidity since then. This hasn't happened. Mortgage rates continue to hover around their lowest rates in over four decades. Here's the reason why.

With the average rate on a one-year, adjustable-rate mortgage at 4.39% and housing prices continuing to rise in many areas, buyers seeking to keep payments low are opting for ARMs. But some economists warn that homeowners might run into trouble if interest rates are higher and their payments rise when their fixed-rate period ends, typically in one to seven years.

Say "farewell" to the lowest mortgage rates since the 1960s, and prepare yourself to get smacked in the checkbook by adjustable rate mortgages (ARMs) and home equity lines of credit.

The interest rates on any mortgage-related loans that are not "fixed," or permanently set, have been moving up since last year. Mortgage industry economists are predicting more to come this year and next as the worldwide economy grows and the Federal Reserve uses higher interest rates to limit inflation.

Currently, 30-year fixed rate mortgages are at 6.08 percent, and one-year ARMs are 4.39 percent, according to the Mortgage Bankers Association. The association's economists are predicting 6.6 percent on fixed rates and 5 percent on ARMs by the end of 2005. By mid-2006, fixed mortgages are expected to be at 6.9 percent and ARMs at 5.2 percent.

Rising mortgage rates have now crossed a threshold.

Mortgage company Freddie Mac says 30-year mortgage rates have climbed for the sixth straight week and are now averaging more than six percent for the first time in eight months. This week's survey puts the average for 30-year fixed-rate mortgages at 6.01 percent, up from 5.95 last week.

A competing report from Bankrate-dot-com has rates taking an even steeper jump, to 6.15 percent.

That's the feeling among industry experts who have marveled over housing's vibrancy — all the way through the 2001 recession as well as the economy's recovery. Powered by low mortgage rates, sales of both new and previously owned homes clocked record highs four years in a row — from 2001 to 2004.

As mortgage rates jumped this week, borrowers got nervous and they applied in greater numbers for adjustable-rate loans.

The benchmark 30-year fixed-rate mortgage rose 13 basis points to 6.00 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.30 discount and origination points. One year ago, the mortgage index reached its lowest point of 2004, at 5.41 percent.

The benchmark 15-year fixed-rate mortgage rose 15 basis points to 5.56 percent. The benchmark 5/1 adjustable-rate mortgage rose 11 points to 5.41 percent.

Long-term mortgage rates have risen for the fifth straight week.

Freddie Mac says the average 30-year fixed-rate mortgage was 5.95 percent, up from 5.85 percent last week. One-year adjustable-rate mortgages averaged 4.20 percent, down from last week's 4.24 percent.

U.S. interest rates on 30- and 15-year mortgages rose to their highest levels since last August, according to a report issued on Thursday by mortgage finance company Freddie Mac.

U.S. 30-year mortgage rates rose to an average of 5.85 percent in the week ended March 10 from 5.79 percent in the previous week. It was the highest level for 30-year mortgage rates since a matching 5.85 percent in the week ended Aug. 12, 2004.

Fifteen-year mortgages also rose in the latest week, to an average of 5.38 percent from 5.33 percent. It was the highest level since 5.40 percent in the Aug. 5, 2004, week.

The average rate on a 30-year U.S. mortgage with no upfront points fell 1/8 of a percentage point on Monday, to 5-3/4 percent, according to BestInfo Inc.

If the mortgage market on Tuesday continues in its current direction, rates may remain the same.

The 30-year mortgage rate with one upfront point fell 1/8 of a percentage point to 5-1/2 percent.

Adjustable-rate mortgages aren't the bargains they were just a few months ago.

In May, an astute borrower could have grabbed a one-year adjustable that was nearly 2.5 percentage points cheaper than a fixed-rate mortgage.

The "spread" between adjustable and fixed rates was so wide that adjustables were a "no-brainer" for many buyers who would not have been able to qualify otherwise, said Irvine housing consultant John Burns.

Home loan refinancing activity slowed sharply last week after climbing steadily so far this year, as rising interest rates dampened demand, an industry trade group said on Wednesday.

The Mortgage Bankers Association's seasonally adjusted index of refinancing applications plunged 9.9 percent to 2281.1 in the week to Feb. 25, after rising for four straight weeks.

"A quarter point rise in mortgage rates over the last few weeks has obviously cut into refinance volume," Michael Cevarr, MBA's director of member surveys, said in a press release.

Fixed 30-year mortgage rates averaged 5.74 percent last week, excluding fees, up from 5.67 percent the previous week. Rates were as low as 5.48 percent in early February.

Japan, China, Taiwan, and South Korea hold 40 percent of our government debt. "By helping keep mortgage rates from rising, China has come to play an enormous and little-noticed role in sustaining the American housing boom" (NYT, Dec. 4, 2004). Read that twice. We owe our housing boom to China, because they want us to keep buying all that stuff they manufacture.

This blogger says that continued increases in short-term interest rates may lead to an inverted yield curve, or a condition where short-term interest rates are higher than long-term interest rates. No guarantees which way the yield curves will go this year, but an inverse yield curve is usually not a good sign for the economy. But it means home mortgage rates would remain historically low.

[S]hort-term rates (represented here by 1-year Treasury yields) have indeed been moving up since the Fed starting raising their target rate. In fact, they were moving up before the Fed's decision as the market was probably anticipating the rate hikes. However, long-term rates (10-year Treasury yields in my example) have not shown the same movement. Instead, the have held steady and even fallen slightly!

Due to these trends the "yield spread," that is, the difference between the two rates, has been falling sharply. It has dropped by almost 2 full percentage points since the beginning of 2004.

Now at this point I should stress that there is nothing to guarantee that this trend will continue. But if it does continue, it's entirely possible that by the end of the year (or shortly thereafter) we could have that strange economic phenomenon known as an "inverted yield curve" (or maybe just a flat one).

An inverted yield curve is a curious situation because investors are earning more money on short-term investments than long-term ones, the opposite of what we'd expect. Under "normal" conditions, investors will demand higher rates of return in exchange for giving up their money for a longer period of time.

As far as leading indicators for recessions go, there isn't anything much better than the IYC. The chart I've constructed below (click it for a better image) shows just the spread between 10-year and 1-year Treasury yields. Those years were selected as they were the longest weekly time-series I could find, going back to 1953 (data from the Federal Reserve).

Rates may go back down again next week as a result of lower consumer inflation, but they nudged up this week.

Long-term mortgage rates, while still historically cheap, rose for a second consecutive week.

Freddie Mac said the average 30-year fixed-rate mortgage rose to 5.69 percent, up from last week's average 5.62 percent. Shorter-term rates also rose. One-year adjustable-rate mortgages averaged 4.16 percent this week.

"Mortgage rates rose for the second week in a row on concerns about a pickup in inflation showing up in raw materials," said Freddie Mac chief economist Frank Nothaft. "However, a broader measure of inflation, the consumer price index, posted a less-than-expected rise in inflation, causing bond yields to fall."

U.S. home mortgage applications decreased last week. However, the MBA's seasonally adjusted index of applications for mortgage refinancing climbed 0.1.

Applications for U.S. home mortgages decreased last week as a drop in home purchasing activity offset a marginal increase in refinancing, amid a rise in interest rates, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity decreased 0.6 percent to 727.9 in the week ended Feb 18, after falling 0.5 percent in the MBA's prior week survey.

A sharp rise in interest rates may have dampened demand for mortgages. Top Stories

Fixed 30-year mortgage rates averaged 5.67 percent last week, excluding fees, up 17 basis points from 5.50 percent the previous week.

Despite the increase, mortgage rates remain historically low, which encouraged a modest amount of U.S. consumers to refinance their existing loans.

Mortgage interest rate news on February 20, 2005.

Rates on 30-year mortgages fell for six straight weeks but edged up slightly last week, reflecting rising rates in financial markets. Freddie Mac's weekly survey of mortgage rates released Thursday showed that rates on 30-year, fixed rate mortgages averaged 5.62 percent for the week ending Feb. 17, up from 5.57 percent the week before. It was the first time 30-year rates had gone up since the last week of 2004. Rates on other types of mortgages rose as well. Analysts said the rate increases occurred because investors choose to focus on a variety of economic reports that showed strength in the economy, raising concerns about future inflation pressures.