(Read more: What you need to know if Fannie and Freddie go)

“Consumers have taken the interest rate rise in stride. Expectations for continued improvement in housing persist, and sentiment toward the current buying and selling environment is back on track from its dip last month,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “These results are consistent with our own analysis of previous housing cycles, which finds that interest rates and home prices are not strongly correlated.”

(Read more: Taking your calls now: Obama sells housing agenda via Zillow)

Another survey from home builder PulteGroup found 43 percent of move-up buyers indicating they are planning to buy a new home within the next five years, with 76 percent saying they believe they can sell their current home within the next two years for enough to move up. Pulte targets the move-up buyer.

Mortgage applications to purchase a newly built home rose 14 percent month to month, according to the Mortgage Bankers Association, but new home buyers may be less sensitive to rates, as builders can buy down mortgage rates as part of the deal.

It all prompts the question: With rates still historically low, does a 1 percentage point jump in rates really matter?

Article source: http://www.cnbc.com/id/100952350

What a difference two months (and 1.11%) makes: Higher rates mean this Brisbane condo would now pencil out to $254 more a month (Kiesha Stephens/Redfin)

Mortgage interest rates are on a tear. Last week they registered their sharpest one-week spike in years, hitting 4.46% for a fixed-rate 30-year home loan, according to Freddie Mac. Less than two months earlier, the rate was 3.35%.

Today’s Chronicle looks at the impact on the housing market; click here for the story.

Is a percentage more really that big a deal? Well, just ask all the folks who refinanced to carve that 1% off their mortgage rate.

Those who have not yet refinanced, perhaps because they were either underwater or close to it (lacking that magic 20% equity) are getting worried they may be out of luck. It’s a balancing act to see what will happen faster: Higher home values to increase their equity or higher mortgage rates that will make a refi less attractive.

Some home buyers, as well as those refinancing, may see the rising rates as motivation to get in the game.

“The rate increase spurred a lot of people to pull the trigger,” said Jay Voorhees, owner/broker of JVM Lending in Walnut Creek. “We’ve had an uptick in volume recently with both purchases and refinances.”

In his blog, mortgage broker Julian Hebron of RPM Mortgage in San Francisco discusses the possibility that rates could hit 5% in the near future.

While many experts say the housing market as a whole is likely to shrug off the higher rates, for some individual buyers, especially those on a shoestring budget, the impact will be stronger.

Consider these two homes now on the market, a condo very close to the Bay Area median, and a more high end home. Assuming a standard 20% down payment, look at what the monthly mortgage payments would be under today’s rate, and what it would have been in early May with the 3.35% rate.

This Brisbane two-bedroom condo “steps from the great outdoors,” (at top) is listed at $499,000. At today’s rate of 4.6%, monthly mortgage payments would be $2,017.  Monthly payments at 3.35% would be $1,763, or $254 less.

This San Jose 5-bedroom with an “inviting floor plan” and “lush backyard” in the Cambrian neighborhood (below)  lists at $889,000. The monthly cost at 4.6%: $3,587.  At 3.35%: 3,135. The difference: $452 a month. (Caveat: In reality this jumbo mortgage might mean a higher rate, but the spread between two months ago and now would be consistent.)

Carolyn Said is a San Francisco Chronicle staff writer. For Bay Area real estate news and insights, follow  her on Twitter: @csaid

This 5-bedroom in San Jose’s Cambrian neighborhood lists for $889,000. (Ashley Rabello/Redfin)

Article source: http://blog.sfgate.com/ontheblock/2013/06/30/mortgage-interest-rates-on-upswing-heres-the-pocketbook-impact/

Mortgage applications to purchase a home are rising for two reasons: Buyer demand is increasing, and those buyers are afraid rates will go up dramatically, so they want to lock in fast.

(Read More: Depression Begone! Home Prices Set Record in April)

Alicia and Ryan Diederichs say they are in a race against time. A job transfer recently sent them and their three young children to Oceanside, Calif. Now crammed into a small rental apartment, they are hoping to buy a house quickly.

“I’m afraid we’re going to miss the boat,” said Alicia Diederichs. “I feel like we might get priced out of the market in a few months, and just depending on the mortgage payment whether we could afford it if the interest rates go up more.”

The Diederichs need a large house to fit their family, but home prices are rising fast on the California coast, and they have not yet locked in a mortgage rate.

“Ideally we would do a 30-year fixed, but it’s all going to be dependent on the end mortgage payment, what we can afford, so we would have to look at an ARM potentially if rates continue to rise,” she said.

(Read More: Mortgage Cop: Four Top Banks Fail Consumers)

The combination of sharply higher home prices and rising rates is squeezing buyers who are already facing tighter underwriting standards. In order to qualify for loans, they must fit into strict debt-to-income calculations, and those calculations change with every increase in mortgage rates.

Article source: http://www.cnbc.com/id/100845777

Treasury’s data shows that the longer a homeowner remains in HAMP, the more likely he or she is to redefault out of the program. As of March 31, 2013, the oldest HAMP permanent modifications, from the third and fourth quarter of 2009, are redefaulting at a rate of 46.1 percent and 39.1 percent. HAMP permanent modifications from 2010 also had high redefault rates, ranging from 28.9 percent to 37.6 percent.

The report directs Treasury to study why these modifications are failing and to come up with some kind of early warning system in order to help borrowers.

(Read More: Despite Rising Demand, Some Builders Slow Production)

“Redefaulted HAMP modifications often inflict great harm on already struggling homeowners when any amounts previously modified suddenly come due,” according to the report.

One of the architects of HAMP, Michael Barr, former Assistant Secretary for Financial Institutions at the U.S. Treasury, is not surprised at the numbers.

“The redefault rates are still below current industry averages, and below the conservative case we used in program design, which was the then-existing rate of 50 percent,” said Barr.

Troubles with HAMP are not new. Initially it did not offer principal reduction on loan modifications, and so far, under a revised HAMP, just 82,813 borrowers received any principal reduction. Banks doing their own loan modifications have wiped away far more mortgage principal, a strategy that has proven far better results. The nation’s five largest banks were required to write down some principal under the National Mortgage Servicing Settlement signed in early 2012, after the so-called “robo-signing” foreclosure paperwork scandal.

The Treasury need not look far for HAMP’s shortfalls.

(Read More: Mortgage Mods Doomed by Back End Debt)

Back in May of 2012, bank representatives complained that the back end debt-to-income ratios (DTI), (which include all debts upon which a borrower pays) for HAMP modifications were far too high. That is, borrowers were paying far too much of their incomes on debt, and the numbers were only rising.

At the time, mortgage analyst Mark Hanson said, “A 64.3 percent DTI is so far out of scope with the pre-bubble years safe-and-sound 36 percent total DTI — and even typical bubble-years full-doc DTI’s of 50 percent — it is absolutely irresponsible. Servicers are pushing the envelope with respect to getting people to qualify.”

Today Hanson is the least surprised of anyone at the failure of HAMP modifications. “Because if you look at them structurally — sky-high DTI, LTV [loan to value] and low credit score — they make legacy Subprime loans look sane.”

Hanson predicts that these bad modifications will come back to bite the banks and the economy.

(Read More: With Home Listings Low, Spec Building Is Back)

“People read headlines that ‘foreclosures are at 2005 levels’ and cheer. I say the high-risk distressed loans and foreclosures are still out there. They have just been called something different by banks and the government and kicked down the road a few years,” says Hanson.

862,000 homeowners are currently in permanent HAMP modifications; 312,000 have defaulted on permanent modifications. In the next two years, many HAMP modifications will re-set to higher interest rates, and that could produce more defaults.

Banks have been doing more modifications on their own, with these proprietary fixes up 55 percent in the fourth quarter of 2012 from the previous year, according to a recent report from the Office of the Comptroller of the Currency. Meanwhile HAMP modifications are down 31 percent for the same period.

Given delays in the foreclosure process in several states, and the risky quality of these early HAMP modifications as well as other proprietary modifications done without principal reduction, it is safe to say foreclosures may rise for a time next year before finally falling back to normal levels in the next three to four years.

As home prices rise, more borrowers will come out from underwater on their mortgages, and that will reduce the risk of new defaults, but the pipeline of distress is still long and far from lean.

Article source: http://www.cnbc.com/id/100674924

Earlier in the year, home buying was still considered to be the more pricey route to go when compared with renting in most parts of the Bay Area.  But the tables seem to have turned recently, as both the buying and rental market have heated up all around the bay the last few months.

Real estate site Trulia recently dug into data on both rental prices and homes for sale across the U.S. in the months of June, July and August and based on their analysis, it’s cheaper to buy than to rent a comparable property everywhere in the U.S., including the bay area.

In the San Francisco metro area, it was 28% cheaper to buy than rent.  It was 31% less expensive to be a homeowner in the San Jose metro area and in the Oakland metro area, a homeowner would save 41% over renting.

Courtesy of Trulia.com

Trulia’s report made several assumptions:

Cost of homeownership assumes that the home is sold after 7 years and includes closing costs, maintenance, insurance, property taxes and other costs. Cost of renting includes security deposit and renters insurance. Monthly cost is based on net present value of costs over 7 years. Monthly costs are based on the average across all properties listed in the metro area, including those for sale and those for rent, in summer 2012.

They also assumed that a homebuyer was able to secure a 3.5% mortgage rate, was in the 25% tax bracket and was able to put a down payment of 20%.  Any change in these assumptions, such as having a higher mortgage rate, a lower tax bracket and selling sooner could significantly change the outcome.  With a mortgage rate of 4.5%, being in the 15% tax rate and only a 3 year window, the tables turn once again and it is 28% cheaper to rent than to buy in the SF metro area.

And while buying may be the way to go in the long run, many are held back by the difficulty in saving for that 20% down payment (especially in the bay area where homes are pricey) and you’re much less flexible in relocating once you’ve got a mortgage.

You can play around with different assumptions on Trulia’s fun interactive infographic here to see what how your particulars work out.  Is it better to rent or buy for you?

Article source: http://blog.sfgate.com/ontheblock/2012/09/19/what-its-cheaper-to-buy-than-rent-in-the-bay-area/

San Jose, CA (PRWEB) April 03, 2012

After the Federal Reserve’s March 2012 Federal Open Market Committee (FOMC) meeting, the future of the nation’s currently low interest rates could be at risk, says Bay Area mortgage broker AccessBanc Mortgage. And now is the time to lock in a good mortgage rate, since there is nowhere for them to go but up.

“There is a lot of room for mortgage rates to rise, but there is not much room for them to fall,” explains Greg Erny, Principle of AccessBanc Mortgage. “The safe play is to get a rate locked now.”

The Fed has said repeatedly that it intends to keep the Fed Funds Rate near 0.000% for an “extended period of time”-through 2014 at least. Unfortunately, this doesn’t mean that conforming mortgage rates and FHA mortgage rates will remain low as well.

Mortgage and FHA rates rise long before Fed Funds Rates in a recovering economy, because they are ultimately an indication of long-term Wall Street attitudes. This is different from Fed Funds Rates, which are usually the outcome of a short-term fix the Fed applies to try to regulate the economy.

“For those individuals who truly want to get a good rate on their mortgage, this is an important time to take advantage of low rates because the only way for rates to go at this point is up,” notes Erny.

The first step for those individuals, says AccessBanc Mortgage, is to make a plan and get a mortgage rate quote. Mortgage rates have remained consistent at historically low levels since 2011, and have only broken 4% within the past few weeks. Following the FOMC meeting, conforming mortgage rates throughout California rose by as much as 0.375%, says Daily Mortgage Advisor, and there is a big chance they will only continue to climb.

According to AccessBanc Mortgage, these rates are a response to the Federal Reserve comments that ignited a mortgage bond selloff by Wall Street, which controls the mortgage rates.

“Locking in mortgage rates now is going to be important because the mortgage rate arena could look drastically different in short order,” says Erny. “Mortgage rates get unpredictable after every FOMC meeting.”

And after the second meeting of the FOMC this year, it’s clear that the economic recovery the nation is seeing is good for stocks and bad for mortgage rates, but the experienced brokers at AccessBanc Mortgage are ready to help lock in loans for interested homebuyers.

For more information about mortgage rate trends, or for information about any of AccessBanc’s products or services, call them at (855) 262-6302 or visit www.accessbanc.com.

About AccessBanc

AccessBanc is a San Francisco Bay Area mortgage broker committed to offering the most seasoned, professional, and competent loan consulting talent available. Because AccessBanc Loan Consultants enjoy favorable lender terms, use state of the art technology, and apply innovative solutions to knowledgeably work the market, they can offer prospective borrowers extremely competitive mortgage rates and great service.

AccessBanc’s services include: refinance, home purchase, first-time homebuyers, conventional conforming loans, jumbo loans, second/vacation homes, investment/rental properties, pre-qualification and pre-approved letters, and home equity loans / lines of credit. From home finance in Marin to first-time homebuyers in San Jose, AccessBanc’s carefully selected Loan Consultant Team can help Bay Area borrowers find the right loan.

AccessBanc Mortgage is a Real Estate Broker licensed by the California Department of Real Estate, License #00892684. NMLS #311147.

For the original version on PRWeb visit: www.prweb.com/releases/prweb2012/4/prweb9361557.htm

Article source: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2012/04/03/prweb9361557.DTL

Burlingame, CA (PRWEB) October 03, 2011

This past week, the 30-year fixed-rate mortgage rate dropped below 4% with a point (1%) fee. When calculated on the Wells Fargo website, a $400,000 loan qualified for a 30-year fixed interest rate of just 3.875%. Burlingame REALTOR Mary Ann Teixeira says refinancing higher interest loans is a no-brainer, but the decision to purchase a new home requires a more calculated risk/reward analysis.

Teixeira has talked to many buyers who are both hesitant and wary about their next move in this persistently unstable market. The big fear they express is over whether housing devaluations will continue. If they purchase a new home, they may suffer investment losses if home prices continue to slide.

The real answer, according to Teixeira, is simple and obvious: no one really knows what the future holds. But based on what is on the market now and the fact that buyers can lock up an incredibly low interest long-term loan now, prospective buyers should at least take a hard look, especially if they are currently renting.

“Just think about it-if you borrow $400,000 using a 30-year home loan at a 3.5% interest rate, your monthly payment is going to be about $1,796. This brings monthly mortgage payments to parity with rents,” said Teixeira.

“Renters in the Bay Area who have the financial means to buy should investigate this option if they are able to retain the property as their primary residence for at least five years. If they don’t buy, they will have contributed approximately $108,000 towards their landlord’s wealth over those five years. If they do buy, they will have grown equity in real property and enjoyed the benefits of lower taxes and homeownership.”

For additional information about low rates on 30-year fixed-rate mortgages, reasons to use a Bay Area real estate agent or San Francisco Bay Area Peninsula real estate and relocation, call Mary Ann Teixeira at (650) 241-0318, or visit her website at www.maryannt.com.

About Mary Ann Teixeira

Mary Ann Teixeira is a licensed REALTOR with McGuire Real Estate in Burlingame, California who specializes in relocation services, homes for sale and luxury homes. She is a seasoned buyer’s agent who serves the San Francisco Bay Area Peninsula communities of Atherton, Burlingame, Cupertino, Hillsborough, Los Altos, Los Altos Hills, Los Gatos, Menlo Park, Mountain View, Palo Alto, Portola Valley, Redwood City, San Carlos, San Jose, San Mateo, Santa Clara and Woodside.

###

For the original version on PRWeb visit: www.prweb.com/releases/prwebbay_area/real_estate/prweb8848336.htm

Article source: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/10/03/prweb8848336.DTL