Wednesday, September 14, 2011

Mortgage rates fall to lowest level since 1950s, few qualify

WASHINGTON – Fixed mortgage rates fell this week to the lowest levels in six decades.
  • Construction workers at a home site in Media, Pa.,
    By Alex Brandon, AP
    Construction workers at a home site in Media, Pa.,
By Alex Brandon, AP
Construction workers at a home site in Media, Pa.,
But few Americans can take advantage of the rates to refinance or buy a home.
The average rate for a 30-year fixed mortgage fell to 4.12%, from 4.22%, Freddie Mac said Thursday. That's the lowest level on records dating back to 1971.
Freddie Mac says the last time rates were cheaper was 1951, when most home loans lasted just 20 or 25 years.
The average rate on a 15-year fixed mortgage, a popular refinancing option, fell to 3.33% from 3.39%. That's the lowest on records dating to 1991 and likely the lowest ever, according to economists.

National Mortgage Rates

30 yr fixed mtg4.15%
15 yr fixed mtg3.36%
5/1 ARM2.95%
$30K home equity loan6.07%
$30K HELOC4.68%
About these rates
Mortgage rates tend to track the yield on the 10-year Treasury note, which fell to an all-time low this week. An uncertain outlook for the U.S. economy has led many investors to shift money out of stocks and into the safety of Treasury securities, lowering the yield.
When demand pushes up bond prices, yields fall.
Still, few expect record-low rates to energize the depressed home market. Over the past year, the average rate on 30-year fixed mortgages has been below 5% for all but two weeks. That compares with five years ago, when the average 30-year fixed rate was near 6.5%. Yet sales remain unhealthy and are holding back the economy.
Sales of new homes are on pace to finish the year as the lowest on records dating back a half-century. The pace of re-sales is shaping up to be the worst in 14 years.
Many Americans can't take advantage of the rare confluence of low home prices and record low mortgage rates. Some are in no position to buy. Unemployment is high, few are getting raises and many are struggling to shrink their debt.
Others can't qualify for the lowest rates. Banks are insisting on credit scores above 700 and 20% down payments for first-time buyers. Many repeat buyers have too little equity in their homes to meet loan requirements.
Roughly 40% of U.S. households have the necessary credit scores to get a prime mortgage rate, according to an Associated Press analysis of Fair Isaac, or FICO, data. But that's not the chief reason people aren't buying homes or refinancing.
Just half of Americans say they'll ever be able to save enough money for any type of down payment, let alone 20%, according to a survey by the National Foundation for Credit Counseling.
Nearly a third of homeowners have nearly zero equity in their homes or are underwater on their mortgage, owing more than the house is now worth, according to the real estate research firm CoreLogic. That leaves then unable to refinance because of lender-imposed limits and the cost of extra fees.

Tips to Increase Home Appeal

What sells a home? Is it the price, location, or condition? The truth is that it takes a combination of all of these factors to make a sale in today's market. Unlike boom era transactions, the seller is now in the passenger seat. Buyers today have a great advantage. A glut of homes in many markets means that supply far outweighs demand. Buyers are able to be choosy and to negotiate sweet deals.

When your home is on the market you want to be noticed and for the right reasons. It's a competitive advantage that could mean the difference between making the sale or not. Let's look at five top ways to increase your home's appeal when it's on the market.

1. Stage for Photos: We are a visual society. Webcasts, virtual tours, and the Internet have made staging for photos and showings an integral part of any marketing plan. Pictures amplify problems. It's a moment frozen in time, available for a viewers deepest inspections. This means you must create a perfect moment in time. Remove any clutter or excess furniture. Rearrange furniture with looks taking rank over functionality. If your furniture has seen better days, consider budgeting for furniture rental. Add detailed touches, such as cut flowers, throw pillows, and lit fireplaces.

2. Clean: While smells and grime don't always translate in pictures, they will definitely be a buyer deterrent during showings. If your home needs a lot of scrubbing, either hire a maid service or work on one room at a time until they all shine. Buyers are especially turned off by dirty bathrooms, kitchens, and odors. Scrubs these rooms and burn candles or spray room fresheners.

3. Enhance Curb Appeal: Curb appeal is the first impression of the real estate market. Yes, buyers do judge a house by it's "cover." The outside must create a desire to see the inside. To accomplish this you may need to spend money to make money. Cosmetic enhancements go a long ways. Start small and work your way up. Powerwash the deck or sidewalk. Fix broken stones and plant new landscaping. Clean and mulch existing landscaping. Add new shutters, house paint, an accent color on the front door, an updated exterior light, and new patio furniture. Staging doesn't stop at the front door. It goes from property line to property line.

4. Price Competitively: Buyers are more dollar conscious than ever. Fears of a renewed recession and a high unemployment rate have them wanting the best deal for their money. Buying in today's market means low interest rates and high levels of affordability. Buyers aren't willing to pay more for an image or an idea. Be sure to be realistic about what your home is worth in today's market. Prices have changed, dramatically in some areas. If you price too high you run the risk of scaring away would be buyers. Price correctly from the beginning.

5. Hire an Agent: Perhaps this should have been number one. Many sellers may be considering doing a For Sale By Owner in an attempt to save money on closing costs in these tough times. That could be a big mistake. Buyers have the upper-hand in negotiations these days and without an experienced professional by their side, they could get taken advantage of. Agents also have access to a larger pool of potential buyers. Buyers seek them out when they want a home.
Selling today is possible. In fact, many areas are seeing increases in existing-home sales. Buyers know now is a great time to buy, you just have to convince them that they should be buying your home.

Tips for Selling Your Home Before the End of the Year

The fourth quarter of the year can cause some sellers to worry if their home hasn't sold yet. But according to, there is still time to sell.

Typically, many buyers are eager to move and get settled in before the school year and holidays begin but that doesn't mean you should be discouraged. While the spring is considered a peak selling period, I recall looking for a home in the winter months and successfully closing just after the New Year. However, I am on the west coast and location does make a difference. Looking for homes in California doesn't require driving around on icy roads, trudging through snow-covered walkways or stormy weather. Even if you're not in more mild climates, there is still time to sell your home.

In fact, there are some key factors that may help sell your home. First remember that the number of buyers may be reduced as we head closer to the holidays. Many people simply don't want to juggle the holiday rush and house hunting.

On the other hand, there will be some serious buyers looking for a very nice holiday gift for themselves. If they're out shopping in dreary weather or nearing the holidays, it could be because they're extremely serious about making a purchase before the end of the year. With this in mind, be sure to make the most of every showing. Don't let things slide with the upkeep of your home because you are juggling selling a home, working, or taking care of the kids. Selling your home in the fourth quarter must be a priority and the closer to the beginning of the quarter the better.
When considering how long to keep your home listed through the holidays, experts suggest looking at the rates of sales activity in your market. Some areas can be pretty bleak, but that doesn't necessarily mean there's no chance of selling. Remember, that some people may even have tax reasons and need to purchase before the end of the year.

Expert staging of your home will suit you well. This is a time of year when homeowners bring out a lot of stuff that may be very appealing to them–pumpkins, turkeys, holiday and religious ornaments–but those things don't always impress buyers. In fact, they can annoy them and make the house seem cluttered. This is not to say you can't have some nice seasonally appropriate decor. However, the fourth-quarter sale requires a good strategy like using an expert stager. If there are a a reduced number of buyers seeing your home, make the most of each showing by having a spectacularly staged and clutter-free house to show off. Staging provides a competitive advantage.

Another reason this fourth quarter may see more buyers is that interest rates remain historically low. The potential threat of a rise in mortgage rates could have more buyers eager to lock into an excellent rate, even if it means a move during the holidays.

However, you can also negotiate the sale and make arrangements so that you can still stay in your home for the holidays and make the move after the first of the year. Another effect of the holidays, buyers tend to be more emotional and may spend more during this time of year. Couple that with potentially fewer homes on the market and you may have the perfect setting for an ideal sale.

Home Price Gains Expected to Wane: Clear Capital

The warm weather homebuying season has kept prices moving up, but Clear Capital says the rate of appreciation is already slowing and weak consumer confidence points to a stormy rest of the year.
The “company’s latest report shows that home prices rose 4.0 percent over the four-month period ending in August when compared to the previous three months – an assessment Clear Capital refers to as a rolling quarter.
The company notes, however, that the recent gains over the summer months have not been enough to recoup longer-term declines, with national home prices still 6.2 percent below last year’s levels.
Dr. Alex Villacorta, director of research and analytics at Clear Capital, points out that the short-term gains reported in recent months are coming off of the record lows of winter.
“With summer coming to a close and the price gains clearly starting to level off, the market is at a critical juncture as to whether it can avoid another significant downturn into the slower buying seasons of fall and winter,” Villacorta said.
According to Clear Capital, low consumer confidence and a continued high unemployment rate support the company’s projection of downward home price movement for the remainder of 2011.
“The latest readings on consumer confidence paint an ominous picture that at present, consumers are still not ready to risk jumping into the market despite very low mortgage rates and very affordable home prices,” Villacorta added.
Based on Clear Capital’s latest report, the Midwest region leads the nation with a seasonal quarterly home price gain of 7.3 percent, buoyed by solid improvement in Chicago and the Ohio markets in particular.
In the Northeast home prices rose 4.9 percent, and in the South quarterly appreciation came in at 3.5 percent.
Home prices in the Western region of the U.S. were up just 0.7 percent. Clear Capital says with economic uncertainty and significant distressed sales activity affecting the West, this small gain may potentially represent peak price growth in the region for the rest of 2011.
Home prices in all four regions came in well below their readings at this time last year, with the smallest annual dip in the Northeast at 2.0 percent.
Jacksonville, Florida replaced Detroit as the “lowest performing” major market, posting a -2.7 percent quarterly price change. Eleven of the 15 markets on the low end of the price performance spectrum reside in the western part of the country.
Cleveland’s rolling quarter price gains jumped to 19.2 percent based on data through August, pushing the market to the top of Clear Capital’s “highest performing” list. The company says Cleveland’s large gains reflect vast differences in its REOcomposition between the winter and the spring-summer homebuying seasons.