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DEVIN REPORT-Weekly Update on the Mortgage Markets

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What's going on this week?

Regulators Seek to Ease Housing Credit:

Both the new regulator for Fannie Mae and Freddie Mac, as well as the secretary of Housing and Urban Development, announced they would shift strategies by making credit more available to homeowners.

Federal Housing Finance Agency (FHFA) Director Mel Watt, who recently took over the job of regulator for the mortgage giants, said in his first public comments that he would not lower the maximum loan limits for Fannie Mae and Freddie Mac, which currently stand at $417,000 in most markets. Watt's predecessor, Edward DeMarco, had contemplated the move as a way to shrink Fannie and Freddie's footprint in the mortgage market.

Watt, a former North Carolina congressman, also said he would try to alleviate some of the uncertainty banks face in dealing with Fannie and Freddie.
"I know that repurchase risk remains a top concern for the mortgage industry. Lenders believe that too much uncertainty still exists in this area for them to ease their credit overlays.
Ultimately, this undermines the goal of improving access to mortgage credit for creditworthy borrowers," he said.

In another move to open up credit to first-time homebuyers specifically, HUD Secretary Shaun Donovan announced a new four-year pilot program at the Federal Housing Administration (FHA) starting this fall. The FHA is the government mortgage insurer for low down payment loans.
Under the program, first-time homebuyers who commit to credit counseling will qualify for reduced FHA insurance premiums on their loans. For the average FHA loan balance of $180,000—these reductions, according to Donovan, can add up to roughly $10,000 in savings over the life of the loan.

How will rates move this week?

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I’m among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Improving

Rates last week improved slightly, as reported by Sigma Research. The overall improvement for last week for the MBS market was +40 basis points, which may mean a slight imporovement in mortgage pricing.

This Week's Rate Forecast: Neutral

According to Sigma Research, the technicals still look good for rates. Sigma Research expects rates to continue to improve as long as the equity market remains weak, but there will be lots of volatility that could cause pricing to fluctuate through the week.

This Week's Potential Volatility: High

Sigma Research says there will be very little economic data this week, and none until Wednesday. The Bond Market will close early on Friday, at 2:00pm Eastern. Remember, there are always unforeseen events that may arise which are not expected. We'll be keeping an eye on all breaking news related to mortgage pricing.

Bottom Line:
If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them. If you would like to reach out to our team the Devin Group at Guaranteed Rate directly to go over your personal scenario click here.

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