Friday, May 30, 2014

Mortgage Rates Drop 5th Week in a Row

Mortgage interest rates have been very volatile so far in 2014 for a number of reasons.  In a previous post titled "What Drives Mortgage Rates" are various factors that influence these rates and how so. However rates have now dropped for their 5th straight week in a row. Here is an article from The Washington Post with some of their comments below.

The 30-year fixed-rate average dropped to 4.12 percent with an average 0.6 point, falling to its lowest level since late October. It was 4.14 percent a week ago and 3.81 percent a year ago. Since starting the year at 4.53 percent, the 30-year fixed rate has plummeted 41 basis points.
The 15-year fixed-rate average fell to 3.21 percent with an average 0.5 point, dropping to its lowest point in seven months. It was 3.25 percent a week ago and 2.98 percent a year ago. The 15-year fixed rate has sunk 34 basis points since the first of the year.
As a visual, I have included a screen shot from my smartphone application showing the 30-year fixed rate over the last 6 months.  You can download my aapplication for free at http:// 

Thursday, May 29, 2014

Portland Rent vs. Buy Breakeven by Zip Code

Below, I have summarized Zillow’s Buy or Rent Breakeven Horizon for the area of Portland. Pretty interesting information!  If the average person moves every 5 to 7 years, the average person would come out ahead by purchasing a house instead of renting in any zip code of Portland. In some areas it only takes 2 years for the homebuyer to come out ahead! 
This information could help first time homebuyers analyze there options in certain neighborhoods and also investors looking to purchase a rental property.  In some areas, rents are projected to increase over 10% in a year! Yikes! In a previous post, we mentioned Portland rents on average were up 9.7% year-over-year in February. 

Zillow - The decision to buy or rent is really a choice between a) buying a home that you hope will appreciate in value or b) renting a home, spending less on housing (at least in the early years), and saving the difference in some form that earns interest, say as stocks or bonds, instead. Options (a) and (b) each have their associated costs net of benefits. The Breakeven Horizon between renting and buying gives the number of years you would have to live in the home for the accumulating net costs of renting to exceed those of buying. In other words, after buying and living in a home for more years than indicated by the Breakeven Horizon, homeowners begin to have more money and assets than they would have if they had rented the same home over that same time period.

Wednesday, May 21, 2014

FHA HAWK Program and Conforming Loan Limits

A lot of great news has surfaced recently in the mortgage industry. First, FHFA Director Mel Watt announced that they will not use its authority to lower conforming loan limits which means that Jumbo loans are still considered anything over $417K in Oregon. Jumbo loans often have higher interest rates and stricter guidelines to qualify.  If this change was implemented, thousands of conforming loans that originate in a given year would be considered Jumbo loans which would potentially impacting the borrowers ability to qualify.  FHFA said they will give 6 months notice if any changes occur.

Second, FHA released a “Blueprint for Access” to expand credit for underserved borrowers. In this blueprint is an FHA program that is in the works and is expected to be rolled out later this year called HAWK (Homeowners Armed with Knowledge).

HAWK is a four-year, two-phase pilot program, that will reduce the upfront mortgage insurance from 1.75% to 1.25% and also lower the annual mortgage insurance premium from 1.35% to 1.25% to homebuyers who complete HUD-approved housing counseling. Through this program, the average buyer would save approximately $325/year. These savings are minimal but still have the ability to impact the price a buyer qualifies for and it’s a step in the right direction for FHA. 
I made an earlier post titled “FHA vs. Conventional trend” which goes into detail about some of the FHA mortgage insurance changes over the last two years and why more and more borrowers have elected to go with a Conventional loan instead. Even though this HAWK program isn’t a huge game changer, it may have an impact on reversing this trend and allow more access to credit for first-time homebuyers entering the market with a less than 5% down payment.  

Monday, May 19, 2014

Rates by the Decade

Dylan and I just got back from California celebrating my other son's graduation from law school. We planned a trip to the Ronald Reagan Library when we were there which was a great time.  They had a section in the library about home buying and interest rates during his presidency that, of course, caught or attention.  One of the pillars stated:

A young couple trying to buy their first house in 1988 could count on some of the lowest mortgage rates in 8 years - about 10.3 percent on a fixed-rate, 30 year mortgage. In 1981, the same mortgage averaged nearly 16.6 percent and proceed many buyers out of the market.

Back then, those interest rates were a great deal!  Here is a chart provided by Freddie Mac showing average interest rates by the decade:

30-year fixed mortgage rate
2014 Avg YTD

These interest rates today are still a fantastic deal compared to where they have been historically! 

Tuesday, May 13, 2014

What Drives Mortgage Rates?

Above is a great graphic by Vantage Production about 6 factors that impact mortgage rates and how so.

Friday, May 9, 2014

May Edition of You Magazine

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YOU Magazine
Clayton Scott   Clayton Scott
Branch Manager/Mortgage Consultant
Phone: 503-497-5060
NMLS ID 754407
License WA-CL 713524, OR-ML 5271
May 2014

April 2014
March 2014
February 2014
January 2014
December 2013
November 2013

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In mid-April, investors fled the Stock market by moving their money over to Bonds, which resulted in the lowest home loan rates seen in a month. Were they enough to get more buyers signing on the dotted line?
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Be Aware or Be a Social Media Square
For many, communicating with younger loved ones requires knowledge of the latest social media apps and lingo. So, if you're feeling a little square and out of the loop, have no fear because we've got you covered.
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While you're spring cleaning, don't forget to spruce up current devices and discard outmoded electronics.
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