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Mortgage Matters Radio: October 25 (NEW)

Guests: None.

Central Coast Lending Soundcloud (full episode downloads). October 25, 2014 (link to episode).



Mortgage Rate Update (October 29)

Mortgage rates have moved up slightly for the second straight week. Rates have almost completely erased the unexpected price improvements from two weeks ago, but are still near 18-month lows. Learn more about the drop and subsequent increases here.

This low rate environment offers a window for existing owners to refinance and drop their monthly payment / eliminate mortgage insurance, and for potential buyers to increase their purchasing power and afford more home.

Give us a call at 805.543.LOAN with any questions.

Read more »


Mortgage Rates Move Off Lows; Pre Qualify to Prepare for Next Dip

On Wednesday, October 15, mortgage rates took an abrupt pitch downward. Today, October 27, rates have moved up and erased much of the discount.

The hefty price dip came after a perfect confluence of events. Might we see such a move again? It is definitely possible, and it would open up another opportunity for existing owners to refinance and potential owners to increase their purchasing power. Give us a call at 805.543.LOAN to set up a pre qualification appointment so that you can quickly take advantage of the next window.

(Note: mortgage interest rates are still very close to all-time lows. If you have mortgage insurance, have a rate above 5.0%, or aren’t sure if you can afford to purchase a home, give us a call at 805.543.LOAN to learn about the possible savings. The call is confidential and honest, and it won’t cost you a dime.)


Recapping the rate dip

Two weeks ago, several major stock indexes (Dow Jones, S&P 500) almost had their first proper downward “correction” (a drop of at least 10%) in nearly three years. Investors pulled back from stocks due to an assortment of worries: global economic slowdown, ebola, geopolitical issues, and the Federal Reserve’s negatively revised expectations for the U.S. economy. The volatile environment is a perfect one for mortgage rates. We cover all of this and more in last week’s column.

By the time the sell-off occurred, mortgage rates were already on their way down. The bond markets were closed on Monday, October 13, so lenders had been holding off making downward revisions from the previous week.

On October 15, as market volatility cranked into high gear, lenders finally priced in all of the changes from the previous week. All of a sudden, mortgage rates were at their lowest level in over 18 months. Mortgage rate prices were about 1.5 points lower than they were three to four weeks prior. A “point” is 1% of the total loan amount, so for a loan of $400,000, a “1.5 point drop” would be $6,000 in cash.

The low-rate window persisted for a little over a week.


Where we stand today

Today – October 27 – mortgage rates have moved up off this unexpected dip. Last week, the S&P 500 jumped 4.1% for its best weekly gain of 2014. The Dow Jones Industrial Average rose 2.6% over the week, and Nasdaq rose 5.3%.

When investors turn to stocks, money flows away from the “safe” bond market. Lower demand for bonds puts upward pressure on mortgage  rates. (The 10-year Treasury yield is a quick and dirty way to track expected rate movement: a higher yield suggests higher mortgage rates, and vice versa). Click here to learn more about when – and why – mortgage interest rates move.

Rates could drop again if anything sets off the market into “sell” mode. Recent stock dips aside, we have still not seen a downward correction. Corrections come about once a year, historically.

Homeowners: to take advantage of the hefty savings offered by such a low rate “window” make sure to get pre qualified, so that your loan officer can lock in a rate when the time is right.


Last Week’s Data

  • Existing home sales rose more than expected in September, up to a pace of 5.17 million for the year. Overall, sales have slowed in 2014 by 1.7 percent year-over-year.
  • The national existing home median sales price of $209,700 is 5.6% higher year-over-year.
  • Jobless claims continue to perform well. The October 11 week offered up 266,000 total claims, a 14-year low, and the October 18 week’s 283,000 claims kept the 4-week average of 281,000 at a 14-year low.
  • New home sales are right around their fastest pace since 2008. The median sales price dropped 9.7% as sellers cut prices, which could account for the improvement in sales pace.


Loan Program Update

If you haven’t yet, be sure to check out the CCL Workforce Housing Loan Program. Median and low income borrowers are eligible to receive what could be a steep discount on their home loan.

This program is particularly effective for middle-credit borrowers who want to offer a down payment under 20% because it puts a cap on fees charged for such “riskier” loans. Read more here.


Central Coast Lending is a California mortgage broker and direct lender based on the Central Coast of California in San Luis Obispo County. Call us today at 805.543.LOAN or email us here to set up a free pre qualification. We are The Mortgage Experts: ask us anything!

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Mortgage Matters Radio: October 18 (NEW)

Guests: Wes Burk, Patterson Realty.

Central Coast Lending Soundcloud (full episode downloads). October 18, 2014 (link to episode).


Mortgage Rate Update (October 22)

Mortgage rates have moved up slightly, but maintain the one 1+ point price improvements over the past month. This low rate environment offers a window for existing owners to refinance and drop their monthly payment / eliminate mortgage insurance, and for potential buyers to increase their purchasing power and afford more home.

Click here to learn why mortgage rates have dropped to such a notable extent.

Give us a call at 805.543.LOAN with any questions.

Read more »


Volatile Stock Market Helps Mortgage Rates Plummet

Last Wednesday, the CBOE Volatility Index, a highly regarded measure of market volatility, reached its highest reading since November of 2011. Several times over the past week, investors sold off stocks en masse. Stocks would then veer higher the following day, only to dip back over some piece of unsettling news.

You might recall: late-2011 was a notably unstable time due to the “sovereign debt crisis” in Europe. Greece and Italy, for example, appeared ready to default on their debt obligations. Investors worried that sovereign default in the Eurozone would have harmful repercussions for the global economy.

Here we are in 2014, and global instability is again impacting U.S. stock markets:

  • The European economy may be slipping back into recession. German industrial activity has dropped. The Greek stock market has plummeted.
  • The geopolitical situation remains a mess, with unstable situations in Russia, Ukraine, and the Middle East (Syria, ISIS, etc).
  • China’s economy appears to be slowing. What repercussions will this have for global demand?

With all of the uncertainty, is there cause for concern?

U.S. retail sales came dipped in September, but other data paints the picture of an economy that is in a steady cycle of growth. U.S. employment news continues to be positive: new jobless claims fell to their lowest level since 2000 last week. Construction activity increased in September.

Stock indexes hadn’t had a “correction” (defined as a dip of 10% or more) in three years, whereas corrections typically happen about once per year. Uncertainty might have given investors the nudge they needed to sell off into this “correction”. Put simply, the stock pullback was overdue. The volatility component comes in as investors attempt to buy at the bottom of the market and find undervalued purchases.


Mortgage Rates

Volatility and uncertainty put downward pressure on mortgage rates.

Over the past three weeks, interest rate pricing has moved down by between 1 and 1.75 points. A “point” signifies one “percent” of the total loan amount. By dollar amount, an interest rate that costs 1 “point” on a loan of $400,000 would translate to $4,000.

Like anything you would purchase, mortgage rates have prices. The lower interest rates are “more expensive”, and buyers are charged more “points” to obtain them. To avoid the expense, buyers can accept a higher interest rate for a lower charge. The higher rates will often offer a “rebate” that the borrower can use to cover closing costs.

Is it better to accept short-term pain and pay “points” for a lower rate? Or accept a higher rate to help cover closing costs? If the owners intend on staying in the home for a long time, the lower interest rate could result in significant long-term savings.

Give us a call at 805.543.LOAN and we will break down the numbers and help you find the best solution for your unique situation.


The Savings Window

To give you an example of just how friendly such a significant price improvement can be to your wallet, consider the following scenario:

Joe Buyer is taking out a $400,000 home loan and elects to use the standard “Conventional” home loan with a 30-year fixed term. Joe Buyer wants to find the lowest possible rate to keep his monthly mortgage payments at a low, manageable level.

On September 24, the 4.000% 30-year fixed rate (4.162% APR) is expensive, and would have cost Joe Buyer 1.75% of the total loan amount: $7,000.

Nearly one month later (October 20), Joe Buyer can obtain the 4.000% 30-year fixed rate (4.015% APR) at a cost of zero points. The 1.75% price improvement offers a savings of $7,000!

The low rate environment offers an opportunity for buyers to increase their purchasing power and afford more home.

Existing owners also have an opportunity to refinance their mortgage into a lower rate. Any mortgage holder with mortgage insurance should also consider refinance to eliminate the costly MI payment.

Give us a call at 805.543.LOAN to discuss the possibilities! No commitment, no cost: just honest advice from the Mortgage Experts. 805.543.LOAN.


Mortgage Matters Radio: October 11 (NEW)

Guests: None.

Central Coast Lending Soundcloud (full episode downloads). October 11, 2014 (link to episode).


Mortgage Rate Update (October 15)

Mortgage rates continue to plummet. Over the past three weeks, check out these massive price improvements:

  • Jumbo: -7/8 of a point
  • 30-year Fixed (Conforming and High Balance): -1 and 1/2 points
  • 15-year Fixed: -1 and 1/8 points
  • Manufactured (Conventional and FHA): -2 and 1/2 points
  • USDA, FHA, FHA 203k, VA: -2 and 3/4 points

As an example, the cost for a 4.000% 30-year fixed rate was 1.750 percent (1 and 3/4 points) on September 24. Today, that cost is just 0.250 percent (1/4 of a point). Lower rate costs help borrowers obtain lower mortgage rates for a lower cost, thus making home financing more affordable. Now is a great time to lock in a rate for purchase or refinance.

Rates have dropped for the following reasons:

  1. Concern that the European economy may be slipping back into recession.
  2. Concern about the geopolitical situation (Russia/Ukraine, Syria/Isis/Middle East).
  3. Concern about China’s slowing growth.
  4. Concern about the ebola outbreak (abroad and closer to home).

As of today, markets can add:

5. Concern over a drop in United States retail sales (lower GDP?). The Dow dropped 350 points in response.

Last Wednesday, the Federal Reserve released the minutes from their September meeting. Members displayed enough concern about the economy to lead to speculation that the Fed could hold interest rates low into 2016.

Concern, volatility, low interest rates, low inflation… these are all ingredients for low mortgage rates. When the future feels uncertain, investors look for safety, and the U.S. bond market is a prime place to find it. Demand for bonds helps put downward pressure on rates.

Give us a call at 805.543.LOAN with any questions.

Read more »


Stock Market Struggles With Volatility; Will Mortgage Rates Drop?

On Tuesday, October 7, the Dow Jones Industrial Average dipped 274 points. The following day, it posted its largest jump of the year: 274 points. Next, the Dow retreated 334 points.

Talk about mixed messages.

All major U.S. stock indexes fell at least 2% last week, with the Nasdaq down 4%. The Dow is now even on the year. Despite Wednesday’s rally, it was the worst week for North American markets since 2012.

The volatility feels somewhat reminiscent to what we saw in 2011, when concern about the U.S. government shutdown, the “fiscal cliff”, and European debt issues dominated the headlines. This time around, however, the U.S. government is functioning (as best it can, at any rate) and U.S. employment data is strong.

The trouble, once gain, comes from abroad. Last week, an economic report showed that German industrial activity and exports had plummeted to 2009 levels. Meanwhile political unrest in Ukraine / Russia and the Middle East has people nervous.

So what can we expect moving forward?

Read more »


NEW Mortgage Matters: October 11

Tune in from 9 a.m. to 11 a.m. to catch Mortgage Matters Radio on KVEC 920. No guest this week, but Dan and Jason will bring their unique charm to the table, as they update listeners on housing, real estate, and the economy.