Rates: Down!!
Guys,
Quick update from the mortgage market:
CONFORMING RATES ARE DOWN!
Here is where I'm at right now:
30 Year: 4.875% @ 0 Points.
15 Year: 4.500% @ 0 Points.
The New York Fed started buying a lot of MBS yesterday and as a result the FNM coupons are trading very well as of this morning. Noah discussed the Fed's plan on quantitative easing about a week ago in the piece titled, "Fed to begin Quantitative Easing in January".
If you have a mortgage professional that you work with, I truly suggest you call them and discuss your mortgage scenario - it might make sense to refi. As I have said many times, rates go up much faster than they come down and I believe it is a great time to take advantage of the opportunity.
Getting approved is really the obstacle we need to get out of the way at this point in time.
Best of luck!
-MM.
Posted by Donald
Tue Jan 6th, 2009 12:55 PM
That's great news. Ditech, which has been advertising 4.8% for the least 2 weeks, is now down to 4.7%. Do you think we will see the much anticipated 4.5%?
Posted by MortgageMan
Tue Jan 6th, 2009 01:00 PM
Donald,
On a 30 year fixed or 15?
Posted by anonymous
Tue Jan 6th, 2009 01:00 PM
are these jumbo or conforming?
Posted by MortgageMan
Tue Jan 6th, 2009 01:01 PM
Anonymous,
So sorry, will update the piece right now - these are conforming rates.
Posted by office-noah
Tue Jan 6th, 2009 01:09 PM
This is the FED buying agency debt and MBS not Fannie or Freddie!
Its part of the fed's quantitative easing strategy now that they took on a ZIRP policy!
http://www.urbandigs.com/2008/12/fed_to_begin_quantitative_easi.html
They are planning to buy about 500Bln of agency MBS by June 30th or so and the hope is to revitalize the secondary market, get rates lower by artifical means, and basically to increase the money supply! As the fed buys MBS or treasuries, the money that was created enters the economic system. The fed is buying from Primary Dealer and they receive a CREDIT in return for the assets. That credit is basically 'created money'. This is how I understand the process of QE.
Posted by Sharon Hollas
Tue Jan 6th, 2009 01:23 PM
It's awesome to see the rates continuing to come down, looks like the banks are finally becoming willing to loosen up the purse strings.
Sharon Hollas - Surrey Homes
Posted by Jac
Tue Jan 6th, 2009 02:09 PM
Not sure where you can get 30 Year: 4.875% @ 0 Points. Most banks I search for (Chase, Sovereign, WellsFargo, etc) are showing no option for a 0 point mortgage at that rate.
I find that most are offering 4.375% @ 3 points, or some variation of that rate with 2-3 points. Not bad though. I have set up an appointment to meet a mortgage consultant through my bank to try to lock in the rate for 90 days.
Posted by anonymous
Tue Jan 6th, 2009 02:12 PM
Have you seen any traction in Manhattan for principal reductions/mortgage modifcations (rates as low as 3%)? Given the number of Wall Street layoffs, not sure if Manhattan homeowners are taking advantage of these various options.
Posted by MortgageMan
Tue Jan 6th, 2009 02:18 PM
Jac,
These rates are based on a 60 day lock, on a 90 day you would have to pay .375 points. Also, every single person's mortgage scenario is different in many ways. The rates quoted are based on a person with excellent credit and a 70% LTV ratio.
I would also tell you that rates found online are MUCH different than if you actually call/sit down with a mortgage professional.
Good luck!
Posted by MortgageMan
Tue Jan 6th, 2009 02:20 PM
Anonymous:
I haven't seen much traction with this nor have I heard of any bank really pushing this program. If your lender can do a rate and term modification, for a decent fee, I would definitely do it. Although I would imagine that the approval requirements will be extremely stringent.
Posted by anonymous
Tue Jan 6th, 2009 02:30 PM
Do you happen to know the "approval requirements"? I bought at the peak of the market, 95% financed, and home prices are down close to 20% (based on comps, so under-water 15%). Doesn't make economic sense to continue to pay my mortgage, figure it makes more sense to leave the keys with the bank. Surprised more Manhattan residents are considering this option? Maybe they haven't received their bonus figures yet.
Posted by Jac
Tue Jan 6th, 2009 03:01 PM
MortgageMan,
Thanks for the clarification. I am new to this, so I guess I will find out in a few days when I meet my mortgage professional.
Posted by TM
Tue Jan 6th, 2009 03:26 PM
MortgageMan,
I bought a few rental studios with 30 years fixed residential mortgages 2 years ago. The rates of all mortgage are at 6.25%. (All mortgage are residential mortgages.)
Do you think am I able to do the refi without the bank changes the residential rate to be investment rate?
The rate now is very enticing. But I am just afraid that trying to do refi might rock-the-boat and banks would see that these properties are all rentals and would change the rate to investment rate.
Any advice is very appreciated. Thanks in advance.
(PS- My credit is very good. Never late on any payment.)
Posted by bf
Tue Jan 6th, 2009 04:43 PM
mortgage man,
how do I get in touch with you to discuss refinancing.
Posted by Donald
Tue Jan 6th, 2009 07:13 PM
where did you buy with only 5% down anonymous? That is extremy rare in Manhattan. Most peopole buy with at least 20-25% down here. And why do you want to walk away? Your going to have to pay rent, and why will a landlord accept you when you jumped ship on your financial obligations. I am a landlord and I would certainly not take you as a tenant.
Posted by Jon
Tue Jan 6th, 2009 09:29 PM
What kind of rate can you get on a jumbo? lets say on $1M+ apartment with 25% down, excellent credit?
Posted by Jon
Tue Jan 6th, 2009 09:30 PM
What kind of rate can you get on a jumbo? lets say on $1M+ apartment with 25% down, excellent credit?
Posted by peter
Tue Jan 6th, 2009 09:48 PM
MM: how do we contact you? Thanks
Posted by hsw9001
Tue Jan 6th, 2009 11:26 PM
Do the rates also include coops? Having a conforming condo loan in Manhattan is kinda hard b/c the majority of condos are above the conforming limit.
Posted by Noah
Wed Jan 7th, 2009 08:21 AM
I have a strange feeling MM wants to remain anonymous so he can continue discussions here without corporate problems of talking with media.
Posted by anonymous
Wed Jan 7th, 2009 10:09 AM
Donald,
It makes sense to walk away, because all of the appreciation in the next 5 years will go to the bank. i.e. it's no different than renting, because your mortgage payments (while tax deductible) is no different than rent if you don't receive the benefit of appreciation. If anything, it can be more expensive.
I bought at the top of the market when they were willing to do 95% financing.
Landlord will accept me because I'll pay at least 6 months upfront.
Posted by MortgageDons
Wed Jan 7th, 2009 11:57 AM
JAC - You should always have an option for a zero point rate. With that being said, the way many banks are pricing today encourage paying points due to the narrow spreads on agency rates (i.e. if 4.875% is a zero point rate, paying one point to get to 4.375% yields a favorable break-even on the point paid). With confidence I will tell you that paying 2-3 points at 4.375% is unnecessary.
ANONYMOUS - There are attorneys here in NYC that specialize in loan modifications. The right law firms with the right banking relationships are able to approach the owner of your mortgage and make a case as to why you should receive a modification. The difference between a modification and refinance was not made entirely clear above. A modification does not require an underwriting approval. The only approval required is an approval by the owner of your mortgage to reduce your principal or interest rate.
TM - If you own multiple units in NYC, then at a minimum, all but your primary residence will be considered an investment property. Depending on the equity in each property, refinancing as an investment property still may make sense. The standard Fannie/Freddie pricing hit for an investment property is 1.75% of the loan amount. If there is equity in the property to roll that pricing hit into the financing, you can bring your rates down to 5%.
JON - Rates for 25% down on a $1mm condo/coop here in NYC:
5 Year ARM - 4.875%
7 Year ARM - 5.25%
10 Year ARM - 5.375%
15 Year Fixed - 5.25%
30 Year Fixed - 6.5%
You will notice the wide difference with the 30 year fixed. Very few lenders offer 30 year fixed rates for this scenario. You can add .25% to the ARM rates if you prefer an interest only loan.
HSW9001 - You can get the same rate for a coop as you can a condo. The biggest issue with coop financing is that not every lender who lends on condos will lend on a coop.
There are a lot of great opportunities and a lot of bad information out there. Make sure you are dealing with a knowledgeable and experienced mortgage professional to ensure you can take advantage of this rate environment.
Posted by Jac
Wed Jan 7th, 2009 03:34 PM
MortgagaDons,
Thanks for the heads up... I will try to see if I can lock at 4.250% with only 1 point.
BTW, looks like rates are done again today.
Sovereign: 4.25% with 3 points
Chase: 4.25% with 3.125 points
Posted by Jac
Wed Jan 7th, 2009 03:36 PM
MortgageDons,
Thanks for the heads up... I will try to see if I can lock at 4.250% with only 1 point.
BTW, looks like rates are done again today.
Sovereign: 4.25% with 3 points
Chase: 4.25% with 3.125 points
Posted by Thisson
Wed Jan 7th, 2009 04:03 PM
I'm looking to refi, so I try to keep an eye on wholesale rates to get a sense of what I can negotiate.
A good source is the wholesale chart on the Mortgage Professor's webpage:
http://www.mtgprofessor.com/Wholesale%20Price%20Data/today's_prime.htm
Today I checked with a mortgage broker and was quoted 4.625% plus a 1-point fee to the broker. This is for a conforming, 30 year fixed on a NYC Co-Op.
Posted by MortgageDons
Wed Jan 7th, 2009 04:44 PM
No problem Jac. Something to keep in mind is the point of diminishing returns. Paying 3 points to get to 4.25% is not nearly as favorable as paying one point to get to 4.5%. You need to weigh the value that each point brings from a rate reduction standpoint. If paying one point reduces the rate by .5%, paying an additional two points to reduce the rate by only .25% additional is not a value play.
Given the volatility across all lenders' pricing, the bank that offers the best 0 point rate may not be the same bank that offers the best 1 point rate. Thorough banking relationships are required to truly take advantage of today's rates.
Posted by TM
Wed Jan 7th, 2009 10:55 PM
5% for investment rate is very good! Thanks MortgageDons for your advice.
Posted by Property Dubai
Thu Jan 8th, 2009 09:41 AM
The deceleration in the rate of growth seen in the first three quarters is attributable to the demand-supply dynamic of Manhattan
Posted by anonymous
Fri Jan 9th, 2009 04:36 PM
what about floating rate mortgages? if this is japan like scenario, wouldn't a L+120-150 bps sound way more attractive than a 5% fixed?
Posted by anonymous
Fri Jan 9th, 2009 04:37 PM
what about floating rate mortgages? if this is japan like scenario, wouldn't a L+120-150 bps sound way more attractive than a 5% fixed?
Posted by Bobbie
Sun Jan 25th, 2009 10:07 PM
I have a 2 family investment property in Williamsburg, Brooklyn with a $577,000 6.75 30 year mortgage. I'd like to refinance. I've heard that extra points are added for 2 families and investment properties.
Any advice?
Thanks.
Bobbie
Posted by VCP-310
Mon May 4th, 2009 12:37 AM
Thanks great rates you share and yeah i have mortgage professional to work with and i will discuss it soon.