Northwest Living | Bellingham Real Estate Market

Mortgage applications remained at their highest level in more than five years last week, as borrowers took advantage of attractive rates and rushed to refinance their home loans.

While low rates are a great opportunity for borrowers with solid credit and plenty of equity in their homes, those in danger of foreclosure are sidelined, and defaults are expected to keep rising in the coming months.

The Mortgage Bankers Association said Wednesday its weekly application index was essentially unchanged for the week ending Dec. 26. The index came in at 1245.7 from 1245.4 a week earlier. Applications surged earlier this month to the highest level since July 2003, when refinancing activity boomed at the peak of the housing market.

80 percent of applications came from borrowers looking to refinance at more affordable rates, the trade group said. Refinance volume dipped by 0.4 percent, while purchase volume rose 1.4 percent.

The trade group’s application index is still below its peak of 1,856.7, reached in May 2003 at the height of the housing boom. The survey provides a snapshot of mortgage lending activity involving mortgage bankers, commercial banks and thrifts. It covers about half of all new residential mortgage loans each week.

An index value of 100 is equal to the application volume on March 16, 1990, the first week the MBA tracked application volume.

Interest rates have plunged since the Federal Reserve said last month it would buy up to $500 billion in mortgage-backed securities in an effort to bolster the long-suffering housing market. The Fed, starting early next month, will buy securities guaranteed by the government-controlled home loan giants Fannie Mae, Freddie Mac and Ginnie Mae, a federal agency.

The average rate for traditional, 30-year fixed-rate mortgages decreased to 5.03 percent from 5.04 percent a week earlier, according to the MBA report. That was the lowest point in the weekly survey since rates fell to 4.99 percent in June 2003.

The average rate for 15-year fixed-rate mortgages fell to 4.79 percent from 4.91 percent a week earlier, while the average rate for one-year adjustable-rate mortgages fell to 6.15 percent from 6.36 percent.

Jerry Campbell - The Muljat Group - Bellingham WA - Bellingham real estate

Bellingham WA - over the past couple of days I’ve talked to at least four to five local Bellingham mortgage lenders and it seems the concensus is that rates on thirty year mortgages are down around 5.25%. With those kind of rates being offered, most of these lenders are locking a lot of loans for consumers in our local bellingham real estate market.

I’m not sure if these loans represent home owners that are refinancing, buyers getting financing on a current home purchase, or buyers locking loans for something they plan to buy soon. The positive in all this good news, is that the activity in the local mortgage lending is up all across the board. I think the next couple of months, as long as rates remain low, will actually be busier in home sales than we have seen in the last year or two.

I’m really surprised that more home buyers are not taking advantage of this rare timing of really attractive interest rates, depressed home values and the fact that it’s a buyers market. I think once the holiday season is over and we start to get into to the new year, we will see some upticks in our local Bellingham real estate sales numbers.

Whats really fueling this drop in interest rates is the ten year long bonds which have droped from a range of about 3.25 to 3.50 down below 3.00 and as low as 2.67 just today. That’s just incredible and reflects strongly in whats happening with interest rates on all kinds of mortgages. I really can’t see interest rates dipping to much further and I would strongly suggest anyone thinking of locking a rate, should be doing it sooner than later. This is obviously just my opinion, but I really can’t see why anyone is waiting if they want to secure some great rates right now. 

Jerry Campbell - Muljat Group - Bellingham WA - Bellingham Real Estate

Home mortgage rates fell again this past week, sending the rate on the 30-year fixed rate mortgage down for a fifth straight week to its lowest level since February, Freddie Mac said.

The average rate on the 30 year fixed-rate mortgage is down about 0.75 percentage point since its decline began last month according to Freddie Mac chief economist, in a news release.

The mortgage rate averaged 5.78% for the week ended Sept. 18, down from 5.93% last week and 6.34% a year ago. It hasn’t been lower since the week ended Feb. 14, when it averaged 5.72%. The loan hit its low for the year on Jan. 24, at 5.48%.

The 15 year fixed rate mortgage averaged 5.35%, down from 5.54% last week and the year ago 5.98%. Five year Treasury indexed hybrid adjustable rate mortgages averaged 5.67%, down from 5.87% last week and the year ago 6.21%. One year Treasury indexed ARMs averaged 5.03%, down from 5.21% and the year earlier 5.65%.

As a result of the mortgage rate decline mortgage applications surged nearly 58% since Aug. 15, largely led by a 122% gain in applications for refinancing, according to the Mortgage Bankers Association. The more we can get the bad loans out of the system through refinancing into fixed interest loans the better this economy will be going into the future.

The government takeover of mortgage giants Fannie Mae and Freddie Mac has spurred a decline in mortgage rates that some analysts say could be long lasting.

In the Bellingham, WA market I have had a quite a few mortgage people email me over the last few weeks that were very excited about where mortgage rates are currently at.

Jerry Campbell - Muljat Group Realtors - Bellingham WA Real Estate

The US Government announced Wednesday that it is freeing up billions of dollars at Fannie Mae and Freddie Mac, so that the two companies can help homeowners refinance mortgages on the brink of default. This will have a huge impact over the next year to help homeowners get out from under these tough loans of the past.

The Office of Federal Housing Enterprise Oversight, which oversees the government-sponsored companies, unveiled a plan to ease mandatory capital requirements now in place. It said the plan is expected to result in an immediate infusion of up to $200 billion into the market for mortgage-backed securities.

Now nearly $20 billion for the two - will be reduced by a third under the new deal. The freed-up money will go toward buying mortgages of struggling homeowners to enable them to refinance into more affordable loans.

The announcement is part of a large number of government actions revealed lately aimed helping the financial markets and protecting the economy from recession. The capacity of Fannie and Freddie will permit them to do more in the jumbo temporary conforming market, subprime refinancing and loan modifications areas.

These type of announcements don’t get much headlines with the general public, but are usually the type of decisions that make the most impact. If your a homeowner in our Northwest corner and have been thinking of refinancing or buying a home…there is good news on the horizon. Now we just need a little bit of a trickle down effect from the three quarters percent drop in rates, to home loans.

Once the housing market can get some footing under neath it by stopping the deflation of housing values, is really when we will see a recovery. This news today with the freeing up of capital from Fannie Mae and Freddie Mac was the kind of stimulus that might get the housing market going again.

Jerry Campbell - Muljat Group - Bellingham, WA - Bellingham WA Real Estate

The Fed’s action lowers the funds rate to 2.25 percent, the lowest since February 2005, and comes two days after the central bank announced the latest in a series of emergency measures to stem a fast-spreading global financial crisis. The Fed has now cut rates by 3 percentage points since mid-September, including 2 points since the start of the year. 

In recent days, the central bank has also offered to help financial institutions as well by providing access to liquid funds. The central bank is pulling out all the stops to provide liquidity to financial markets and put a floor under an economy many analysts believe is in recession. 

The Fed, fearing financial markets would freeze up and send the economy into an sharp downward spiral, has offered cash auctions and direct loans to financial institutions, opening those liquidity avenues beyond the banks that normally deal with the Fed to include other Wall Street firms. 

The good thing is that the global economy is doing pretty good and especially in China where they are experiencing a boom. Our nations steel industry is actually on a rebound and looks to do pretty good. 

Jerry Campbell - Muljat Group - Bellingham WA - Bellingham Real Estate

The Federal Reserve dropped the federal funds rate to 4.25 percent today. The street however was hoping the Fed might instead lower rates by a half point but chose not to. This key rate is what governs overnight lending between the nations banks.

In another move the Fed also lowered the discount rate it charges for direct loans to banks by matching a quarter point here as well to 4.75 percent. Since September the Fed has now lowered the overnight rates by a full percentage point in an attempt help the nations economy and lower the risk of falling into a recession. 

Most of todays decision was based on the nations condition with the housing sector.  With so many banks exposed to subprime loans, especially in the southern part of the country from California to Florida, that the banks are reluctant to extend credit.  The Northwest is not spared from the subprime mess, but were at least fortunate to have a much lower rate of subprime loans outstanding per loans on the market. One look at the national map of subprime loans shows that the Northwest should at least be feeling like we will get through this. 

But because the nation as a whole has several areas of concern with housing and subprime loans, it affects us all, and so the fed had no choice but to step in and react.

Outside of the housing and financial services sectors, the U.S. economy has exhibited resilience. In addition to a steady labor market, many retailers reported stronger than expected November sales and a slumping dollar helped boost demand for U.S. exports.

Also, the risk of a inflation, which the central bank had cited as a reason for monetary restraint even as financial markets clamored for rate cuts, appears to have
eased slightly. Productivity has been strong and core inflation gauges, which exclude volatile energy and food costs, have remained tame.

However, after a period of relative calm, credit markets are showing a level of strain not evident since August, when mounting defaults on U.S. subprime mortgages first led to a
worldwide pullback in money markets.

Does this mean that interest will drop in lock step, not necessarily, because interest rates are connected to long term bond rates.  Subprime borrowers will not gain from this cut, because those type of loans are keyed with LIBOR rates which actually have been trending up in recent weeks. Because of the liquidity issues in global financial markets, LIBOR rates have actually increased at the same time that treasury and other benchmark yields have been declining. The rate cuts today will however benefit those that are looking for lower rates on home equity loans, because those are tied in with the prime rate that borrowers pay on such loans.

Jerry Campbell - Muljat Group - Bellingham, WA - Bellingham WA Real Estate

 I normally don’t like to post to many interest rate articles, but wow interest rates are down under 6% again and the trend is looking good for the foreseeable future.  That’s got to help our local Bellingham WA real estate market.  Here’s some stats I want to pass on. 

Long-term mortgage interest rates were down Monday, and the benchmark 10-year Treasury bond yield dropped to 3.83 percent.

The 30-year fixed-rate average sank to 5.82 percent, and the 15-year fixed rate fell to 5.4 percent. The 1-year adjustable held at 5.53 percent. The 30-year Treasury bond yield was down at 4.29 percent.

Mortgage rate figures are according to Bankrate.com, which publishes nightly averages based on its survey of 4,000 banks in 50 states. Points on these mortgages range from zero to 3.5.  But one still needs to check with one of our local banks or mortgage company’s here in Northwest Washington.

Anyone that might be looking to lock in some decent rates and buy a home in this buyers market might have just gotten an early Christmas present with the new interest rate news.

Jerry Campbell - Muljat Group Realtors - Bellingham WA - Search Bellingham real estate

It seems like more and more these days I’m getting questions about buyers wanting to purchase foreclosure homes. So I did some research the other day and found a few web sites and blogs that had some very useful information on the subject of foreclosures.  One of the best sources I found was on the Austin real estate blog which had a lot of useful information.  Ki Gray is the owner of the site and he’s using a map that he found on the New York Times showing county by county where the highest percentage of the subprime loans were taken out.

click the map below to open a new window with the full interactive version and our Northwest viewers can checkout the areas in the Northwest with the highest subprime loans.  That will give one an idea where you could pretty much predict where one would expect to find loans going into foreclosure.

subprime mortgage map

The interactive map showed that for the Northwest corner of Washington State, Skagit County showed that 27% of all mortgages are in subprime lending, 19% in Whatcom County, 18% in Island County, and only 10% in San Juan County. As high as those numbers might seem at first glance, those numbers are not to bad when compared to many of the other counties in the State of Washington.  Most of the other counties range from 25% to 35% overall.

This map is a good indication why the Northwest has done so well versus the rest of the country.  The light shade areas are the areas in the US that have the lowest subprime loans per county, and the darker areas are the worse hit by these tough loans. Looking at that map it appears that many areas in the midwest and especially the south and southwest have really been the hardest hit.

Click that link above the map and you can really zoom in and get a good idea of whats going on across the united states.  I really think if buyers and sellers in the Northwest could see this scenario, it would give a much more positive attitude towards are market here.  Especially when one factors the low interest rates under 6%, low unemployment rates (down to 3.8% in Whatcom County), and pretty good retail numbers.  In Whatcom County we also have the benefit of having almost three million citizens of British Columbia just over our border and with the parity of the Dollar and the Looney, Canadians are shopping here more. 

Next week I’m going to post the sales numbers for the Whatcom County housing market and it will show that the Bellingham WA housing numbers for the first ten months of 2007 vs 2006 are actually up year over year. I have the total sales numbers for the last eight years on a monthly basis and I’m going to start sharing them here on my Northwest real estate blog.  Look for the stats next week. I tend to look at the number of sales instead of prices, because I feel its one part of statistics that can not be easily manipulated. Price increases only tell you about what properties are selling for, but what about the homes that tested the market and didn’t sell.  That’s why I look at sales numbers comparisons instead. Tells a more true story.

Jerry Campbell - Muljat Group - 510 Lakeway Dr - Bellingham, WA 98225 - Northwest Living

Northwest Home buyers should take notice of where interest rates are currently, there looking pretty good at the moment.  Combine that with the fact that home buyers usually fair better with negotiations in a buyers market, now might be the perfect time to buy. 

Long-term mortgage interest rates dropped to 6.06%, and the benchmark 10-year Treasury bond yield inched up to 4.58 percent. The 15-year fixed rate sank to 5.69 percent. The 1-year adjustable dipped to 5.7 percent. The 30-year Treasury bond yield held at 4.83 percent.Mortgage rate figures are according to Bankrate.com, which publishes nightly averages based on its survey of 4,000 banks covering the United States. Points on these mortgage loans range from zero to 3.5.

In other economic news, the Dow Jones Industrial Average went over 14,000 for the first time and finished the day at 14,087.55, gaining  191.92 points on the day. The Nasdaq was up 39.49 points for the day to finish at 2741.

Home buyers in the Northwest here might want to lock in a long term rate and consider this a buying oportunity in the market place.  I know in fact there are a lot of home buyers sitting on the fence for some kind of good news.  I really think this is a perfect time to purchase a home with home prices dipping and lock in a great rate to boot.     For all your Bellingham real estate needs visit Bellingham WA Homes.

The subprime fallout has made the once slam-dunk home loans more difficult to obtain. While some Puget Sound neighborhoods continue to be very active, exemplified by one Bainbridge Island home drawing nine offers in one day, other areas have slowed considerably.

In addition, the first notion of back to school already has hit many second-home owners who are beginning to schedule the winterization of the family cabin. Instead of going through another off-season with little use and significant maintenance, some owners will use the last few weeks of the summer season to show and hopefully sell the family getaway, raising for-sale real estate inventory levels in popular areas.

If your house or cabin already has been sitting for sale long enough to bite into your comfort and affordability zones, you might want to consider a lease option.

A lease with an option to buy often can solve a two-mortgage problem for a seller, and provide a cash-poor buyer with an opportunity to “try out” a house while getting a portion on the monthly rent credited toward an eventual down payment.

Many sellers make a commitment to purchase another house contingent on selling the one they’re already in. But when it comes time to purchase the second house, or lose it, the prospective buyer can be faced with making payments on two homes if the first one has not sold.

A 12- to 18-month lease agreement, with an option to buy within the lease period, can solve problems. Here’s how a typical lease-option works:

The buyer and seller agree on a purchase price, usually a figure somewhere between today’s market value and the anticipated market value 12 months down the road.

The seller gives up tomorrow’s presumably higher value for money in hand today. The buyer pays a bit more than today’s value in exchange for very little cash down. Let’s say buyer and seller agree the price will be $335,000.

The seller charges the buyer a nonrefundable fee for agreeing to this option. The amount can vary depending on factors such as how eager the seller is to move and the size and quality of the house. Typically, the higher the fee, the better the buyer maintains the property.

Let’s use $3,000 for the fee in our hypothetical transaction. The fee is in addition to the monthly lease payments. And we’ll have the seller give the buyer the right to purchase the property for $335,000 at any time within the 12-month lease period. If the option is exercised, the fee could be considered part of the down payment.

The lessee has made no down payment, hence the monthly option fee is typically higher than rental market rates. The two parties agree on what portion of the rent will be applied to the down payment. Any amount can be credited. For example, if the monthly fee is $2,000, $800 could be credited to the down payment. (If the seller really is not eager to sell, he may not agree to a higher rent credit.)

Buyer and seller must be sure to specify both lease and sale terms in the agreement. For example, when the time comes for the buyer to exercise the option, if the interest rates are at 8 percent, the buyer may not be able to qualify for a loan. It’s a good idea to set an interest-rate ceiling in the agreement, or ask the seller to finance the home when conventional rates hit a certain level.

Sellers should read their mortgage agreements carefully before entering a lease-option agreement. Some lenders may activate a “due-on-sale” clause if the seller enters into a lease-option with another party. Many times, lenders will permit a specific lease-option period if notified in advance. And lenders usually are more willing to participate when they are assured of future business — like the seller’s or buyer’s new mortgage loan.

Some realty agents have been reluctant to seek lease options for clients because they have been unwilling to gamble their commissions on whether the option would be exercised. Others are skittish about deferring their commission until a deal is solidified. However, when open-minded agents understand a lease-option could keep a deal together and result in future business, the concept is readily accepted.

What’s the once-popular saying … a small piece of something is better than a large piece of nothing? Via HeraldNet and Tom Kelly