Effects of government’s mortgage overhaul to start early

The winding down of Fannie Mae and Freddie Mac will make a big impact in the next few months.While lawmakers in Washington are working to wind down Fannie Mae and Freddie Mac over the next five or seven years, real estate experts say the impact from those decisions will be felt well before those changes become final.

Mortgage experts told the New York Times (http://www NULL.nytimes NULL.com/2011/03/06/realestate/mortgages/06Mortgage-fannie-freddie NULL.html) that those looking to buy a home could see higher mortgage costs even within the next year. That's because while some parts of the plan require approval from Congress, others don't, and could be in place quickly.

"There's a lot of uncertainty in the process," Barry Zigas, the director of housing policy at the Consumer Federation of America, told the paper. "but you're probably going to get a better deal on a fixed-rate loan sooner rather than later."

Other analysts said that in the coming months, banks may try to promote adjustable-rate loans instead of fixed-rate mortgages, because they generally bring in more money.

However, that would not be the preferred choice of most people looking at Houston homes. A survey last year by Fannie Mae found that borrowers with fixed-rate loans were more satisfied than those with other mortgage types.

Fixed-rate mortgage rates drop below five percent

Mortgage rates have declined again.Thirty-year fixed-rate mortgages dropped this week, going below 5 percent, which is encouraging news for the Houston real estate market, since more people are likely to apply for mortgages and purchase homes.

According to the Freddie Mac's (http://www NULL.freddiemac NULL.com/pmms/release NULL.html?week=8&year=2011) latest weekly survey, 30-year fixed-rate mortgages are averaging 4.95 percent. Last week, the rate was at 5 percent, and a year ago, it was 5.05 percent. The report stated that the Southwest's current FRM is 4.98 percent, which is slightly higher, but could be a welcome sign to prospective buyers of Houston real estate.

"Low mortgage rates and home prices are sustaining affordability in the housing market. Existing home sales rose for the third consecutive month in January and were at the strongest pace in eight months," Frank Nothaft, vice president and chief economist for Freddie Mac said, citing a National Association of Realtors report.

According to that report, the Northeast was the only region of the country that sustained a sales decrease during the month of January, as overall sales topped their year-ago levels.

Report: Mortgage rates rising in many categories

Government economists say mortgage rates on the riseStatistics released recently by government-backed mortgage giant Freddie Mac indicate that rates for home loans are steadily increasing across the board, indicating a possible revival of the market.

The average rate for 30-year fixed-rate mortgages spiked from 4.81 percent at the beginning of February to 5.05 percent ten days in, according to Freddie Mac. The current rate is also higher than the same measurement taken a year ago, the company adds.

The rates, according to Freddie Mac vice president and chief economist Frank Nothaft, are the highest they have been since last April.

"Long-term bond yields jumped on positive economic data reports, which placed upward pressure on mortgage rates this week. For all of 2010, nonfarm productivity rose 3.6 percent, the most since 2002, while January's unemployment rate unexpectedly fell from 9.4 percent to 9 percent. Moreover, the service industry expanded in January at the fastest pace since August 2005," he said, detailing some of the reasons behind the change.

Houston real estate, like property around the country, could command increased prices despite still-strong sales, experts say.

Mortgages rates remain steady as applications bounce back

Mortgage rates have remained low and steady.The Mortgage Bankers Association (http://www NULL.mbaa NULL.org/NewsandMedia/PressCenter/75572 NULL.htm) says mortgage rates have continued to remain historically low, while mortgage volume has picked back up following a drop the week before.

The group says that 30-year fixed-rate mortgages during the week ending January 28 had an average interest rate of 4.81 percent, up just slightly from 4.8 percent the week before.

The MBA's weekly report also showed a sharp increase in applications compared to the previous week, which was skewed by the influence of the Martin Luther King holiday. Purchase applications gained more than 9 percent while refinancing numbers increased by nearly 12 percent.

"Applications increased this week relative to the holiday week," said Michael Fratantoni, MBA's vice president of research and economics. "Looking over the past two weeks, purchase applications are flat, and refinance applications are down about five percent."

However, interest rates aren't expected to stay low forever. The MBA's recent forecast for 2011 predicted that rates would be 5.3 percent by the end of this year, which would increase the cost for people looking to buy Houston homes.


Get every new post delivered to your Inbox

Join other followers: