SW Florida Borrowers See Slight Fall in Mortgage Interest Rates, Naples, Isles Of Capri, Estero!

 SW Florida Borrowers See Slight Fall in Mortgage Interest Rates, Naples, Isles Of Capri, Estero! It was fairly clear that the table had been set for last week’s Federal Reserve meeting to result in a minimal rise in mortgage interest rates. Their Fed Funds rate directly influences the mortgage interest rates that banks observe. Since SW Florida real estate activity can be spurred or dampened by the monthly payment amounts SW Florida mortgage lenders offer applicants, this national story has meaningful local repercussions.

It wound up as a non-event that nonetheless spawned action—albeit in a minor way. In May, Chair Yellen had said that a rate increase would be “appropriate” over the summer months. In the lead-up to last week’s meeting, other Fed governors had strongly implied that it was now time for a slight Fed Funds bump.

Still, most commentators kept their prognostications vague; they had been vociferously anticipating a move for many cycles, only to hear serial postponements from the Fed. In addition to having been burnt before by Fed head fakes, there was also another reason why a no-go might happen this time around. Regardless of what the jawboning had been, economic and employment growth was still stuck in first gear—and a rate hike could retard improvement.

The commentators weren’t wrong to hold fire. Once again, the Fed did nothing (except make even more noise about an interest rate hike…later).

Yet, even so, the market forces that nudge mortgage interest rates one way or the other did seem to react. After the non-announcement, rates barely budged at first—but then continued steadily lower (the lowest in weeks, in fact). By week’s end, the Mortgage News Daily announced that the string of moves had brought mortgage interest rates into a “post-Brexit range”—similar to the conditions “that sent rates plunging toward all-time lows.”

The reasons last week were less than certain, although frustration with the Fed’s lack of coherence was fairly unanimous. CNBC interviewed big time investment manager Bill Gross, who said that investors were left “very confused” by the meeting’s outcome. He pointed to the likely rate raise that Yellen had emphasized at last month’s Jackson Hole speech, as well as to Fed Vice Chair Stan Fischer’s earlier assurance that there would be two hikes this year.

All this left {Your Town} mortgage interest rate watchers to make their own assessments about what to expect for future conditions—most importantly, whether current favorable low-interest rates could be counted on for long. There had been at least one indicator that optimists could welcome. Almost unnoticed was a footnote to the Fed’s announcement. Back in June, the Fed had predicted the lending rate to end 2016 at .9 percent. It now said the likely number would be .6%. That would result in {Your Town} mortgage interest rates still comfortably in the historically low range—hardly a flashing red light for would-be borrowers.

SW Florida Borrowers See Slight Fall in Mortgage Interest Rates, Naples, Isles Of Capri, Estero! Wherever the Fed heads eventually, it’s indisputable that right now SW Florida mortgage interest rates remain fetching low—creating rare opportunities for buyers and sellers both. Why not give me a call to explore how you can take advantage today?

Wandering SW Florida Mortgage Rates’ Infinitesimal Moves, Naples, Ft. Myers, Cape Coral!

  Wandering SW Florida Mortgage Rates’ Infinitesimal Moves, Naples, Ft. Myers, Cape Coral! The legendary figure of The Wanderer has different connotations in different cultures. English teachers in {Your Area} high school classrooms have always taught some of the most famous parts of Homer’s Odyssey—the heroic story of Ulysses, the most famous wanderer. Ulysses wandered in and out of a lot of trouble…

Planets are wanderers, too. During ancient night times, ancient shepherds looked up and watched them meandering restlessly among the stars, so they called them planets (“wanderers”). Dion (of Dion and the Belmont) was the most celebrated wanderer of the 60s—at least his hit song claimed that he roamed “around around”).

In today’s SW Florida culture, though, wondering is a lot less glamorous than it’s been through most of history. A modern definition includes the bit about moving around, but most dictionaries include less-than-positive modifiers like “aimless” or “without plan or purpose.”

So when Federal Reserve Chair Janet Yellen gave a recent speech that SW Florida mortgage rate observers hoped would signal the direction where rates are headed, they expected clarity on the Fed’s plan and purpose. Last Thursday, The Washington Post headlined the following days’ financial reaction:

“Mortgage Rates Wander Higher but Remain Near Yearly Lows.”

When financial writers talk about mortgage rates that “wander,” it doesn’t really matter in which direction. It means that they’re going up and down in what amounts to wandering’s “aimless manner.” If it signals anything, it’s mainly that the signals from all corners are mixed. At Jackson Hole, Chair Yellen had signaled that the central bank “is moving closer” to raising their benchmark rate, but it seemed that the signal was not too convincing: Bankrate.com found that nearly 90% of the experts it talked to think rates will remain unchanged for a while.

As for how the Post could see rates “wandering” higher yet remaining near 2016 lows, it became clear in the paragraphs down below. The average 30-year mortgage rate had changed from 3.43% to 3.46%, remaining stuck in the range that’s lasted all summer (it’s been moving up and down no more than 7 hundredths of a percent). “Wandering” sounds appropriate. Freddie Mac’s Chief Economist said mortgage rates have been “hovering;” but “wandering” sounds at least as apt. What this means for SW Florida real estate is perhaps the only really clear signal to emerge. For the moment, SW Wandering SW Florida Mortgage Rates’ Infinitesimal Moves, Naples, Ft. Myers, Cape Coral! Florida mortgage rates remain appetizing low, keeping the residential market pegged at historical bargain basement levels.

Best of all, that means it’s still a great time to give me a call!

For SW Florida Mortgage Shoppers, Bad News Isn’t Always Bad, Naples, Marco Island!

For SW Florida Mortgage Shoppers, Bad News Isn’t Always Bad, Naples, Marco Island! If you keep track of the ebb and flow of U.S. economic news, you might also be aware of how it relates to some things that happen here. Particularly in the way SW Florida’s mortgage rates have been responding to the ups and downs of announcements from Washington, the cause and effect relationship has settled into a fairly predictable tango. Last week was no exception, with a dip from afar leading to some more good news here.

The less-than-buoyant news from Washington came in the form of what CNBC called a “weak” Gross Domestic Product reading for the second quarter. That news caused a drop in mortgage interest rates, which triggered an increase in home purchase applications (now 13% higher than a year ago) and a 10% increase in refinance activity from the previous week. Any time SW Florida’s mortgage interest rates fall, it of course it spells opportunity for both buyers and sellers here: the asking price for a home in SW Florida is one thing, but sooner or later, most prospective buyers get down to what the monthly cost of buying will be—and at current historically low interest rates, that number is often surprisingly affordable.

Why a drop in the U.S. GDP—which is certainly not a welcome news item—should result in good mortgage news in SW Florida is due to a mix of elements. The Wall Street Journal provided a few hints. After noting that recent data releases (retail sales stalled in July; wholesale prices fell) caused Treasury note yields to briefly hit their “second lowest level in history,” they concluded that such news “suggests September and perhaps December rate hikes are less than likely.” Readers were on their own, left to grapple with why that should be. If previous history is a guide, they probably remembered that the Federal Reserve is afraid of weakening the economy by closing the taps on borrowing—which is what results from rate raises. Looked at another way (as economists always do), strong economic news spurs activity and borrowing, so lenders expect that higher rates won’t discourage loan applicants. When the opposite happens, only temptingly lower rates keep the borrowing cycle going.

SW Florida rate-watchers didn’t have to wade through the WSJ financial analyses, though. Local Twitter addicts were invited to follow along as well. It turns out that the Mortgage Bankers Association tweets all the time. By late Friday, they were welcoming the weekend with such TGIF mortgage tidbits as, “average interest rate for 30-year fixed-rate mortgage drops to 3.65%.”

For SW Florida Mortgage Shoppers, Bad News Isn’t Always Bad, Naples, Marco Island! The bad news wasn’t really terrible; in fact, it was moderated by some healthier employment statistics. All in all, though, the effect of the rock-bottom mortgage interest rate news gives SW Florida buyers and sellers a strong reason for optimism—as well as an excellent reason to give me a call!

SW Florida Mortgage Applicants’ Credit Histories Reappraised, Naples, Bonita Springs

SW Florida Mortgage Applicants’ Credit Histories Reappraised, Naples, Bonita Springs. This will be a heads-up for SW Florida residents who may be applying for a home loan in the future: there are some major adjustments underway that could affect their eligibility. It hasn’t been talked about much—possibly because most peoples’ eyes tend to glaze over when the topic of loan analysis is raised. But the more SW Florida mortgage applicants know about how lenders decide which loans to grant and on what terms, the better the odds of getting a green light. Briefly, here’s what is coming:

Starting on the 25^th of this month, the way Fannie Mae (FNMA) goes about assessing creditworthiness will change. FNMA is the government-backed outfit that buys up private lenders’ home loans once they have been made. That insures that the lenders continue to have a steady supply of cash with which to fund new loans. In short, Fannie’s mission is to keep the home loan industry liquid. Together with similar corporation Freddie Mac, they are behind 60% of home loans in the U.S.—so many SW Florida mortgages are directly involved.

In order to qualify for government backing, lenders have to prove that a given home loan carries an acceptable level of risk. Lenders work with software programs issued by Fannie to help put numbers to the amount of risk—and that’s where the change is about to take place. Beginning next weekend, their latest release of the software (“Desk Underwriter 10.0”) will start to be used. For the first time, it will add a new element in the way a local applicant’s credit history is analyzed—one that is intended to better predict their ability to repay. It’s called “trended data.”

Credit reports will continue to use the familiar scoring benchmarks: outstanding balance, percentage of credit used, and timeliness of payments. In fact, the traditional credit scores aren’t slated to be impacted at all. What will change is the importance those scores are given, because the trended credit data will go deeper into what a borrower’s history shows. The software will take the previous 24 months’ revolving credit card payment history to rate whether the trend has been one of using more credit; maintaining the same level of borrowing; or paying down balances. In brief, if the “trended data” shows that balances owed have been rising, it indicates a Near Prime borrower. If the amount owed remains relatively stable, it shows a Prime borrower. If the balances have been dropping, it indicates a Super Prime candidate who is most likely to repay without a hitch.

There are nuances, too (they really would make everyone’s eyes glaze over)—but that’s the big picture. For SW Florida mortgage applicants who will be applying this summer, the fact that their history will now be analyzed in this manner is at least good to know—even if it’s not possible to alter. For everyone else who may not be applying for a while yet, it should be useful to plan credit card usage in light of how it’s likely to affect lending decisions.

SW Florida Mortgage Applicants’ Credit Histories Reappraised, Naples, Bonita Springs. I make it a point to keep my clients abreast of all current developments affecting the buying, selling, and financing of SW Florida properties. Whenever you have a question about anything to do with our local real estate scene, I hope you won’t hesitate to call!

Events Will Determine SW Florida Home Loan Interest Rate Outlook

Events Will Determine SW Florida Home Loan Interest Rate Outlook. Those of us who keep abreast of where SW Florida’s home loan interest rates are likely to head haven’t had much to keep track of lately. By the end of last week, that was beginning to change.

Ever since the Federal Reserve’s single boost in their Fed Funds rate by a quarter of a percent last December, the interest rate scene had been quiet. At that time, a gradual increase in the Funds rate had been predicted by nearly every observer. It’s the benchmark rate by which banks determine their prime interest rates, which are generally about 3% higher; SW Florida’s home loan interest rates are closely related to those.

 But the widely hailed gradual rise in rates failed to appear in January; then again in February—the result of the Fed’s Governors getting cold feet. The economy, battered by some nasty weather and further rained upon by disappointing employment numbers, was judged to be simply too uncertain to have more cold water poured upon it (interest rate hikes do that). The consensus view gradually turned to an expectation that home loan interest rates were stuck in neutral.

This month began with most observers sticking to their guns. The 24/7 Wall Street web site ended April with the headline “Little Chance (or None) Seen for Fed Rate Hike.” They elaborated that “Some economists feel that the rate hike risks have all but dried up for 2016…it does imply that rates will rise far slower than what had been expected…”

SW Florida businesses (SW Florida real estate among them) generally stand to benefit by the continuation of the stimulative effect of low-interest rates, so having rates frozen at historically low levels is treated as good news. Sooner or later there will have to be a return to normal interest rate levels, but in the meantime, few voices argue very strenuously against the status quo.

That quiet was broken last Wednesday with the release of minutes from the Fed’s last meeting—the gist of which seemed to be that a June hike in rates was now being seriously considered. Most press reports made it sound as if a rate hike was imminent; but closer scrutiny made that considerably less than a sure thing. What had really been enunciated was subtle.

CNBC’s Kate Rooney had the clearest take in an article about Wall Street trying to make sense of the Fed’s announcements. Since Fed Chair Janet Yellen’s statements in March had led all to believe no rate hike was anticipated, the new strong statement may have been intended to undo too much reliance on that. What was really being said was that a hike would be likely if current positive trends continued, rather than that newly strengthening trends were required. Most importantly, NO prediction was being made: everything would depend on the data (and events like the British vote to leave the European Union).

Events Will Determine SW Florida Home Loan Interest Rate Outlook. The bottom line for where home loan interest rates were likely to head? The best call is that unfolding events will determine that—and even the Fed itself awaits what’s to come. The one absolute in all of this was that right now, SW Florida’s home loan interest rates remain extremely attractive. It’s nice to have at least one certainty—which continues to be that it’s a very good time to call me!   

SW Florida Homeowners Have the Option: Loan or Line of Credit

SW Florida Homeowners Have the Option: Loan or Line of Credit. There’s a reason the English language’s greatest playwright was called “The Bard of Avon” and not “The Bard of SW Florida.” In Hamlet, for instance, despite the fact that Shakespeare’s Polonius character is supposed to be a wise counselor, he gets at least one piece of advice wrong when he tells his son, “Neither a borrower nor a lender be.”

This is flat-out terrible advice—at least for many SW Florida homeowners. 

The thing about borrowing is that if done prudently, borrowing can free some of the value a given SW Florida residence represents. There are two different ways that happens:

First off, there is the property’s stored value (the equity). As each monthly mortgage payment whittles down the amount owed to the lender, that equity builds—more so if the value of SW Florida real estate happens to be growing in general, which has been true lately. Unlike the other daily living expenses a family incurs, the dollars paid for your SW Florida shelter aren’t entirely “spent”—that is, lost. Like a savings account, the portion of the money that isn’t apportioned to interest will be recapturable when the home is sold.

Better yet, you don’t have to sell the place in order to free some of the value of that equity. After all, if you had to move out of your house to make use of it, it would be highly inconvenient. But you can make use of the property’s value in the meantime by naming it as collateral for a loan—either a line of credit (HELOC) or a home loan (a second mortgage). Because both types are smiled upon by lenders since they are secured, the interest rate will be less than for other kinds of personal loans.

The second way that Polonius’ advice would have been wiser in Hamlet’s Denmark or Shakespeare’s England than it is here today involves a more contemporary character: Uncle Sam. Some or all of the interest paid on either a HELOC or a second mortgage may be taken as a personal income tax deduction, depending upon various factors. Polonius might foolishly offer some blanket advice about that—but wiser counsel would be to consult your tax advisor.

When it comes to deciding which makes more sense for tapping into your home’s equity— opening a line of credit or second mortgage—the choice depends on the uses planned for the cash. If you know exactly how much you need (as when a major home repair is needed), the key advantage of an equity loan is that the interest rate and repayment schedule are fixed. With a HELOC, you have more flexibility: it works like a credit card. You can repay a borrowed amount and later tap into the line of credit again without reapplying. On the other hand, the interest rate and repayment requirements can change over time. And like a credit card, there is a built-in temptation to overuse it. Polonius wouldn’t approve…

SW Florida Homeowners Have the Option: Loan or Line of Credit. The financial wisdom of owning your home was around long before Shakespeare’s time— it’s one thing that doesn’t change. Whenever you have a question about your own plans and SW Florida real estate, I hope you’ll give me a call. As usual, the Bard had something wise to say about that, too: “Better three hours too soon than a minute too late!”

Mortgage Rate Blahs are the Good Kind for SW Florida Home Buyers

This is sort of fun:

Mortgage Rate Blahs are the Good Kind for SW Florida Home Buyers. Mortgage rates, SW Florida home loan applicants and soon-to-be-applicants should be delighted to hear, went down again last week. The national average quoted in the Washington Post notched down to 3.61% on a 30-year fixed loan, down from blah blah blah…

You will probably not be surprised by the presence of the multiple blahs. By now, everyone in SW Florida has simply heard this so often and for so long that it has practically lost all meaning. But it’s sort of fun to realize that we were already celebrating the decline in mortgage rates to 3.8% a year ago, although it was pointed out even back then that we’d been hearing it for so often and so long…

Despite the repetition, in the real world of SW Florida —where low mortgage rates translate into very real payment dollars saved every month—this is the kind of news that impacts a family’s future disposable income more than any other. The difference between last year’s average mortgage interest rate and that average last week means savings of more than $13,000 over the span of a $350K loan. And that was just the improvement since last year. The savings over historical average mortgage rates (7.49%) amounts to a gasp-inducing $306,000 for the same loan…a difference that surely deserves banner headlines.

That didn’t happen. Even the most financially sophisticated journals seemed to have all but succumbed to the numbness-producing sameness of the news, partly because the Fed’s announced plan to raise their Fed Funds rate seems to be fizzling out. The Economist described the moves by the Federal Reserve variously as “lackluster” and “dovish.” “If any other lift-off were so sluggish,” they yawned in the print edition, “you would not want to be aboard the rocket.”

There was little more excitement evident at The Wall Street Journal, who focused on guessing what mortgage rate changes might be in store. They found that the mix of good and bad economic numbers meant that the Federal Reserve “may opt to simply wait”—rather than rocking the boat and raising in June, as had been expected.

“Mortgage Rates: Trending Down Going Into Homebuying Season” was the most excitement Forbes’ headline writers could muster; possibly because the news that followed was anything but new. Forbes quoted Freddie Mac’s chief economist with his less than stirring pronouncement: “Since the start of February, mortgage rates have varied within a narrow range.” Forbes’ deduction? “For now, home loans are really cheap.” 

Mortgage Rate Blahs are the Good Kind for SW Florida Home Buyers. Does this mean that SW Florida home buyers can relax for a while longer, content to rely on an extended period of this kind of bargain-basement financing? Perhaps. But although those historical averages are reassuring when compared to current mortgage rates, they also stand as a sobering reminder of what the new normal could become. In other words, if striking while the iron is hot is still common sense, giving me a call sooner rather than later could be a prudent move!