Houston Mortgage Update 10/07/2014

Posted ago by Cary Cox

Houston mortgage rates are holding steady with faltering global growth  in Europe and China. The German manufacturing sector was disappointing, showing contraction in the sector for the first time in over a year. U.S. Factory activity, marked by the ISM Manufacturing Index, did not fare well either. Composite activity slowed but nevertheless, remained solid for the ISM manufacturing sample where the headline index fell 2.4 points to 56.6. It appears that Eurpoe is headed for its’ third recessin since the Lehman Brothers implosion that led to mortgage mess of the last decade.

Things on this side of the pond are not fairing much better. On Tuesday, the Conference Board reported that its measure of Consumer Confidence had experienced its sharpest decline since last October. Negative sentiment should be good for Houston mortgage rates, but not good for the overall health of the nation’s economy.

The Labor Department data indicated that employers added 248,000 jobs to their payrolls last month. The unemployment rate fell to 5.9%, its lowest point since July 2008, but much of the drop in unemployment stemmed from a continuing decline in the labor force participation rate. With the labor force participation rate at an all-time high those in Washington should stop crowing about the unemployment rate. If less people are actually in the labor force it is a moot point.

Overall bad economic news is typically good for Houston mortgage rates. We are living the dream with great job growth in Houston, along with low Houston mortgage rates, which continue to drive the growth of Houston.

Oveall the economic calendar this week that could effect Houston mortgage rates is somewhat light compared to last week. Here is what we have on this week’s calendar:

FOMC Minutes on Wednesday

Jobless Claims on Thursday

Treasury Budget and Import and Export Prices on Friday

We see Houston mortgage rates holding steady this week.



FHA – Wants a Mortgage For Low Score Borrowers, But Wants Better Mortgage Performance?

Posted ago by Cary Cox

Yes leave it to the government to want the impossible, but FHA is asking lenders to do just that with the FHA mortgage program – they want a mortgage for more low FICO borrowers, but they want lenders to deliver better default rates for the FHA mortgage program.

From Rob Chrisman:

The FHA now expects 25% of the loans it insures will be to borrowers with FICO scores of 640 or below. Another 50% will go to those in the middle ground of 640 to 680. The remaining 25% will be to those borrowers with scores above 680. Efforts have been underway to get lenders to remove so-called credit overlays – FICO score requirements of 680 or more that are used to screen out borrowers with a higher probability of default. Some lenders have lowered credit score requirements this year, largely to drum up business. Many others haven’t budged from imposing credit overlays out of fear they will ultimately be forced to eat losses for any FHA loans that default.

The FHA wants their mortgage program “cake” and they want to eat it too! Rob has more on the default rates that they want lenders to meet for the FHA mortgage program:

The FHA, however, thinks that the defect rate for FHA loans is still too high and defects on FHA loans appear to be on the rise. In June, the FHA provided a breakdown of 6,645 loans it reviewed in the first quarter and found that just 16% were deemed acceptable, meaning they had no mistakes. A whopping 48% were “unacceptable,” with material defects, while another 36% were considered “deficient,” with errors that could potentially be corrected. Lenders are still trying to get their arms around the FHA’s quality assurance plan announced in March. The FHA has said its “blueprint” for evaluating underwriting defects should reduce lenders’ fears of having to indemnify the agency for losses on loans to riskier borrowers.

Obviously someone within the FHA knows that you cannot make a mortgage loan to low score borrowers while seeking low mortgage default rates as FHA has refused to lower the Upfront Mortgage Insurance Premium on each mortgage originated from the current 1.75% as they know they will have higher mortgage default rates with the lower FICO score borrowers.


Houston Luxury Home Sales Soar – Low Jumbo Mortgage Rates Help

Posted ago by Cary Cox

It was reported in the Houston Chronicle that Luxury Home Sales are near the top in the nation. From the Houston Chronicle:

It’s no secret that Houston has some pretty pricey neighborhoods, but the city has also seen growth overall in the luxury home market.

According to a new report by Coldwell Banker Previews International, the Bayou City has climbed to the fifth spot in the country for the number of homes sold above the million-dollar threshold.

With 981 high-dollar homes sold during a 12-month span, Houston is only outpaced by San Jose, New York, Los Angeles, and the No. 1 city San Francisco.

Not only is the booming Houston, Texas economy driving luxury home sales so are low jumbo mortgage ratets. Both the fixed rate mortgage rate for a jumbo mortgage or super jumbo mortgage and the Adjustable Rate Mortgage (ARM) rate for a jumbo mortgage or super jumbo mortgage are currently very attractive.

Mortgage rates are not back at their all time lows, though they are very good. The lower your mortgage rate the more home you can afford and less interest you will pay over the life of the mortgage.

Houston Mortgage Update on Mortgage Rate Movers 09/29/2014

Posted ago by Cary Cox

Lots of items last week and this week that will influence Houston mortgage rates. Here is what happened to influence mortgage rates last week:

The Chicago Federal Reserve reported that the National Activity Index was negative in August, suggesting below average growth. The index fell from a positive .26 in July to a negative .21 in August. Manufacturing production was down .4 percent and manufacturing Capacity Utilization also declined. The National Association of Realtors reported that Existing Home Sales fell 1.8 percent in August. Economists expected sales to increase to 5.15 million in August and instead, they fell to 5.05 million.

Commerce Department reported an 18 percent increase in New Home Sales on Wednesday. This is the fastest pace since May of 2008 and the largest one month gain since January of 1992. The median price of a new home increased to $275,000, up 8 percent from last year. August’s supply of new homes fell to 4.8 months from
5.6 months in July. Jobless Claims rose last week by 12,000 to end at 293,000.

This week kicking off today we have lots of financial reports that again will make it a volatile mortgage rate market including Personal Income, Consumer Spending, and Core PCE Price Index:

Teh International Supply Managers Index alont with & Construction spending will also influence Houston mortgage rates this week.



Mortgage News for 09/22/2014

Posted ago by Cary Cox

Last week we had many more geo-political events moving the mortgage market and mortgage rates around.

Here is a quick summary of last week and upcoming news this week that will affect mortgage rates in Houston, TX and all over the state of Texas:

CPI and core CPI, excluding food and energy, came in lower than expected. This news was good for Houston mortgage rates . Overall consumer prices fell 0.2 percent in August after rising 0.1 percent in July. Analysts projected no change. Excluding food and energy, the CPI was unchanged after gaining only 0.1 percent the month prior.

The bond markets, treasury yields,  and mortgage-backed security yields which were rising for the last two weeks in anticipation of the Fed meeting, eased after the Fed reaffirmed its plans to keep rates low for a “considerable time.” At the end of the week, the Ten Year Treasury yield was down nearly 3 bps and ended at 2.58 percent. Towing the same line, conforming mortgages rates also loosened a bit. At the end of the week the Conforming Fixed 30-year rate leveled out at around 4.08 percent, while the Conforming Fixed 15-year rate finished at around 3.16 percent. All good for Houston mortgage rates.

Here are some items in the news this week that will influence mortgage rates in Houston, TX –

Existing & New Home Sales Data, Durable Goods Orders & GDP for Q2




Fewer Mortgage Originators Are Not Good For Competition or The Consumer

Posted ago by Cary Cox

Over-regualtion and over-compliance are causing many small to medium size mortgage lenders and mortgage banks to either consolidate or, pass the higher costs onto borrowers, or close down all together.

I’ll be the first to admit that for years there was too little regulation, or actually the government turned a blind-eye to the enforcement of the exisiting mortgage regulations and laws. So instead of enforcing the laws and putting the big banks executives in jail, they bailed them out and over-regulated the industry driving out many of the smaller mortgage lenders that provided the best customer service.

Here is just a small sampling of this week’s mortgage bank and mortgage company mergers from the Rob Chrisman Report:

Recently in Texas Pilgrim Bank ($386mm) announced it will acquire State National Bank of Texas ($240mm). Up north in Ohio First Citizens Banc Corp. (NASDAQ: FCZA), and TCNB Financial Corp, Dayton, Ohio announced that they have signed a definitive agreement and plan of merger which provides for First Citizens to acquire TCNB, and its wholly-owned subsidiary, The Citizens National Bank of Southwestern Ohio (“Citizens National”), in an all-cash transaction. Cape Bancorp, Inc. (NASDAQ: CBNJ), the holding company for Cape Bank, and Colonial Financial Services, Inc. (NASDAQ: COBK), the holding company for Colonial Bank, FSB, jointly announced they have entered into an agreement and plan of merger. In nearby Kentucky, Town Square Bank ($430mm) will acquire the Commonwealth Bank, FSB ($20mm). In the Great State of Texas First National Bank ($782mm) will sell two branches to AIMBank ($501mm); the branches have about $180mm in deposits. And Community Bank ($3.5B, CA) announced a new private banking division called CH Cook & Co. Private Client Advisors will focus on developing banking relationships with high net worth customers.

Do you really think that fewer mortgage companies and mortgage originators will lead to more competition and better pricing for the consumer?

If you do, I have a bridge I want to sell you.

Mortgage Application and Mortgage Rate Update

Posted ago by Cary Cox

It is a big week for all interest-rate products including mortgage product rates with the Federal Reserve meeting this week. You’ll really want to check the forward guidance of the Federal Reserve to see what may be ahead for mortgage rates.

The Mortgage Bankers Association reported on last week’s applications and mortgage applications were up almost 8%. Refis shot up 10% though mortgage refinancing are still down year of year by 22%. Mortgage  applications to purchase a home rose 5 percent from the previous week. Mortgage purchases are down 10 percent on year. The refinance share of mortgage activity increased to 57 percent of total applications, the highest level since February, while the adjustable-rate mortgage share of activity increased to 7.6 percent. If you are going to be in a home less than 7 years an adjustable-rate mortgage is a great option right now. You will get a much lower rate and save in monthly mortgage payments

Mortgage Rates – there just is no volatility, which is fine with many capital markets folks out there. As a proxy for the bond market, look at what the riskless 10-yr T-note has done recently at the end of every day: Friday 2.61%, Monday 2.59%, and yesterday was 2.59%. The Producer Price Index number didn’t move rates much yesterday. Today brought us the Consumer Price Index, down -.2%, core rate unchanged. We’ll also have the NAHB Housing Market Index.

But more importantly, today brings us the Federal Open Market Committee meeting announcement with its policy decisions and brief comments on the FOMC’s view of the economy and how FOMC members voted. The mainstream press certainly believes that this has the potential to move interest rates, especially if the Fed changes the wording by even the slightest measure.

Your Mortgage Data & Mortgage Information

Posted ago by Cary Cox

I read an article today about mortgage data breaches and how to stop them. Here are some questions to ask yourself:

1. Does my mortgage lender employ secure encryption for my mortgage data?

2. Does my mortgage lender have a secure physcial location?

3. Does my mortgage lender use a bonded shredding service for disposal of all paper documents?

4. Has my mortgage lender received passing excellent grades/reviews from the govermental agencies that monitor them?

5. Does my mortgage lender sell my information/date for commercial purposes?

6. Does my mortgage lender earn excellent reviews on Google, Yelp, etc?

7. Has my mortgage lender ever been suspended or sanctioned by a governing entity, if so why?

As a consumer it is important that your mortgage lender takes the best appropriate countermeasures to combat identity theft and keeping your information private.

To answer the questions above to be sure you are working with a mortgage lender that at a minimum does the following:

1. Uses miliatry-grade encryption for your electonic data.

2. Your mortgage lender is in a building that has security, auto-locks on the doors after closing, and their offices have electronic locks for controlled entry.

3. They should use a contracted secure shredding service.

4. Ask your mortgage lender to see the reports/grades they have received from the supervising agencies.

5. Your information should be private and a reputable mortgage lender will never sell it for profit.

6.  Check the Google and Yelp ratings, your mortgage lender should have outstanding reviews.

7.  Your lender should have a clean bill of health and be of any severe sanctions.

Getting a great rate is important., though working with a reputable mortgage lender that cares about your security is just as important.

Quick Hit on Economic & Mortgage Picture for Week of 09/15/2014

Posted ago by Cary Cox

The economy still seems to be stuck in low gear, we are moving forward albeit at a painstakingly slow pace. Mortgage applications have been down, which is never a good sign for the housing recovery which needs to drive the recovery.

Here is a quick update from our partner NYCB with news that may move mortgage rates:

In the aftermath of the back-to-school shopping rush, Retail Sales for the month of August posted a 0.6 percent increase, just in line with analysts’ expectations. July sales were also revised upwards, from flat to 0.3 percent growth. Consumer Sentiment is climbing this month, as compared to August, while Business Inventories growth remains steady at 0.4 percent, in line with expectations.

According to Freddie Mac, the average mortgage interest rates were 4.12 percent for the 30 year Fixed rate term and 3.26 percent for the 15 year Fixed rate term, as compared to 4.10 percent and 3.24 percent, correspondingly, last week. As can be seen, interest rates inched up slightly again, after three flat weeks.

The next FOMC meeting this week, followed by an official announcement on Wednesday, may introduce some new factors and change the current interest rates trend. The Housing Market Index will be reported earlier on the same day and Housing Starts, a leading indicator of the housing market conditions, is being released on Thursday. Two other categories of significant economic readings are scheduled for release this week: inflation data – the Producer Price Index on Tuesday and Consumer Price Index on Wednesday, and Manufacturing data (Empire State Manufacturing Survey) along with Industrial Production on Monday, and Philadelphia Fed Survey on Thursday.


Houston Mortgage & Real Estate Update

Posted ago by Cary Cox

Mortgage rates have been in a sideways pattern, influenced mainly by geo-political events. These events may also keep the price of oil up which will just continue the demand for Houston real estate.

For self-employed borrowers many of our investors are coming out with alternative mortgage products, like bank-statement mortgage-loan programs that allow your monthly deposits to be used as your income. To qualify for this mortgage you must be self-employed for at least two years.

Houston’s real estate market continues to stay hot and good mortgage rates are helping buyer demand as well. Here is the latest on the market from our membership newsletter at the Houston Association of Realtors. You can see Houston is still a sellers’ market. Here is the latest from HAR:

The Houston housing market eked out another month of positive sales in July with prices up and the supply of homes continuing to grow, albeit slightly. Sales volume was the highest monthly total ever recorded.

Housing inventory, which fell to 40-year lows earlier this year, has edged up each of the last three months, reaching a 3.0-months supply in July. Prices climbed to the highest levels for a July, but were lower than June’s all-time record highs. Sales among homes priced between $250,000 and the millions showed the greatest strength, while Days on Market, or the number of days a home takes to sell, fell to a record low of 45.

Single-family home sales totaled 7,769 units, up 1.0 percent compared to July 2013, according to the latest monthly report prepared by the Houston Association of Realtors® (HAR). That represents a record high one-month sales volume. New listings of single-family properties this month rose 5.5 percent, translating to 10,390 properties, which helped boost inventory from June’s 2.9-months supply to 3.0 months. That is still below the 3.4-months supply of inventory one year earlier and significantly lower than the current national supply of 5.5 months of inventory.

The average price of a single-family home jumped 6.4 percent year-over-year to $277,023. The median price—the figure at which half the homes sold for more and half for less—increased 6.8 percent to $202,000.


July did not bring the most dramatic sales performance we’ve ever seen, but the numbers are headed in the right direction,” said HAR Chair Chaille Ralph with Heritage Texas Properties. “We are beginning to see a steady resupply of housing inventory with proportionate sales and pricing gains, all of which translates to a healthier real estate market.”

July sales of all property types totaled 9,250 units, a 0.7-percent increase compared to the same month last year. That marks the second largest one-month total sales volume of all time. Total dollar volume for properties sold rose 7.0 percent to $2.4 billion versus $2.3 billion a year earlier.

July Monthly Market Comparison The Houston housing market experienced across-the-board gains in July with total property sales, total dollar volume and average and median pricing all up when compared to July 2013.

Month-end pending sales for all property types totaled 4,743, up 7.3 percent versus last year, which likely portends another month of positive home sales for August. Active listings, or the number of available properties, at the end of July is 29,880 and is 9.4 percent lower than last year. This is reflective of a record low inventory, but also demonstrates the steady absorption by real estate consumers.

Meanwhile, Houston’s housing inventory is gradually being replenished, hitting a 3.0-months supply in July. Inventory was flat at a 2.6-months supply from last December to April, but has edged upward each of the last three months. It is down from the 3.4-months supply of one year ago and below the current 5.6-months supply of inventory across the U.S. reported by the National Association of Realtors®.

Single-Family Homes Update July single-family home sales totaled an all-time record high of 7,769. That is up 1.0 percent from July 2013 and represents the second monthly sales increase since a decline of 8.1 percent in May. Sales rose 4.6 percent in June.


Home prices reached record high levels for a July. The single-family median price climbed 6.8 percent from last year to $202,000 and the average price rose 6.4 percent year-over-year to $277,023. Transactions overall continued to close at a record pace. The number of days a home took to sell¬, or Days on Market, reached 45 – the lowest level of all time.


Broken out by housing segment, July sales performed as follows:

  • $1 – $79,999: decreased 36.3 percent
  • $80,000 – $149,999: decreased 9.3 percent
  • $150,000 – $249,999: increased 6.8 percent
  • $250,000 – $499,999: increased 11.6 percent
  • $500,000 – $1 million and above: increased 11.7 percent

HAR also breaks out the sales performance of existing single-family homes for the Houston market. In July, existing home sales totaled 6,903. That is 1.8 percent ahead of the same month last year. The average sales price increased 5.6 percent year-over-year to $263,506 while the median sales price jumped 6.9 percent to $190,000.

Townhouse/Condominium Update Hampered by low inventory, July sales of townhouses and condominiums dipped 2.3 percent from one year earlier. A total of 671 units sold last month compared to 687 properties in July 2013. The average price rose 7.8 percent to $207,644 and the median price increased 6.6 percent to $153,000. Inventory was down to a 2.7-months supply versus a 3.2-months supply a year earlier, but up from the June 2014 level of 2.6 months.


Lease Property Update Lease properties remained in high demand in July. Single-family home rentals rose 7.2 percent compared to July 2013, while year-over-year townhouse/condominium rentals increased 4.1 percent. The average rent for a single-family home shot up 13.7 percent to $1,950 and the average rent for a townhouse/condominium rose 4.1 percent to $1,555.

Houston Real Estate Milestones in July

  • Single-family home sales staged their second monthly increase since May’s decline, edging up 1.0 percent versus July 2013;
  • At 7,769, the total number of single-family homes sold was the largest monthly sales volume ever;
  • Total property sales rose 0.7 percent year-over year, reaching the second highest level of all time;
  • Total dollar volume was up 7.0 percent, increasing from $2.3 billion to $2.4 billion on a year-over-year basis;
  • At $202,000, the single-family home median price achieved a record high for a July;
  • At $277,023, the single-family home average price also reached a July high;
  • Days on Market for single-family homes was 45, the lowest level of all time;
  • The local supply of homes continues to gradually be replenished, with inventory edging up to a 3.0-months supply. That compares to a 3.4-months supply locally last July and the current national average of 5.5 months, as reported by the National Association of REALTORS®;
  • Rentals of single-family homes rose 7.2 percent year-over-year and the cost of renting those homes increased 13.7 percent to $1,950.