In our effort to cover important trends that affect the mortgage market, FREEandCLEAR keeps a close eye on existing home sales, which is the number of previously constructed housing units that are sold in a month. The existing home sales figure is reported separately from the new home sales figure, which is the number of newly constructed homes that are sold in a month. An increase in existing home sales reflects improvement in the housing market while a decrease in existing home sales reflects a weakening of the housing market. In addition to reporting the number of housing units sold, the existing home sales report also includes information on the supply of units for sale as wells as the median and average existing home sales price.

The existing home sales report, issued on a monthly basis, includes statistics for the prior month. The report for December 2014 showed that existing home sales in November decreased 6.1% on a month-over-month basis and increased 2.1% on a year-over-year basis to an annualized 4.93 million units (so if you take the home sales figure for November and multiplied it by twelve), which fell short of industry analyst expectations. The monthly decline in existing home sales was experienced nationwide as all four regions reported declines. The number of existing homes available for sale, known as supply, decreased by 15,000 units to 2.09 million units as compared to 2.24 million units in October. The median existing home sales price decreased 1.1% to $205,300 from $208,300 in October. After two months of positive results, the November existing home sales figure fell short of industry expectations as favorable weather, low interest rates and relatively steady home prices failed to stimulate a significant increase in purchase activity. (Source: Econoday)

What it Means for Mortgage Borrowers
The decline in existing home sales after two consecutive months of increases indicates that the mortgage and real estate markets continue to lack sustained momentum. First-time home buyers remain reluctant market participants which is a key factor holding back the overall market. On the positive side, home prices continue to moderate on a nationwide basis which when combined with low interest rates as well as a gradually improving economy and employment market may eventually pull first-time home buyers into the market. Potential first-time home buyers thinking about making a move in the next six months should check out the FREEandCLEAR First-Time Home Buyer Mortgage Cheat Sheet to get organized and informed before they embark on the home buying and mortgage processes.

The FREEandCLEAR Mortgage Expert
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The Federal Reserve determines monetary policy in the United States, and monetary policy, in turn, is one of the most important factors in determining mortgage interest rates.  So when the Federal Reserve speaks, FREEandCLEAR listens closely and passes along our insights to the the FREEandCLEAR community.  One of the key tools that the Federal Reserve uses to control monetary policy is the Federal Funds Rate.  In short, the Federal Funds Rate is the interest rate that banks pay when they borrow money from each other overnight to make sure they have enough money in reserve.  The Federal Reserve sets a target for the Federal Funds Rate which influences other interest rates, including mortgage interest rates.  Although there are other factors involved, the lower the Federal Funds Rate, the lower mortgage interest rates and the higher the Federal Funds Rate, the higher mortgage interest rates.  The Federal Open Market Committee (FOMC) is the policy-making unit of the Federal Reserve that is responsible for determining the Federal Funds Rate and meets eight times a year to discuss what the target rate should be.  After every meeting, the FOMC releases a policy statement that discusses the target Federal Funds Rate as well as other monetary policy and economic issues.  The FOMC announcement can have a significant impact on mortgage rates depending on if the FOMC changes the target Federal Funds Rate and the language the statement uses to discuss monetary policy and the economy.

In its most recent FOMC announcement released on December 17th, the Federal Reserve left the target Federal Funds Rate unchanged at 0 to .25%.  The FOMC also reiterated that the Federal Reserve will likely maintain the current low target Federal Funds Rate for “a considerable time” and indicated it will exercise “patience” before increasing the target Federal Funds Rate, which means that the target rate is likely to remain at its current level for several for the near future unless there are any significant economic developments.  The FOMC’s decision to maintain the current Federal Funds Rate did not come as a surprise to industry analysts although three members of the FOMC voted against the action, which is an unusually high number of dissenting votes.  The three FOMC members that voted against the action expressed concern that the economy is improving faster than anticipated which could require the FOMC to increase the target Federal Funds Rate sooner than expected.  Despite the dissenting votes, mortgage rates remained flat-to-slightly down after the announcement.

What it Means for Borrowers

The FOMC’s decision to hold the target Federal Funds Rate constant and reiterating its relatively cautious language about not raising interest rates for “a considerable time” had a steadying effect on mortgage interest rates.  As we head into 2015, mortgage rates remain at historical lows and the FOMC announcement suggests that interest rates will remain relatively flat for the near future although the increase in dissenting FOMC member votes suggests that 2015 could see a change in the time frame of when the FOMC could consider raising the target rate.  The first quarter of 2015 should continue to be a good time to purchase a home or refinance your mortgage and check out the INTEREST RATES feature on FREEandCLEAR to review interest rates from lenders in your areas.

The FREEandCLEAR Mortgage Expert

www.freeandclear.com

At FREEandCLEAR, we follow the Mortgage Bankers’ Association (MBA) mortgage applications index which measures both purchase and refinance applications for mortgage lenders across the country. An increase in the MBA applications index reflects an increase in mortgage applications while a decrease in the index reflects a decline in mortgage applications.

For the week ended December 12th, the composite mortgage application index, which includes both home purchase mortgages and refinancings, dipped 3.3%, reversing a 7.3% increase for the prior week. The decline in the composite application index was driven by a 7.0% decrease in purchase applications, as compared to the prior week, which was up slightly at 1%. The refinance component of the index was unchanged for the week, as compared to the the 13.0% increase for the prior week. Mortgage application activity failed to respond to a decline in interest rates as the average interest rate for conforming loans decreased to 4.06% as compared to 4.11% for the prior week. The decline in the mortgage application index is likely driven by seasonality as mortgage activity typically slows down prior to the holiday season. (Source: Bloomberg)

What it Means for Mortgage Borrowers
The dip in mortgage application activity should not come as a surprise given the expected real estate market holiday slowdown. Interest rates continue to be low which could boost activity heading into the new year as mortgage borrowers tend to become more active in January. If you are thinking about buying a home or refinancing your existing mortgage in early 2015, now is the perfect time to review the FREEandCLEAR Home Purchase Mortgage Guide and Mortgage Refinance Guide. Making sure you are the most organized, informed and prepared borrower is the best way to find the mortgage that is right for you. Additionally, use the INTEREST RATES feature on FREEandCLEAR to keep track of rates and fees for lenders in your area.

The FREEandCLEAR Mortgage Expert
www.freeandclear.com

We are happy to announce the re-launch of FREEandCLEAR! With a new home page, one of the deepest libraries of mortgage videos available online and enhanced navigation functionality, FREEandCLEAR provides mortgage consumers a wider offering of high-quality tools, resources and information to help them master the mortgage process.

Highlights of our re-launch include a redesigned home page that features popular FREEandCLEAR mortgage instructional videos as well as customized resources for different types of mortgage consumers including first-time home buyers, people looking for a home purchase mortgage and people looking to refinance.

We have also added a ton of quality video content to FREEandCLEAR including mortgage topic instructional videos, mortgage document overview videos and mortgage calculator “how-to” videos.  Our videos provide informative and engaging explanations of key mortgage concepts and break down important mortgage documents line by line, helping mortgage consumers become more educated and knowledgeable borrowers.

You can check out our welcome video on our new home page that describes everything the new FREEandCLEAR has to offer and explains how you can get the most out of our site.

As always, we put our users first when we redesigned FREEandCLEAR.  We are confident that our new site helps us realize our goal of enabling mortgage consumers to make better decisions and save money.  And remember, at FREEandCLEAR, we strive to live up to our name — our site is FREE to use and we present information in a CLEAR and useful way.  We hope that by using FREEandCLEAR you become a more informed borrower and are empowered through information and education to make the mortgage decisions that are right for you.

We would love to hear what you think of the new FREEandCLEAR so drop us line through the ASK AN EXPERT or FEEDBACK buttons at the top or button of any page.

Thank you for reviewing the new FREEandCLEAR!

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At FREEandCLEAR, we follow the Mortgage Bankers’ Association (MBA) mortgage applications index which measures both purchase and refinance applications for mortgage lenders across the country.  An increase in the MBA applications index reflects an increase in mortgage applications while a decrease in the index reflects a decline in mortgage applications.

For the week ended December 5th, the composite mortgage application index, which includes both home purchase mortgages and refinancings, increased 7.3%, exactly reversing a 7.3% decline for the prior week.  The rebound in the application index was driven by a 13.0% increase in refinance applications, as compared to the prior week, which was down 13%. The purchase component of the index increased 1.0% for the week, down from the 3.0% increase for the prior week.  The boost in refinance application activity is likely the result of continued low interest rates.  Although interest rates for conforming loans increased to 4.11% as compared to 4.08% for the prior week, rates remain relatively low and existing borrowers are looking to refinance their mortgages before the new year.  (Source: Bloomberg)

What it Means for Mortgage Borrowers

The rebound in the refinance index is a positive sign after almost six weeks of flat-to-down refinance application activity.  Analysts were hoping for stronger performance from purchase application activity which has been relatively lackluster all year.  As we close out 2014 and look to 2015, borrowers may want to take advantage of attractive interest rates.  Because this is typically a slower time of year for mortgages, borrowers may experience better customer service and faster closing time from lenders.  Check out our Mortgage Refinance Calculator and Mortgage Qualification Calculator to determine if now is the right time for you to refinance your mortgage or buy a new home.  Additionally, use our INTEREST RATES feature to keep track of rates and fees for lenders in your area.

The FREEandCLEAR Mortgage Expert

www.freeandclear.com

Government regulators reduced the required down payment for certain types of mortgages, which should make it easier for first-time buyers to purchase a home.  The new regulations, announced by FannieMae, allow eligible first-time home buyers to purchase a home with a down payment of as little as 3% of the purchase price of the property, down from the previously required minimum down payment of 5%.  The new down payment regulation applies to first-time home buyers (or buyers who have not owned a home within the past three years).  Additionally, in order to qualify for the program, buyers must demonstrate the ability to repay the mortgage according to industry-standard Qualified Mortgage guidelines (basically you prove you can back back the mortgage based on your income and debt levels), meet minimum credit score requirements; and, depending on the specific mortgage program being used, buyers may have to complete a pre-purchase home buyer education course. It is important to highlight that home buyers who make a down payment of less than 20% are typically required to pay private mortgage insurance (PMI) which is an ongoing monthly fee in addition to your mortgage payment.  The reduced down payment requirement only applies to fixed rate mortgages up to 30 years in length so a borrower would not be able to use an adjustable rate mortgage or an interest only mortgage.  Previously, if a home buyer wanted to purchase a property with a down payment of less than 5%, they would have typically used the FHA Home Loan Program.  The FHA Program allows buyers to purchase a home with a down payment as little as 3.5% but requires the buyer to pay an up-front and ongoing FHA Mortgage Insurance Premium (MIP) which is typically more expensive than PMI.  Additionally, eligible military personnel and veterans can use the VA Home Loan Program that requires no down payment although the borrower is required to pay a one-time, up-front VA Funding Fee.

What it Means for Mortgage Borrowers

Although the reduced down payment requirement is only a small change, it should make it easier for more first-time home buyers to purchase a home.  Home purchases by first-time buyers are at their lowest level in almost three decades and the new regulations are designed to make home ownership more attainable for more people.  If you are thinking about purchasing a home for the first time, check out our First-Time Home Buyer Mortgage Cheat Sheet with useful information and helpful resources.  Additionally, to learn more about the new down payment programs and how they could work for you, contact your local lender by using the INTEREST RATES feature on FREEandCLEAR.

The FREEandCLEAR Mortgage Expert

www.freeandclear.com

At FREEandCLEAR, we follow the Mortgage Bankers’ Association (MBA) mortgage applications index which measures both purchase and refinance applications for mortgage lenders across the country.  An increase in the MBA applications index reflects an increase in mortgage applications while a decrease in the index reflects a decline in mortgage applications.

For the week ended November 28th, the composite mortgage application index, which includes both home purchase mortgages and refinancings, decreased 7.3% as a 13.0% decrease in refinance applications offset a 3.0% increase in purchase applications.  The increase in purchase applications exceeded analyst expectations for the holiday-shortened week and suggests that home buyers may be responding to lower interest rates and stabilizing home prices.  The decline in the refinance index continued a downward trend in refinance applications over the past month and a half.  Although interest rates continue to be attractive, refinance applications have steadily declined after an initial burst of activity when rates dropped in October. Interest rates for conforming loans continued their gradual downward trend, decreasing to 4.08%, as compared to 4.15% for the prior week.  (Source: Bloomberg)

What it Means for Mortgage Borrowers

The increase in the purchase mortgage index was a welcome and surprising development given that Thanksgiving week is typically a slow time for mortgage applications. Home buyers appear to be taking advantage of attractive interest rates and stabilizing home prices while refinancing activity seems to have dried up as the majority of qualified existing home owners have already refinanced their mortgages.  Monitor the INTEREST RATES feature on FREEandCLEAR to review rates for lenders in your area and then use our Mortgage Selector to determine the mortgage amount and program that are right for you.

The FREEandCLEAR Mortgage Expert

www.freeandclear.com

Lenders are set to implement revised lending standards that should make it easier for borrowers to obtain mortgages.  The new standards, agreed to by lenders and industry regulators in October, reduce borrower credit requirements and could also streamline the amount of time it takes to process and close a mortgage.  The new standards relax borrower credit requirements which should make it easier for home buyers with lower credit scores or minor credit issue to obtain mortgages.  For example, a lender may be more willing to provide a mortgage to a borrower with a credit score as low as 620, the minimum score for most mortgage programs according to federal regulations, whereas in the past the lender may have required a minimum credit score of 660.  Additionally, minor credit issues that do not impact the borrower’s ability to repay the mortgage, such as a one-time late payment, will become a less significant part of the mortgage process and require less time and effort for the borrower to address.  It is important to highlight that banks have discretion over how they respond to and apply the new mortgage standards so not all banks will change or relax their lending requirements.  Most industry analysts, however, expect the relaxed regulations to be a positive for mortgage borrowers, especially for individuals with less than perfect credit profiles.

What it Means for Mortgage Borrowers

The clarified and relaxed lending standards should benefit borrowers looking to buy a home or refinance their mortgages.  FREEandCLEAR provides an in-depth discussion of how your credit score impacts your ability to get a mortgage and understanding your credit profile is one of the first steps in the mortgage process.  Additionally, because the lending standards are relatively new and may vary by lender, borrowers should make sure they understand a lender’s borrower qualification and credit score requirements before they select a lender.  Borrowers can use the INTEREST RATES function on FREEandCLEAR to review a list of lenders in their area to understand how the new lending requirements apply to them.

The FREEandCLEAR Mortgage Expert

www.freeandclear.com