September Round Up: Rates Remain Low, Increasing Affordability

In Freddie Mac's results of its Primary Mortgage Market Survey, the 30-year fixed-rate mortgage (FRM) averaged 5.04 percent with an average 0.6 point for the week ending September 24, 2009, unchanged from the previous week when it averaged 5.04 percent. Last year at this time, the 30-year FRM averaged 6.09 percent.

The 15-year FRM this week averaged 4.46 percent with an average 0.6 point, down from the previous week when it averaged 4.47 percent. A year ago at this time, the 15-year FRM averaged 5.77 percent. This is the lowest the 15-year FRM has been since Freddie Mac started tracking it in 1991.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.51 percent this week, with an average 0.5 point, unchanged from the previous week when it averaged 4.51 percent. A year ago, the 5-year ARM averaged 6.02 percent.

The one-year Treasury-indexed ARM averaged 4.52 percent this week with an average 0.6 point, down from the previous week when it averaged 4.58 percent. At this time last year, the 1-year ARM averaged 5.03 percent.

"Mortgage rates held relatively steady at three-month lows this week," said Frank Nothaft, Freddie Mac vice president and chief economist. Correspondingly, the Mortgage Bankers Association reported that mortgage applications jumped 12.8 percent over the week of September 18th to the strongest pace since late May, boosted by refinancing activity.

"In its September 23rd policy statement, the Federal Reserve (Fed) indicated that it plans to keep its benchmark interest rate exceptionally low for an extended period. This will likely benefit consumers who opt for ARMs, because they are typically tied to shorter-term interest rates. The Fed also noted that activity in the economy and housing market has picked up and financial markets have improved."

Credit Reports Under Extra Scrutiny
Buyers who are under contract and hoping to close before Nov. 30 when the first-time home buyer credit expires should refrain from buying furniture and other things on credit.

Lenders are running credit checks prior to closing day and any increase in credit card or other debt can jeopardize the loan.

Buyers should be warned to even refrain from checking out a new large purchase because even an inquiry on a credit report could scare a lender.

If someone’s squeaking by and, all of a sudden, they may be looking at increasing debt, the lenders will have a keener eye in looking at your loan.

Don’t look until you’ve closed is basically what it comes down to. That’s the safest way.

Get Lawns Ready Now for Next Year
Anybody who will be selling a property in the spring should get a jump on curb appeal by working now on beautifying the lawn.

Here are some key tasks that will lead to a green and healthy yard in the next selling season:
* Calculate the total lawn area to learn how much seed and chemicals are required.
* Treat weeds with an herbicide.
* Test the pH level and, if indicated, add lime.
* Plant ground cover like pachysandra and hardy ferns in low-light or slopping areas. Before preparing, seeding and fertilizing the rest of the lawn, consider whether there are areas that might be better candidates for stepping stones or another attractive alternative to plantings.

Tax Credit Extension Could Sway Buyers
At least 43 percent of potential first-time home buyers told Zillow.com that extending the $8,000 federal tax credit would go a long way toward motivating them to buy a home in 2010.

Nearly 18 percent called the credit the "primary influence" in their decision; 25 percent said it would be a "significant influence;" 27 percent said the credit would have "some" influence on any homebuying decision; and 31 percent said it would have no influence.

If the 18 percent of those who called the credit a primary influence ultimately bought a home, that would equate to 334,000 buyers from Dec. 1, 2009, to Nov. 30, 2010, and would cost taxpayers $14.86 billion, the online real estate marketing firm calculated.

Zillow also noted that based on its survey, about 80 percent of first-time home buyers in the coming year will buy whether there is a credit or not, but it argues that expanding the credit is worthwhile.

"While 334,000 may seem like a small number relative to the total number of home buyers who would claim the credit, their addition to the market next year could make the difference between a robust annual increase in home sales next year and a flat or negative change in home sales relative to this year," Zillow Chief Economist Stan Humphries says.

This article appeared in Realty Times
Written by: Michele Dawson

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