Information From Florida Mortgage and Real Estate Professionals

A report from the Lakeland Ledger confirmed news for Winter Haven mortgage borrowers that home sales are picking up in the area, despite a down December existing home sales period nationally.

All told, some 376 existing homes were sold in Winter Haven, Lakeland, and surrounding Polk County areas in December, bringing the year’s total to 4,290.  This upswing marks the highest home sales period since 2006, when 5,606 homes were sold.

Per the Ledger article, the uptick in home sales is owed largely to the sale distressed, foreclosed, and bank owned properties.  In fact, reports are that more than half of the sales from 2009 can be attributed to these types of properties.  One side effect these types of sales are having is that the average value of existing homes is still being kept low.

For December 2009, the Florida Association of Realtors reports that the average home sales price was $107,300, showing a decrease by 17 percent from the year before.

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Playing it safe, Lakeland mortgage borrowers should consider locking in favorable mortgage rates ahead of today’s FOMC meeting adjournment.

The Federal Open Market Committee wraps up its scheduled, 2-day meeting today at 2:15 PM ET in Washington. It’s the first of 8 scheduled meetings for the policy-setting group in 2010.

As usual, we’ll see a press release just after today’s meeting adjourns that recaps the FOMC’s views of the country’s current economic condition and provides its outlook for the near-term future.

These press releases are brief, but comprehensive, and Wall Street eats them up.  Every word, sentence and phrase is carefully picked apart by analysts hoping to achieve any possible investment edge over other active traders.

It’s for this reason that mortgage rates tend to be jittery on days the FOMC adjourns. Wall Street is frantically re-balancing its bets.

Lakeland mortgage borrowers will see much of the same today.

While I don’t expect to see a change in the current Fed Funds rate, we do need to pay attention to the language the Fed uses in its statement today.

After the Fed’s last meeting in December, it made several observations:

1. The jobs market is getting “less worse”
2. The housing sector is making improvements
3. Financial markets are stabilizing further

The economy is gradually improving, the Fed told us, but there are still risks to the economy ahead.  Furthermore, inflation remains in check.

As compared to December’s press release, today’s FOMC statement will be closely watched. If the Fed changes its verbiage in any way that alludes to strong growth and/or inflation in 2010, expect mortgage rates in Lakeland, Florida to rise as Wall Street moves its money from bonds to stocks.

Conversely, reference to slower growth in 2010 should lead rates lower.

We can’t know what the Fed will say so if you’re floating a mortgage rate right now or wondering whether the time is right to lock, the safe approach would be to lock prior to 2:15 PM ET Wednesday. After that, what happens to rates is anyone’s guess.

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The Federal Open Market Committee voted to leave the Fed Funds Rate within its target range of 0.000-0.250 percent.

In its press release, the FOMC noted that the U.S. economy “has continued to strengthen”, that the jobs markets is getting better, and that financial markets are supportive of growth.

There was no mention of the housing market’s strength.  The last 3 statements from the Fed included that specific verbiage.

It’s the fifth straight statement in which the Fed spoke about the economy with optimism.  This should signal to markets that 2008-2009 recession is over and that economic growth is returning to U.S. economy.

The economy isn’t without threats, however, and the Fed identified several in its press release, including:

1. Credit remains tight for consumers
2. Businesses are reluctant to hire new workers
3. Housing wealth is down

The message’s overall tone, however, remained positive and inflation appears is still within tolerance.

Also in its statement, the Fed confirmed its plan to hold the Fed Funds Rate near zero percent “for an extended period” and to wind down its $1.25 trillion commitment to the mortgage market by March 31, 2010.  This is noteworthy because Fed insiders estimate that the bond-buying program suppressed mortgage rates by 1 percent through 2009.

Mortgage market reaction to the Fed press release is, in general, negative. Mortgage rates in Winter Haven are rising this afternoon.

The FOMC’s next scheduled meeting is March 16, 2010.

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Lakeland mortgage borrowers saw mortgage rates improve last week, despite some of the economic and financial news we received.

The news breakdown from last week is as follows:

1. The Federal Reserve relayed high hopes for continued economic recovery
2. Consumer Confidence pushed to a 2-year high
3. 4th Quarter domestic output exceeded Wall Street’s expectations

Normally, when we receive these kinds of financial and economic news reports, investors begin to pull money out of “safer” bond markets and put it back into “risker” stock investments – as Wall Street preps for better corporate earnings. The movement pressures mortgage rates to rise.

Last week, however, different stories trumped the headlines including a report from Standard & Poor’s that said U.K. banks are no longer counted among the world’s most stable.  This research, in particular, triggered a flight-to-quality among investors that pumped the U.S. dollar and sparked new demand for mortgage bonds.

This is but one reason we saw Lakeland mortgage rates improve, and it shows how unpredictable mortgage rates can be.

This week figures to be a challenge, too.

First, we start the week with key inflation data.  When inflation runs hot, it’s usually bad for mortgage rates.  Inflation is expected to be tame, however — a point the Fed made several times in its press release last week.  That said, inflation data is closely watched by markets and can make a big impact on rates.

Then, on Wednesday, ADP releases its private sector job report.  The ADP data is a precursor to the government’s own Non-Farm Payrolls report which is due to hit Friday.  ADP is expected to show a net loss of roughly 85,000 jobs.  Depending on where the actual numbers comes in, mortgage rates could wiggle a bit.

If the ADP report shows much fewer than 85,000 jobs lost, expect mortgage rates to rise.  The same is true for Friday’s job report.  A miss on expectations will cause mortgage to ratchet higher.

Since peaking on the last day of December, mortgage rates took a slow, steady descent through January. They’ve have taken back close to two-thirds of December’s overall losses.  This week, rates could fall some more, or they could bounce back up.  The most prudent time to lock would be prior to Tuesday’s closing.

After that, the respective jobs reports will take over and rates could go either way with force.

As always, if you’re on the fence as to whether to lock in your Lakeland mortgage rate, consider talking to a qualified mortgage broker now about doing so.  Volatility is still in the picture, so locking when you see a rate you like is advised.

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Florida Mortgage markets improved last week on domestic jobs data and international banking concerns. The news triggered buying in the bond market and, as a result, conventional, FHA and VA mortgage rates in Florida improved for the 4th consecutive week.

Mortgage rates are now at a 6-week low but probably shouldn’t be.  It underscores just how important global events can be to U.S. mortgage markets.

For example, corporate earnings continue to improve and key elements of the economy are strengthening.  Even the Federal Reserve acknowledges this.  In most circumstances, that would be a boon for the stock markets and bond markets would suffer, including mortgage bonds.

Last week, that wasn’t the case.

Early in the week, as (1) China tightened its monetary policy, (2) Greece did little to quell lingering default fears, and (3) Spain raised its deficit forecasts, global investors sought to reduce their collective risk exposure. For safety of principal, many sold some of their more aggressive positions and moved the cash proceeds into the U.S. bond market — which includes mortgage bonds.

On Wall Street, this type of trading pattern is called a “flight-to-quality”.  Because mortgage bonds are backed by U.S. government entities, the debt is considered to be ultra-safe.  Last week’s extra demand for bonds helped to push prices up and mortgage rates down.

And that was before Friday’s weak jobs report. Although the Unemployment Rate fell to 9.7%, the government reported a net loss of 98,000 jobs last month and this, too, helped mortgage rates tick lower.

This week, we’ll hope for momentum to continue.

There’s very little domestic news to move rates this week so keep an eye on the global market for similar stories like what we saw last week.  Or, if you’re not sure what to look for, just give me a call or send me an email and I’ll be happy to watch the markets and mortgage rates for you.

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Lakeland mortgage borrowers who have been turned down for home loans due to low credit scores know very well that importance of a good credit score is rising.  Not only are credit scores important in determining whether you will be approved for a mortgage, they also play a huge role in determining how high or low your interest rate will be once you are approved.  In short, higher credit scores get you lower rates.

In the 3-minute piece, the NBC Today Show talks about 7 ways that homebuyers ruin their credit — often by accident.  Some of the highlighted mistakes include:

• Closing open credit cards
• Making appliance buys on credit prior to closing
• Asking creditors to lower credit balances prior to closing

In general, a 740 FICO will protect Lakeland mortgage borrowers from the higher costs and/or rates associated with low credit scores.  Below 740, though, every 20 points adds to the damage.  Watch the video and apply what you can to your own situation.  The more you know, the more you can save.

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