Utah Real Estate News Clips - Utah Real Estate

Mortgage Market Update
September 6, 2007

An article this morning from CNN Money stated that foreclosures nationally are on the rise compared to last year (duh). However, here is an interesting quote:

"There are the three midwestern states - Michigan, Ohio and Indiana - where defaults and foreclosures are linked to serious underlying economic and job issues. Michigan alone has lost 300,000 jobs since 2000. Then there are the once red-hot housing markets of the Sunbelt. According to Duncan, homes entering the foreclosure process in Arizona, California, Florida and Nevada drove the national increase - the national foreclosure rate would have otherwise declined."

The mortgage market seems to be stabilizing somewhat. We used to receive notices every day of loan program changes and companies going out of business, but it's been quiet lately. Investors on Wall Street are beginning to show interest in the jumbo loans again (loans above 417,000). This may bring non-conforming rates down. FHA is beginning to re-emerge as a competitive product for first time home buyers. Of all the loans we closed last year, only maybe 3 or 4 were FHA. Now, it seems that FHA loans fit about 35% of our pipeline. FHA is still an outstanding choice for people with a rough credit history. Remember, FHA cannot disqualify a borrower for a LACK of credit nor does it go off of credit score, only recent credit history. So if you have a borrower with lower FICO scores but have a clean recent history or some other explainable problem (health care collections for example) have them call us.

Market Conclusion:

1. Mortgage rates continue to move downward slightly. The national job report for August comes in tomorrow. If the economy is showing an increase in the unemployment rate or if less jobs are added than expected, you can expect rates to decline a bit further.

2. Most investors are betting that the Fed will lower the prime rate by .25% on September 14. If this occurs, then short term rates will benefit. Short term rates affect loans such as construction loans, home equity lines of credit, 3/1 ARMs, etc. 30 yr fixed rates are not directly influenced by the Fed, but by the bond market.

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