Mortgage Interest Rates September 2011
By NICK TIMIRAOS of the WSJ
The Federal Reserve’s decision to reinvest payments from mortgages in its portfolio into government-backed mortgage securities signals a renewed effort to help consumers take advantage of interest rates that have fallen to their lowest levels in decades.
Wednesday’s announcement follows recent talks between the White House and federal regulators to ease hurdles to refinancing for borrowers whose loans are backed by Fannie Mae and Freddie Mac. The Fed said its action “would help support conditions in mortgage markets and contribute to a stronger economic recovery.” The central bank hopes that by restraining the supply of mortgage-backed securities in the hands of private investors, it will support their price and thus push down the yields, which could trickle through to borrowers in the form of lower mortgage rates.
WSJ’s Nick Timiraos reports the Fed’s decision to reinvest payments from mortgages into government-backed mortgage securities signals a renewed effort to help consumers take advantage of interest rates. Photo by David Paul Morris/Getty Images
A $1.25 trillion program of mortgage-backed securities purchases by the Fed, which ended in March 2010, is widely believed to have had that effect. Its holdings of those securities have since fallen to about $885 billion.
The Fed won’t increase its overall portfolio of mortgage bonds. Instead, it is simply taking the cash it gets when bonds in the existing portfolio mature and reinvesting it into other mortgage-backed securities.
“This is a way of saying, ‘We are going to also foster low mortgage rates, and if the market isn’t interested in buying them, well, we will buy them,’ ” said Keith Gumbinger, vice president at financial publisher HSH Associates.
In recent weeks, the prospect of a refinancing wave has sparked concerns that mortgage markets would face a glut of newly issued bonds, particularly as those held by the Federal Reserve are paid off. “Who’s going to buy all those mortgages if the Fed isn’t buying them?” said Jim Vogel, an analyst at FTN Financial. “There was that possibility of an oversupply.”
Teachers, Law Enforcement officers and Firefighters may qualify for 50% discount on a HUD home.
Law enforcement officers, pre-Kindergarten through 12th grade teachers and firefighters/emergency medical technicians can contribute to community revitalization while becoming homeowners through HUD’s Good Neighbor Next Door Sales Program. HUD offers a substantial incentive in the form of a discount of 50% from the list price of the home. In return you must commit to live in the property for 36 months as your sole residence.
How the Program Works
Eligible Single Family homes located in revitalization areas are listed exclusively for sales through the Good Neighbor Next Door Sales program. Properties are available for purchase through the program for five days.
How to Participate in Good Neighbor Next Door
Check the listings for your state. Follow the instructions to submit your interest in purchasing a specific home. If more than one person submits on a single home a selection will be made by random lottery. You must meet the requirements for a law enforcement officer, teacher, firefighter or emergency medical technician and comply with HUD’s regulations for the program.
HUD requires that you sign a second mortgage and note for the discount amount. No interest or payments are required on this “silent second” provided that you fulfill the three-year occupancy requirement. The number of properties available is limited and the list of available properties changes weekly.
Info from HUD. If you think you may qualify please contact an ERA Knight Realty agent at 1-888-892-7373
ERA Knight Realty reports record sales for August 2011
“August sales stats for ERA Knight Realty were the best monthly totals of the year for a single month” , reports Rick Knight. “We saw a slower 1st quarter this year than what we expected. Then sales started to take off this summer. Knight Realty sold over 5.7 million in real estate in the month of August. That is closed sales volume. That is an increase over August of 2010 so we are excited. We also will sale more in September 2011 than September 2010. So there is a buzz around the office that, Hey we are seeing the light at the end of th tunnel.”
ERA Knight agents are talking about the low interest rates and a new crop of young home buyers. “These guys were in college when the market was starting to slide a few years ago. Now, these young men and women are getting their careers together and looking at the interest rates and buying. ” adds Rick Knight, ” We are also seeing a lot of retired home buyers paying cash for homes. That is a good sign that prices are attractive and they see good value. Our average sales price in August was $247,826. And that really nails it about what is hot in the market. We sold in all price points this summer but the bulk is in the popular neighborhoods in the $200,000’s plus or minus. We still are seeing price pressure on the more expensive homes. But as we look to the 4th quarter we see buyers interested in getting a good price with a very low interest rate. Our Corporate Relocation business has been busy all summer. Our property management division is very busy and they are seeing prices increase because of demand. That is huge for sales. When rent prices go up, it makes buying more attractive. ”
Rick Knight is Broker / Owner of ERA Knight Realty. He can be reached at 1-888-892-7373
