ARAMCO Report - The Mother of ALL Mortgage Blogs!

Homeowner Equity Rebounding

Posted by The Aramco Group on Mon, Jul 13, 2015 @ 17:07 PM

Real Estate equity is on the mend according to new data released by the Federal Reserve. At its peak in 2005, the value of homes in the U.S. hovered around $13.1 trillion. In the aftermath of the 2008 financial crises, that number plummeted and ultimately led to more than seven million homes being lost to foreclosure. By 2011, homeowner equity had dropped to $6.4 trillion, affecting half of America’s mortgages.

The Fed now says that between 2011 and 2014, homeowner equity climbed to $11.3 trillion, putting the market on track for a full recovery by next year. This recovery is crucial in giving homeowners who had been underwater for years options previously closed off to them.

Home equity lending activity is on the rise, which include single lump-sum loans and lines of credit. Homeowners are refinancing, as mortgage rates remain low. The current no point 30-year fixed rates are averaging 4.125 percent and 15-year rates are averaging 3.25 percent.

Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381–8888 and your question may be featured in an upcoming article.

Topics: 30 year fixed rates, equity

U.S. Trade Deficit Grows

Posted by The Aramco Group on Sat, Jul 11, 2015 @ 14:07 PM

The trade deficit grew a little wider in May, resulting from declines in exports of American aircraft and other manufactured products. The nation’s shortfall rose to 2.9 percent or a seasonally adjusted $41.9 billion, according to the Department of Commerce.

Exports suffered because of a strong dollar, making purchasing American goods with foreign currencies more expensive. This is particularly true in vital markets such as the European Union and China, both of whose economies are struggling. The Greek debt crisis has shaken Europe and China is contending with the looming fears of a stock-market crash.

The volatility of the U.S. trade deficit has Federal Reserve officials keeping an eye on the global economy as they consider raising the benchmark interest rate for the first time since 2008. While there remains worldwide economic uncertainty, the U.S. has seen a slowdown in inflation, a growing jobs market and home prices leveling. These factors should keep mortgage rates affordable in a historical context. The current conforming no point 30-year fixed rates average 4.125 percent and 15-year rates average 3.25 percent.

Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381–8888 and your question may be featured in an upcoming article.

Topics: Greek Debt Crisis, European Union, China, 30 year fixed rates, Mortgage rates

Job Openings at Record High

Posted by The Aramco Group on Thu, Jul 9, 2015 @ 14:07 PM

The Labor Department announced last week that the number of job openings in the U.S. remain at a record high – 5.36 million during the month of May. There were 1.7 million layoffs during the month, on par with the last 12 months.

The report underlined a key difference between the number of jobs available and the hiring rate, an indication that businesses are struggling to find candidates qualified to fill vacancies. The rate of open jobs in May came in at 3.6 percent, while the rate of hires dropped to 3.5 percent. Typically, employers hire at faster rates than they post job openings, but the narrowing of the two rates illustrates that companies will hold off for the perfect candidate.

While wages have remained relatively stagnant, the job-opening numbers are returning to pre-recession levels.

While low mortgage rates are obviously advantageous to the house buyers, a vibrant job market has historically proven to be even more important. Today the current conforming no point 30-year fixed mortgage rates average 4 percent while 15-year rates average 3.125 percent.

Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381–8888 and your question may be featured in an upcoming article.

Topics: Labor Department, 30 year fixed rates, jobs

ARAMCO Report - Friday June 5, 2015

Posted by The Aramco Group on Fri, Jun 5, 2015 @ 16:06 PM

Low down payment mortgages in San Diego increase

Approximately 15 percent of the mortgages originated in San Diego during quarter one were special low down payment loans according to ReatlyTrac. That is up from approximately 12 percent in the first quarter of 2014.

Structured low down payment loans like the ones offered by FHA, Fannie Mae, and Freddie Mac are loans with a loan-to-value ratio of 96.5 percent or higher — meaning the down payment is approximately 3-3.5 percent of home’s value. Nationally, the average down payment during the first quarter 2015 for FHA mortgages, for example, was 89.5 percent lower than the average down payment for a conventional loan ($7,609 vs. $72,590) according to RealtyTrac.

Nationally low down payment mortgages made up a larger share of total purchases during the same period, up to 27 Percent from 26 percent one year ago.

The numbers of homebuyers, particularly first time buyers, were running near record lows over the past couple of years according to Chase International brokerage. The growing number of low down payment loans reflects an appetite on the part of lenders and the government to reverse that trend. 

Mortgage applicants will find that conforming no point 30-year mortgage rates average 4.125 percent while 15-year rates average 3.25 percent.

For more information on a home purchase, refinance, or a reverse mortgage, visit our website at Aramco.Biz or call me at (877) 700-0942. This is Mehran Aram with today's ARAMCO Report.

Topics: 30 year fixed rates, Fannie Mae, Freddie Mac, first-time buyers, FHA, Low Down Payments

ARAMCO Report - Thursday June 4, 2015

Posted by The Aramco Group on Thu, Jun 4, 2015 @ 16:06 PM

The Catch 22 of Renting before Buying

San Diego rents increased 5.5 percent between April 2014 and April 2015. That is equivalent to an increase of $123 per month as of April of this year, when the median monthly rent was $2,347 according to Zillow.

Renting is traditionally the stepping-stone to homeownership in the American dream, but while higher rents motivate people to buy a home and get out of the rental market they can also hinder homeownership by siphoning potential savings away from being used for a down payment.

Renters in high-income areas like San Diego can often pay higher than average percentages of their monthly income—sometimes up to 50 percent vs. an average of 30 percent nationally—on rents. This is because San Diegans’ median incomes have been 18.8 percent higher than the national average (approx. $63,000 vs. $50,000, via US Census), but their median monthly rental costs have been 72 percent higher than the national average ($2,347 vs. $1,364), as they were April 2015.

Mortgage programs from FHA, Freddie Mac and Fannie Mae—that have low down payments and that historically have lower interest rates—are meant to help qualified first-time homebuyers break this problematic cycle.

For more information on a home purchase, refinance, or a reverse mortgage, visit our website at Aramco.Biz or call me at (877) 700-0942. This is Mehran Aram with today's ARAMCO Report.

Topics: San Diego County, home buying, San Diego, Down Payment, 30 year fixed rates, renting, Rent

ARAMCO Report - Wednesday June 3, 2015

Posted by The Aramco Group on Wed, Jun 3, 2015 @ 16:06 PM

Bubble or robust growth in SD housing market?

Housing bubbles have historically occurred when housing prices were above what the population of the same area can afford for a prolonged period of time.

The ARAMCO Group, in an effort to give context to other recent reports of increases in home sales and home prices, currently estimates that more than 1.8 million people cannot afford a median-priced home ($500,000 in May 2015 according to Zillow) in San Diego County.

The ARAMCO Group based its calculations on US Census data, and it assumed 20 percent down payment, 45 percent debt-to-income ratio, and 3.875 percent on a 30-year fixed mortgage, including insurance and taxes. The company also assumed a potential borrower will nominally have $500 per month of other obligations (e.g. monthly credit card debt, etc.).

A potential borrower in this case would need to make $78,000 per year or 23.8 percent more than the San Diego area’s median household income of approximately $63,000. According to US Census data, 56.9 Percent of the local population—or 1.8 million people—makes less than $75,000 per year.

Therefore it is important that economists consider both income growth and home price growth into the future as ongoing disparities would signal a looming price correction.

or more information on a home purchase, refinance, or a reverse mortgage, visit our website at Aramco.Biz or call me at (877) 700-0942. This is Mehran Aram with today's ARAMCO Report.

Topics: 30 year fixed rates, Housing Affordability index, Housing, household income, Bubble, Housing Bubble, Housing Affordability

ARAMCO Report - Tuesday June 2, 2015

Posted by The Aramco Group on Tue, Jun 2, 2015 @ 19:06 PM

Homeowners overvalue their homes 

Homeowners may be overly optimistic when estimating the value of their homes according to a new study.

The results of an examination published in the Journal of Housing Economics presented evidence from across the country that homeowners overestimate the value of their properties by around 8 percent on average.

The authors of the study found that nearly all homeowners overvalue their homes, and overestimations ranged from 3.4 percent to 12.7 percent. The researchers concluded that the cause was often due owners’ miscalculating the amount their homes appreciated over time.

This is something to keep in the back of one’s mind while attempting to buy or sell a home in the hot San Diego market. Realtor.com ranked the San Diego metro area as the 11th hottest housing market in the country in May. They looked the 300 largest metro areas, and they based their grades on two factors: demand, measured by how many people looked at each listing, and supply measured by how fresh or stale listings were in each area.

People looking to purchase a home or refinance their mortgage will find that conforming no point 30-year mortgage rates average 3.875 percent while 15-year rates average 3.125 percent.

For more information on a home purchase, refinance, or a reverse mortgage, visit our website at Aramco.Biz or call me at (877) 700-0942. This is Mehran Aram with today's ARAMCO Report.

Topics: home prices, 30 year fixed rates, home price appreciation, Realtor.com, Journal of Housing Economics

ARAMCO Report - Monday June 1, 2015

Posted by The Aramco Group on Mon, Jun 1, 2015 @ 16:06 PM

Weaker Economic Data Supportive of Low Interest Rates

Recent weak reports—about the GDP contracting and consumer sentiment going down—support a low interest rate environment. 

The negative reports from the U.S. Commerce Department and the University of Michigan Consumer Sentiment Index contributed to a mild flight to safety rally on Friday May 29, 2015 that drove down 10-year T-Bill yields and mortgage rates.

The most impactful contributing report was the Commerce Department’s revised quarter-one GDP figures that showed the economy contracted 0.7 percent. While this is less than the 1.0 percent revision economist expected, it may nonetheless spoil hopes that the country would have grown an average of 3.0 percent over the last 12 months.

The University of Michigan’s announced on the same day that its Consumer Sentiment Index also fell to May reading of 90.7, from 95.9 in April. This is a six-month low for the index.

Housing data is a silver lining however as the unfavorable economic data supports the Fed’s continued patience in not yet raising short-term interest rates, which promotes buyer demand.

People looking to buy a home will find mortgage rates near all-time lows with conforming no point 30-year fixed rates averaging 3.75 percent and 15-year rates averaging 3.00 percent.

For more information on a home purchase, refinance, or a reverse mortgage, visit our website at Aramco.Biz or call me at (877) 700-0942. This is Mehran Aram with today's ARAMCO Report.

Topics: Interest Rates, U.S. economy, GDP, 30 year fixed rates, interest, economic data, U.S. Department of Commerce, University of Michigan

ARAMCO Report - Friday May 29, 2015

Posted by The Aramco Group on Fri, May 29, 2015 @ 15:05 PM

America says it still likes homes as an investment

Americans’ views toward their housing as an investment haven’t changed much over the last year, and the majority of people still think it's a prudent put to their money.

The New York branch of The Federal Reserve found that over 60 percent of renters and owners think that buying property in their zip code is a good investment, while only 10 percent thought otherwise.

Households’ expectations about how good of an investment that purchase might be are about the same as they were last year. The NY Fed’s 2015 housing survey, released on 5/28/15, also revealed that U.S. households, on average, continued to expect 4.4. percent appreciation returns.

The possibility of rising interest rates in the next twelve months will have some influence on these expectations, and The Fed is going to choose which moment to follow through with raising interest rates later in 2015.

People who think it's a good idea to buy a home in a San Diego zip code right now will find mortgage rates near all-time lows with conforming no point 30-year fixed rates averaging 3.875 percent and 15-year rates averaging 3.125 percent.

For more information on a home purchase, refinance, or a reverse mortgage, visit our website at Aramco.Biz or call me at (877) 700-0942. This is Mehran Aram with today's ARAMCO Report.

Topics: home prices, investment, Interest Rates, 30 year fixed rates, home price appreciation, Federal Reserve of New York,

ARAMCO Report - Thursday May 28, 2015

Posted by The Aramco Group on Thu, May 28, 2015 @ 16:05 PM

Homeowners control San Diego’s inventory

Homeowners currently have more influence on San Diego’s housing market than they have in years.

Real estate investors are more active when they are able to find distressed properties at a discount, but current foreclosure rates are near zero.

According to CoreLogic on 5/25/15 the foreclosure rate in San Diego in March 2015 was less than one half of one percent of all outstanding mortgages. The rate decreased 0.1 percentage points to 0.42 percent in March and stayed below 0.5 percent in April.

New housing project starts have been low until recently also, and the units currently under construction will take months to enter the market.

Therefore, it’s San Diego’s homeowners who are benefiting from controlling the limited inventory in the current sellers’ market where prices have risen around 1.2 percent in the last couple of months according to S&P Case Shiller.

Demand is still strong as can be seen in the rise in national mortgage applications for purchase which were up 1.2 percent in the week that ended May 22, 2015, despite that week’s slight rise in mortgage rates.

Mortgage applicants will find that conforming no point 30-year mortgage rates average 3.875 percent while 15-year rates average 3.125 percent.

For more information on a home purchase, refinance, or a reverse mortgage, visit our website at Aramco.Biz or call me at (877) 700-0942. This is Mehran Aram with today's ARAMCO Report.

Topics: home prices, homeowners, S&P Case Shiller, inventory, 30 year fixed rates, foreclosure, foreclosures, Investors, home price appreciation, foreclosure inventory, Home Inventories