Brian Vanderhoff's North Fulton Real Estate Blog

Looking for Atlanta real estate? Well you may just be in luck. Not only are home prices low, but fixed mortgage rates continue to fall. Last week Freddie Mac reported that the average rate for 30-year fixed mortgages fell to 4.12; the lowest level in three decades. The average rate on 15-year mortgages fell to 3.33, the lowest level on records and probably the lowest level ever, according to experts.

Unfortunately, experts also aren’t expecting these all-time low rates to get Americans to purchase new homes and revive the real estate market, and the overall economy. Even with mortgage rates below 5% over the past year, it is predicted that this year’s new home sales will be the worst in close to 50 years and resales will be the worst in 14 years.

With unemployment and apprehension about the economy high, many Americans are not in the position to take advantage of this rare opportunity. Many first-time buyers can’t meet lenders’ credit score guidelines and many repeat buyers do not have adequate equity invested in their homes to meet loan requirement. Many Americans also say that with rising living costs and no raises in their paychecks, they are unable to save enough money for a down payment.

However, if you look on the bright side, homebuyers who purchase this year are literally getting the home deals of a lifetime! So, if you are one of those in the market for a new home in Atlanta or are interested in Atlanta real estate, now is a noteworthy time.

Labels: freddie mac, mortgage market, Mortgage Rates

With the back-to-schoolers back on metro Atlanta roads, you may have noticed your morning commute setting new records over the past few weeks. But there have also been some other new records being set over the past few weeks – exceptionally low mortgage rates. There has literally never been a better time to look for real estate in Atlanta.

Last week, Freddie Mac reported that the average rate on a 30-year fixed mortgage has fallen to 4.15%, its lowest level on record since 1971. Rates on this popular mortgage were 4.23% two weeks ago.

Average rates have been below 5% for almost all of the last year but the struggling economy remains just that – struggling. Experts say that the low rates are not likely to strengthen the housing market because it’s not mortgage rates (alone) that shape the market. Remember in 2006, the average rate was 6.5%, in 2000, it was over 8%. Overall, home prices and sales are in poor shape because qualifying for a mortgage these days is so difficult, unemployment rates are still over 9% and Americans are either not getting raises, are struggling to keep their debt down and/or are too nervous about the economy and even their job security to purchase a home.

Average rates on 15-year fixed mortgages are also at a record low, 3.36%. This is the third week in a row that that rates have reached record lows and analysts believe it’s the lowest ever reached for this mortgage option. Homeowners looking to refinance will often choose a 15-year fixed rate. And borrowers who qualify are taking advantage of low rates. Freddie Mac says refinancing made up 70% of the mortgage applications in the first half of 2011. Unfortunately, refinancing doesn’t provide as much benefit to the overall economy as home purchases do and the Federal Reserve expects growth to stay weak for several more years.

Average rates on five- and one-year adjustable-rate loans have also hit record lows over the past two weeks to 3.08% and 2.86%, respectively; surpassing the records they set just two weeks ago at 3.13% and 2.89%.

If you are in the market for a new home in Atlanta or real estate in Atlanta, make sure to visit Atlanta Real Estate Forum often for the latest news, incentives and deals.

Labels: Mortgage Rates

• 30-year fixed-rate mortgage (FRM) averaged 4.54 percent with an average 0.7 point for the week ending July 29, 2010, down from last week when it averaged 4.56 percent. Last year at this time, the 30-year FRM averaged 5.25 percent.
• 15-year FRM this week averaged a record low of 4.00 percent with an average 0.7 point, down from last week when it averaged 4.03 percent. A year ago at this time, the 15-year FRM averaged 4.69 percent.
• 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.76 percent this week, with an average 0.7 point, down from last week when it averaged 3.79 percent. A year ago, the 5-year ARM averaged 4.75 percent.
• 1-year Treasury-indexed ARM averaged 3.64 percent this week with an average 0.7 point, down from last week when it averaged 3.70 percent. At this time last year, the 1-year ARM averaged 4.80 percent.

• “For the sixth week in a row, interest rates on fixed-rate mortgages eased to all-time record lows during a week of mixed housing data reports. The number of local markets experiencing annual increases in home prices appears to be growing. For instance, 13 metropolitan areas in the S&P/Case-Shiller® 20-city index experienced price appreciation over the 12-months ending in May, compared to 11 in April and 10 in March.
• “However, existing home sales in June slowed to an annualized pace of 4.37 million units, the fewest since March. Moreover, although new home sales jumped by almost 24 percent to 330,000 dwellings, it represented the second slowest rate since 1963.”

--- Brian and Jennifer Vanderhoff North Fulton County REALTORS Vanderhoff Real Estate (770) 331-1206 --- Milton, GA Real Estate, Condos, Homes for Sale North Fulton County, GA Real Estate, Condos, Homes for Sale Forsyth, GA Real Estate, Condos, Homes for Sale ---

Labels: freddie mac, Mortgage Rates, new low

Rates on 30-year mortgages plunged this week to the lowest level since January, and are poised to fall further after the Federal Reserve launched a new effort to prop up the flailing housing market.

Mortgage finance giant Freddie Mac said Thursday that average rates on 30-year fixed-rate mortgages dropped to 4.98 percent this week.

That was down from 5.03 percent last week. It was the lowest since the week of Jan. 15, when it was at 4.96 percent.

The rate quotes included in Freddie Mac's survey were taken before the Fed said Wednesday it will pump $1.2 trillion into the economy in an effort to lower rates on mortgages and other and loosen credit. That is expected to drive mortgage rates down further.

Labels: 30 year mortgages, Alpharetta, falling, Fulton County, Georgia, Mortgage Rates, Roswell

Rates on 30-year mortgages plunged this week to the lowest level since January after the government launched a sweeping new effort to aid the U.S. housing market.

Mortgage finance giant Freddie Mac reported Thursday that average rates on 30-year fixed-rate mortgages dropped to 5.53 percent in the largest one-week drop in 27 years. That was down from 5.97 percent last week, and the lowest since the week of Jan. 24, when it was at 5.48 percent.

Further drops could be on the way if the government launches an industry-backed plan to lower the rate on a 30-year mortgage to 4.5 percent by spending hundreds of billions to buy mortgage-backed securities issued by Fannie Mae and Freddie Mac.

That would follow an effort announced last week by the Federal Reserve, which is planning to purchase up to $600 billion of mortgage-backed securities and other debt issued by Fannie and Freddie and the Federal Home Loan Banks. Those institutions don’t make loans directly to consumers, but provide money to the mortgage market by packaging loans into investments.

The Fed’s move caused rates to immediately drop by about a half-point, and many in the real estate industry hope rates will keep dropping as the government increases efforts to battle the credit crisis.

Rates “are now almost a full percentage point lower since the last week in October,” Freddie Mac Chief Economist Frank Nothaft said in a statement.

Bringing mortgage rates down is positive, but it “doesn’t help people that currently have unaffordable mortgages because it doesn’t help them refinance,” Sheila Bair, chairman of the Federal Deposit Insurance Corp., said Thursday. “Low interest rates help some consumers, but the ones that really need help and can’t refinance are not helped.” Mortgage rates are sinking as Treasury yields, some of the most sensitive barometers of investor sentiment, have dropped to record lows this week as a torrent of bad economic news continues. But as investors send yields down, they’re also influencing the economy —- driving interest rates so low that savers get punished and borrowers get a break.

Treasury buying has picked up and sent yields down because the economy is in a recession that investors believe will be long and deep.

Consumers already are taking advantage of the situation. New mortgage applications more than doubled last week, according to the Mortgage Bankers Association’s weekly survey released Wednesday. Refinance volume more than tripled, and made up nearly 70 percent of all applications.

Rates on other types of mortgages also fell, according to Freddie Mac’s survey. For 15-year, fixed-rate mortgages, rates averaged 5.33 percent, down from 5.74 percent last week.

Rates on five-year, adjustable-rate mortgages dipped to 5.77 percent, compared with 5.86 percent last week. Rates on one-year, adjustable-rate mortgages dropped to 5.02 percent, from 5.18 percent last week.

The rates do not include add-on fees known as points. The nationwide fee for 30-year and 15-year mortgages averaged 0.7 point last week. The fee on five-year, adjustable-rate mortgages averaged 0.6 point, while the fee on one-year adjustable-rate mortgages averaged 0.5 point.

A year ago, the nationwide average rate on 30-year mortgages stood at 5.96 percent, 15-year mortgage rates averaged 5.65 percent, five-year adjustable-rate mortgages were at 5.75 percent, and one-year adjustable-rate mortgages stood at 5.46 percent.

Labels: 11 month low, 30 year mortgages, freddie mac, Georgia, Mortgage Rates

The Federal Reserve on Wednesday cut a key interest rate for the second time in just over a week, reducing the federal funds rate by a half point. It signaled that further rate cuts were possible.

The Fed action pushed the funds rate to 3 percent. It followed a three-fourths of a percentage point cut on Jan. 22, a day after financial markets around the world had plummeted on fears that the U.S. economy was heading into a recession. That decrease had been the biggest one-day move in more than two decades.

The half-point cut Wednesday followed news that the economy had slowed significantly in the final three months of last year with the gross domestic product expanding at a barely discernible pace of 0.6 percent, less than half what had been expected. The report came amid increased concern from several quarters about a possible recession.

In a brief statement explaining their decision, Federal Reserve Chairman Ben Bernanke and his colleagues said that "financial markets remain under considerable stress."

The Fed move was approved on a 9 to 1 vote. Richard Fisher, president of the Fed's Dallas regional bank, dissented, preferring no change in rates.

The rate cut marked the fifth time that the Fed has cut the funds rate since it started with a half-point cut on Sept. 18 in response to the severe credit crisis which hit global markets in August.

The latest Fed action was expected to be quickly followed by cuts in banks' prime lending rate, the benchmark rate for millions of consumer and business loans. The Fed's hope is that by making credit cheaper, it will encourage more borrowing, giving the economy a needed boost.

The Fed's half-point move met expectations of financial markets and was a bolder move than the smaller quarter-point cut that many economists had been expecting.

In its statement, the Fed said that "downside risks to growth remain" and pledged to "act in a timely manner as needed to address those risks." That was seen as a pledge to cut rates further if the economy continues to weaken.

On inflation, the Fed officials said that they expected inflationary pressures to moderate in coming quarters but they also pledged to monitor price developments closely.

The GDP report showed that a key gauge of core inflation, which excludes energy and food, jumped at an annual rate of 2.7 percent in the final three months of last year, the fastest increase in a year and up sharply from a 2 percent increase in the July-September quarter.

The economy has been dealt a series of blows from a two-year slump in housing to a severe credit squeeze as banks faced with billions of dollars in losses from mortgage defaults have cut back on their lending and tightened standards.

The GDP report showed that the housing collapse had depressed economic growth last year by the largest amount in a quarter-century. Policymakers are worried that the slump could intensify this year as millions of subprime mortgages rest at higher rates.

To combat the threat of a recession in an election year, the Bush administration has been negotiating with congressional leaders for an economic stimulus package of around $150 billion, focused on tax rebates for households and business tax breaks to spur investment. The House passed its version of the proposal on Tuesday but Senate action could be delayed by efforts to expand the relief to senior citizens and the unemployed.

The Fed move Wednesday occurred at the first regularly scheduled meeting of 2008 for the Federal Open Market Committee, the group of Fed governors in Washington and regional Fed bank presidents who set interest rates.

The Fed's three-quarter-point cut on Jan. 22 was taken after an emergency video conference held by Bernanke and other members of the FOMC.

That rate cut, the biggest reduction in the funds rate in more than two decades, was seen as an effort to boldly demonstrate that the central bank was prepared to do whatever necessary to keep the country from slipping into a recession -- or at least make the downturn milder than it would have been otherwise.

Financial markets had complained that once the credit crisis hit in August, the Bernanke-led Fed had been too tentative in its responses until last week's move.

Many private economists believe the central bank will keep cutting rates through the spring, especially if the unemployment rate keeps rising. The jobless rate jumped from 4.7 percent to 5 percent in December, the biggest one-month increase in five years.

Labels: Fed Chairman, Feds, Key Rates, Mortgage Rates, Rates

Bank of America said Friday it will buy Countrywide Financial for $4.1 billion in stock, a deal that rescues the country's biggest mortgage lender and expands the financial services empire of the nation's largest consumer bank.

The acquisition will make Charlotte-based Bank of America Corp. the nation's biggest mortgage lender and loan servicer.

Bank of America said it initially plans to operate Countrywide separately under the Countrywide brand, with integration occurring no sooner than 2009.

The transaction represents a 7.5 percent discount to where Countrywide shares ended Thursday after they soared on news that a rescue plan was in the works. It also effectively leaves Bank of America with a big loss on its $2 billion August investment in Countrywide Financial Corp. during the height of the summer's global credit crisis.

An aggressive dealmaker who has already snapped up behemoths FleetBoston Financial and MBNA, Bank of America chief executive Ken Lewis this time isn't buying a financial winner. Delinquencies and loans in pending foreclosure are rising in Countrywide's loan portfolio, and Bank of America chief executive Ken Lewis said Friday "there are near-term challenges" in the nation's housing market.

But Countrywide's troubles have allowed Lewis to sweep in and add a major business line to his supermarket of financial products on the cheap.

"Countrywide presents a rare opportunity for Bank of America to add what we believe is the best domestic mortgage platform at an attractive price and to affirm our position as the nation's premier lender to consumers," Lewis said in a statement.

It also places Lewis in the position of a market savior. By buying Countrywide, he's keeping the industry and regulators from the messy task of figuring out who would take on the responsibility of collecting payments for the 9 million U.S. home loans serviced by the Calabasas, Calif.-based lender. Lewis said Friday there was no government support for Countrywide's loan portfolio.

"There's still plenty of risk involved," said Bart Narter, senior analyst at Celent, a Boston-based financial research and consulting firm. "He's brave to do it. But I think that it's very likely down the road to be profitable, maybe not immediately, but long-term."

There was no immediate work on job cuts, but analysts said they expect some among the ranks of Countrywide's 15,000 employees. Lewis said he would like Countrywide chairman and chief executive Angelo R. Mozilo to stay with the combined companies until the deal is done.

"Angelo has told me that he will do anything that we want him to do," Lewis said. "I would guess that he'll want to go have some fun. I will talk with him next week about his personal desires. Many of the senior people will have big operating roles in this company."

Shareholders of Countrywide will receive 0.1822 of a share of Bank of America stock in exchange for each share of Countrywide. The deal is expected to close in the third quarter and to be neutral to Bank of America earnings per share in 2008 and lift earnings per share in 2009, excluding buyout and restructuring costs.

Bank of America expects $670 million in after-tax cost savings in the transaction, or 11 percent of the expense base of the two companies' mortgage operations.

The agreement has been approved by both companies' boards and is subject to regulatory and Countrywide's shareholders approval.

Shares in Countrywide hit record lows in recent days on persistent rumors that a bankruptcy was imminent, a condition brought on by the widespread spike in mortgage defaults and foreclosures, especially in subprime loans -- those made to borrowers with weak credit.

Countrywide shares plummeted 11 percent, or 85 cents, to $6.90 in premarket trading after soaring $2.63, or 51.4 percent, to close at $7.75 Thursday on reports of a possible deal. Bank of America shares rose 42 cents to $39.72.

Countrywide shares have fallen 57 percent since Bank of America made its $2 billion deal in August at $18 per share. That purchase of preferred stock was convertible into a common shares of Countrywide at $18 per share, for roughly a 16 percent stake in the company.

Along with the $2 billion investment from Bank of America, Countrywide was forced to draw on an $11.5 billion line of credit to steady itself in August. It also tightened its credit guidelines and stopped selling some types of adjustable rate loans. But analysts said it wasn't enough, with one noting this week that Countrywide needed an infusion of $4 billion in capital within the next two weeks to save itself.

Lewis' bank holds $1.5 trillion in assets and is the nation's largest bank by market capitalization

"Their balance sheet can take a shock much better than Countrywide," said CreditSights senior analyst David Hendler. "When you take the shocks at Countrywide, they have a big, busting consequence that's negative."

While Lewis downplayed the prospect of a major deal last month, it fits with an established pattern of building Bank of America through acquisition. In the past few years, Lewis has expanded the bank's retail operation with multibillion purchases of FleetBoston Financial Corp., bolted on a credit card business by adding MBNA Corp., and grabbed a wealth-management business in U.S. Trust Co.

The result of all the dealmaking is a widely diversified financial services company that does business with nearly one out of every two American households.

In the past year, Bank of America has boosted its market share of prime mortgages, or those offered to borrowers with a solid credit history, and was the top retail mortgage originator in the U.S. during the first nine months of 2007.

"We are aware of the issues within the housing and mortgage industries," Lewis said. "The transaction reflects those challenges. Mortgages will continue to be an important relationship product, and we now will have an opportunity to better serve our customers and to enhance future profitability."

In Countrywide, Lewis gets the "best, total mortgage-banking company in the U.S. by far," Hendler said. Countrywide's sophisticated back office is a valuable asset that makes Bank of America a much bigger competitor with Wells Fargo & Co., Washington Mutual Inc. and others, he said. In 2007, Countrywide had $408 billion in mortgage originations and has a servicing portfolio of about $1.5 trillion with 9 million loans.

"The technology platform, the people who run it, the hedging, the facilities, the mortgage servicing rights, the origination platform, you know, they are all state of the art," Hendler said.

While there are some regulator hurdles to close the deal, they are hardly insurmountable. The buyout would require approval from the Federal Reserve, and possibly other agencies, but analysts believe regulators are more concerned about a Countrywide collapse than industry consolidation.

A Countrywide failure would be a huge blow to government-sponsored mortgage finance companies Fannie Mae and Freddie Mac, which are major buyers of Countrywide's loans.

Federal law also bars banks from acquisitions that would increase market share above 10 percent of U.S. deposits, a limit that Bank of America is nearing. Bank of America chief financial officer Joe Price said because Countrywide Bank us a federally regulated thrift, it "doesn't play into the deposit cap."

In addition, banking industry experts say Bank of America could easily lower the total amount of money held in deposits by decreasing interest rates and shedding deposits.

Labels: Bank Of America, BOA, Countrywide, Mortgage, Mortgage Rates

The collapse of the subprime mortgage market and ensuing credit crisis have claimed their latest casualty: the longest serving chief executive at any of the big Wall Street investment banks.

Bear Stearns Cos. Chief Executive James "Jimmy" Cayne said Tuesday that he's stepping down, not long after Merrill Lynch & Co. CEO Stan O'Neal and Citigroup Inc.'s Chuck Prince were ousted.

Cayne, 73, led Bear Stearns to its only quarterly loss since being founded in 1923 as the collapse of the subprime mortgage market has forced global banks to write down $105 billion worth of investments.

He will serve as non-executive chairman of the New York-based company and will be succeeded as CEO by President Alan Schwartz, effective immediately.

"We have been through some challenging times in the past few months, but I am confident the difficulties are temporary," Cayne said in a memo to staff. "I am equally confident that Alan will lead Bear Stearns to new levels of success and prestige."

Cayne added that his new role as non-executive chairman will be as an "advisory capacity" to Schwartz, and he is no longer an employee of Bear Stearns. The memo did not state when Cayne might give up the chairman position.

Bear Stearns' lead independent director, Vincent Tese, said it was Cayne's decision to step down. "We are very pleased that he has agreed to stay actively involved in the business as chairman of the board," Tese said in a written statement.

A Bear Stearns spokesman declined to comment.

Cayne, who became CEO in 1993, had been under pressure since the summer when two hedge funds managed by Bear Stearns collapsed. Since then, he has been the target of criticism for playing golf and bridge while the company's key fixed-income business suffered heavy losses.

Bear Stearns shares have lost more than half their value in the past year, more than any other Wall Street investment bank. The stock fell $5.08, or 6.7 percent, to $71.17 Tuesday.

Analysts believe the change in leadership is a first step in Bear Stearns becoming a more diversified company.

"He was the architect of what now appears to have been a failed business strategy," said Punk Ziegel & Co. analyst Richard X. Bove. "Under his tutelage, the firm, focused its efforts too heavily on the mortgage and credit derivatives markets."

Schwartz said Bear Stearns has been attempting to expand the investment house into more lucrative areas, though admitted there are still challenges ahead as he takes over the reigns this year.

"Although the operating environment has been difficult, we are off to a good start in 2008," he said in a written statement. "We remain excited about our core equity, banking and fixed income businesses, our international expansion initiatives, and the further development of our energy and wealth management platforms."

With growing calls for his ouster, Cayne did take steps to maintain control of the company he joined in 1969. He ousted his co-president, Warren Spector, after the two hedge funds collapsed and later forced out the manager of the two hedge funds amid probes by the Securities and Exchange Commission and U.S. attorney's office.

In October, Cayne organized a $1 billion investment by China's government-controlled Citic Securities Co. for a 6 percent stake. He alone owns about 4.9 percent of Bear Stearns shares, making him the second-largest individual investor after billionaire Joseph Lewis, according to regulatory filings.

Cayne also said last month that he and other top leaders gave up their bonuses for 2007 after Bear Stearns took a $1.9 billion writedown and posted an $859 million loss in the fourth quarter. Rivals Lehman Brothers Holdings Inc., Morgan Stanley and Goldman Sachs Group Inc. all were able to offset fixed-income losses to post a profit during the quarter.

Both Cayne and Schwartz rose through the ranks of Bear Stearns during the past three decades, both considered up-and-coming leaders by longtime chairman and CEO Alan "Ace" Greenberg.

Cayne was hired by Greenberg as a stock broker when the two met during a bridge tournament in 1969. He went on to become president in 1985 and then took over for Greenberg as CEO eight years later. He became chairman in 2001.

Meanwhile, Schwartz caught the attention of Greenberg after starting off at Bear Stearns' Dallas office in 1976 as an institutional stock salesman. He was a star pitcher for Duke University in the 1970s and was drafted by the Cincinnati Reds but never played an inning because of an elbow injury.

Schwartz was head of research and developed the firm's corporate finance business. As an investment banker in the 1990s, he was said to be a close adviser of top executives that included Walt Disney Co.'s Michael Eisner.

Labels: Bear Stearns, CEO, Jimmy Cayne, Mortgage, Mortgage Rates

WASHINGTON -- Alan Greenspan, former chairman of the Federal Reserve, suggested Sunday that a tax break or other government financial help for homeowners facing the mortgage crunch would be the best political fix for the economy.

He cautioned against meddling with home prices or interest rates to address the housing problem.

Greenspan did not specifically call for a tax cut. Instead, he called for the government to apply money to the severe housing market slump. Such a cash infusion would typically come through a tax break or a new government spending program.

"Cash is available and we should use that in larger amounts, as is necessary, to solve the problems of the stress of this," Greenspan said during an appearance on ABC's "This Week."

Separately, Greenspan said he is concerned about signs of a resurgence of inflation.

"Core inflation is up. Wholesale prices had their highest increase I think in a generation. That raises the specter of stagflation again," said Greenspan, referring to a simultaneous stagnant economy and upward pressure on prices.

He said the Federal Reserve should "do what it has to do to suppress the inflation rates that I see emerging, not immediately, but clearly over the intermediate and longer term period."

Greenspan said a large number of people are in major financial stress, even when they've tried exceptionally hard to make their monthly mortgage payment. But some political solutions would only prolong their agony, he said.

"It's far less damaging to the economy to create a short-term fiscal problem, which we would, than to try to fix the prices of homes or interest rates. If you do that, it'll drag this process out indefinitely," said Greenspan, referring to his preference for a cash infusion to help homeowners.

Greenspan ran the central bank for more than 18 years. He has been criticized by some for keeping interest rates too low for too long after the 2001 recession.

He said -- as he did earlier in the week in another interview -- that he agrees with some experts who see prospects for a recession at about 50-50.

"Whether it's above or below (50 percent) is really extraordinarily difficult to tell," Greenspan said.

Greenspan said the key lesson the economy has provided lawmakers over the last 20 years is that inflation must be suppressed for sustained economic growth to occur

Labels: Financial Aid, Greenspan, Homeowners, Mortgage Rates