Five Year Florida Mortgage Loan Strangle Hold May Be Loosening

Florida mortgage loans may now be a bit easier to get, thanks to banks loosening some of their underwriting guidelines.

The Federal Reserve conducts a quarterly survey of its member banks and, last quarter, not a single responding bank reported having tightened its mortgage guidelines for prime borrowers.

So, What’s a Florida Mortgage Prime Borrower?

A “prime borrower” is defined as one with a well-documented credit history, high credit scores, and a low debt-to-income ratio.

53 banks responded to the Fed’s survey and none said that mortgage guidelines “tightened considerably” or “tightened somewhat” between September and December 2011; 50 said that guidelines remained “basicaly unchanged”; 3 said that guidelines “eased somewhat”.

Florida mortgage applicants often relay that they have a heck of a hard time getting loans through the underwriting process.

Not since before the recession have banks lowered mortgage approval standards like this, and it bodes well for this year’s Florida housing market. Real estate agents report that 1 in 3 home sale contracts fail with “declined mortgage applications” as a leading cause.

Looser Florida mortgage lending standards should mean more home loan approvals for buyers, and fewer contract cancellations. This can spur the housing market forward.

Make note, though. “Looser standards” should not be confused with ”irresponsible standards.” It’s still more harder to meet bank standards as compared to 5 years ago. Today’s underwriters are more conservative with respect to household income, overall assets and credit scores.

Florida Mortgage Requirements Compared to One Year Ago

Even as compared to one year ago:

• Minimum credit score requirements are higher
• Downpayment/equity requirements are larger
• Maximum allowable debt-to-income ratios are lower

For buyers and refinancing households gaining approval, though, the reward is the lowest mortgage rates in a lifetime. Mortgage rates in Florida continue to fall, helping home affordability reach new highs.

If you’re in the market to buy a new home or refinance one, your timing is excellent.

Technorati Tags: Federal Reserve, FICO, Florida Mortgage, Florida Mortgage Rates, Florida mortgages, Senior Loan Officer

Low Florida Mortgage Rates and Affordable Home Prices Boost Housing Market

After 3 consecutive months of growth, the housing market appears to have eased a bit in December.  This, of course, is spurred on by low Florida mortgage rates and excellent deals on homes here in our state.

According to the National Association of REALTORS®, December’s Pending Home Sales Index slipped 4 percent from the month prior. The index measures the number of homes under contract to sell nationwide, but not yet sold.

Despite falling below its benchmark “100 value”, December’s Pending Home Sales Index is the reading’s second-highest value since April 2010 — the last month of last year’s home buyer tax credit program.

Affordable Florida Mortgage Payments Help Spur Home Sales

In other words, the housing market continues to show signs of improvement, propelled by low home prices and the cheapest mortgage rates of all-time.

Freddie Mac’s mortgage rate survey put the 30-year fixed rate mortgage at an average of 3.96% in December — a 75-basis point improvement from December 2010. When Florida mortgage rates drop, it helps to make homes more affordable nationwide.

On a regional basis, December’s Pending Home Sales Index varied :

• Northeast Region: -3.1 percent from November 2011
• Midwest Region : +4.0 percent from November 2011
• South Region : -2.6 percent from November 2011
• West Region : -11.0 percent from November 2011

But even regional data is only so helpful. Like everything in real estate, data must be local to be relevant.

Throughout the West Region, for example, the U.S. region in which pending home sales fell the most, several states must have performed better than the regional average. And, undoubtedly, there were cities, towns, and neighborhoods that experienced marked market growth.

Unfortunately, the Pending Home Sales Index can’t capture that data. Nor can it identify the markets in which home sales suffered.

For today’s Florida mortgage borrowers, home buyers and sellers, therefore, it’s important to understand your local market and the drivers of local activity. Reports like the Pending Home Sales Index can paint a broad picture U.S. housing but for data that matters to you, you’ll want to look local.

For local real estate data, talk to an experienced real estate professional.  And of course, for your Florida mortgage rate quote, go ahead and complete the Live Rate Quote form on our sidebar. I’ll be sure to get back to you with information on how we can help you with your Florida mortgage.

Technorati Tags: Florida Mortgage, Florida Mortgage Rates, NAR, Pending Home Sales Index, PHSI

Florida Mortgage Rate Increase May Be Ahead

The Federal Open Market Committee adjourns from a scheduled 2-day meeting today, its first of 8 scheduled meetings this year.  Depending on how things read, Florida mortgage rates could rise.

FOMC Votes Influence Wall Street. Wall Street Influences Florida Mortgage Rates

The FOMC is a designated, rotating, 12-person committee within the Federal Reserve, led by Federal Reserve Chairman Ben Bernanke. Members of the FOMC sub-committee are the voting members of the Federal Reserve; the ones that ultimately determine U.S. monetary policy.

The most well-known Federal Reserve monetary policy tool is the central bank’s Fed Funds Rate. The Fed Funds Rate is the prescribed interest rate at which banks borrow money from each other for a period of one night.

The Fed Funds Rate can only be changed by FOMC vote.

For home buyers and would-be refinancing households in Orlando , it’s important to recognize that the Fed Funds Rate is an interest rate separate and distinct from “mortgage rates”. Mortgage rates are not voted upon by the Federal Reserve. Rather, mortgage rates are based on the price of mortgage-backed bonds, a security bought and sold among investors.

Historically, there is little correlation between the Fed Funds Rates and 30-year fixed rate mortgage rates throughout Florida. Going back 20 years, the benchmark rates have been separated by as much as 5.29% and have been as near as 0.52%.

The spread has even gone negative, most recently in 1979 and 1981 — a period marked by high inflation.

Today, the separation between the Fed Funds Rate and the average, 30-year fixed rate mortgage rate is roughly 3.60%. Beginning at 12:30 PM ET, however, that spread is expected to change. The FOMC will make its statement to the press at that time, and will release its quarterly forecast to the markets.

As Wall Street reacts to the Fed’s press release and projections, mortgage rates will move.

Investors expect the Fed to vote the Fed Funds Rate unchanged from its current range near 0.000 percent, but are unsure of how the Fed will characterize the U.S. economy. If the Fed speaks optimistically on the economy, stock markets should rise and mortgage bonds should fall, driving mortgage rates higher.

Conversely, if the Fed shows concern for future economic growth, mortgage rates should drop. Either way, today figures to be volatile one for mortgage markets.

When mortgage markets get volatile, the safe play as a rate shopper is to lock your mortgage rate immediately. There too much risk in floating.

Technorati Tags: 30- Year Fixed, fed funds rate, Florida Mortgage, Florida Mortgage Rates, FOMC