Marc's Mortgage Matter's

Mortgage rates slipped back a little bit last week, moving somewhat closer to the bottom of the range which has held since late May and early June.

Would-be borrowers hoping for mortgage rates to return to the 4% range of Spring should know that those rates were the result of lingering financial and economic panic, circumstances which seem to be fading into the rearview mirror. If the conditions which caused those rates is fading, so it the probability of any return there for rates. Regardless, even as mortgage rates remain at fantastic levels, underwriting criteria remains quite stiff by recent standards.

The overall average rate for 30-year fixed-rate mortgages moved down by 10 basis points (0.10%) this week, landing at an average 5.65%. It was the lowest such average since late May, just barely surpassing the 5.67% seen on July 10. 

That credit criteria remains tight isn't news to homebuyers and refinancers. However, according to the latest Federal Reserve poll of bank Senior Loan Officers, rather fewer banks continued to tighten the vice on potential borrowers. The Fed's survey of lending conditions for 'prime' first mortgages indicated that only 21.6% of respondents twisted the credit tourniquet in the second quarter of 2009, down from 49% in 1Q08. Tight credit has discouraged at least some seekers of home financing, since just 15.7% of banks reported increases in demand for mortgage loans, down from 26.7% in the first quarter.

The Mortgage Bankers Association of America again reported record-high levels of delinquencies and foreclosures. Nearly 14% of all loans -- subprime and prime -- were headed toward or were in serious trouble in the second quarter of 2009. The foreclosure problem, originally rooted in bad-credit borrowers, and later low- and no-doc mortgages, has fully taken hold of the 'prime' mortgage market; more and more formerly great-credit borrowers are suffering from the twin issues of falling home prices and job losses. As homes are foreclosed and dumped back into the market, inventories bloat and downward pressure on home prices continues unabated. What a fantastic time to purchase a home indeed.

I was confused when I heard the word "service" used with these agencies:
Internal Revenue Service.
U.S. Postal Service.
Civil Service.
State, City, County & Public Service.

This is not what I thought “service” meant. But yesterday I overheard two farmers talking, and one of them said he had hired a bull to “service” a few cows.

BAM!!! It all came into focus. Now I understand what all those agencies are doing to us!