Dec 23 2011, 1:22PM
Mortgage Rates suffered their worst losses of the week today as light volume and low participation left sellers in control, driving benchmark interest rates higher. When we talk about "sellers," it's in reference to sellers of fixed-income securities in bond markets. The Mortgage-Backed-Securities (MBS) that most directly influence mortgage rates are part of the broader bond markets and tend to move in the same direction as the most popular bond: 10yr Treasury Notes. When sellers outnumber buyers, prices get lower and lower, bringing yields (aka: interest rates) higher. This is happening fairly rapidly for Treasuries, but to a lesser extent for MBS (and consequently lender's rate sheets). Best-Execution 30yr Fixed rates STILL haven't moved higher, but closing costs are quite a bit higher at many lenders today.
What we said yesterday: "Low volume and year-end lack of participation continue to distort movements in the secondary mortgage market. The lower a market's volume, the more weight carried by those who participate meaning that it takes fewer trades/less money to move things around. In general, MBS (mortgage-backed-securities) have pitched and rolled less (for better or worse) than their Treasury counterparts."
Please make sure to read the "important rate disclaimer" at the bottom of the page in considering what "all-time lows" means. The issue of "buckets" as described in the lock/float considerations below, remains a factor that may prevent rates and/or fees from moving significantly lower in the short term.
Sunday, December 25, 2011
Thursday, October 7, 2010
15 Times When You Shouldn't Use Your Credit Card
Thursday, October 7, 2010
There are plenty of reasons to use a credit card — convenience, accountability and safety among them — but when is it better just to step away from the swiper?
There are many out there who would say that there's never a good time to use a credit card, and that cash, debit or anything else would be a better choice. While forgoing credit for good may or may not be realistic, there are some times when it is best to just leave the card in your wallet or purse. Here are some times when you should never use your card:
More from CreditCards.com:
• The Good, Bad and the Ugly of Credit Card Offers
• When a Parent's 'Favor' Can Ruin Your Credit
• 5 Ways to Know You've Got the Wrong Credit Card
1. After midnight. Paraphrasing Eric Clapton, after midnight tends to be when people let it all hang out — even financially. "After midnight is the time you get into more trouble rather than making a sound financial decision. If you're at a club or casino, just go home," says Michael McAuliffe, president of Family Credit Management in Chicago. Put the card away and take another look in the morning.
2. When you're near your credit limit. "You don't want to be even within a couple hundred of your limit or your credit score will go down," says Mary Ellen Nicol, counselor with CredAbility in Atlanta. If you're getting too close to your credit limit, ask your credit card company to raise your limit, switch to a card with a lower balance or find another way to pay.
3. When considering an extended warranty at the car dealership. You can probably get a better deal if you roll the warranty cost into the car loan. Even though you may have a slightly higher monthly car payment that way, wrapping it into a secured loan likely still beats paying high interest for it on your credit card, says David Johnson, bankruptcy counseling director at ClearPoint Credit Counseling Solutions in Los Angeles.
4. If you get a notice that your rate will go up: "That's basically a notice that you should stop using your card," says Lauren Bowne, a staff attorney with Consumers Union. Although the Credit CARD Act of 2009 says that credit card companies have to give you 45 days' notice before your rate goes up, there's a quirk in the law. The new rate actually applies to purchases starting on the 14th day after you get the notice. This is the time to negotiate with your credit card company to plead for the old rate, switch to a different company with a lower interest rate or put yourself on a credit fast.
5. If you're paying off one card with another, and it's a habit: "If you're swapping your debt every six months, that's going to show up on your credit report," Bowne says. If it's a one-time thing, consider whether the offer is too good to be true. "Transfer fees have gone up at least a percent on average in the last year," Bowne says. "We're talking about 4 percent of your debt you're going to pay up front just to transfer the debt." Be clear on the rate you will pay after the promotional rate ends. It could be higher than the rate you're trying to escape from, she warns.
6. At a flea market: "It used to be that you always had to have a wad of cash. Now, through the magic of technology, some guy selling rickety, old wagon wheels can take your credit card," Williams says. This is the kind of purchase where convenience doesn't outweigh the risk, she says. Bring the cash.
7. If you think you're building your credit history: David Beddoe, counselor with American Financial Solutions in Seattle, says he hears that a lot. While your credit score goes up if you pay off the purchases you make, putting items on a credit card without paying them off will have the opposite effect on your score, he says.
8. If you can't pay for half of the purchase with cash on hand: Say you need new tires, Nicol says. If you don't have half the money right now to pay for the repairs, wait until you do. Then charge the purchase, pay off half right away and make a plan to pay the rest in one to two months. In the case of tires, you probably knew you needed them months ago and that would have been the time to plan ahead for the expense, she says. Check out public transportation or reduce your driving and save until you can afford at least half.
9. When it's all about the rewards points: Rewards points "should be nowhere in the equation for making that decision or not making it," says Michael McAuliffe, president of Family Credit Management in Chicago. "Base your decision on the merits of the purchase." Otherwise, you will tend to overspend. If you want to finance a vacation, skip the coffee or dessert or find cheaper parking and put away $5 a day for a year, he says.
10. When you think prices may drop: "For many things in our society, we're starting to see deflation. If you think it's going to cost less in three months, why start paying interest on it today?" McAuliffe says.
11. To buy something from a website with an obscure foreign extension: Don't charge online if you don't know who you are dealing with, says Catherine Williams, vice president of financial literacy for Money Management International. "While you always have protection under the Fair Credit Billing Act, the damage that can be done during that 30 days (until you see it on your bill) is just crazy." Study the website -- watch for suspicious wording — to make sure it is legitimate.
12. If you don't have a plan for paying it off: "We always recommend paying a purchase off in no more than three months. Without a game plan, you're playing credit card roulette. That's when people get into trouble," says Kathy Virgallito, a regional director for Apprisen Financial advocates.
13. If you're charging things that you used to pay cash for: That's a red flag that you're getting overextended, Virgallito says. You need to review your credit card statements and identify where the budget issues are. If you're suddenly having more car repairs or travel expenses to visit a sick relative, you may need to create a specific savings account for those things rather than relying on credit, she says.
14. When you feel that you'll save money by purchasing something you want rather than need. Beddoe gives the example of someone saying, "If I buy this 60-inch TV right now, I can save $200 on it." If you never planned to get that TV in the first place, it's hardly a savings, says Beddoe.
15. When the temptation for a big impulse buy strikes: "We instituted the 24-hour rule at our house," Williams says. "Anything over a certain dollar amount that isn't food, we have to wait 24 hours to buy. Had we not observed that ...I would have a fire engine red wicker chair. It would have been so cute on the Fourth of July for about 20 minutes."
There are plenty of reasons to use a credit card — convenience, accountability and safety among them — but when is it better just to step away from the swiper?
There are many out there who would say that there's never a good time to use a credit card, and that cash, debit or anything else would be a better choice. While forgoing credit for good may or may not be realistic, there are some times when it is best to just leave the card in your wallet or purse. Here are some times when you should never use your card:
More from CreditCards.com:
• The Good, Bad and the Ugly of Credit Card Offers
• When a Parent's 'Favor' Can Ruin Your Credit
• 5 Ways to Know You've Got the Wrong Credit Card
1. After midnight. Paraphrasing Eric Clapton, after midnight tends to be when people let it all hang out — even financially. "After midnight is the time you get into more trouble rather than making a sound financial decision. If you're at a club or casino, just go home," says Michael McAuliffe, president of Family Credit Management in Chicago. Put the card away and take another look in the morning.
2. When you're near your credit limit. "You don't want to be even within a couple hundred of your limit or your credit score will go down," says Mary Ellen Nicol, counselor with CredAbility in Atlanta. If you're getting too close to your credit limit, ask your credit card company to raise your limit, switch to a card with a lower balance or find another way to pay.
3. When considering an extended warranty at the car dealership. You can probably get a better deal if you roll the warranty cost into the car loan. Even though you may have a slightly higher monthly car payment that way, wrapping it into a secured loan likely still beats paying high interest for it on your credit card, says David Johnson, bankruptcy counseling director at ClearPoint Credit Counseling Solutions in Los Angeles.
4. If you get a notice that your rate will go up: "That's basically a notice that you should stop using your card," says Lauren Bowne, a staff attorney with Consumers Union. Although the Credit CARD Act of 2009 says that credit card companies have to give you 45 days' notice before your rate goes up, there's a quirk in the law. The new rate actually applies to purchases starting on the 14th day after you get the notice. This is the time to negotiate with your credit card company to plead for the old rate, switch to a different company with a lower interest rate or put yourself on a credit fast.
5. If you're paying off one card with another, and it's a habit: "If you're swapping your debt every six months, that's going to show up on your credit report," Bowne says. If it's a one-time thing, consider whether the offer is too good to be true. "Transfer fees have gone up at least a percent on average in the last year," Bowne says. "We're talking about 4 percent of your debt you're going to pay up front just to transfer the debt." Be clear on the rate you will pay after the promotional rate ends. It could be higher than the rate you're trying to escape from, she warns.
6. At a flea market: "It used to be that you always had to have a wad of cash. Now, through the magic of technology, some guy selling rickety, old wagon wheels can take your credit card," Williams says. This is the kind of purchase where convenience doesn't outweigh the risk, she says. Bring the cash.
7. If you think you're building your credit history: David Beddoe, counselor with American Financial Solutions in Seattle, says he hears that a lot. While your credit score goes up if you pay off the purchases you make, putting items on a credit card without paying them off will have the opposite effect on your score, he says.
8. If you can't pay for half of the purchase with cash on hand: Say you need new tires, Nicol says. If you don't have half the money right now to pay for the repairs, wait until you do. Then charge the purchase, pay off half right away and make a plan to pay the rest in one to two months. In the case of tires, you probably knew you needed them months ago and that would have been the time to plan ahead for the expense, she says. Check out public transportation or reduce your driving and save until you can afford at least half.
9. When it's all about the rewards points: Rewards points "should be nowhere in the equation for making that decision or not making it," says Michael McAuliffe, president of Family Credit Management in Chicago. "Base your decision on the merits of the purchase." Otherwise, you will tend to overspend. If you want to finance a vacation, skip the coffee or dessert or find cheaper parking and put away $5 a day for a year, he says.
10. When you think prices may drop: "For many things in our society, we're starting to see deflation. If you think it's going to cost less in three months, why start paying interest on it today?" McAuliffe says.
11. To buy something from a website with an obscure foreign extension: Don't charge online if you don't know who you are dealing with, says Catherine Williams, vice president of financial literacy for Money Management International. "While you always have protection under the Fair Credit Billing Act, the damage that can be done during that 30 days (until you see it on your bill) is just crazy." Study the website -- watch for suspicious wording — to make sure it is legitimate.
12. If you don't have a plan for paying it off: "We always recommend paying a purchase off in no more than three months. Without a game plan, you're playing credit card roulette. That's when people get into trouble," says Kathy Virgallito, a regional director for Apprisen Financial advocates.
13. If you're charging things that you used to pay cash for: That's a red flag that you're getting overextended, Virgallito says. You need to review your credit card statements and identify where the budget issues are. If you're suddenly having more car repairs or travel expenses to visit a sick relative, you may need to create a specific savings account for those things rather than relying on credit, she says.
14. When you feel that you'll save money by purchasing something you want rather than need. Beddoe gives the example of someone saying, "If I buy this 60-inch TV right now, I can save $200 on it." If you never planned to get that TV in the first place, it's hardly a savings, says Beddoe.
15. When the temptation for a big impulse buy strikes: "We instituted the 24-hour rule at our house," Williams says. "Anything over a certain dollar amount that isn't food, we have to wait 24 hours to buy. Had we not observed that ...I would have a fire engine red wicker chair. It would have been so cute on the Fourth of July for about 20 minutes."
Friday, September 3, 2010
Modest Inflation Expectations Allow Mortgage Rates to Once Again Set New Record Lows
McLean, VA – Freddie Mac (OTC: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), and for yet another week, fixed-rate mortgages reached record lows, as did the 5-year adjustable rate in this survey. (The 30-year fixed-rate survey began in 1971, the 15-year began in 1991, and the 5-year adjustable in 2005.)
News Facts
30-year fixed-rate mortgage (FRM) averaged 4.32 percent with an average 0.7 point for the week ending September 2, 2010, down from last week when it averaged 4.36 percent. Last year at this time, the 30-year FRM averaged 5.08 percent.
15-year FRM this week averaged a record low of 3.83 percent with an average 0.6 point, down from last week when it averaged 3.86 percent. A year ago at this time, the 15-year FRM averaged 4.54 percent.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.54 percent this week, with an average 0.6 point, down from last week when it averaged 3.56 percent. A year ago, the 5-year ARM averaged 4.59 percent.
1-year Treasury-indexed ARM averaged 3.50 percent this week with an average 0.7 point, down from last week when it averaged 3.52 percent. At this time last year, the 1-year ARM averaged 4.62 percent.
Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.
News Facts
30-year fixed-rate mortgage (FRM) averaged 4.32 percent with an average 0.7 point for the week ending September 2, 2010, down from last week when it averaged 4.36 percent. Last year at this time, the 30-year FRM averaged 5.08 percent.
15-year FRM this week averaged a record low of 3.83 percent with an average 0.6 point, down from last week when it averaged 3.86 percent. A year ago at this time, the 15-year FRM averaged 4.54 percent.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.54 percent this week, with an average 0.6 point, down from last week when it averaged 3.56 percent. A year ago, the 5-year ARM averaged 4.59 percent.
1-year Treasury-indexed ARM averaged 3.50 percent this week with an average 0.7 point, down from last week when it averaged 3.52 percent. At this time last year, the 1-year ARM averaged 4.62 percent.
Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.
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