The idea of an interest-free mortgage is not as impossible as one might believe. In fact, in an effort to increase home ownership in the state of Seattle some are floating the idea of interest-free mortgages in order to meet the needs of an untapped portion of society: Muslims.
Seattle Mayor Ed Murray raised minimum wage to $15 per hour for his constituents in Seattle in 2014 and now he is trying to get low to mid-income Muslims into their own homes without having to pay interest and violate their religious beliefs.
Photo by David Ryder/Getty Images
On July 23, Fox News reported that Seattle officials have joined the push for Sharia-compliant mortgages, with the Seattle mayor proposing these types of loans in order to provide affordable housing to the Islamic community.
So what does that mean? It means that when a Muslim wants to buy a home the lender must give them a mortgage contract that does not charge them any interest, as paying interest violates their religious belief. Many Americans would say paying interest violates some type of belief system they have as well--at least usury interest rates (the practice of lending money at unusually high rates). But the odds of getting large banks to be motivated to change their policy about charging them interest would be nil, even with a mayor advocating it.
In Seattle, however, the Muslim community is garnering support for interest-free mortgage loans, using their religious dictates as a tool in which to achieve this highly-desired objective. According to Seattle Mayor Ed Murray, this type of mortgage would only be for the low and middle income Muslim families--and only those who strictly adhere to Sharia law, since traditional mortgages would be unattainable for them, as such interest-charging mortgages (or any financial dealings involving the paying or receiving of interest) is forbidden in their faith.
Christians are commanded in their religion to not engage in usury, either, when they lend money, and they are discouraged from owing any man anything, too, but there are not any banks in America giving them loans automatically at low-interest rates just because of their religious beliefs. So should one religious belief trump another when it comes to getting a home mortgage without interest?
The obvious answer is 'no,' of course. But in this instance the Muslim community will not be getting to buy a home more cheaply than their Christian competitors, as Sharia law may dictate that Muslims not pay interest, but it does not dictate that they not pay the full value of a home--along with any profit a bank would make if they did charge interest for the home loan over time. Thus, the banker just has to make sure the contract with his Muslim client does not include the words "interest" for the financial profit that the bank will realize as a result of the home mortgage loan based on Sharia law.
read more: http://www.examiner.com/article/christians-not-missing-out-on-new-mortgage-financing-tool-offered-to-muslims
Showing posts with label mortgage rates. Show all posts
Showing posts with label mortgage rates. Show all posts
Friday, July 24, 2015
Monday, July 6, 2015
Mortgage Rates Hit 2015 Highs as Homebuyers Take a Breather
Consumers may have been more interested in planning their holiday vacation than a relocation as mortgage applications fell and interest rates edged upward this week. Mortgage rates are now at new 2015 highs.
30-year fixed-rate mortgages rose to 4.08% with an average 0.6 point for the week ending July 2, 2015, according to Freddie Mac’s weekly market survey. A year ago, the rate averaged 4.12%.
15-year fixed rates moved to 3.24% with an average 0.6 point. The same term priced at 3.22% a year ago.
5-year adjustable-rate mortgages headed up to 2.99% with an average 0.4 point. Last year at this time the same ARM averaged 2.98%
“Overseas events are generating significant day-to-day volatility in interest rates,” said Sean Becketti, chief economist for Freddie Mac, in a release. “The [Mortgage Bankers Association] composite index of mortgage applications fell 4.7% in response to what is now three consecutive weeks of mortgage rates over 4%. Other measures, however, confirmed continued strength in housing — pending home sales rose 0.9%, exceeding expectations, and the Case-Shiller house price index recorded another solid increase.”
The MBA’s weekly survey of lenders also reported refinance applications fell by 5% for the week ending June 26.
Lower loan activity for the most recent week may be more of a quick side trip than a major change in direction as the housing industry continues to be on track for its best year since 2006. Realtor.com’s most recent analysis of residential inventory and demand shows pending home sales are at their highest level in nine years.
“Factors lending themselves to the market’s upswing are the psychological effect of recently increased mortgage rates as well as the specter of the Fed raising interest rates later this year,” said Realtor.com Chief Economist Jonathan Smoke. “Although demand has been strong all year, in June we’re finally beginning to see an uptick in supply as sellers become more confident about home prices.”
A refinance ‘boomlet’ is on
read more: https://www.nerdwallet.com/blog/mortgages/mortgage-rates-hit-2015-highs/
30-year fixed-rate mortgages rose to 4.08% with an average 0.6 point for the week ending July 2, 2015, according to Freddie Mac’s weekly market survey. A year ago, the rate averaged 4.12%.
15-year fixed rates moved to 3.24% with an average 0.6 point. The same term priced at 3.22% a year ago.
5-year adjustable-rate mortgages headed up to 2.99% with an average 0.4 point. Last year at this time the same ARM averaged 2.98%
“Overseas events are generating significant day-to-day volatility in interest rates,” said Sean Becketti, chief economist for Freddie Mac, in a release. “The [Mortgage Bankers Association] composite index of mortgage applications fell 4.7% in response to what is now three consecutive weeks of mortgage rates over 4%. Other measures, however, confirmed continued strength in housing — pending home sales rose 0.9%, exceeding expectations, and the Case-Shiller house price index recorded another solid increase.”
The MBA’s weekly survey of lenders also reported refinance applications fell by 5% for the week ending June 26.
Lower loan activity for the most recent week may be more of a quick side trip than a major change in direction as the housing industry continues to be on track for its best year since 2006. Realtor.com’s most recent analysis of residential inventory and demand shows pending home sales are at their highest level in nine years.
“Factors lending themselves to the market’s upswing are the psychological effect of recently increased mortgage rates as well as the specter of the Fed raising interest rates later this year,” said Realtor.com Chief Economist Jonathan Smoke. “Although demand has been strong all year, in June we’re finally beginning to see an uptick in supply as sellers become more confident about home prices.”
A refinance ‘boomlet’ is on
read more: https://www.nerdwallet.com/blog/mortgages/mortgage-rates-hit-2015-highs/
Friday, June 26, 2015
30-year mortgage edges up to 4.02%
Mortgage rates are looking stable amid an improving housing market, with Freddie Mac’s latest survey showing that lenders were offering 30-year fixed-rate home loans this week at an average interest rate of 4.02 percent, up from 4 percent a week ago.
The results of Freddie Mac’s weekly survey, released Thursday, said the average for a 15-year fixed mortgage slipped from 3.23 percent to 3.21 percent. The start rates for adjustable mortgages also fell slightly.
While higher than recent levels — Freddie’s survey showed the 30-year average at less than 3.6 percent at one point in January — the rates are still exceedingly low by historical standards and lower than a year ago, when the 30-year loan averaged 4.14 percent
Sean Becketti, Freddie Mac’s chief economist, noted that home sales have strengthened recently as buyers anticipate that the Federal Reserve will begin raising interest rates later this year.
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Posted: Friday, June 26, 2015 6:00 am
Mortgage rates are looking stable amid an improving housing market, with Freddie Mac’s latest survey showing that lenders were offering 30-year fixed-rate home loans this week at an average interest rate of 4.02 percent, up from 4 percent a week ago.
The results of Freddie Mac’s weekly survey, released Thursday, said the average for a 15-year fixed mortgage slipped from 3.23 percent to 3.21 percent. The start rates for adjustable mortgages also fell slightly.
While higher than recent levels — Freddie’s survey showed the 30-year average at less than 3.6 percent at one point in January — the rates are still exceedingly low by historical standards and lower than a year ago, when the 30-year loan averaged 4.14 percent
Sean Becketti, Freddie Mac’s chief economist, noted that home sales have strengthened recently as buyers anticipate that the Federal Reserve will begin raising interest rates later this year.
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“Buyers appear anxious to purchase homes,” Becketti said. “Given the tight inventory of homes for sale, a 5.1-month supply at the current sales pace, home prices are being bid up.”
Freddie Mac asks lenders each Monday through Wednesday about the terms they are offering to solid borrowers seeking mortgages of up to $417,000.
The loans must conform to guidelines set by Freddie Mac and Fannie Mae, the nation’s other major buyer and guarantor of home loans.
The borrowers would have paid an average of 0.7 percent of the loan balance in upfront lender fees and discount points.
read more: http://www.southbendtribune.com/news/business/year-mortgage-edges-up-to/article_0d018d56-cf58-5e66-beab-3464ad29d02e.html
Monday, June 22, 2015
How Mortgage Rates Move When The Federal Reserve Meets
Mortgage Rates Expected To Change
The Federal Reserve's Federal Open Market Committee (FOMC) adjourns from a scheduled two-day meeting Wednesday afternoon. The meeting's outcome is expected influence U.S. mortgage bonds which, in turn, will cause mortgage interest rates to change.
If you're currently unlocked on your loan; or about to start a refinance, consider yourself on alerted. Beginning Wednesday afternoon, mortgage rates may look decidedly different.
Since crossing 4 percent for the first time in nine months last week, mortgage rates have since dropped back to the threes. Rates for VA loans, FHA loans, and USDA loans are even lower.
It's an excellent time to consider locking a rate. Rates could change dramatically later this week and it would unfortunately to miss the last chance at sub-4 percent rates.
Click to see today's rates.
The Fed Does Not Control Mortgage Rates
Mortgage rates are made on Wall Street. Rates are not set by the Fed.
The Federal Open Market Committee is a rotating, 12-person sub-committee within the Federal Reserve. The group is currently headed by Federal Reserve Chairperson Janet Yellen, and meets eight times annually on a pre-determined schedule.
The Fed also meets on an emergency basis, as needed.
For example, during the three-year period 2008-2011, as the U.S. economy staved off depression, the Federal Open Market Committee met 13 times separate from its regularly scheduled meetings in order to review the group's ongoing stimulus plans.
In the time since, the Fed has met just twice in "emergency" -- once to discuss what would happen if the U.S. government failed to raise its debt limit (2013) and once to discuss how the group would communicate forward-guidance to the markets (2014).
The FOMC's most well-known role is as keeper of the Fed Funds Rate. The Fed Funds Rate is the prescribed rate at which banks lend money to each other on an overnight basis.
When the Fed Funds Rate is low, the Fed is attempting to promote economic growth. This is because the Fed Funds Rate is correlated to Prime Rate, and Prime Rate is the basis of most bank lending including most business loans and consumer credit cards.
Since December 2008, the Federal Reserve has held the Fed Funds Rate in a target range near 0.00% which has made borrowing money "cheap" for both businesses and consumers.
The Federal Reserve has advised Wall Street that the Fed Funds Rate will remain near zero percent until the labor market is markedly improved, assuming stable inflation. Once the economy improves, a rise in the Fed Funds Rate becomes possible.
An increase to the Fed Funds Rate may not move mortgage interest rates higher, though.
see more at: http://themortgagereports.com/17724/how-mortgage-rates-move-when-the-federal-reserve-meets
The Federal Reserve's Federal Open Market Committee (FOMC) adjourns from a scheduled two-day meeting Wednesday afternoon. The meeting's outcome is expected influence U.S. mortgage bonds which, in turn, will cause mortgage interest rates to change.
If you're currently unlocked on your loan; or about to start a refinance, consider yourself on alerted. Beginning Wednesday afternoon, mortgage rates may look decidedly different.
Since crossing 4 percent for the first time in nine months last week, mortgage rates have since dropped back to the threes. Rates for VA loans, FHA loans, and USDA loans are even lower.
It's an excellent time to consider locking a rate. Rates could change dramatically later this week and it would unfortunately to miss the last chance at sub-4 percent rates.
Click to see today's rates.
The Fed Does Not Control Mortgage Rates
Mortgage rates are made on Wall Street. Rates are not set by the Fed.
The Federal Open Market Committee is a rotating, 12-person sub-committee within the Federal Reserve. The group is currently headed by Federal Reserve Chairperson Janet Yellen, and meets eight times annually on a pre-determined schedule.
The Fed also meets on an emergency basis, as needed.
For example, during the three-year period 2008-2011, as the U.S. economy staved off depression, the Federal Open Market Committee met 13 times separate from its regularly scheduled meetings in order to review the group's ongoing stimulus plans.
In the time since, the Fed has met just twice in "emergency" -- once to discuss what would happen if the U.S. government failed to raise its debt limit (2013) and once to discuss how the group would communicate forward-guidance to the markets (2014).
The FOMC's most well-known role is as keeper of the Fed Funds Rate. The Fed Funds Rate is the prescribed rate at which banks lend money to each other on an overnight basis.
When the Fed Funds Rate is low, the Fed is attempting to promote economic growth. This is because the Fed Funds Rate is correlated to Prime Rate, and Prime Rate is the basis of most bank lending including most business loans and consumer credit cards.
Since December 2008, the Federal Reserve has held the Fed Funds Rate in a target range near 0.00% which has made borrowing money "cheap" for both businesses and consumers.
The Federal Reserve has advised Wall Street that the Fed Funds Rate will remain near zero percent until the labor market is markedly improved, assuming stable inflation. Once the economy improves, a rise in the Fed Funds Rate becomes possible.
An increase to the Fed Funds Rate may not move mortgage interest rates higher, though.
see more at: http://themortgagereports.com/17724/how-mortgage-rates-move-when-the-federal-reserve-meets
Thursday, May 21, 2015
Mortgage rates climb for 4th week in a row
Mortgage rates inched up this week after days of volatile trading that sent the 10-year Treasury yield on a wild ride. Meanwhile, homebuyers remained reluctant to borrow for a second straight week, even as builders geared up to break more ground.
2015%30-year fixedMarAprMay3.703.803.904.004.10
30 year fixed rate mortgage -- 3 month trend
The benchmark 30-year fixed-rate mortgage rose to 4.03 percent from 4.01 percent last week, according to the Bankrate.com national survey of large lenders. One year ago, that rate was 4.29 percent. Four weeks ago, it was 3.79 percent, and the rate has increased four weeks in a row. The mortgages in this week's survey had an average total of 0.23 discount and origination points. Over the past 52 weeks, the 30-year fixed has averaged 4.07 percent. This week's rate is 0.04 percentage points lower than that 52-week average.
The benchmark 15-year fixed-rate mortgage rose to 3.23 percent from 3.22 percent.
The benchmark 5/1 adjustable-rate mortgage rose to 3.19 percent from 3.17 percent.
The benchmark 30-year fixed-rate jumbo rose to 4.13 percent from 4.09 percent.
Read more: http://www.bankrate.com/finance/mortgages/mortgage-analysis-052115.aspx
2015%30-year fixedMarAprMay3.703.803.904.004.10
30 year fixed rate mortgage -- 3 month trend
The benchmark 30-year fixed-rate mortgage rose to 4.03 percent from 4.01 percent last week, according to the Bankrate.com national survey of large lenders. One year ago, that rate was 4.29 percent. Four weeks ago, it was 3.79 percent, and the rate has increased four weeks in a row. The mortgages in this week's survey had an average total of 0.23 discount and origination points. Over the past 52 weeks, the 30-year fixed has averaged 4.07 percent. This week's rate is 0.04 percentage points lower than that 52-week average.
The benchmark 15-year fixed-rate mortgage rose to 3.23 percent from 3.22 percent.
The benchmark 5/1 adjustable-rate mortgage rose to 3.19 percent from 3.17 percent.
The benchmark 30-year fixed-rate jumbo rose to 4.13 percent from 4.09 percent.
Read more: http://www.bankrate.com/finance/mortgages/mortgage-analysis-052115.aspx
Friday, May 8, 2015
Mortgage rates move higher for second week in a row
Mortgage rates moved higher for the second week in a row, according to the latest data released Thursday by Freddie Mac.
The 30-year fixed-rate average spiked to 3.8 percent with an average 0.6 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.68 percent a week ago and 4.21 percent a year ago. The jump of 12 basis points was the biggest gain by the 30-year fixed-rate average since November 2013 when it soared 19 basis points.
The 15-year fixed-rate average climbed to 3.02 percent with an average 0.6 point. It was 2.94 percent a week ago and 3.32 percent a year ago. The 15-year fixed rate surpassed 3 percent for the first time since March 19.
Hybrid adjustable rate mortgages were mixed. The five-year ARM average rose to 2.9 percent with an average 0.4 point. It was 2.85 percent a week ago and 3.05 percent a year ago. The five-year ARM has stayed below 3 percent since March 12.
The one-year ARM average fell to 2.46 percent with an average 0.4 point. It was 2.49 percent a week ago and 2.43 percent a year ago.
Len Kiefer, Freddie Mac deputy chief economist, cited German government bond yields for the upturn.
“Mortgage rates rose this week to the highest level since the week of March 12 as a selloff in German bunds helped drive U.S. Treasury yields above 2.2 percent,” Kiefer said in a statement.
“The U.S. trade deficit reached $51.4 billion in March to the highest level since 2008. Also, the Institute for Supply Management’s manufacturing index was unchanged in April, but manufacturing employment contracted as the index fell below 50 for the first time since May 2013.”
see more at: http://www.washingtonpost.com/blogs/where-we-live/wp/2015/05/07/mortgage-rates-move-higher-for-second-week-in-a-row-2/
The 30-year fixed-rate average spiked to 3.8 percent with an average 0.6 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.68 percent a week ago and 4.21 percent a year ago. The jump of 12 basis points was the biggest gain by the 30-year fixed-rate average since November 2013 when it soared 19 basis points.
The 15-year fixed-rate average climbed to 3.02 percent with an average 0.6 point. It was 2.94 percent a week ago and 3.32 percent a year ago. The 15-year fixed rate surpassed 3 percent for the first time since March 19.
Hybrid adjustable rate mortgages were mixed. The five-year ARM average rose to 2.9 percent with an average 0.4 point. It was 2.85 percent a week ago and 3.05 percent a year ago. The five-year ARM has stayed below 3 percent since March 12.
The one-year ARM average fell to 2.46 percent with an average 0.4 point. It was 2.49 percent a week ago and 2.43 percent a year ago.
Len Kiefer, Freddie Mac deputy chief economist, cited German government bond yields for the upturn.
“Mortgage rates rose this week to the highest level since the week of March 12 as a selloff in German bunds helped drive U.S. Treasury yields above 2.2 percent,” Kiefer said in a statement.
“The U.S. trade deficit reached $51.4 billion in March to the highest level since 2008. Also, the Institute for Supply Management’s manufacturing index was unchanged in April, but manufacturing employment contracted as the index fell below 50 for the first time since May 2013.”
see more at: http://www.washingtonpost.com/blogs/where-we-live/wp/2015/05/07/mortgage-rates-move-higher-for-second-week-in-a-row-2/
Thursday, May 7, 2015
Mortgage rates rise to highest level of the year so far
Mortgage rates jumped this week after the yield on the 10-year Treasury note hit its highest level in two months. The increase in rates spurred a drop-off in refinances, but purchases are still up.
The 10-year Treasury yield, which mortgage rates tend to follow, reached its highest level since March 6 after a weeklong sell-off in European bonds.
"Obviously, rates are up. The real question is what is driving it right now," says Joel Naroff, president of Naroff Economic Advisors in Holland, Pennsylvania. "It's not necessarily U.S. growth inflation. It's what's happening in the European markets."
Dissipating worries over deflation in the eurozone prompted a global sell-off in government bonds.
2015%30-year fixedFebMarApr3.703.803.904.00
30 year fixed rate mortgage -- 3 month trend
The benchmark 30-year fixed-rate mortgage rose to 3.99 percent from 3.86 percent last week, according to the Bankrate.com national survey of large lenders. One year ago, that rate was 4.37 percent. Four weeks ago, it was 3.82 percent. The mortgages in this week's survey had an average total of 0.23 discount and origination points. Over the past 52 weeks, the 30-year fixed has averaged 4.08 percent. This week's rate is 0.09 percentage points lower than that 52-week average.
The benchmark 15-year fixed-rate mortgage rose to 3.17 percent from 3.07 percent.
The benchmark 5/1 adjustable-rate mortgage rose to 3.19 percent from 3.11 percent.
The benchmark 30-year fixed-rate jumbo rose to 4.07 percent from 3.97 percent
Read more: http://www.bankrate.com/finance/mortgages/mortgage-analysis-050715.aspx
The 10-year Treasury yield, which mortgage rates tend to follow, reached its highest level since March 6 after a weeklong sell-off in European bonds.
"Obviously, rates are up. The real question is what is driving it right now," says Joel Naroff, president of Naroff Economic Advisors in Holland, Pennsylvania. "It's not necessarily U.S. growth inflation. It's what's happening in the European markets."
Dissipating worries over deflation in the eurozone prompted a global sell-off in government bonds.
2015%30-year fixedFebMarApr3.703.803.904.00
30 year fixed rate mortgage -- 3 month trend
The benchmark 30-year fixed-rate mortgage rose to 3.99 percent from 3.86 percent last week, according to the Bankrate.com national survey of large lenders. One year ago, that rate was 4.37 percent. Four weeks ago, it was 3.82 percent. The mortgages in this week's survey had an average total of 0.23 discount and origination points. Over the past 52 weeks, the 30-year fixed has averaged 4.08 percent. This week's rate is 0.09 percentage points lower than that 52-week average.
The benchmark 15-year fixed-rate mortgage rose to 3.17 percent from 3.07 percent.
The benchmark 5/1 adjustable-rate mortgage rose to 3.19 percent from 3.11 percent.
The benchmark 30-year fixed-rate jumbo rose to 4.07 percent from 3.97 percent
Read more: http://www.bankrate.com/finance/mortgages/mortgage-analysis-050715.aspx
Friday, May 1, 2015
Mortgage rates rise, even in a weak economy
Mortgage rates increased this week as yields on government bonds spiked. Still, rates will likely stay low down the road as an economy recovering from a severe winter keeps the Federal Reserve from raising interest rates too soon.
Housing picture mixed
After last week's good housing data, the state of the home market looked more conflicted this week. New home sales disappointed in March, falling 11.4 percent, while the volume of mortgage applications fell 2.3 percent last week from the previous one, according to the National Mortgage Bankers Association. That included a 4 percent decline in refinances and a flat reading on purchase applications.
Those downbeat reports were balanced out by Standard & Poor's/Case-Shiller Home Price Index on April 28, which showed values in 20 cities increased in February 0.9 percent month over month (seasonally adjusted) and 5 percent year over year (non-seasonally adjusted). Pending home sales for April edged up 1.1 percent, the third straight month of increases, according to an April 29 report from the National Association of Realtors.
2015%30-year fixedFebMarApr3.703.803.904.0030-year fixed02/11/2015 : 3.90%
30 year fixed rate mortgage -- 3 month trend
The benchmark 30-year fixed-rate mortgage rose to 3.86 percent from 3.79 percent last week, according to the Bankrate.com national survey of large lenders. One year ago, that rate was 4.44 percent. Four weeks ago, it was 3.82 percent. The mortgages in this week's survey had an average total of 0.22 discount and origination points. Over the past 52 weeks, the 30-year fixed has averaged 4.09 percent. This week's rate is 0.23 percentage points lower than that 52-week average.
Read more: http://www.bankrate.com/finance/mortgages/mortgage-analysis-043015.aspx
Housing picture mixed
After last week's good housing data, the state of the home market looked more conflicted this week. New home sales disappointed in March, falling 11.4 percent, while the volume of mortgage applications fell 2.3 percent last week from the previous one, according to the National Mortgage Bankers Association. That included a 4 percent decline in refinances and a flat reading on purchase applications.
Those downbeat reports were balanced out by Standard & Poor's/Case-Shiller Home Price Index on April 28, which showed values in 20 cities increased in February 0.9 percent month over month (seasonally adjusted) and 5 percent year over year (non-seasonally adjusted). Pending home sales for April edged up 1.1 percent, the third straight month of increases, according to an April 29 report from the National Association of Realtors.
2015%30-year fixedFebMarApr3.703.803.904.0030-year fixed02/11/2015 : 3.90%
30 year fixed rate mortgage -- 3 month trend
The benchmark 30-year fixed-rate mortgage rose to 3.86 percent from 3.79 percent last week, according to the Bankrate.com national survey of large lenders. One year ago, that rate was 4.44 percent. Four weeks ago, it was 3.82 percent. The mortgages in this week's survey had an average total of 0.22 discount and origination points. Over the past 52 weeks, the 30-year fixed has averaged 4.09 percent. This week's rate is 0.23 percentage points lower than that 52-week average.
Read more: http://www.bankrate.com/finance/mortgages/mortgage-analysis-043015.aspx
Thursday, April 23, 2015
The crazy world of negative rates: Banks pay your mortgage for you?
Up is down, black is white.
Or at least that's what it feels like in Europe, where at least one bank is paying some customers who borrow from it because interest rates have turned negative.
The European Central Bank has slashed official rates to record lows, and is pumping billions of euros into the economy to boost growth and inflation.
That has forced rates on some mortgage products far enough below zero to create a big headache for the banks: Do they now owe their borrowers?
"We are in uncharted waters," said Luca Bertalot, secretary general of the European Mortgage Federation. "Monetary policy is changing the funding landscape in Europe completely."
Here's how it works. Mortgage interest in Europe is often pegged to interbank lending rates known as Libor or Euribor. Short-term rates on a Swiss franc version of Libor are now approaching minus 1.0%.
Spain's Bankinter, which sold mortgages pegged to Swiss Libor, told CNN it couldn't pay interest on a loan (go figure!) so instead reduced the principal for some of its customers.
Bankinter's policy was first reported by The Wall Street Journal earlier this month.
With no shift in ECB policy likely for some time, the banking industry is worried about how things will pan out. Bertalot said mortgage lenders were talking to the ECB and national central banks about how to deal with the challenge.
"There are no clear guidelines on how to move forward," he said.
Related: Fed rate hike: Here's what matters
The Bank of Spain told CNN it has not issued any official guidance to banks on how to adjust lending practices to the negative interest rate environment. The Bank of Portugal said in March that lenders should take "precautionary measures."
Negative interest rates have created anomalies elsewhere in Europe.
Germany issued its first 5-year bond with a negative yield in February, meaning investors are prepared to make a small loss buying super secure government debt. In the same month, a small Danish bank said it would charge customers 0.5% interest on their deposits from March. So for every $100 they deposit, the bank takes 50 cents.
see more: http://money.cnn.com/2015/04/22/investing/negative-mortgage-rates-europe/
Or at least that's what it feels like in Europe, where at least one bank is paying some customers who borrow from it because interest rates have turned negative.
The European Central Bank has slashed official rates to record lows, and is pumping billions of euros into the economy to boost growth and inflation.
That has forced rates on some mortgage products far enough below zero to create a big headache for the banks: Do they now owe their borrowers?
"We are in uncharted waters," said Luca Bertalot, secretary general of the European Mortgage Federation. "Monetary policy is changing the funding landscape in Europe completely."
Here's how it works. Mortgage interest in Europe is often pegged to interbank lending rates known as Libor or Euribor. Short-term rates on a Swiss franc version of Libor are now approaching minus 1.0%.
Spain's Bankinter, which sold mortgages pegged to Swiss Libor, told CNN it couldn't pay interest on a loan (go figure!) so instead reduced the principal for some of its customers.
Bankinter's policy was first reported by The Wall Street Journal earlier this month.
With no shift in ECB policy likely for some time, the banking industry is worried about how things will pan out. Bertalot said mortgage lenders were talking to the ECB and national central banks about how to deal with the challenge.
"There are no clear guidelines on how to move forward," he said.
Related: Fed rate hike: Here's what matters
The Bank of Spain told CNN it has not issued any official guidance to banks on how to adjust lending practices to the negative interest rate environment. The Bank of Portugal said in March that lenders should take "precautionary measures."
Negative interest rates have created anomalies elsewhere in Europe.
Germany issued its first 5-year bond with a negative yield in February, meaning investors are prepared to make a small loss buying super secure government debt. In the same month, a small Danish bank said it would charge customers 0.5% interest on their deposits from March. So for every $100 they deposit, the bank takes 50 cents.
see more: http://money.cnn.com/2015/04/22/investing/negative-mortgage-rates-europe/
Friday, April 10, 2015
Mortgage rates fall; 30-year averaging 3.66%, Freddie Mac says
Fixed mortgage rates moved lower this week on news of weakness in the labor markets, with Freddie Mac saying lenders were offering conventional 30-year loans at an average of 3.66%, down from last week’s 3.7%
The average offering rate for 15-year loans, which are popular with refinancers, dropped to 2.93%, from 2.98%, the home finance giant reported.
In the latest sign that economic growth may be slowing, the Labor Department said Thursday that claims for first-time unemployment benefits rose last week from a 15-year low set the previous week.
Jobs are a key indicator for analysts considering when the Federal Reserve may increase a benchmark short-term lending rate from near zero, where it has been held since the 2008 financial crisis to stimulate the economy.
If the Fed begins to raise the rate later this year, it could also affect long-term interest rates such as those for mortgages, although the Fed has no direct control over the long rates.
Keith Gumbinger, vice president of HSH.com, which tracks mortgage rates day to day, said other economic reports in recent weeks also have suggested that the economy has lost some momentum, allowing interest rates to ease.
"The employment report for March was rather weak, breaking a year-long string of solid gains in hiring," Gumbinger wrote.
see more: http://www.latimes.com/business/la-fi-freddie-mac-mortgage-rates-20150409-story.html
The average offering rate for 15-year loans, which are popular with refinancers, dropped to 2.93%, from 2.98%, the home finance giant reported.
In the latest sign that economic growth may be slowing, the Labor Department said Thursday that claims for first-time unemployment benefits rose last week from a 15-year low set the previous week.
Jobs are a key indicator for analysts considering when the Federal Reserve may increase a benchmark short-term lending rate from near zero, where it has been held since the 2008 financial crisis to stimulate the economy.
If the Fed begins to raise the rate later this year, it could also affect long-term interest rates such as those for mortgages, although the Fed has no direct control over the long rates.
Keith Gumbinger, vice president of HSH.com, which tracks mortgage rates day to day, said other economic reports in recent weeks also have suggested that the economy has lost some momentum, allowing interest rates to ease.
"The employment report for March was rather weak, breaking a year-long string of solid gains in hiring," Gumbinger wrote.
see more: http://www.latimes.com/business/la-fi-freddie-mac-mortgage-rates-20150409-story.html
Friday, April 3, 2015
Fixed Mortgage Rates Rise in Latest Week
Average fixed mortgage rates in the U.S. edged up in the latest week, according to mortgage-finance company Freddie Mac.
"Mortgage rates were little changed this week, entering April about where we started the year," Freddie Mac Deputy Chief Economist Len Kiefer stated Thursday.
Mr. Kiefer noted that the final fourth-quarter gross domestic product growth estimate was unchanged from a previous estimate for a 2.2% increase. Also, pending home sales rose 3.1% in February, beating expectations.
For the week ended Thursday, the 30-year fixed-rate mortgage averaged 3.7%, compared with 3.69% a week earlier and 4.41% a year earlier. Rates on 15-year fixed-rate mortgages averaged 2.98%, compared with 2.97% the previous week and 3.47% a year earlier.
Five-year Treasury-indexed hybrid adjustable-rate mortgages, or ARMs, on average, were at 2.92%, unchanged from the previous week and down from 3.12% a year earlier. One-year Treasury-indexed ARM rates on average were 2.46%, flat from the previous week and up slightly from 2.45% a year earlier.
Read more: http://www.nasdaq.com/article/fixed-mortgage-rates-rise-in-latest-week-20150402-00581
"Mortgage rates were little changed this week, entering April about where we started the year," Freddie Mac Deputy Chief Economist Len Kiefer stated Thursday.
Mr. Kiefer noted that the final fourth-quarter gross domestic product growth estimate was unchanged from a previous estimate for a 2.2% increase. Also, pending home sales rose 3.1% in February, beating expectations.
For the week ended Thursday, the 30-year fixed-rate mortgage averaged 3.7%, compared with 3.69% a week earlier and 4.41% a year earlier. Rates on 15-year fixed-rate mortgages averaged 2.98%, compared with 2.97% the previous week and 3.47% a year earlier.
Five-year Treasury-indexed hybrid adjustable-rate mortgages, or ARMs, on average, were at 2.92%, unchanged from the previous week and down from 3.12% a year earlier. One-year Treasury-indexed ARM rates on average were 2.46%, flat from the previous week and up slightly from 2.45% a year earlier.
Read more: http://www.nasdaq.com/article/fixed-mortgage-rates-rise-in-latest-week-20150402-00581
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