Oil and Rates

20140309-080351.jpgThere is an old saying which revolves around the fact that oil and water do not mix. But how about oil and interest rates — do they mix? The truth is that oil prices and rates have gone lower in tandem this summer. There was a time when the economy could be stopped or started with a change in either energy prices or rates. However, today the effects are not as clear. For example, changes in gas prices don’t seem to affect the consumer as much as they did decades ago. There are several reasons for this, but one important factor is the increase in energy efficiencies.

On the other hand, the magnitude of the effect of interest rates does not seem to have lessened, but it is hard to tell with rates remaining so low for the past several years. For example, last year when interest rates started to rise, the real estate market responded by eventually slowing down. Again, the direct effect is not as clear as it always has been. For example, so many in America refinanced at record low rates in the past few years, the rise in rates not only slowed down the pace of refinancing, but also made homeowners more reticent to put their homes on the market. Why leave a home which has such a low mortgage payment? This phenomenon has contributed to a shortage of listings which has in turn contributed to the slowing down of the real estate recovery. Continue reading

How to Interview a Mover

Are you planning to move in the next few years? Even if moving is not in the near future, here’s a list of great questions to ask a mover—regardless of whether you hire a local mover that will move you across town, or you are planning to move to another city or state.

Oh, and if you have any friends who are planning to move, please pass these questions on to them! Continue reading

How to Correct Mortgage Servicing Issues

Have you ever wondered if the extra principal payment you made was properly applied to your mortgage loan balance? How about your escrow account – how was that dollar amount figured? Or do you think you were erroneously charged a late fee?

The Consumer Finance Protection Bureau has recently issued rules requiring the company where you made your mortgage payment to respond to your inquiry within a certain amount of time.

But they also suggest certain things you should do if you have questions about your current mortgage. Regardless if you phone or send a letter, here is the information the servicing company will need from you before they are required to respond:

  • Exact names that appear on your mortgage documents
  • Address and loan number
  • Try to provide exact details of when you believe the error occurred (like on July 1, I sent in a check to pay my mortgage payment, the check was cashed on July 7, but I was charged a late charge…)
  • Do not write a note on your payment coupon. The coupon usually gets thrown away right after the payment has been recorded.

Here’s what to expect from the servicing company when you make an inquiry:

  • Servicing company must “acknowledge” your complaint within 5 business days (either email or letter)
  • If you are paying off your mortgage, they must respond within 7 days
  • If the company asks you for additional information, they have an additional 15 days to respond
  • For all other “general” inquiries, (late charges, payments to principal balance, escrow accounts) they have 30 days to respond
  • They cannot charge you a fee for research or responding to an inquiry
  • They must confirm if the error has been corrected
  • If there is no error, they must explain why they are not going to make an correction.

If your loan has been transferred to another mortgage servicing company, you have a time limit of 12 months to inquire about errors. After the one-year time period, they are not required to investigate your inquiry.

For more information about mortgage servicing rules, visit ConsumerFinance.GOV.

Realtor Appraiser Summit – Save the Date

Do you want your appraisal questions answered?  Then save September 17th for an appraiser summit sponsored by Fairway Independent Mortgage.  Remember, Fairway powers the Jeff Baxter Mortgage Team.

Save the Date - Appraisal Summit

We are holding sessions in New Castle County (AM from 9-11) and Sussex County (PM from 3-5) on the 17th.   The locations are TBD – stay tuned for more information and remember this summit is free.

Please email, call or message me if you would like to attend.

The World is in Focus

20140309-080351.jpgThere is no doubt that the world has seen more than its share of conflicts this year. We have seen major conflicts in the Ukraine, Iraq, Gaza, Syria, Libya and more. With the amount of turmoil we have seen, the world markets have been pretty solid with our stock market being no exception. By mid-July, the Dow and the S&P were in record territory. In this column we even called it the “Teflon Market” because major news seemed to be shrugged off regularly.

Could this time be different? The Ukrainian crisis has occupied the headlines pretty much all year. Yet, the downing of a civilian airliner has brought the conflict to center stage as many countries, including the U.S., have invoked economic sanctions against Russia because of it’s actions in Ukraine. Russia has retaliated with sanctions of their own and now we have an economic cold war in the making. And the markets have reacted negatively to these escalating developments.

Many times analysts have indicated that the stock market is due for a correction as it has been almost three years since the last real correction of at least 10%. Each time we have had a pullback in the past three years the markets have rebounded quickly and this past week we saw at least a moderate rebound. If the Russian crisis escalates, could we be in for a real correction? Only time will tell. However, there is some positive news which has arisen from the stock market’s recent international malaise. Long-term rates and oil prices have both headed lower. At a time in which we are receiving positive news with regard to the economic recovery, lower rates and lower oil prices may serve to hasten economic growth. If economic growth accelerates, that is good news for stocks — but possibly only if rates stay low.


The Markets. Fixed rates fell slightly in the past week with rates staying within the same range they have been for almost the past three months. Freddie Mac announced that for the week ending August 14, 30-year fixed rates fell slightly to 4.12% from 4.14% the week before. The average for 15-year loans ticked down to 3.24%. Adjustables were also stable in the past week, with the average for one-year adjustables up slightly to 2.36% and five-year adjustables decreasing marginally to 2.97%. A year ago 30-year fixed rates were at 4.40%. Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac — “Rates on home loans were down slightly amid a week of light economic reports. Of the few releases, retail sales were virtually unchanged in July after a 0.2% increase in June, ending five months of increases. Excluding motor vehicles and parts, retail sales were up 0.1% last month.” Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Current Indices For Adjustable Rate Mortgages
Updated August 15, 2014

Daily Value Monthly Value
August 14 July
6-month Treasury Security 0.06%  0.06%
1-year Treasury Security 0.10%  0.11%
3-year Treasury Security 0.87%  0.97%
5-year Treasury Security 1.58%  1.70%
10-year Treasury Security 2.40%  2.54%
12-month LIBOR  0.556% (July)
12-month MTA  0.118% (July)
11th District Cost of Funds  0.668% (June)
Prime Rate  3.25%

  The creator of one of the most widely used and influential credit scores, FICO, said that the latest version of its score would no longer weigh medical debts — which account for about half of all unpaid collections on consumers’ credit reports — as heavily as it did in previous iterations. The newer FICO scores, available this fall, will also ignore any overdue payments that have already been made. Previously, the scores factored paid and unpaid collections equally, though it ignored amounts under $100. FICO credit scores, which have become consumers’ financial passport to just about everything from rental apartments to most loans such as mortgages, are based on the information in an individual’s credit reports, which are generated by the three major credit bureaus: Equifax, Experian and TransUnion. The scores are based on a 300- to 850-point scale. Because of the new scoring model, individuals with a median score of 711 — and an otherwise clean credit history, except for unpaid medical debts — may see their FICO score rise by 25 points. As a result, many consumers may qualify for more attractive interest rates on various loans, potentially resulting in thousands of dollars in savings. “It probably doesn’t mean the difference between an approval and a denial, but it can mean the difference in a more advantageous rate,” said John Ulzheimer, a credit expert at Credit Sesame, a consumer credit website, and a former FICO employee. But consumers whose credit files are tarnished only by unpaid medical debts that went to collection agencies — but were ultimately settled or paid — are likely to see a much greater increase in their scores. “That is when you could expect to see your score go through the roof,” said Mr. Ulzheimer.  Source: NY Times — Not sure where your score puts you with regard to being eligible for a home purchase or refinance? A quick and simple analysis may let you know how to get in position to take advantage of these upcoming changes. Just contact me and I will help you get started.

When it comes to smart homes, consumers are more interested in their security features than the gadgets that control the homes’ appliances. New research by Icontrol Networks, a home technology company, shows that 90 percent of 932 respondents recently surveyed say that security is one of the most important reasons for using a smart-home system. In fact, 67 percent rank it the No.1 reason, and the majority of consumers say security is a must-have in any home automation, according to Icontrol’s 2014 State of the Smart Home Report. Fire and carbon monoxide alarms, as well as gas leak alarms, were listed as top security features, according to the survey. “For now, safety and security are driving initial mass market adoption,” says Jim Johnson, executive vice president of Icontrol Networks. “But the convenience associated with a connected home will likely play a greater role as consumers realize how much easier automation makes their lives.” Seventy-eight percent of respondents also ranked energy management as one of the top features that matter most to them in a smart home. HVAC heating and cooling management was cited as the most important feature in helping to reduce utility bills. Nearly 43 percent of respondents say they’d be interested in replacing their thermostat with a “smart thermostat,” one that automatically adjusts when the home is occupied. Source: Builder

International buyers continue to flock to the U.S. to purchase and invest in properties. Favorable exchange rates, affordable home prices, and rising affluence abroad is driving interest, according to the 2014 Profile of International Home Buying Activity conducted by the National Association of Realtors®. From April 2013 through March 2014, total international sales are estimated at $92.2 billion, a rise from $68.2 billion from the previous period, NAR reports. Twenty-eight percent of Realtors® reported working with international clients this year. “We live in an international marketplace; so while all real estate is local, that does not mean that all property buyers are,” says Steve Brown, NAR’s president. “Foreign buyers are being enticed to U.S. real estate because of what they recognize as attractive prices, economic stability, and an incredible opportunity for investment in their future.” International buyers are coming to the United States from all over the world, but the highest interest in U.S. property is being driven by Canada, China, Mexico, India, and the United Kingdom, which accounted for about 54 percent of all reported international transactions. Canadian residents continue to have the largest share of U.S. purchases, but dropped their share from 23 percent in 2013 to 19 percent in 2014. Buyers from China hold the lead in dollar volume, purchasing an estimated $22 billion with an average sale cost of $590,826, according to the NAR study. China was also the fastest-growing source of transactions, now accounting for 16 percent of all purchases, up 4 percent from last year. In 2014, nearly 60 percent of reported international transactions were all cash, compared to only one-third of domestic purchases. The survey also revealed that 42% of foreign buyers use their U.S. home as a primary residence. Source: NAR


The Aftermath

20140309-080351.jpgWe have had a week to consider the barrage of data released during the last week of the month and the first days of August. The markets were very volatile during this period with the Dow moving from record territory by mid-July to a 2.5% loss in one week and negative territory for the year as of August 1. Other markets moved as well during this period as oil moved down below $100 per barrel the same week and long-term interest rates were also volatile.

Previously we asked why rates are staying so low if it looks like the economy is rebounding. As a matter of fact, one of the reasons the stock market reacted so negatively to the good news regarding the economy is that there was a concern the Federal Reserve Board might raise rates more rapidly than expected. The Fed even noted in its recent announcement that inflation was moving closer to their target numbers. We note that this was just one reason for the negative reaction in the stock market. There were others. For example, there continues to be plenty of political and financial turmoil overseas. Plus, with the Dow and S&P reaching record territory again and again in the first half of the year, the markets could have been due for a correction. Continue reading

Let’s Add Up The Data

20140309-080351.jpgWe very rarely get a week of economic data like the past week. We had a week of employment releases, culminating in the release of the employment report on Friday. We also had the Federal Reserve’s Open Market Committee meeting last week. Add to that the release of personal income and spending data for June and for good measure add in the first estimate of the second quarter growth of the economy (GDP). It is tough to sum up all that data in a short amount of time and indeed it may take some time for the markets to fully absorb the data as well. But let’s give it a shot by asking the general question — how did we do?

With regard to second quarter growth, the preliminary number released on Wednesday was strong. However, the 4.0% growth rate is subject to revision and it comes after a drop of 2.1 % in the first quarter due to the harsh winter we experienced. Taken together, the economy grew at less than a 1.0% rate during the first half of the year and economists expect faster growth during the second half, but not necessarily as strong as 4.0%. Meanwhile, the Fed’s statement after their meeting contained no surprises as they continue to lessen stimulus by paring down on purchases of securities and were a bit more upbeat in their assessment of the economy which gave the markets the idea that a rate increase will still come down the road, but that “down the road” is probably closer than it has been. Continue reading