Archive for February, 2008
Definition of Libor Rate
LIBOR is the London Interbank Offered Rate. It is a daily reference rate based on the interest rates banks in the London wholesale money market (or interbank market) offer to lend unsecured funds to each other. LIBOR is usually slightly higher than the London Interbank Bid Rate (LIBID). LIBID is the rate the same banks are prepared to accept deposits.
With the 1 year LIBOR Rate currently at 2.77%, there is not a big hurry to refinance “reasonable” ARMS now.
Web Page of ” Current Libor Rates “
Make sure you read our survey of the best mortage rates .
Case Shiller Housing Index Shows Major Prices Declines
Prices continue to fall significantly in almost all bubble cities. Forbes reported that:
The virtual collapse of US home prices continued in December, including record annual declines in the S&P/Case-Shiller Home Price Indexes released today.
The 20-city price index was down 2.1 pct for the month and recorded an
annual decline of 9.1 pct.
Washington Biz Journal reports that in the Washington area the “Case Shiller Home Price Indices report released Tuesday found price declines in the Washington area averaged 9.4 percent this past December, compared with December 2006.”
The Washington, DC area is now13.3% below peak prices. Anonymous wrote that “Prices dropped 1.7% in November and another 2.5% in December - both record decreases in the last 21 years. The fact that prices are ACCELERATING downwards still is a very bad sign considering we’re already 13% off the July 2006 highs.” Very well put!
The declining housing market is far from over in the Washington, DC areas. Thus far outer suburbs have experienced much larger prices declines then inner part of the region. Similarly, condos have experienced larger price declines then single family residences. The housing bust is far from over in the Washington, DC area.
Price Declines & Months of Supply (Backlog)
Seems that the question still is, “Are home prices going to decline in the Baltimore Metro area?” My last post, January 2008 Data , shows significant year-over-year price declines for almost all the major metro areas of Baltimore.
Baltimore County -5.9% for both median and average sale price
Carroll County - 7.8% for both median and average sale price
Howard County -2.6% for median and -0.2% for average sale price
Anne Arundel County -4.4% for median and +0.4% for average sale price
Harford County +2.2% for median and -1.6% for average sale price
Unit mix is to blame for Howard, Anne Arundel and Harford Counties having differences between median and average. Mix skewed either to higher or lower end housing will cause this difference.
Anne Arundel and Howard County appear to be selling more low end housing than before and why it has a slight price increase is unknown. I’d have to look at the actual sales data by house to know why. It could be due to a handful of extremely high end homes selling, more $1M+ and fewer $500K homes selling. I would think, but not necessarily correct, would be more low end sales with a very few high end sales ($400 - $700K) and a handful of mansions sold.
Harford County is selling more high end homes than last year (increased median), but the price of those homes have declined (decreased average). This might be explained due to the fact that Harford County still has a lot of new construction coming to the market.
Housing is not going to cheat the laws of supply and demand. When their are more sellers than buyers, prices come down. When their are more buyers than sellers, prices go up. Since real estate is not very liquid (can’t convert to cash or cash equivalent quickly), price impacts from supply is delayed. Additionally prices are sticky (reference these posts from Calculated Risk on “Sticky House Prices” ) and take time to come down. Below are two graphs which show how Baltimore and Maryland are not immune to the housing correction.
The left axis shows home sales and inventory (red and blue bars) while the right axis shows months of supply (yellow line). Months of supply is Active Inventory/Sales. This is also known as months of backlog. Pay particular attention to what happened in August 2007, notice the drastic jump in months of supply? This is due to the credit crisis which resulted from the “subprime meltdown” and the credit markets cutting off loans for anybody with bad credit and non-conforming loans (note many of Greater Baltimore’s homes are non-conforming, over $417,000). The fed has cut rates like a heroin addict going through withdrawal in hopes to keep mortgage rates low, but this hasn’t helped. Baltimore and Maryland are not immune to the housing correction, we are all subprime now. (click on graphs to make larger)
Greater Baltimore’s Month of Supply (Backlog) is 14.1 months while Maryland as a whole is 16.8 months. Both of these figures might be an all time record for Maryland. The national average is currently 10.3 months according to the NAR as reported by the Baltimore Sun . During the bubble period shown above, backlog was below 2 month on multiple occasions for both Greater Baltimore and Maryland as a whole.
According to Calculated Risk (hat tip to BubbleMeter for digging up this link), “Usually 6 to 8 months of inventory starts causing pricing problems, and over 8 months a significant problem.”
I think this spring will be renamed the “spring listing season” instead of the spring selling season. Anyone want to take bets on Greater Baltimore and/or Maryland going over 20 months of backlog?
As it is now, some serious pricing pressure is in our housing market….it can only get worse.
How To Reduce your Mortgage?part 2
How To Reduce your Mortgage?part 2
how to reduce your mortgage is by setting up a additional budget plan if your existing mortgage is $500 dollars a month you would need to budget to find extra income to reduce your mortgage.Because you still have to pay all your exsisting bills while you continue to reduce your mortgage but don’t get discourage because you will start to see the fruits of your labour.
Best bad credit mortgage deals
by R Rama
Availing a remortgage even if one’s credit history is bad is not a tough proposition these days considering the fact that people can avail a remortgage on the strength of the security of their homes. This is because lenders are financing a home on the basis of the value of the home and therefore they do not need to carry much risk when they refinance a home. If the borrower is not able to pay back the money, the lender can as well reclaim costs by seizing the home.
People looking o refinance their homes while having a bad credit history can consider cheap bad credit remortgages. Such homeowners can approach remortgage providers to provide a loan against the property even though it is mortgaged with another company. Such remortgages, which are essentially a remortgage that is provided to people with a bad credit history, are becoming popular with lenders.
A bad credit re-mortgage may be availed by providing a house as a security. Since the interest that is charged on such a loan is less, customers may use it to avail a better option to manage their finances. Such loans enable customers to free up equity on their home for a variety of purposes such as home improvements, buying a new car, going to an exotic place for holidaying etc.
A re-mortgage is a good way to manage resources because it allows people to avail money at a lower interest rate. The loan can also be used to enhance the credit rating of borrowers who can use the money to enhance their credit scores or simply repay their bad loans. In any case, availing such a loan is beneficial because they are receiving the loan at a lesser interest rate. However a host of factors such as personal circumstances of the borrowers also determine the rates at which one can avail a mortgage.
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Tips For First Time Home Buyers
To help you feel prepared and informed, here are some of the steps involved in buying a house. If there’s anything you’re unsure about, please don’t hesitate to talk to your local Mortgage Specialist. We’re prepared to do everything we can to make things proceed smoothly, quickly and effortlessly.
Choosing a Realtor
Choosing the right realtor can […]