Jan272015
CFPB launches new mortgage interest rate checker
Consumer Financial Protection Bureau launched a controversial mortgage interest rate checker to protect customers from rate-gouging lenders.
The more information consumers have, the better decisions they make. When I launched the new system on this site that provides detailed cost of ownership information, I did that to provide consumers more information of higher quality than they can find elsewhere to help them make better housing decisions.
One of the important decisions people have to make when house shopping is which lender to use for the transaction (assuming they aren’t paying cash). Many people don’t shop their lenders, and as a result, they end up paying higher interest rates or endure higher fees.
The much-maligned Consumer Financial Protection Bureau developed a new tool to help people compare the rate their lender quotes them with market rates for the area. This tool caused many lenders to complain, mostly because they wanted to continue gouging customers without their customer’s knowledge.
If you are shopping for a home loan, this tool is worth a look.
Check interest rates for your situation
The CFPB is a federal government agency. We are providing this tool for free, with no profit motive, to help you make more informed mortgage decisions.
Our data is provided by real lenders and is updated every business day in the evening. The lenders in our data include a mix of large banks, regional banks, and credit unions.
The data is provided by Informa Research Services, Inc., Calabasas, CA. www.informars.com. Informa collects the data directly from lenders and every effort is made to collect the most accurate data possible, but they cannot guarantee the data’s accuracy.
(click below for a larger image)
Shop around.
Get quotes from three or more lenders so you can see how they compare. Rates often change from when you first talk to a lender and when you submit your mortgage application, so don’t make a final decision before comparing official Good Faith Estimates.
Consider all your options.
Make sure you’re getting the kind of loan that makes the most sense for you. If more than one kind of loan might make sense, ask lenders to give you quotes for each kind so you can compare. Once you’ve chosen a kind of loan, compare prices by getting quotes for the same kind of loan.
Negotiate.
Getting quotes from multiple lenders puts you in a better bargaining position. If you prefer one lender, but another lender offers you a better rate, show the first lender the lower quote and ask them if they can match it.
Check your credit report.
If you haven’t checked your credit report recently, do so now. If you find errors, get them corrected before you apply for a mortgage.
Our data comes from actual lenders and is updated every day. Credit score, loan type, home price, and down payment amount all affect the interest rate you can get. Interest is only one of the many costs you will pay when getting a mortgage. While shopping, ask about points, mortgage insurance, and closing costs. Make a final decision only after comparing lenders’ Good Faith Estimates, which include all the costs.
The mortgage rate is one of the most important determinants of affordability and overall market prices, so it pays to take the time to shop the rate and get a better deal.
Impact of Mortgage Interest Rates
Remember, Dr. Housing Bubble’s real homes of genius. He found the most dilapidated crack houses in LA asking obscene prices as emotional evidence of a housing bubble back in 2006. It was a very powerful series. Many of the prices today give home shoppers the same negative emotional reaction.
So what is different today?
Mortgage interest rates.
The prices of the housing bubble that were insanely stupid eight years ago are coming back. The only reason they don’t look as ridiculous today is not due to wage inflation, but entirely due to the difference in cost of ownership created by 4% interest rates rather than 6.5% rates. Since people know their wages haven’t gone up very much, they have the same reaction today that they had eight years ago.
If we had the same interest rates we had during the bubble, house prices today would be just as insane. A 40% drop in interest rates doesn’t have the same emotional impact as a raise at work because lower rates are intangible, but their effect is real.
Market Timing
It’s very difficult to time the housing market — which is one of the reasons I developed my monthly housing market reports — but irrespective of the changing winds of the market, the analysis of individual properties is constant: it’s either a good deal versus renting or it’s not.
What’s been lacking in the past is a good and reliable method for evaluation every property for sale in the market. For buyers to perform their own rent-versus-own analysis on every property they were interested in would take far too much time and effort. Having that data and analysis available to buyers was the main reason I commissioned the custom IDX system on this site.
I expanded on the rental parity concept to create detailed housing market reports, and develop the analysis of each for-sale property on the MLS found on this site. I want to bring the power of rental parity analysis to everyone and enable them to benefit financially from its power.
The rating system on every property shown on this site — which includes the entire SoCal MLS, and very soon will include San Diego County — the rating system is now based solely on rental parity. Properties at or below rental parity are rated 7 or higher, and properties above rental parity are rated 6 or less.
I could have eliminated the rating system entirely and just used the valuation percentage also shown on each property, but this is less intuitive and harder to grasp. Remembering that negative numbers are good and positive numbers are bad confuses many people, and determining relative values is even more difficult. A scale of 1 to 10 is immediately understood by even first-time users, and it’s relationship to valuation and rental parity reinforces the power of the rental parity concept.
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I did something this morning out of my routine. I turned on the TV and started watching CNBC. It’s really funny watching all the hand wringing regarding the US Economy.
The problem is very clear … and very simple. For the last 20 years, cheap borrowed $ has pushed up asset prices without the underlining fundamental necessity of rising incomes.
The FED cannot and will not raise interest rates this year or anytime this decade. They may try another round of QE, but it’s not sustainable and will not work.
There’s really ONE answer. Privet Debt and asset prices have to be slashed. America needs NEW equity owners, and the Federal Reserve needs to stop protecting the old asset owners. Period the End.
Rising interest rates have the potential to narrow the rift between the rich and the middle class. As interest rates rise, the assets and net worth of the wealthy should get pummeled, and as rising rates should be associated with an improving economy, the middle class should prosper.
IR from yesterday:
“From what I’ve observed, gold either needs a currency crisis or fears of rapid inflation to prompt buying, …”
What would a currency crisis look like? Or, how would one identify a currency crisis? Could a currency crisis be identified before it happens? If so, what would the indicators be?
Need not worry, currency crisis unfolding !
Derek – same questions:
What would a currency crisis look like? Or, how would one identify a currency crisis? Could a currency crisis be identified before it happens? If so, what would the indicators be?
You can identify currency crisis by capiatl flows. After the euro dies they will punish another. Sheep mentality. Herbert Hoover gave great insight on money flows during the melt down.
Currency crises generally can’t be identified in advance because they are often triggered by exogenous events that causes a shift in psychology where people question the soundness of the currency. Governments and central banks don’t like to give the markets advance notice of a devaluation, and although the seeds of a political crisis like Ukraine are visible in advance, there is no way to tell how they will play out and if they lead to a currency crisis. The most obvious sign of a currency crisis is printing money when inflation is already a problem. That’s the currency crisis most people think about and can easily identify. The difference today is that all the quantitative easing is offsetting major deflationary forces, so the quantitative easing isn’t causing a currency crisis — yet. It still could, if the central banks keep printing money long after deflation has turned to inflation, but that’s not where we are today, and a look at the yields on long-term bonds shows that deflation is the bigger worry, even among investors.
Thanks.
In some cases you can see currency crisis/weakness in advance such as the sliding prices for oil affect OPEC members currencies like Russia, Venezuela, Iran, etc…Or Europe economic weakness inflicting the gradual slide in the Euro. Granted Central Banks can announce sudden devaluation/revaluation like the Swiss banks or bank of Venezuela. However, more often than not there are pressure building up to the minute they (Central Banks) make the decision and it’s a matter of understanding currency risk and trend in relation to the economic conditions that provide the backdrop for these currencies and potential moves. If quantitive easing failed to produce any inflation than it’s not because of dosage but rather systemic flaw such as piling on more debt to print money is rather deflationary if eventually some or most of those debts has to be written off. QE is not printing money, it’s actually printing new debts and these debts will crush any future economic growth/spending due to the interest payments which can balloon if rates go up.
QE is printing money. When a central bank buys the debt of the government, the government pays interest on that debt back to the central bank that books it as profit. The central bank then gives the money back to the government. It’s a big circular flow that costs the government nothing, which is why politicians like QE, particularly in third-world countries.
The only way the government can pay the interest on it’s debt is to incur more debt. If the government borrows $95, it has to pay back $100, $5 of which is interest. Since only $95 was originally added to the system, the government has to borrow that $5. It is an inherently unstable system in which the government is in a state of perpetual debt, the government is us, and we lose. The banks win.
BTW, before the federal reserve pays it’s “profit” to the government, it pays dividends to it’s member banks. The “profit” is a red herring to keep the populace mollified.
All currency created in the current fiat fractional reserve monetary system is created as debt. BenShalom is absolutely correct when he says QE does not create money. QE creates debt, which the populace is told is money. Check out one of the bills in your wallet that you consider money. It is a “Federal Reserve Note”. What is the financial definition of a “note”. What is the Constitutional definition of a “dollar”?
“It’s a big circular flow that costs the government nothing, …”
The government, us, has to pay interest, and the only way to pay that interest is to borrow it, which inflates the money supply. The cost of an increased money supply is currency devaluation, or it takes purchasing power from us. If the central bank did not inflate the money supply during times of deflation, you would have to work less hard for what you buy. Things would cost less. The losers would be the banks. The winners would be us.
When the Treasury sells bonds, certain member banks are required to buy any bonds that do no sell on the open market.
The Fed then buys those bondsfrom it’s member banks, with currency it creates out of thin air, at a profit to the banks.
So far in this circle, the government, us, has to pay interest, and the banks make a profit, said profit coming from an inflated money supply, again costing us.
And there is cost of the spectacular inefficiency and counterproductivity of the federal governments spending, which would be lessened if the federal government was not encouraged and empowered to borrow more and more and more.
At times the banks can borrow the currency from the Fed to buy the bonds from the Treasury, which they then sell to the Fed at a profit.
At times the banks us the proceeds to deposit at the Fed, to earn interest, at a rate greater than rate they have to pay to borrow the currency from the Fed.
Another cost is the malinvestment costs associated with currency too easily borrowed at less that market interest rates, ie. the housing bubble, any stock bubble, loans to shale oil developers, etc. My guess is the malinvestment costs are the greatest of all the costs of QE.
It may be a somewhat circular flow that costs the politicians nothing, but it costs us a lot, even we do recognize the costs.
Another BTW, the federal reserve does not publish the amounts it pays to which banks and how many shares each bank has.
Sorry to disagree, they can be identified.
Lack of Kool-Aid Intoxication Hinders Housing
Problems with “lingering wariness about homeownership benefits”
Based on company transactional data and Google search activity, Auction.com predicted Monday that existing-home sales in January will come in at a seasonally adjusted annual rate of 5.06 million, just slightly above the National Association of Realtors’ (NAR) December estimate of 5.04 million. The company’s range of predictions includes a lower forecast of 4.90 million annual sales and an upper forecast of 5.21 million sales.
“There’s nothing pointing towards a quantum leap in January home sales,” said Rick Sharga, EVP for Auction.com. “Demand continues to be tepid, reflected by the relatively weak search activity that we’re tracking in Google Trends data. And inventory levels of available homes continue to fall, which means that even if demand picks up, there might not be enough homes to meet it.”
In its latest look at resale data, NAR reported that the stock of available existing homes for sale was around 1.85 million in December, putting the national supply at 4.4 months at the current sales rate.
Also challenging the housing market right now are stringent credit conditions, stagnant wages, and “lingering wariness about homeownership benefits,” said Auction.com’s chief economist, Peter Muoio.
“lingering wariness about homeownership benefits”
Nice. How ’bout we edit that to read, “growing education and knowledge among prospective home buyers about the real costs and benefits of home ownership relative to renting.
I would like to believe I contribute to that “problem.”
More wishful thinking about Boomerang buyers
homeownership is not for everyone
The first wave of 7.3 million homeowners who lost their home to foreclosure or short sale during the foreclosure crisis are now past the seven-year window they conservatively need to repair their credit and qualify to buy a home, according to a new report from RealtyTrac.
More waves of these potential boomerang buyers will be moving past that seven-year window over the next eight years corresponding to the eight years of above-normal foreclosure activity from 2007 to 2014.
“The housing crisis certainly hit home the fact that homeownership is not for everyone, but those burned during the crisis should not immediately throw the baby out with the bathwater when it comes to their second chance at homeownership,” said Chris Pollinger, senior vice president of sales at First Team Real Estate, covering the Southern California market which has more than 260,000 potential boomerang buyers.
“Homeownership done responsibly is still one of the best disciplined wealth-building strategies, and there is much more data available for homebuyers than there was five years ago to help them make an informed decision about a home purchase,” Pollinger said.
Stocks down 500 points since Friday
(Reuters) – Global stock indexes fell on Tuesday following disappointing earnings results and weaker-than-expected U.S. durable goods orders, while the euro rose for a second day against the dollar.
All three major U.S. stock indexes were down around 2 percent in early trading. The Dow Jones industrial average .DJI fell 362.28 points, or 2.05 percent, at 17,316.42. The Standard & Poor’s 500 Index .SPX was down 33.18 points, or 1.61 percent, at 2,023.91. The Nasdaq Composite Index .IXIC was down 99.71 points, or 2.09 percent, at 4,672.06.
“U.S. equities could come under pressure as investors ratchet down their growth estimates for the U.S. economy,” said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin.
“There was just too much hype about the U.S. economy having risen into a new and higher growth channel. We’re still stumbling along.”
As Commodities Fall, Some Investors See Reasons to Buy
Commodities likely to remain weak as QE winds down
A few brave investors are betting the gloom oppressing global commodity markets is on the verge of lifting.
The world’s farmers, mining companies and oil producers spent billions of dollars over the last decade to increase output. The result: huge surpluses and sharply lower prices for commodities ranging from oil to sugar to iron ore.
The magnitude of the decline has exceeded the expectations of the vast majority of investors and analysts. The Bloomberg Commodity Index, tracking 22 commodities, fell for a fourth straight year in 2014 and is down 3.1% this year.
But some investors see the seeds of a recovery in daily reports of plunging prices. They are buying some of the hardest-hit commodities, in a bet that low prices will quickly force producers to cut back, erasing the global surpluses behind the multi-year slide.
Many of these money managers acknowledge that a rebound may still be months off but say they are willing to endure some short-term losses rather than miss an opportunity to get in early on the next rally. And though analysts predict months, or even years, of low prices for some commodities, bullish investors take heart that while many observers saw signs that the decadelong commodity boom was nearing an end, few predicted the extent to which prices would crash.
These people reason that if market watchers failed to foresee the depth of the current downturn, they may be wrong about the timing of the rebound, as well.
“I don’t think commodities will go down much more than they have,” said Christopher Burton, portfolio manager at Credit Suisse Asset Management’s commodities group, which oversees about $10 billion. “We are bullish and we are positioned for a bullish move in commodities.”
The Bureau’s interest rate tool angers creditors because the site isn’t following the same laws and regs creditors must when advertising mortgage rates. One quick and simple fix would be to add the APR next to the rate, but the Bureau hates the APR. They’ve done extensive research that proves no borrowers understand it much less care about it. So the Bureau is loathe to place an APR on this site.
Indicative of the Bureau’s distaste for the APR, the APR is on the last page of three in the new Loan Estimate effective later this year:
http://files.consumerfinance.gov/f/201403_cfpb_loan-estimate_fixed-rate-loan-sample-H24B.pdf
And the APR is on the last page of five in the new Closing Disclosure effective later this year:
http://files.consumerfinance.gov/f/201403_cfpb_closing-disclosure_cover-H25G.pdf
The problem with quoting just the rate, is that none of the other fees the creditor will charge are included in the quote. Do you have to pay the lender a full point just to receive the 3.75% 30-year fixed rate, and then pay additional lender fees? These are important facts the Bureau’s site omits.
That is a valid complaint, and the CFPB will likely cave in to those demands. If their intent is to have a valid and reasonable rate checking tool, they need to make the proper adjustments to the costs so people can compare apples to apples.
Oil, other commodities will be in the dumps for another decade
http://www.marketwatch.com/story/gold-oil-will-be-in-the-dumps-for-another-decade-2014-11-12?page=1
Remember the commodities supercycle, that seemingly endless 2000s commodities boom? It drove oil, gold, copper and other commodities to record levels.
The supercycle was driven by exploding demand from China and other emerging countries, supply bottlenecks caused by years of not developing wells and mines, and rock-bottom interest rates that inflated demand for hard assets all around the world.
But now gold, oil and other commodities are well off their peaks, so far off, in fact, and for so long that they can only be described as in a supercycle in reverse, or a secular bear market.
“Commodity cycles are very long on the way up and the way down,” he told me in a phone interview. They last around 13 to 15 years, because it takes that long for fundamentals of supply and demand to go to extremes.
When the most recent supercycle began in 1998, Driscoll said, commodities prices had plummeted, so producers shuttered old mines and wells and hadn’t opened new ones in a while.
But when demand revived, it took years for producers to catch up. Ultimately, companies built too much capacity just in time for the next peak.
That’s where we are now, he said. The previous commodities bull market started in 1968, just when the 1960s go-go bull market in stocks faltered, and ended in 1981 when gold surged above $800 an ounce.
The current commodities supercycle ran from 1998 through 2011, said Driscoll — the same length as the last one. “We think of the peak in the commodities supercycle as roughly early April 2011,” he told me.
That’s when copper topped $4.40 a pound; it’s barely above $3 now, a drop of more than 30%. Gold, which peaked around $1,900 an ounce that year, changed hands near $1,150 on Monday, almost 40% off its high.
And Brent crude oil, trading just above $80 a barrel, is more than 40% below its July 2008 record high of $146. [MR Note: Now trading at $50 and 66% off the high]
Can anyone seriously believe this isn’t a long-term bear?
If you’ve lost money in commodities for the past 3 ½ years, you could do a Rip Van Winkle and tune out for a decade or so, or you can pretend you’ve been right all along. [The awgee/el O strategy…LOL]
LMAO!!
Dude, gold has reached a point where it’s now rising as the dollar is rising, instead of falling(the norm).
See for yourself….
http://www.macrotrends.net/1335/dollar-gold-and-oil-chart-last-ten-years
Cheers!!!
Gold will have its day. But in the end deflation will take it all. Austria should be the first to pull out. Capital flows will shift from USA. China will recover and their economy !
Thanks for proving my point that get your info and take your cue from the MSM, (Marketwatch).
Do you consider gold to be a commodity? I know the media the mainstream financial world calls it a commodity, but what about you?
Mellow Ruse says:
June 28, 2013 at 12:43 pm
“el numeraire is toast.
Gold is a bubble. The selloff is not recent. It has been going on for two years. What has changed is that we’ve entered the acceleration phase of the decline.
My prediction: Gold will bottom at $500 and stay there.”
Price of gold in Euros on June 28, 2013 was 949.00
Price of gold in Euros today is 1138.00
Gold has appreciated 20% in Euros since Mellow Ruse said, “we’ve entered the acceleration phase of the decline.”
Even in dollars, it was $1,230 when you made your “acceleration phase of the decline” observation, and it is today $1,293.
What exactly is the acceleration phase of the decline?
And when will the $500 pog bottom happen?
2029: 18 years after the 2011 peak. It took gold 18 years to bottom last time, so I’ll go with that again.
Ive been looking at northern OC housing for the past year and for the entire 2014, I have seen inventory picking up and fewer homes go pending. In the past few weeks however I have seen a slight pick up in high end homes… is this coincidental or does anyone have a reason for this recent pick up?
Some of this effect is seasonal, but some is also due to sub 4% mortgage rates.
China’s Gold Imports From Hong Kong Tumble 32% From Record
“Net imports by mainland China were 750 metric tons last year, down from 1,108.8 tons in 2013, when shipments more than doubled, according to data compiled by Bloomberg from the Hong Kong Census and Statistics Department. Imports in December fell 36 percent from the same month a year earlier, according to the figures, which deduct flows from China into Hong Kong.
China’s net gold imports declined to 58.8 tons in December from 87.2 tons the previous month.
Mainland buyers purchased a total 128.4 tons, including scrap, compared with 149.3 tons a month earlier, data from the Hong Kong government showed. Exports to Hong Kong from China were 69.6 tons in December. That compares with 62.1 tons in November. Mainland China doesn’t publish such data.”
[…] CFPB launches new mortgage interest rate checker Interest is only one of the many costs you'll pay when getting a mortgage. While shopping, ask about points, mortgage insurance. Closing costs. Make a final decision only after comparing lenders'. Good Faith Estimates, which include all the costs. Read more on OC Housing News (blog) […]
[…] home, shopping around for the lowest rate can save thousands of dollars over the life of the loan. The Consumer Financial Protection Bureau launched a Rate Checker to help consumers verify if the rate they are quoted is good or […]