Delaware Mortgage Rates weekly mortgage rate update for the Week of May 12, 2014, by John R. Thomas with Primary Residential Mortgage, Inc. in Newark, Delaware. John Thomas is the Newark, Delaware Branch Manager and the author of the best selling book, Your Guide to Buying Your First Home in Delaware. Call 302-703-0727 to get a mortgage planning consultation or APPLY ONLINE for Delaware mortgage loan

Delaware Mortgage Rates moved to the lowest rates we have seen since October 2013 as the stock market stalls and tension overseas move money into bond markets. If you look at the mortgage bond chart below you can see mortgage bonds hit highs not seen since October 2013 last Thursday.  As mortgage bonds move up in price, the interest rates moved down. We recommend LOCKING your Delaware Mortgage Rate to take advantage of the lowest rates we have seen all year. The risk is that rates could move higher not lower in the short term as traders book in profits on the recent run-up in bond prices.

Why have home loan rates improved so far this year versus moving higher as predicted? Mortgage Rates are predicted to move higher this year as the Federal Reserve continues to reduce their bond-buying program by $10 Billion at each Fed Meeting. They have dropped from $85 Billion in December 2013 to only $45 Billion for May 2014. This should have caused home loan rates to move higher as there would be less demand for mortgage bonds but it hasn’t, we have actually seen home loan rates move lower, so the question is WHY?

The big reason Feds reduction in bond buying hasn’t negatively impacted bonds is because the supply of mortgage bonds has dropped drastically as mortgage production is off 55% from last year so as the demand from the Feds has dropped so has the supply. There are also two other reasons that have helped home loan rates move lower: the first being Tensions overseas and the second being a pullback in the stock market. The tensions overseas in Ukraine and Russia has caused a “safe haven” trade for many investors.  This is where investors move money out of more risky investments like the stock market into safer trades like the bond market.

In Economic News, Fed Chair Janet Yellen was on Capitol Hill on Thursday testifying on the state of the U.S. economy and, for the most part, she is upbeat, but the housing sector gives her cause for concern. Ms. Yellen said the housing sector has been recovering since 2011 but has been a disappointment so far this year. Ms. Yellen said, “The recent flattening out in housing activity could prove more protracted than currently expected rather than resuming its earlier pace of recovery.”

Thursday we saw the report of Weekly Initial Jobless Claims by the Labor Department and showed claims dropped by 26k claims to 319,000 Claims.  This was below expectations of 325k claims and the lowest level in a month. Falling jobless claims is a good sign for the Labor Market.

In Housing News, CoreLogic reported their Home Price Index for March 2014 was up 11.13% from March 2013 and home prices increased 1.4 percent from February 2014 to March 2014. This is down from 11.81% from February 2013 to February 2014. Tighter Credit Standards and limited inventory will slow the appreciation rate of home prices in the rest of 2014.

RealtyTrac reported that Cash Buyers of Residential Properties in the first quarter of 2014 was 43% of all sales which is more than double the cash buyers in the first quarter of 2013 which was only 19%. This high percentage of cash buyers show a soft underbelly to the housing market recovery. A high percentage of cash buyers is not sustainable and marks more investors than homeowners.  This cash buyer problem is highlighted by the decline in homeownership which has fallen to 64.8% of people own their homes in the first quarter of 2014 which is a 19 year low. But we see this as an opportunity for housing to improve in the future as all those renters and the younger generation living at home with parents are going to see housing as a good investment as home appreciation will continue.  The number of renters are at the highs not seen since 1995 and housing had a good run from 1995 till 2006.

The next Delaware First Time Home Buyer Seminar is Saturday, May 17, 2014, n Newark, Delaware, and the Dover Delaware Home Buyer Seminar is Saturday, June 14, 2014, in Dover, Delaware. Register by calling 302-703-0727 or Register online at http://www.DelawareHomeBuyerSeminar.com

Then next Maryland First Time Home Buyer Seminar is Saturday, May 24, 2014 in Towson, Maryland and Maryland First Time Home Buyer Seminar June 7, 2014, in Clinton, Maryland. Register by calling 410-412-3319 or Register online at http://www.MarylandHomeBuyerSeminars.com.

If you would like to apply for a Mortgage Loan, you can APPLY ONLINE HERE, you can call John Thomas at 302-703-0727.

John R. Thomas – NMLS 38783

Certified Mortgage Planner – Primary Residential Mortgage, Inc.

302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office

248 E Chestnut Hill Rd, Newark, DE 19713