Beginning on October 1, FannieMae and FreddieMac will cut the size of loans they purchase from lenders. This will force many future borrowers into more expensive and harder-to-get jumbo loans.Fannie Mae and Freddie Mac conforming loan limits were raised in 2008 in some high-cost housing markets to stimulate the economy. In many areas such as San Francisco, the limits rose to $729,750, and next month they will fall to $625,500.

The reduction in the conforming loan limit will hurt buyers shopping in the $800,000 and $1.2 million neighborhood the most, and so a slowdown in that segment of the market is expected. On the other hand, this change has been well publicized and some lenders, even as early as August, have already changed their underwriting guidelines to reflect this new reality.


As we suspected last week, SF announced that Property Tax is increasing 0.67% for the 2011-2012 Fiscal year:



Interior pictures of the most expensive listed homes in SF courtesy of Curbed SF:




A true no cost, 7 year fixed loan that was 4% on August 15 is now down to 3.3175% today. You should talk to one of the bankers we work with and find out if you can save money or not.


The gap between the lowest advertised mortgage rate and the average rate that borrowers actually get is as high as it has been in two years, save a single week last September according to today’s Wall Street Journal: “As of last week, the lowest available rate—according to a survey of more than 200 lenders by LendingTree.com—was 3.75% for a 30-year fixed mortgage, but the average rate was 4.39%. At the current 0.64 percentage-point spread, the difference in rates could mean an extra $53,000 in interest payments over the life of a 30-year, $400,000 mortgage.”

While there is always a spread—not all borrowers qualify for the lowest rate, after all—it is usually much smaller: An average spread is usually around 0.40 percentage point.

According to the Wall Street Journal:  The bigger discrepancy of late has little to do with borrowers’ credit scores, which historically have largely decided what rates lenders choose to offer. Instead, it is more reflective of changes in the way lenders approach their business. Lenders have raised their profit margins by 1.5 to 2 percentage points in the past month, according to Informa Research Services, by offering borrowers slightly higher rates.

Lenders say they haven’t lowered rates further because, simply, they don’t have to. The mortgage market is not the cut-throat business of years past. Most lenders are happy to make mortgages but not at any cost. And there is still plenty of demand given that rates are still historically very low. As it is, lenders are able to make loans that, while still cheap, are more profitable, says Michael Fratantoni, vice president of research and economics at the Mortgage Bankers Association, a trade organization that represents mortgage lenders.”

Consequently, we think the best way to get lower rates, assuming a good credit, is to be cognizant of the banks profit margins that are built in, to shop for rates using a site like: www. Bankrate.com and use this information and negotiate with your banker. Keep in mind that you can lock in your rate for over 30 days if you wish and you may want to lock a low rate for 60+ days to make sure delays in qualifying don’t cost you the low rate.



Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing mortgage rates, fixed and adjustable, hitting all-time record lows amid market and employment concerns and economic uncertainty. The previous record lows for fixed mortgage rates, and the 1-year ARM, were set the week of August 18, 2011. The 5-Year ARM matched its all-time low set last week at 2.96 percent.

News Facts:

  • 30-year fixed-rate mortgage (FRM) averaged 4.12 percent with an average 0.7 point for the week ending September 8, 2011, down from last week when it averaged 4.22 percent. Last year at this time, the 30-year FRM averaged 4.35 percent.


  • 15-year FRM this week averaged 3.33 percent with an average 0.6 point, down from last week when it averaged 3.39 percent. A year ago at this time, the 15-year FRM averaged 3.83 percent.


  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.96 percent this week, with an average 0.6 point, the same as last week when it averaged 2.96 percent. A year ago, the 5-year ARM averaged 3.56 percent.


  • 1-year Treasury-indexed ARM averaged 2.84 percent this week with an average 0.6 point, down from last week when it averaged 2.89 percent. At this time last year, the 1-year ARM averaged 3.46 percent.

Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage. Visit the following links for Regional and National Mortgage Rate Details and Definitions.


Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

“Market concerns over Eurozone sovereign debt default and a weak U.S. employment report for August placed downward pressure on Treasury bond yields and allowed fixed mortgage rates to hit new lows this week. On net, the economy added no new jobs last month and was the weakest reading since September 2010. Meanwhile, the unemployment rate remained at 9.1 percent, marking its 31st consecutive month of being above 8 percent, the longest such stretch in 70 years.

“The Federal Reserve (Fed) painted a bleaker picture as well in its September 7th regional economic review. Seven of its 12 Districts reported more subdued views of business conditions. Many of the Fed’s manufacturing contacts downgraded or became more cautious about their near-term outlooks due to increased economic uncertainty.”

Get the latest information from Freddie Mac’s Office of the Chief Economist on Twitter: @FreddieMac

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation’s residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

SOURCE Freddie Mac


Excellent short lessons in Income Property Investing and 1031 exchanges:





A very short and useful primer on why NOI is the single most important measurement in Real Estate.:




If you are a dog owner in Soma, South Beach, Rincon Hill, take advantage of this new park for your dog. Check out progress via their Facebook page:



San Francisco is scheduled to increase property taxes this week: The Board of Supervisors’ Budget and Finance Committee will vote on an increase of .753% to a 1.1718% of a property’s current valuation. Another way to look at it is that you will pay an additional $165.14 per $1,000,000.

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