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Asset Preservation Advisors




City:Atlanta

State: GA



BIOGRAPHY:
APA’s philosophy is to work closely with our clients to develop an in-depth understanding of their unique needs and objectives. We then customize a municipal bond portfolio that best meets their specific goals and needs. APA manages high quality municipal bond portfolios in four strategies: Short-Term, Intermediate-Term, High Income, and Taxable.

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Housing Affordability, Mortgage Rates at New Records

Mortgage rates hit new lows, housing affordability hits new highs. What does this mean for prospective buyers?

| BY Adriana Reyneri

Mortgage rates set a new record low for the fourth consecMorutive week, after falling for seven out of the past eight weeks, according to a weekly national survey released yesterday by Bankrate.com.

The average rate for a 30-year, fixed-rate mortgage was 3.97 percent, while the average 15-year fixed-rate mortgage held at 3.2 percent and the average rate for a jumbo 30-year fixed mortgage sank to a record low of 4.52 percent, according to the Bankrate survey, compiled from data provided by the top 10 banks and thrifts in the top 10 markets.

Prospective borrowers are benefitting from another “flight to quality” inspired by the European debt crisis, said Bankate. The economic uncertainty in Europe increases the appeal of safe-haven products, such as U.S. Treasuries, and the increased demand for Treasuries drives down yields. Closely related, mortgage rates follow yields.

“As long as uncertainty prevails, mortgage rates are likely to remain at these ultra-low levels,” Bankrate said in a statement. Mortgage rates have not exceeded 6 percent since November of 2008, according to Bankrate, when 30-year, fixed-rate mortgages averaged 6.33 percent.

The current ultra-low rates are contributing to record high housing affordability, according to the National Association of Realtors, which reports a “new milestone” for the housing market. The association’s Housing Affordability Index rose to a new peak of more than 205 in the first quarter of 2012 – the first time the quarterly index broke 200 since recordkeeping began in 1970.

The index is based on the relationship between median home price, median family income and average mortgage rates, and provides a measure of a prospective homebuyer’s purchasing power.  An index of 100 represents the point at which a median-income family can qualify for an existing, median-priced, single-family home.

The index assumes that the family makes a 20 percent down payment and devotes 25 percent of gross income to mortgage principal and interest payments.  Within these parameters, the median-income family is now able to purchase a $325,000 home.

“For those with good credit, we’ve never seen better housing affordability conditions or market opportunities than we see at present,” said Moe Veissi, the association’s president, but tight lending standards continue to restrain sales.

“Although home prices are stabilizing and sales are rising, some buyers still have to jump through a lot of hoops to convince a lender that they are creditworthy, even for a mortgage that would be well within their means,” said Veissi, in a statement.

With increased housing affordability, an index measuring the purchasing power of first-time buyers also set a record, reaching 135.8 in the first quarter, according to the association. A first-time buyer is assumed to have a lower income, purchase a starter home below the median price and make a down payment of 10 percent. According to Veissi, housing affordability conditions for first-time buyers have never been better.

Housing affordability is expected to decline slightly from current highs are home prices and mortgage interest rates edge up modestly over the year, according to the association.