Mortgage rates for Tuesday, April 12

Mortgage rates are mixed today. The average rate on 30-year fixed mortgages inched up, the average 5/1 adjustable-rate mortgage fell and the average 15-year fixed rate stayed the same.

But overall, those looking to purchase a home will find that its a great time to be in the market.

Tips to Save Money by Refinancing Your Mortgage

With mortgage rates hitting historic lows in recent years, refinancing has become a popular option for homeowners. The benefits of refinancing include lower monthly payments, locked-in low rates and extra cash available every month for purposes ranging from home repairs to paying down consumer debt.

The decision can be complicated for homeowners, so NerdWallet asked Forrest Baumhover — a financial advisor with Westchase Financial Planning in Tampa, Florida, and a member of NerdWallet’s Ask an Advisor network — about key factors homeowners should consider when deciding whether to refinance.

Besides lower monthly payments, what is another potential benefit of refinancing?

One advantage is potentially lowering your loan-to-equity ratio and not having to pay private mortgage insurance. If your down payment when you bought your home was less than 20% of the purchase price, chances are you had to buy PMI, the annual cost of which is generally 0.5% to 1% of the loan amount. For a $300,000 house, that could mean up to $3,000 per year.

After owning your home for a few years, building up equity and changing your loan-to-equity ratio, you may be able to refinance at a lower interest rate and without the PMI. Assuming a 1% PMI savings on a $300,000 home, you could apply that extra $250 per month to your mortgage payment and pay off your loan seven years early. If you took that same amount of money and invested it at 8% annually, you’d have more than $367,000 saved by the time you paid off your mortgage.

gt;gt; MORE: Should you refinance? Use this calculator to find out

What are some tips for people planning to refinance?

Make sure you have a plan for the savings you’ll see every month. Whether it’s investing, paying down your mortgage or something else, make sure the savings doesn’t get wasted on “stuff.”

If you do refinance, the company usually grants a grace period before the new mortgage payments begin. This grace period can be a month or more, so take advantage of that month’s mortgage payment you don’t have to make. Some good options include paying down a credit card or making a needed home repair you’ve been putting off.

gt;gt; MORE: See today’s mortgage rates

What are the potential disadvantages of refinancing?

The thing to watch out for is excessive closing costs, which are a risk every time you look to refinance a mortgage. It’s important to know how long you plan to stay in the home — if you plan to move within two years, for example, the fees might not warrant the savings from PMI or from lower monthly payments. Make sure to do the math and calculate how many months of mortgage savings you’d need to make it worthwhile.

Forrest Baumhover is a financial advisor with Westchase Financial Planning in Tampa, Florida.

Re-build credit with a personal loan

As our economy continues to improve following the Great Recession, personal loans look to be increasing in popularity, says a recent report by TransUnion. With delinquencies falling and more lenders entering the market, TransUnion reports that personal loans are becoming more available. The report says there are an increasing number of well-funded online lenders and the appeal of personal loans is increasing for both secured and un-secured personal loans.

3 Stocks to Watch on Monday: American Express Company (AXP), Apple Inc. (AAPL) and Fitbit Inc (FIT)

Heres why these companies might be on the move Monday:

American Express Company (AXP)

American Express Company shares may lose ground in the new week as the company could lose an importantbusiness partner.

Marriott International Inc (NASDAQ:MAR) is closing in on the acquisition of Starwood Hotels amp; Resorts Worldwide Inc (NYSE:HOT) a company that currently has the AmEx Starwood Preferred Guest card.

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This credit card amounts to 4% of the companys loans and 2% of its total spending. American Express services to Starwood would be replaced by JPMorgan Chase amp; Co. (NYSE:JPM) and Visa (NYSE:V) as Marriott has a partnership with the financial services companies.

This follows the recent losses of partnerships including Costco Wholesale Corporation (NASDAQ:COST) and JetBlue Airways Corporation (NASDAQ:JBLU)

AXP shares are already off more than 12% year-to-date.

Apple Inc.

Credit Suisse just raised its price target on Apple shares from $140 per share to $150, and also added shares to the CS US Focus List.

According to analyst Kulbinder Garcha, Wall Street might be underestimating the GP contribution from Services, but more important, underappreciates its growth potential and the annuity-type business it drives in terms of retention and replacement across the business.

That GP Services figure currently stands at $14.5 billion, or 15% of the group, and Credit Suisse believes that could expand to $33.7 billion, or 29% of GP, by 2020.

Apple stock is up 1% in Mondays premarket trading, and is about 5% in the black for the YTD.

Fitbit Inc (FIT)

The developer of fitness tracking devices could enjoy some momentum heading into this week after last weeks good news on the product front.

Fitbit has received criticism recently as some believe the companys products can no longer compete with the likes of Apple Watch and other fitness trackers. However, the companys two newest devices have each sold more than 1 million units.

The $200 Fitbit Blaze was revealed at CES 2016 in January; the gadget offers a number of new features including heart rate monitors, connected GPS and color touch screens. The company also launched the Alta, a fitness device that is more suited for the luxury crowd.

Selling more than 2million units of these devices indicates that Fitbit is not as dead and buried as critics believe.

While FIT stock is down 12% YTD, it has rebounded some 20% off its February trench.

EDITORS NOTE: An incomplete version of this report was posted earlier. We have corrected this, and we apologize for the error.

As of this writing, Karl Utermohlen did not hold a position in any of the aforementioned securities.

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Household debt hits 10-year high

Jamaicans are borrowing a lot more from banks with household debt now at a decade high and growing twice as fast as income.

It tells a tale of Jamaicans increasing their personal debt for buying cars, electronics and other items much faster than they are investing in homes, according to the newly released Financial Stability Report 2015 published by the Bank of Jamaica.

Roughly $7 of every $10 of household disposable income goes towards paying debt to deposit taking institutions, a group designation for the various classifications of banks. That compares with less than $5 a decade earlier.

Even a year on year comparison shows that the debt servicing capacity of the household worsened by three percentage points year on year to 69.5 per cent in 2015.

The reason was due to debt rising faster than income, according to the stability report, which provides an annual assessment of the main financial developments, trends and vulnerabilities of Jamaicas financial system. Essentially, debt is growing at double the rate of income.


This out-turn was primarily as a result of the faster pace of increase in household debt of 7.8 per cent relative to growth in disposable income of 3.2 per cent for the review period, said the BOJ, which contextualised the debt servicing to levels well above the global pre-crisis average level of 40.1 per cent.

Commercial banks, which dominate the loans market, had $192 billion of personal loans on their books at September 2015 or just under half of the $406 billion in total commercial bank loans, according to BOJ data.

Personal loans first grew beyond the $50 billion mark in 2006 than surpassed the $100 billion mark in 2011. They are now set to surpass the $200 billion mark in 2016.

The exposure of the banking sector to the household sector, as measured by household debt to assets, increased slightly for 2015 to 23.9 per cent compared to 23.8 per cent at end-2014.

Fortunately for lenders, Jamaican consumers were better at servicing their personal debt last year.

BOJ said the increased exposure of the DTIs to the household sector occurred against the backdrop of an improvement in loan quality. Specifically, household non-performing loans (NPLs) as a share of total household loans for DTIs decreased to 5.3 per cent at end-2015 relative to 5.8 per cent at end-2014, the central bank said.

Consumer loans grew despite reductions in mortgage rates during the period.

The expansion in real household sector credit was mainly driven by consumer loans as mortgage credit remained fairly stable, added the BOJ, explaining that real consumer loans grew by 5.8 per cent for 2015 relative to 1.0 per cent for 2014 while real mortgage debt grew by 6.5 per cent relative to 4.6 per cent for the prior year.

This growth occurred within a context of lower mortgage rates among building societies and commercial banks during the review period. However, while there were declines in the nominal mortgage rates, real mortgage rates increased for 2015 relative to 2014, reflective of the faster pace of decline in the annual inflation rate relative to nominal mortgage rates.

The report described the financial system and its capital adequacy as robust due to routinely applied hypothetical shocks during 2015. Additionally, profitability measures for the banking system showed improvements for 2015 due to larger net interest income.

Along with larger profits, the DTI sector showed improvements in balance sheet indicators of capital to assets, deposits to loans and progressively declining non-performing loans over the year, BOJ said.

Gundlach Recommends Mortgage Bonds Rather Than Corporate Debt

Jeffrey Gundlach,chief investment officer of DoubleLine Capital, said mortgage-backed securities are trading cheap relative to corporate bonds and a better bet because of the elevated risk of defaults in high-yield debt.

“This would be a good time to be selling corporate bonds and buying mortgage-related bonds,” Gundlach told investors during a webcast Tuesday.

Mortgage-bond funds have lagged behind other sectors of the debt market this year. Gundlach’s $58 billion DoubleLine Total Return Bond Fund, which had more than 80 percent of its assets in mortgage-related securities as of Feb. 29, has returned about 2 percent in 2016, compared with a 3.4 percent gain by the Barclays US Aggregate Bond Index, the main benchmark for the broader bond market.

Hunters skilled at shooting down scandals

The float doesn’t fall far from the tree.

Rep. Duncan D. Hunter, R-Alpine, has taken a bold step toward defusing a Federal Election Commission review of his de facto personal loans from his campaign fund.

As you’d expect, Hunter admits no serious wrongdoing, simply cluster-confusion over credit cards, reporting errors exacerbated by the allegedly fraudulent billing practices of an online video game played by his son.

By the congressman’s calculation, $12,000 of his own money makes his campaign fund whole and should satisfy the FEC as well as his quizzical constituents.

The Hunter fingers-crossed message: No harm, no foul. Nothing unethical (or, God forbid, criminal) to see here. Just a little loosey-goosey with the books. Character test passed.

Bank of America Merrill Lynch pulls business in-house from mortgage outsourcer

Bank of America Merrill Lynch is planning to pull a significant chunk of its mortgage business in-house from outsourced mortgage solutions provider PHH Corporation, PHH announced Monday.

The change in strategy comes after the bank renewed its contract with PHH for the business in question at the start of the year, HousingWire reported. The business affected includes the origination of new applications for certain mortgage loans for Merrill Lynch Home Loans. The transition of the business to the banks internal operations is effective April 25.

Merrill Lynchs total loan closing volume accounted for approximately 26 percent of PHHs overall volume in 2015. PHH estimated that on an annualized basis, the change could represent a reduction of approximately 20 percent of Merrill Lynchs 2015 loan closing dollar volume with the company or approximately 5 percent of PHHs total 2015 loan closing dollar volume.

Merrill Lynch also informed PHH that it intends to insource it subservicing portfolio no later than Dec. 31, which is the contract expiration date for that business. Merrill Lynchs subservicing accounted for approximately $40 billion in unpaid principal balance, or 32 percent of PHHs subservicing portfolio and 18 percent of its total servicing portfolio.

It was unclear what accommodations Merrill Lynch has made to internal operations or staffing levels to be able to manage the business that it is taking in house. A spokesperson for the bank could not be reached for comment.

Shares of PHH, based in Mount Laurel, New Jersey, plummeted Monday after the company withdrew its earnings guidance for the year as a result of the loss of business. Shares of PHH fell more than 17 percent in late afternoon trading to $10.28 Monday. The company had said in March that it was reviewing its strategy as a result of changing industry and regulatory dynamics impacting our business, Philadelphia Business Journal reported.

Separately, PHH announced that Morgan Stanley Private Bank, which represents 20 percent of PHHs 2015 loan closing dollar volume, has extended its origination services contract through Oct. 31, 2017.

For more:
– read the HousingWire article
– read the Philadelphia Business Journal article
– read the National Mortgage News article

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What personal loan complaints reveal

I examined the publicly available list of complaints made against a number of the online lenders. Unlike other financial institutions that fall under the bureaus purview, these lenders have had few complaints made against them. Thats not completely surprising given their size relative to the big banks and their short history in the complaint database. Even so, many of the complaints against these lenders were made well before the financial protection bureaus announcement.

RATE SEARCH: Looking for a personal loan today? Let help you find the best rates.

Who are these guys?

Online lenders, like Lending Club and Prosper Marketplace, offer unsecured personal loans that allow consumers to consolidate debt, renovate their homes or pay for large expenses.

Many of these lenders are not banks, although most have banking partners that originate the loans. In fact, many banks and credit unions offer unsecured personal loans, too. But these more established lenders are not who bureau Director Richard Cordray had in mind when he said last month that the bureau wants to ensure consumers understand what they are signing up for.

All lenders, from online startups to large banks, must follow consumer financial protection laws, Cordray said in a press release. By accepting these consumer complaints, we are giving people a greater voice in these markets and a place to turn to when they encounter problems.

What the complaints say

The complaints offer a snapshot of the types of problems borrowers are having. I found, for example, a few dozen complaints against Social Finance, or SoFi. This San Francisco-based company is known for its student loan refinancing product, and about half of the complaints center on the inability to qualify for the refi or a belief the borrower should have received a better rate quote.

Theres nothing here to suggest SoFi did anything wrong; the borrower just didnt like the answer he or she received or how the underwriting process played out.

Your approval process, dragging out over several weeks and requiring multiple uploads of the same information (paystubs) that couldve easily been understood by people of average intelligence, was ridiculous, one rejected loan applicant from Texas wrote in August.

The few complaints against San Francisco-based Prosper that included an explanation were about debt collection issues. Problems working with the lender on a delinquent account were the main complaints leveled against another City by the Bay firm, Lending Club.

One Missouri borrower, delinquent on a $35,000 loan, complained he was having no luck trying to get Lending Club to agree to a repayment plan he could afford:

I need assistance here for this matter as Ive never had a delinquency before. I am a single-income (worker) supporting my wife and (redacted) children and I want to make this right. To add insult to injury, I just got into a car accident last week and I feel my car might be deemed salvaged by the insurance company given how old it is. So my only form of transportation to work might be taken away, and now that I have a horrible credit score, I wouldnt be able to get a car lease or a loan to purchase a new car if I wanted to.

What the CFPB says about marketplace loans

The same advice about what to do before taking out a loan from a conventional lender applies when considering applying for a loan from a marketplace lender. According to the Consumer Financial Protection Bureau, you should first:

  • Examine your income and spending.
  • Determine how much you need and can afford to borrow.
  • Check your credit reports.
  • Shop around.

FREE TOOL: Check your credit report for free today at myBankrate.

The bureau did offer one caveat when considering shopping for a loan at a marketplace lender:

If you consider a marketplace lender as one of your options when shopping for a loan, keep in mind that marketplace lending is a young industry and does not have the same history of government supervision and oversight as banks or credit unions, the bureau wrote last month. However, marketplace lenders are required to follow the same state and federal laws as other lenders.