Freddie Mac bought $10.09 billion worth of mortgages last month, which increased its portfolio to $715.4 billion for an annualized growth rate of 17.2%, the Associated Press reports.  The last time Freddie Mac got this hungry for mortgages was in November of last year.

Freddie Mac spokesman Michael Cosgrove told the AP that the federally chartered company wanted to take advantage of a "modest widening of mortgage debt spreads." Freddie Mac's main purpose in life is to keep the mortgage market liquid by buying mortgages from banks to free up more money for home loans.  Freddie Mac keeps some of the loans it buys and repackages others into mortgage securities to be sold.

Freeing up some money for new home loans is a good thing right now, since according to reports earlier this week from the Commerce Department and the National Association of Realtors home sales are climbing.  New mortgage applications should shoot up soon too.

New homes sales surprised everyone in March.  According to Bloomberg, new homes sales took the biggest jump in almost 12 years.  New purchases jumped 13.8% - the most since April 1993.  The annual rate is now tracking at 1.213 million up from 1.066 million in February, according to the Commerce Department.  Sales of resales jumped by a much smaller percentage - 0.3% in March to annual rate of 6.93 according to the National Association of Realtors yesterday.

That should be good news to mortgage lenders as well.  No doubt most of these home buyers will need mortgages. 

The median price of new home sales did drop slightly by 2.2 percent to $224,200 over the past 12 months, which was the first time that happened since December 2003.  The drop reflects the fact that more homes were bought in the price range of $150,000 to $299,999.  There were fewer sales of higher-priced homes compared to March 2005.

As housing sales slow, fewer people look for new mortgages.  Bank profits took their first hit in this slowing market last quarter.  Citigroup, J.P. Morgan Chase, Wells Fargo and Wachovia all reported falling mortgage sales.

Citigroup said sales declined in its U.S. consumer lending business because of reduced mortgage servicing revenues and the reduction in gains on the sale of real estate loans.  CFO Sallie Krawcheck told analysts that the bank is selling off its fixed-rate mortgages and holding onto variable rate mortgages.

J.P. Morgan Chase reported its net income from mortgage banking dropped from $139 million to $39 million.

Wells Fargo reported its home-mortgage revenue dropped to $853 million from $1.5 billion.

Wachovia reported 14% revenue growth in its General Bank unit, but said there was slowing growth in its home equity lines.

The Mortgage Bankers Association (MBA) predicts a 7% to 8% drop in home sales this year.  It also believes new mortgages and refinancings could drop 14%.  MBA reported a decrease in mortgage applications of 1.7% for the week ended April 14 compared to the prior week.

The popularity of interest-only mortgages continues to increase as interest rates rise, but don't jump too quickly into this new mortgage scheme.  Financial services firm UBS AG analyzed loans being packaged into mortgage-backed securities and found that the volume of interest-only loans jumped from only $7.9 billion in 2004 to $38 billion last year. They now account for 8% of all new residential mortgages.

While the interest-only mortgage does look attractive because of the initial lower payments, your payments will jump dramatically when the interest-only period ends in 10 to 15 years. For example, a standard $300,000 30-year fixed rate loan at an interest of 6.62% (this week's average) would have a principal and interest payment of $1,920.  The interest-only loan rate is a bit higher at 6.75%, but the payment is much lower at $1,687.  That's because you won't be paying anything toward the principal of the loan initially.

Those lower payments may sound great if you're trying to buy a larger home, but don't get caught up in the hype of the interest-only loan.  Usually the interest-only period lasts for just 10 years.  If you don't sell or refinance before that time, your payments could jump by 35% to $2,281, when the interest-only period ends.  You will still have to pay the principal off in 30 years, but only have 20 years in which to do it.

If you do need to sell the home in the first ten years,  you'd better hope your home has appreciated enough to cover the costs of the sale, since you haven't paid down any of the principal of the loan.  If not, you may have to come up with cash to close the loan in order to pay closing and sales (real estate commissions) costs.

"If you had told me we would have had this many people for a friggin' mortgage company opening--give me a break," said Donald Trump, speaking to several hundred people crammed into a lower level space at Trump Tower.
It's not typical that an 11 a.m. mortgage company launch could turn into a media circus.

"When Don [Trump, Jr.] and I struck the deal, we said, 'We'll have a new conference," continued Mr. Trump. "What we didn't expect was Extra!, Access Hollywood, Entertainment Tonight, and some of the other folks up here. Take a look Lois--my friend Lois [Weiss] from the New York Post."

Mr. Trump was joined by E.J. Ridings , the new company's President and CEO, and his son, who is also involved in the project.

"The business they're doing is unbelievable," said Mr. Trump in typically, grandiose fashion. "Literally, we signed the lease a few months ago, they are going to take an additional floor."

On Wednesday HomeServices of America Inc., said it acquired Huff Realty for an undisclosed price to expand in the U.S. Midwest. Huff, whose corporate offices are in Cincinnati and Fort Mitchell, Kentucky, is a residential real estate brokerage, mortgage and title company with 12 locations and more than 700 sales associates in Ohio and northern Kentucky.

The addition of Huff gives Minneapolis-based HomeServices more than 20,000 sales associates in 19 states. Known for its insurance holdings and investments, Berkshire has announced or completed at least four acquisitions this year.

The typical amortization schedule for a home loan provides for an even number of payments that consist of an identical sum of money each month. Each payment consists partly of mortgage principal, interest, and taxes. In the early years of the mortgage, most of the payment is interest, with only a small portion being applied to the principal.

By adding as little as $20 or $50 a month the term of the mortgage can be reduced a lot. As the principal is reduced, so is the interest that is due on the remaining balance. This compounds over time, reducing the overall time of repayment. For example an extra $50 each month on a $200,000 mortgage at 6.5%, will cut more than three years off of the repayment schedule.