Hitwise’s Robin Goad posted about how mortgage calculator terms have began capturing a larger portion of the UK mortage search market recently.

The US based growth in demand for mortgage calculator searches was largely on the demand created by the sharp lowering of the Federal Reserve funds rate from 5.25% to 2.00% during the September 18, 2007 to April 30, 2008 time period.

As a website that publishes in the space we had a pulse on the search volume changes and reasoning behind them

• the lowered Fed funds rate lifted search volume
• eroding conumer confidence, a glut of housing inventory, and falling real estate prices have made people far more comfortable sitting out buying a new home until the pricing trend reverses

The Bank of England has lowered rates much slower than the United States, lowering from 5.75% to 5% over the course of 5 months from December 6, 2007 through April 10, 2008. In spite of their rate cuts, UK mortgage rates have reached 8 year highs amid higher inflation.

For fifty years we simply believed that home prices would always increase, and then one day it was no longer true. Many people are looking, but few people are buying right now.

We simply attempt to be fearful when others are greedy, and to be greedy only when others are fearful. - Warren Buffett

Surely amongst the chaos and fear in the markets there is lots of opportunity. Are you a contrarian investor? Or is it best to wait until you see market stability before investing?

Some of our website users have requested that we offer a mortgage calculator download so they can calculate payments offline. So we did just that. Hope you like it!

Since many real estate brokers and agents install our mortgage calculators in their sites we have looked at a cross range of sites in the space and determined that there were many recurring marketing issues holding many of them back from their full potential. To help out on this front we decided to create the online real estate marketing guide.

We recently created a free Mortgage Calculator plugin that you can easily install in any Wordpress blog in under 5 minutes!

How it works:
Hit the calculate button and see the results in real-time on your site. This helps you keep your site visitors focused on your site and your inventory - instead of sending them elsewhere.

If you look at the left sidebar of this blog you can see it in action, and here is an image of the calculator in use

Download WP-MortgageCalculator Now:
You can download WP-Mortgage Calculator here now!

Installation instruction for WP-MortgageCalculator:

This free calculator installs in the sidebar of your Wordpress blog as a widget. The calculated results appear directly on your website, so you keep your readers engaged and active on your website!

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Step 1: Unzip the WP-Mortgage Calculator package and
put in it in your plugins folder located at
wp-content -> plugins

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Step 2: after unzipping the files upload them to your remote server using an FTP program.

The (4) files included in this package are
mc_calculate.php
mc_linktext.php
mortgage-calculator-logo.gif
mortgagecalculator.php

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Step 3: log in to your WP admin panel, located at
/wp-admin/

Click the plugins link, which will send you to
/wp-admin/plugins.php
and enable the Mortgage Calculator Widget.

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Step 4: For older versions of Wordpress, inside the WP admin panel click on presentation. Then click on the Widgets sub-menu item. If you are using Wordpress 2.5 you should click on Design then Widgets.

Drag the Mortgage Calculator and any other needed widgets (categories, archives, links, pages, etc.) into Sidebar 1.

Click “Save Changes” and your Mortgage Calculator should be live.

Can’t see widgets? Your Wordpress theme may not be widget aware. To make it widget aware you need to ensure your theme has a functions.php file and that your sidebar is theme friendly. This Automattic page describes how to make themes widget friendly.

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Want an easier way to install a mortgage calculator on your site? Perhaps you could try using one of our other linking options - like posting HTML into one of your blog posts.

Have questions, comments, or feedback? Leave them below.

Thank you & enjoy!

The Big Picture, a bear investment blog by Barry Ritholtz, recently highlighted a NYT article about home equity line of credit loans becoming scarce in an environment where banks are overextended and housing prices are falling.

Here’s the sickest part of the entire affair: Borrowers with an excellent credit rating will see their FICO score dinged when their home equity line is frozen. Why? When a lender suddenly caps a $50,000 line at $25,000, it appears that the borrower tapped out the entire amount of the loan. This reduces their score.

The NYT article also highlights Fee Disclosure, a website dedicated to helping home buyers discover and minimize hidden fees that are typically associated with mortgages.

If you were thinking of getting a home equity loan while interest rates are low, it looks like it still might be worth waiting it out for a few more months to see if the choppy waters clear and banks are less emotional about extending new HELOC loans.

TechCrunch covered news of the new Zillow mortgage marketplace:

Borrowers submit just the essentials - what type of loan they need, where they’re located, their estimated property value, their credit history, etc - without divulging any of their contact info. Then certified lenders make offers that can be compared side-by-side.

Think of this new Zillow launch as LendingTree in reverse, where the borrower picks the lender.

With home prices aggressively dropping a big concern amongst some investors holding mortgage backed securities is that some of the houses will be worth less than what the mortgage borrower owes. Explained by Nouriel Roubinin in his congressional testimony [PDF]:

In most US states mortgages are a non-recourse loan; thus, if a home owner defaults on its mortgage the bank take over the collateral - the home - via foreclosure but once that happens it cannot go after the borrower for any difference between the value of the original mortgage and the current value of the property.

Some home owners may get out of their mortgages simply by missing payments and mailing their house keys to the bank, a process that is known as jingle mail. It will damage their credit scores, but if they can’t keep up with the mortgage then those were going to get damaged anyway.

To mitigate the risk of homeowners walking away, the Office of Thrift Supervision is in the early stages of a plan to create negative equity certificates:

Under the regulatory agency’s proposal, still in its early stages, these borrowers would refinance into government-insured loans that cover the current value of their homes. The refinancing would pay part of what’s owed to the original lender. For the remainder, the lender would get what the plan’s backers call a “negative equity certificate.” The lender could redeem the certificate if the home is eventually sold at a higher price.

Hundreds of readers of the influential Calculated Risk blog are doubtful of the viability of such a program, as guessing a bottom in home prices is aiming at a moving target, especially with so many homeowners having zero equity or negative equity.

To appreciate how ugly the problem is, here are a couple charts. Click on either for a larger view.

The National Association of Realtors claims now is the perfect time to buy a home

But what they forgot to tell you is that while the Federal Reserve has recently slashed the funds rate by 1.25%, 30 year fixed mortgage rates are going up:

U.S. fixed-rate mortgages rose in the latest week, according to Freddie Mac’s survey released Thursday. The national average interest rate on the benchmark 30-year, fixed-rate loan averaged 6.04% in the week ending Thursday, up from 5.72% a week ago, but lower than the year-ago 6.22%.

Home owners who get a mortgage today are paying for the money banks lost writing bad loans in the recent housing bubble.

If you are in a market where prices are dropping, expect further savings by waiting out your purchase, as homes keep losing value, inventory keeps increasing, and mortgage rates eventually reflect the Fed’s recent cuts and future cuts.

The most recent issue of Harpers magazine has a cover article by Eric Janszen titled The next bubble: Priming the markets for tomorrow’s big crash. He discusses how banks helped create the housing bubble and how subprime loans were only a symptom of the problem: hyperinflation of real estate. He also hypothesized that the markets may still have a few years of correction in them before housing prices are where they belong. The article also predicts alternative energy to be at the center of the next bubble.

On Tuesday, in a suprise event after a couple shaky days in worldwide stock markets, the Federal Reserve lowered interest rates 3/4 of a percent to 3.5%. Paul Kedrosky has reported that many people are already refinancing, but another rate cut may come at the next Fed meeting, which could drive rates lower. Reuters reports

Implied prospects for the Federal Open Market Committee to lower benchmark lending rates by 50 basis points next week FFG8, to 3 percent, fell to 36 percent early on Friday before roaring back to end the week at 70 percent.