Mortgage Rates Inch Up After Posting Record Lows

Improving housing data and higher Treasury bond yields moved rates higher for the week, Freddie Mac reports in its weekly mortgage market survey. After setting all-time lows last week, rates bumped up slightly for the week--the exception being the 5-year adjustable-rate mortgage, which dropped this week to reach a new record low.

Here’s a closer look at rates for the week:

30-year fixed-rate mortgages: Averaged 4.22 percent, up from last week’s record low of 4.15 percent. Last year at this time, 30-year rates averaged 4.36 percent.
15-year fixed-rate mortgages: Averaged 3.44 percent, up from last week’s 3.36 percent average.A year ago at this time, 15-year rates averaged 3.86 percent.
5-year ARMs: Averaged 3.07 percent this week--a new all-time low. It was down from last week’s 3.08 percent average. A year ago, the 5-year ARM averaged 3.56 percent.
1-year ARMs: Averaged 2.93 percent this week, up from last week’s 2.86 percent average. At this time last year, the 1-year ARM averaged 3.52 percent.
Frank Nothaft, chief economist at Freddie Mac, attributed the overall rise in rates to signs this week of an improving housing market. He noted that the Federal Housing Finance Agency’s national House Price Index reported a rise for the third straight month in June. Also, the Mortgage Bankers Association reported this week that the serious delinquency rate (90 days or more plus foreclosures) on mortgages outstanding fell for the sixth consecutive quarter at the end of June to 7.85 percent.

Source: “Mortgage Rates Follow Bond Yields Higher for the Week,” Freddie Mac (Aug. 25, 2011)

Banks Agree to More Short Sales

Banks are agreeing to more short sale transactions, and short sales are taking less time to sell, which is helping to clear large inventories of distressed properties more efficiently, says James J. Saccacio, RealtyTrac CEO, in releasing new housing data this week.

“This is a glimmer of hope that lenders are getting more realistic,” Rick Sharga, senior vice president of RealtyTrac, told Bloomberg News. “It’s a win for borrowers who avoid foreclosure, buyers who get a house in better condition and banks that lose less money, which is also a win for taxpayers.”

During the second quarter, the number of homes nearing foreclosure accounted for 12 percent of total home sales, with banks agreeing to more transactions at prices below the outstanding mortgage balance, RealtyTrac reported in releasing its second quarter data this week.

What’s more, pre-foreclosure homes took an average of 245 days to sell after receiving the initial foreclosure notice--that’s down from 256 days in the first quarter, RealtyTrac reports.

Sales of homes in the foreclosure process or short sales sold on average for a 21 percent discount--or an average sales price of $192,129--compared to the sales price of non-distressed homes.

Source: “Home Short Sales Increase as Banks ‘More Realistic’ on Market,” Bloomberg News (Aug. 24, 2011)

New-home Sales Drop, Median Prices Rise

For the third straight month, new-home sales fell in July, the Census Bureau reported on Tuesday. However, sales were 6.8 percent higher compared year-over-year from July 2010.

The new-home building industry continues to struggle to compete against a backlog of existing-homes and foreclosures on the market that have pushed prices down.

For July, new homes sold at a seasonally adjusted annualized rate of 298,000, only a 0.7 percent drop from a rate of 300,000 homes sold in June.

The median home price for new-homes was $222,000 in July, which is 5.5 percent down from June. The median price is 8.8 percent higher from 12 months prior. The median price of a new home is more than 30 percent higher than the median price for an existing home, analysts say. Free Credit Score, Summary and; Consultation - call (866) 943-9815

The drop in sales reflects an increasing concern over the economy, said David Crowe, chief economist for the National Association of Home Builders. Crowe said he expects August figures will also drop because of “the market turmoil and the uncertainty it creates in consumers.”

Source: “New-home Sales Dip in July,” CNNMoney Aug. 23, 2011

Foreclosures Down, But Delinquencies Back Up

The number of delinquent mortgages more than 90 days late--those that are closest to bank repossession--declined during the second quarter, the Mortgage Bankers Association reported on Monday. The country is back to 2007 levels in foreclosures--with fewer borrowers losing their homes to bank repossessions, MBA. reported.

Also, MBA found that loans originated after 2007 are performing better than those issued earlier. Mortgages issued from 2005 through 2007 represent 30 percent of all mortgages. Yet, they account for 65 percent of defaults.

MBA’s report over improvements in foreclosures were masked by a slight rise in the number of troubled mortgages--borrowers who have missed at least one payment--during the second quarter. While delinquencies only increased 0.12 percentage points to 8.44 percent, experts say after two years of improvement in delinquencies, the increase was worrisome.

"Delinquencies are mirroring what's taking place in the employment market," Jay Brinkmann, the MBA's chief economist, told CNNMoney.

Source: “Number of Troubled Mortgages on Rise Again,” CNNMoney (Aug. 22, 2011)

Number of troubled mortgages on rise again

NEW YORK (CNNMoney) -- In another hit to the beleaguered housing market, a report out Monday found that the number of delinquent mortgage borrowers -- those who have missed at least one payment -- rose during the second quarter. The delinquency rate grew only slightly, up 0.12 percentage points to 8.44%but that reverses the steady improvement of the past two years.

The increase, as reported by the Mortgage Bankers Association (MBA), may not sound like much, but it could mean that the recovery in the housing market will take even longer than thought.
The MBA breaks down delinquencies by degree of severity, ranging from one payment past due to 60 days late, 90 days late and loans that are in the process of foreclosure proceedings, the final step before bank repossession.

One bright spot: The number of loans more than 90 days late declined. Those are the mortgages that are most likely to proceed all the way to repossession. Still, the number of initial filings ticked higher , Borrowers earlier in default are more likely to begin repayment again. Often the problems besetting them were temporary, such as an unexpected medical bill or a brief layoff from work. "Delinquencies are mirroring what's taking place in the employment market," said Jay Brinkmann, the MBA's chief economist.

Foreclosure Talks Snag on Bank Liability

Observers say federal and state officials continue to work on a settlement with the nation's biggest banks with regard to their foreclosure practices, but the process has been delayed as banks seek broad legal immunity for mortgage-related claims.

The banks reportedly are seeking legal protection with regard to loan origination, securitization, and servicing and fair-lending practices, as well as for claims tied to their use of the Mortgage Electronic Registration Systems (MERS), but federal and state officials countered with an offer to cover only robo-signing and other servicer-related practices.

Federal officials hope to forge a settlement by Labor Day, and observers say banks may agree to a settlement approved by 80 percent of states.

Source: “Foreclosure Talks Snag on Bank Liability,” The Wall Street Journal, Ruth Simon, Vanessa O’Connell, and Nick Timiraos (Aug. 22, 2011)

Economic Woes Prompt Buyers to Back Out of Deals

Recent falls in the stock market and growing concerns over the cloud hanging over the U.S. economy has prompted more home buyers to cancel real estate deals or continue to sit on the sidelines, analysts say.

The National Association of REALTORS® said in a recent report that home buyer cancellations in the last two months increased about 10 percent from a year earlier. Lawrence Yun, NAR’s chief economist, says the increase is due to low appraisals that do not match the mortgage amount, “overly stringent” lending standards, as well as waning buyer confidence. 

“The typical home buyer gets rattled when confronted with economic turmoil,” says Stan Humphries, Zillow.com’s chief economist. “The type of fear we’re seeing could substantially worsen the housing market.”

Stock market declines are denting many buyers’ pocketbooks. “A lot of people have seen their down payments for a home disappear in the stock market,” Keith Gumbinger, vice president of HSH Associates, told Bloomberg News. “It served as a reinforcement to the hunker-down mentality that a lot of home buyers already had.”

Some home buyers who still have the means to buy are waiting for prices to fall even further too, says Jim Hamilton, with Lyon Real Estate.

“People are watching the stock market as a major indicator of what’s going on in the economy,” Hamilton told Bloomberg News. “Buyers are beginning to think that if they wait, they’re going to get a better deal in a few months.”

Even Low Interest Rates Can’t Get Buyers Moving

Despite borrowing costs at record low levels, applications for mortgages to purchase homes continues to fall. In fact, for the week ending Aug. 12, mortgage applications to buy dropped to a 13-month low, according to the Mortgage Bankers Association.

Federal Reserve Chairman Ben Bernanke was hoping to revive demand for housing by lowering interest rates and vowing to not raise key rates until 2013. Rates have been below 5 percent for more than two weeks but have failed to spark more buying.

“Low mortgage rates are only helpful to home buyers who aren’t paralyzed with fear after watching their 401(k) disappear,” says Mark Goldman, a lecturer at the Corky McMillin Center for Real Estate at San Diego State University. “For now, people see the stock market as a casino table.”

Source: “Housing’s Drag on Economy May Worsen,” Bloomberg News (Aug. 21, 2011) 

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