How Low Will Mortgage Rates Go?

For the second consecutive week, fixed-rate mortgages reached new all-time records lows, offering another big boost to home buyer affordability. The 30-year fixed-rate mortgage averaged 3.83 percent for the week ending May 10, posting a new record low from last week’s 3.84 percent average. The 15-year fixed-rate mortgage also posted a new record, averaging 3.05 percent this week. Here’s a closer look at mortgage rates for this week: 30-year fixed-rate mortgages: averaged 3.83 percent, with an average 0.7 point, down from last week’s previous record of 3.84 percent. A year ago at this time, 30-year mortgages averaged 4.63 percent. The 30-year fixed-rate mortgage, the most popular choice among home buyers, has averaged below 4 percent for nearly every week — except for one — since Dec. 8, 2011, according to Freddie Mac. 15-year fixed-rate mortgages: averaged 3.05 percent, with an average 0.7 point, dropping from last week’s previous record low of 3.07 percent. Last year at this time, the 15-year fixed-rate mortgage averaged 3.82 percent. 5-year adjustable-rate mortgages: averaged 2.81 percent, with an average 0.5 point, dropping from last week’s 2.85 percent average. Last year, 5-year ARMs averaged 3.41 percent. 1-year ARMs: averaged 2.73 percent, with an average 0.5 point, rising from last week’s 2.70 average. A year ago, 1-year ARMs averaged 3.11 percent. Source: Freddie Mac

Thousands of REALTORS® Ready for Housing Rally

It’s an election year, and real estate professionals from across the country want to make sure their voices are heard. More than 10,000 REALTORS® from coast to coast are expected to come together next week to show their support for home ownership in the nation’s capital. The Rally to Protect the American Dream will be held May 17 in front of the Washington Monument in Washington, D.C. The rally will take place during the National Association of REALTORS®' Midyear Legislative Meetings & Trade Expo, May 14-19. Several members of Congress are also expected to attend the rally and listen to real estate professionals speak out about the critical issues facing home ownership today and how important housing is to an overall economic recovery. Among the housing issues to be addressed are the threats mortgage interest deduction, foreclosures and short sales, affordable financing, and ensuring that credit is available for those who want — and are able to — purchase a home. By Melissa Dittmann Tracey, REALTOR® Magazine Daily News

Mortgage Giant Offers Another Sign of Stabilizing Market

Fannie Mae, which backs the most loans in the country, announced that it would not need taxpayer aid to cover losses for the first time since the federal government took control over the mortgage giant in 2008. Fannie posted a profit in the first quarter of the year, reporting a net income of $2.7 billion compared to a $6.5 billion loss they reported in the first quarter of 2011. “We expect our financial results for 2012 to be significantly better than 2011,” says Susan McFarland, Fannie Mae’s chief financial officer. “As our serious delinquency rate declines and home prices stabilize, we expect to reduce our reserves, which combined with revenue from our high-quality new book of business, will drive our future results.” Several analysts say there are signs of the housing market stabilizing: The decline in home prices is slowing, more Americans are buying homes than a year ago, and housing starts have climbed in the last year. Freddie Mac, also a government-sponsored enterprise and mortgage giant, recently reported a profit as well — a $577 million quarterly net income for the first quarter. Source: “Fannie Mae Profit Signals a Stabilizing Housing Market,” The New York Times (May 9, 2012)

Top 10 Turnaround Housing Markets

Cities hardest hit by the foreclosure crisis are among some of the cities leading a housing recovery, Move Inc. reports in its Top Turnaround Town Report for May. Move Inc. compiled a list of Top Turnaround Towns for this month, using year-over-year housing data from the first quarters of 2012 and 2011. Many of the cities in the top 25 that have seen the biggest boosts in price appreciation are also seeing a big drop to inventories of homes for-sale. Some of the states that suffered the worst of the foreclosure crisis — such as Florida, Arizona, and California — have cities represented on the list, and are showing some of the biggest signs of recovery. The following are the top 10 turnaround markets, according to Move Inc.’s report from May (including the year-over-year median list price increases). 1. Phoenix-Mesa, Ariz. Median list price increase from Q1 2011 to Q1 2012: +26.94% 2. Miami Median list price increase from Q1 2011 to Q1 2012: +24.32% 3. Orlando Median list price increase from Q1 2011 to Q1 2012: +11.54% 4. Boise City, Idaho Median list price increase from Q1 2011 to Q1 2012: +17.53% 5. Naples, Fla. Median list price increase from Q1 2011 to Q1 2012: +14.34% 6. Oakland, Calif. Median list price increase from Q1 2011 to Q1 2012: +7.07% 7. Fort Myers-Cape Coral, Fla. Median list price increase from Q1 2011 to Q1 2012: +18.27% 8. Lakeland-Winter Haven, Fla. Median list price increase from Q1 2011 to Q1 2012: +12.95% 9. Sarasota-Bradenton, Fla. Median list price increase from Q1 2011 to Q1 2012: +12.56% 10. Tampa-St. Petersburg-Clearwater, Fla. Median list price increase from Q1 2011 to Q1 2012: +11.92% “We continue to see signs of stabilization and recovery on the local level throughout the country,” says Steve Berkowitz, CEO of Realtor.com operator, Move Inc. “By all indications, the 2012 housing market is unfolding as we expected, and we’re encouraged with the progress local markets are making. However, much will depend on the continued health of our economy, specifically job rates, and how lenders will release their foreclosure inventories.” See what other real estate markets made Move Inc.’s top 25 list of turnaround towns. Source: Realtor.com

TransUnion: Mortgage Delinquencies Down in 1Q to Lowest Level Since 2009

The rate of borrowers past due by 60 days or more on their mortgage payments fell in the first quarter to 5.78 percent, the lowest delinquency rate since 2009, according to TransUnion. The pace was lower in all but eight states, with Florida and Nevada posting the highest rates. TransUnion forecasts a decline in delinquency rates this year as gradual improvements in the economy help more borrowers to repay their home loans. Source: "TransUnion: Mortgage Delinquencies Down in 1Q to Lowest Level Since 2009," Wall Street Journal (05/09/12)

Experian: Lenders May Want to Expand Borrowing Pool

A new study estimates that 17.3 million prospects for new mortgages are being overlooked by lenders. Many of these prospects hold little credit history and, therefore, may be viewed as a risk to some lenders in making a loan. Experian, a credit analytics provider, notes that lenders will need to widen their market base if they are to grow their portfolios. That may require lenders to expand who they're lending to, including finding creditworthy prospects who may have lower credit scores than the typical prime borrowers. "Identifying near-prime borrowers is a trend in place for the last eight years, but lately there is a renewed focus as small- to medium-sized lenders get into the mortgage space more," Michele Pearson, vice president of product management at Experian, told HousingWire. "We want to give those folks a chance to identify those borrowers." Otherwise, lenders may miss out on the potential to grow new mortgages at an estimated $3.86 billion, Experian estimated in a recent white paper. Source: “Experian: Mortgage Lenders Looking to Draw Lower-Credit Borrowers,” HousingWire (May 8, 2012)

Home Prices to Rise 4% Per Year?

Have home prices finally hit bottom? Many analysts think so. According to the latest forecast by Fiserv, the market watcher sees a big boost to home prices on the horizon, projecting that home prices will rise nearly 4 percent per year for the next five years. The real estate markets expected to see the biggest increases in home prices will likely be those hardest hit the last few years by foreclosures, such as in Phoenix and Las Vegas, and areas where prices have fallen the most, according to Fiserv’s forecast. Housings rising affordability mixed with falling inventories of for-sale homes are the main factors driving the expected price increases, according to Fiserv. Initially, investors are expected to help drive most of this price increase, and then followed by first-time and trade-up buyers as they re-emerge in bigger numbers to the market. Source: “U.S. Home Prices Could Rise 4% a Year, Forecast Says,” USA Today (May 8. 2012)

Improving Housing List Mostly Holds Steady in May

One of the most battered housing markets during the housing crisis, plagued with a number of foreclosures and falling home prices, is on the mend, joining a list of improving housing markets in May, according to a newly released index by National Association of Home Builders/First American. Phoenix was among 17 metro areas added to this month’s Improving Market Index. Also among some of the metro areas added this month were Bowling Green, Ky.; Bend, Ore.; and Lubbock, Texas. The monthly index, created by the National Association of Builders and First American, measures areas that have shown improvement in housing permits, employment, and prices for at least six consecutive months. The May index mostly held steady at 100 metro areas showing improvement, down from only 101 in April. While 17 new areas were added in May, 18 metro areas previously on the list dropped off. "The fact that there are 100 markets in 34 states and the District of Columbia represented on the improving list illustrates that all housing markets are local, and that the national headlines often don't apply to what's happening in a specific metropolitan area," says NAHB Chairman Barry Rutenberg. "In places where employment is firming up along with demand for new homes, the main factors weighing down the housing market continue to be access to credit — for both builders and buyers — and the difficulty of obtaining accurate appraisals on new construction." To find a list of all 100 metro areas on May’s list, visit www.nahb.org/imi. By Melissa Dittmann Tracey, REALTOR® Magazine Daily News

Weighty College Debt Holds Up First Home Purchase

Increasingly, young people are delaying the pursuit of home ownership because of outstanding student loan debt — which now tops $1 trillion, according to the Consumer Financial Protection Bureau. "Some student loan payments are as high as a mortgage," notes Cari Sweet-Kostoplis of the Jersey Mortgage Corp. Student loan debt now surpasses the amount owned on all credit cards issued in the U.S. And unless Congress agrees to extend subsidies to keep student loan rates at 3.4 percent, the rates are set to double in July. Because most lenders' underwriting standards limit total debt payments to just 45 percent to 50 percent of a borrower's adjusted gross income, Sweet-Kostoplis explains, many first-time buyers are rejected for home financing, which usually accounts for 33 to 35 percent alone. Source: "Student-Loan Debts Keep Them From Buying Homes," Sarasota Herald-Tribune (FL) (05/07/12)

Survey Shows More Reason to Buy Than Rent

Thirty-three percent of Americans say they expect home prices to rise in the next 12 months, the highest level in more than a year, according to Fannie Mae’s March 2012 National Housing Survey of consumer attitudes about the housing market. The number of people who say now is a good time to buy is also on the rise, increasing to 73 percent—also the highest level in more than a year. The percentage who said it's a good time to sell a home also increased one point to 14 percent in March. Meanwhile, more Americans expect rental prices to rise and are projecting an increase by 4.1 percent over the next year, the highest number recorded to date. “Conditions are coming together to encourage people to want to buy homes,” says Doug Duncan, Fannie Mae’s chief economist. “Americans’ rental price expectations for the next year continue to rise, reaching their record high level for our survey this month. With an increasing share of consumers expecting higher mortgage rates and home prices over the next 12 months, some may feel that renting is becoming more costly and that home ownership is more compelling house choice.” Source: “Americans’ Expectations Align to Encourage Home Buying,” RISMedia (May 6, 2012)

Home Buying Gets Another Boost in Affordability

For home buyers or refinancers, borrowing costs for home ownership just got a little cheaper as mortgage rates took another dip to new all-time record lows this week, Freddie Mac reports in its weekly mortgage market survey. "Signs of slowing economic growth and inflation remaining subdued allowed yields on Treasury bonds to ease somewhat and brought most mortgage rates to new all-time record lows this week,” says Frank Nothaft, Freddie Mac’s chief economist. Here’s a closer look at average rates for the week ending May 3: 30-year fixed-rate mortgages: averaged 3.84 percent, with an average 0.8 point, reaching a new historical low. The previous record for 30-year rates was 3.87 percent, which was set on Feb. 9 of this year. A year ago at this time, rates averaged 4.71 percent. 15-year fixed-rate mortgages: averaged 3.07 percent, with an average 0.7 point, another historical low. The previous record for 15-year rates was 3.11 percent set on April 12 this year. A year ago at this time, 15-year rates had averaged 3.89 percent. 5-year adjustable-rate mortgages: averaged 2.85 percent, with an average 0.7 point, holding the same as last week. Last year at this time, 5-year ARMs averaged 3.47 percent. 1-year ARMs: averaged 2.70 percent this week, with an average 0.6 point, also registering at a new all-time low. Last year at this time, 1-year ARMs averaged 3.14 percent. Source: Freddie Mac

Low Rates Spark Rise in Loan Demand

Mortgage applications for purchase were up slightly as mortgage rates last week hovered near record lows. Overall, applications increased 0.1 percent last week compared to a week earlier, with purchase applications seeing the largest increase, according to data from the Mortgage Bankers Association for the week ending April 27. Mortgages for home purchases increased 2.9 percent last week and was 3 percent higher last week compared to the same week one year ago, according to MBA. Meanwhile, applications for refinancings, which make up 72.6 percent of total applications last week, decreased 0.7 percent compared to the previous week. Investor applications for mortgages have decreased slightly over the last few weeks, according to MBA. The share of applications for home purchases from investors during the month of March was at 5.7 percent, which is down from 6.1 percent in February. Meanwhile, purchase applications for second homes has held steady at 5.8 percent. Source: Mortgage Bankers Association

More Home Owners Take on House Projects Themselves

A new survey shows that the tighter economy has prompted more home owners to tackle do-it-yourself house projects — everything from “plumbing, painting, and home cleaning,” according to a new report from Bank of America. Home owners say they used to hire-out for such projects in the past. The survey found that 70 percent of home owners have taken on such improvement jobs to curb housing costs in the last year. The most common DIY house tasks: repairing leaky faucets, fixing loose wiring in a light, as well as doing yard work and gardening. "The mass affluent are taking more steps now than we saw just six months ago to improve their finances,” says Alok Prasad, Merrill Edge executive at Bank of America. “We're heartened to see so many in this group making additional strides, like cutting back on unnecessary purchases and taking on more DIY projects, to make those goals a reality. For most, starting the process is the hardest part, and this group has taken that first, crucial step." Generation Y members, those aged 18 to 34, were the most focused on cutting costs compared to other age groups, according to the survey. Fifty-one percent of that age group said they saved more money over the last year compared to 37 percent of 35- to 50-year-olds. One way they’ve done that is by focusing on more DIY home improvement projects. Eighty-four percent of the GenY age group surveyed said they took on home improvement projects themselves, compared to 77 percent of 35- to 50-year-olds. Source: “Taking on Home Projects to Save Money,” The New York Times (May 2, 2012) and Bank of America

Is Housing as Cheap as It'll Ever Get?

Home buyers who want a bargain may want to act now because the housing market is in the midst of a turnaround, economists say. Home prices have fallen and mortgage rates are hovering near record lows, pushing home affordability for the average family to record highs. Meanwhile, rents have been on the rise, making owning a home cheaper than renting in most areas of the country, according to recent surveys. But the housing deals aren’t expected to stick around much longer. An improving job market, a decrease in the number of home owners falling behind on their mortgage, and an anticipated improvement in access to mortgages is expected to help home prices start bouncing back by next year, economists say. Investors eyeing profits in rentals also have been snapping up bank-owned properties, which Clear Capital’s Alex Villacorte attributes as helping to lead to an increase in prices on foreclosed properties. This “could have a significant impact on the market overall in terms of providing a rising floor to home values,” Villacorte told CNNMoney. Some areas are already seeing prices rise. In Phoenix, housing prices have already increased 8.4 percent during the three months ending April 30, and Miami saw prices bump up 4.6 percent quarter over quarter, according to Clear Capital data. "Stuff I was selling six months ago for $60,000 to $80,000 is now $90,000 to $110,000," Tanya Marchiol, founder of Team Investments in Phoenix, told CNNMoney. Loan Rates, Demand Predictions Buyers may want to act more quickly because mortgage rates are expected to tick up slightly by the end of the year. The increase is being sparked by greater demand, says Doug Lebda, CEO of LendingTree. He predicts 30-year fixed-rate mortgages will inch up to 4.5 percent by the end of the year, which is still low, however, by historical standards. The Mortgage Bankers Association is also predicting a big leap in mortgage loans next year. For this year, MBA estimates that buyers will take out loans totaling about $415 billion, but by 2013 that number is expected to nearly double to $706 billion. Source: “Buying a Home Won't get Much Cheaper,” CNNMoney (May 3, 2012) and “Time To Trade The Lease For A Mortgage?” NPR (May 1, 2012)