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Thirty-Year Rate Remains at Record Low
July 15, 2010
The average rate for a 30-year fixed rate mortgage during the week ended July 15 matched the previous week's record low of 4.57%, according to Freddie Mac's Primary Mortgage Market Survey. "Fixed-rate mortgages continued to hover at 50-year lows," said Frank Nothaft, vice president and chief economist, Freddie Mac. That 30-year rate was down from 5.14% a year ago. The average rates for 15-year FRMs and one-year Treasury indexed adjustable-rate mortgages both fell slightly week-to-week, with the latter hitting a low not seen since Freddie began tracking it in 1984. The average rate for the 15-year FRM during the week ended July 15 was 4.06%, down from 4.07% a week ago and 4.63% a year ago. The average one-year Treasury ARM rate was 3.74%, down from 3.75% a week ago and 4.76% a year ago. The average rate for a five-year Treasury hybrid was 3.85%, up from the previous week's 3.75% but still down from 4.83% a year ago. Average points were 0.7 for all the aforementioned loan types during the week ended July 15.
Purchase Applications Hit Low Not Seen Since December 1996
July 14, 2010
The home purchase application component of the Mortgage Bankers Association's Market Composite Index reached its lowest point since December 1996 during the week ended July 9. The seasonally adjusted Purchase Index decreased 3.1% from one week earlier, while the unadjusted Purchase Index decreased 12.7% compared with the previous week and was 43% lower than Independence Day week one year ago. The MCI decreased 2.9% on a seasonally adjusted basis from one week earlier; the calculation includes an adjustment to account for the Independence Day holiday. On an unadjusted basis, the Index decreased 12.6% compared with the previous week. The Refinance Index decreased 2.9% during the time span. Even so, the refinance share of mortgage activity remained high at 78.7%, the same as the prior week. The adjustable-rate mortgage share of activity increased to 5.5% from 5.4%. The average contract interest rate for the 30-year fixed rate mortgage increased by a single basis point to 4.69% from 4.68% for the preceding week with points increasing to 0.96 from 0.86 (including the origination fee) for loans with an 80% percent loan-to-value ratio, according to the association. The average contract interest rate for 15-year FRMs also rose by a single basis point during the week to 4.12%. The average contract interest rate for one-year ARMs was unchanged at 7.20%.
Study: Renters Still Want to Buy
July 13, 2010
A substantial percentage of consumers who are becoming new renters are actually still in the market to purchase a home, according to a survey conducted by Relocation.com. Sharon Asher, Relocation.com chairman, said the survey findings suggest that more Americans are getting ready to reenter the housing market this year. Of the 60% of individuals moving into rental properties, 24% are previous homeowners who are renting temporarily while looking for a new, more desirable home to buy. Foreclosure was not the reason these former homeowners elected to rent. The survey found that the number of people who moved due to foreclosure dropped by 70%. In addition, one-third of those moving stayed in the area they were familiar with, where they knew schools, shopping and prime neighborhoods.
Somewhat Positive News on Home Prices
July 13, 2010
U.S. home prices rose 0.9% in May after a 1.3% monthly increase in April, according to the CoreLogic housing price index. The CoreLogic HPI, which is not seasonally adjusted and includes distressed sales, is up 2.9% since May 2009. Excluding distressed sales, the year-over-year price increase for May was 0.9%. "Home price appreciation stabilized as homebuyer tax credit driven sales peaked in late spring," said Mark Fleming, chief economist for CoreLogic. "But given that the labor market and income growth remain tepid, we expect prices to moderate and possibly decline the rest of the year," he said. The top five states with the highest price appreciation in May, including distressed sales, were: California (7.9%), Virginia (6.8%), Massachusetts (5.7%), Rhode Island (5.5%) and Vermont (5.1%). The top five states with the greatest price depreciation in May, including distressed sales, were: Idaho (-6.6%), Alabama (-5.3%), New Mexico (-4.2%), Maryland (-3.1%) and Wyoming (-3.1%).
South Florida Home Repossessions Could Set Record
July 13, 2010
Lenders took back an average of 4,000 properties per month during the first half of 2010 in the tri-county South Florida market, a pace that, if it continues, could see nearly 50,000 properties repossessed by year's end, according to a new report from consulting firm CondoVentures. Miami-Dade registered a 125% increase in repos during the period, while Palm Beach saw the number of take-backs rise 112%, the Bal Harbor-based firm reported. Repos in Broward were up "only" 42%, according to the report, which is based on court records. Foreclosures filings were down for the six-month period, but if the current rate of repossessions continues, it could set a modern-day record for the beleaguered South Florida market. Lenders took control of 30,400 units in 2009, the previous record year. In 2008, they took back 26,250 units, and in 2007, they repoed just 10,100. "South Florida's real estate market is at a crossroads," said consultant Peter Zalweski. "The number of bank repossessions in 2010 is higher than at any time in the last two decades." If there is a bright side, the number of foreclosure filings is down 34% in the first half. If that pace holds, it will mean that filings in 2010 will drop from 97,000 last year to not quite 70,000 this year. Meanwhile, for the fifth week in the last six, the number of resale houses on the market in the tri-county area has increased, moving the total overall inventory to more than 67,000 properties, according to data from the Florida Association of Realtors. The resale inventory has been growing by nearly 300 units a week since May 31.
OC Distressed Inventory Highest Since May 2009
July 12, 2010
The inventory of homes in foreclosure and short sales that are on the market in Orange County, Calif., has grown by 29% so far this year, according to Altera Real Estate. In its biweekly report on the Orange County housing market, the company notes, "The active distressed inventory has increased from 2,555 homes at the beginning of the year to 3,307, levels not seen since May of 2009." In Orange County, one of the hardest real estate markets in Southern California, the distressed homes inventory represents 31% of the current active inventory. Last year at this time, there were 2,766 distressed homes on the market, 541 fewer than today. The number of foreclosures within the active listing inventory increased by 19 homes in the past two weeks from 559 to 578. But the expected market time for foreclosures is 1.73 months, Altera says, which indicates a hot seller's market.
Wells Top Ranked FHA Funder in the First Quarter
July 9, 2010
Wells Fargo & Co. originated $20.8 billion of FHA-backed mortgages in the first quarter, ranking first nationwide, according to new survey figures compiled by National Mortgage News. Bank of America ranked second with $16 billion. However, B of A's volume is an estimate made by NMN. (The firm declined to provide a figure even though it is one of the largest GNMA issuers in the nation.) Chase ranked third with $2.25 billion in FHA production with Franklin American Mortgage of Tennessee, a close fourth with $2.23 billion. In the first quarter, FHA production fell 18% compared to the same period a year ago. FHA/VA lending continues to account for about 25% to 30% of all loans produced in the U.S.
Canada's Housing Starts Rise Month-to-Month
July 9, 2010
The seasonally adjusted annual rate of Canadian housing starts registered a 3.7% increase to 189,300 in June from upwardly revised May numbers, according to Canada Mortgage and Housing Corp. According to a report by CMHC chief economist Bob Dugan, the increase was largely due to an increase in Ontario's multifamily starts. Single-family starts remained largely unchanged throughout the country. While in recent months the total number of single-family and multifamily starts combined have seen increases that were larger than expected, Dugan forecasts a moderation in starts going forward that will leave them at 182,000 units by yearend. Bill Clark, senior economist at CMHC, told National Mortgage News that forecast for moderation is based on expectations that the Canadian economy will continue to strengthen and the Bank of Canada will continue to raise rates in response, making home loans less affordable as time goes on.
CoreLogic: 1Q Foreclosure Run-Rate at 1.23 Million Units
July 9, 2010
Residential foreclosures could top 1.23 million units this year, according to figures compiled by CoreLogic, Los Altos, Calif. In the first quarter 309,194 homes went into foreclosure, the company found, a 17% jump from the same period last year. In 2009 1.16 million homes went into foreclosure, a record. Meanwhile, figures CoreLogic calculated for The New York Times suggest that more than one in seven homeowners with loans in excess of a million dollars is seriously delinquent. The newspaper reported, "Though it is hard to prove, the CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment." A CoreLogic senior economist noted, "The rich are different: they are more ruthless."
Average Fannie/Freddie Guarantee Fee Fell Last Year
July 9, 2010
The guarantee fee that Fannie Mae and Freddie Mac charge to their seller/servicers fell to 22 basis points last year from 25 the year before, according to a new study conducted by the Federal Housing Finance Agency. Lower "g-fees" translate into improved earnings for lenders that sell to the two government-controlled mortgage investing giants. In years past—before the mortgage market cratered—some of the top volume sellers to Fannie and Freddie received huge g-fee discounts in exchange for upstreaming most of their originations to one GSE or the other. Countrywide Financial Corp., for instance, was rumored to have a g-fee agreement with Fannie Mae for as little as 14 basis points. In its report, the FHFA says the reduction in g-fees last year "resulted from significant improvement in the credit profile of the single-family mortgages they acquired relative to 2008." A recent profitability study conducted by the Mortgage Bankers Association found that the average residential lender had pretax income of $4.9 million last year compared to just under $1 million in 2008.
