Freddie Mac Weekly Mortgage Update: Rates Inch Downward to Another New Low

30-year fixed-rate mortgage: Averaged 4.54 percent with an average 0.7 point for the week ending July 29, 2010, down from last week when it averaged 4.56 percent. Last year at this time, the 30-year FRM averaged 5.25 percent.

The 15-year fixed-rate mortgage: Averaged a record low of 4.00 percent with an average 0.7 point , down from last week when it averaged 4.03 percent. A year ago at this time, the 15-year FRM averaged 4.69 percent.

Five-year indexed hybrid adjustable-rate mortgages ARMs: Averaged 3.76 percent this week, with an average 0.7 point, down from last week when it averaged 3.79 percent. A year ago, the 5-year ARM averaged 4.75 percent.

One-year Treasury-indexed ARMs: Averaged 3.64 percent this week with an average 0.7 point, down from last week when it averaged 3.70 percent. At this time last year, the 1-year ARM averaged 4.80 percent

Freddie Sayz
For the sixth week in a row, interest rates on fixed rate mortgages eased to all time record lows during a week of mixed housing data reports. The number of local markets experiencing annual increases in home prices appears to be growing. For instance, 13 metropolitan areas in the S&;P Case-Shiller 20 city index experienced price appreciation over the 12-months ending in May, compared to 11 in April and 10 in March.
However, existing home sales in June slowed to an annualized pace of 4.37 million units, the fewest since March. Moreover, although new home sales jumped by almost 24 percent to 330,000 dwellings, it represented the second slowest rate since 1963


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Mortgage Bankers Weekly Update: Mortgage Applications Decrease

Mortgage Bankers Association for the week of  07/28/2010

Market Composite Index: (loan application volume) decreased 4.4 percent on a seasonally adjusted basis from one week earlier

Refinance Index:  decreased 5.9 percent from the previous week.

Purchase Index: increased 2.0 percent from one week earlier and is the highest Purchase Index observed in the survey since the end of June
 
Refinance Share of Mortgage Activity: decreased to 78.0 percent of total applications from 79.4 percent the previous week.
Arm Share: i ncreased to 5.7 percent from 5.2 percent of total applications from the previous week.

MBA outlook: (Excerpted from mbaa.org)

Federal Reserve policymakers have been increasingly clear that they will keep their target rate at exceptionally low levels for an extended period.  They have also made no moves to this point in terms of asset sales from their trillion dollar portfolio of mortgage backed securities.  Fannie Mae and Freddie Macs large buyouts of delinquent loans from MBS have substantially been completed by this point, so there are no longer large-scale purchases of MBS by unconventional buyers artificially constraining mortgage rates .
Purchase application data from MBAs Weekly Application Survey show no rebound in activity to date, with apps remaining at 13 year lows (15-year lows for conventional purchase mortgages).  As the pending home sales and housing starts numbers showed, this drop in applications clearly predicts similar sized drops in home sales over the next couple of months.

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Real Estate Markets: Whats The Catalyst

The number of homeowners missing their first payment on their mortgage declined  from May to June and number of loans in foreclosure was flat at nearly 2 million.

Delinquencies and Foreclosures remain stable but elevated with two loans deteriorating for every one that has improved. 

So Whats The Catalyst

It's all about jobs and income growth and until that happens there's nothing that's going to push sales. As sales have slowed, the supply  of unsold homes on the market has risen 2.5 percent to nearly 4 million. That's a nearly nine-month supply at the current sales pace, the highest level since August. It compares with a healthy level of about six months.

Sales are likely to keep falling for three to four months, said Lawrence Yun, the Realtors' chief economist. That would likely boost the supply of unsold homes to more than 10 months for the first time since the spring of 2009. And it could push down home prices.  

NARs Future Forcast

Bread Crumbs

Through May of this year 495,000 net private sector jobs have been created; NAR’s forecast for employment growth is about 1 million additional net new jobs over the balance of the year and another 2 million in 2011. If jobs come back as expected, the pace of home sales should pick up later this year and reach a sustainable level of activity given very favorable affordability conditions

Rae Rosen, a regional economist at the Federal Reserve Bank of New York said Wall Street typically hires in anticipation of the recovery, and there is a sense that the economy has bottomed out and is slowly improving

But NAR doesnt expect a sharp snap back in home prices in the upcoming years, although some local markets have experienced double-digit gains this year. NAR forecasts the national median home price to rise only 4 percent cumulatively over the next two years. 

The number of homeowners missing their first payment on their mortgage

 ticked down slightly from May to June, but the total number of loans in some stage of the foreclosure process remained essentially flat at nearly 2 million, according to statistics collected by Lender Processing Services.

Delinquencies and Foreclosures remain stable but elevated with two loans deteriorating for every one that has improved. 

So Whats The Catalyst

It's all about jobs and income growth and until that happens there's nothing that's going to push sales. As sales have slowed, the supply  of unsold homes on the market has risen 2.5 percent to nearly 4 million. That's a nearly nine-month supply at the current sales pace, the highest level since August. It compares with a healthy level of about six months.

Sales are likely to keep falling for three to four months, said Lawrence Yun, the Realtors' chief economist. That would likely boost the supply of unsold homes to more than 10 months for the first time since the spring of 2009. And it could push down home prices.  

NARs Future Forcast

Bread Crumbs

Through May of this year 495,000 net private sector jobs have been created; NAR’s forecast for employment growth is about 1 million additional net new jobs over the balance of the year and another 2 million in 2011. If jobs come back as expected, the pace of home sales should pick up later this year and reach a sustainable level of activity given very favorable affordability conditions

Rae Rosen, a regional economist at the Federal Reserve Bank of New York said Wall Street typically hires in anticipation of the recovery, and there is a sense that the economy has bottomed out and is slowly improving

But NAR doesnt expect a sharp snap back in home prices in the upcoming years, although some local markets have experienced double-digit gains this year. NAR forecasts the national median home price to rise only 4 percent cumulatively over the next two years. 

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Mortgage Bankers Weekly Update: Mortgage Applications Increase

Mortgage Bankers Association for the week of  07/07/2010

Market Composite Index: (loan application volume) increased 6.7 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 6.5 percent compared with the previous week.
Refinance Index: increased 9.2 percent from the previous week and is the highest Refinance Index observed in the survey since the week ending May 15, 2009
Purchase Index: has decreased eight of the last nine weeks
Refinance Share of Mortgage Activity:  increased to 78.7 percent of total applications from 76.8 percent the previous week, which is the highest refinance share observed in the survey since April 2009.
Arm Share: increased to 5.4 percent from 4.7 percent of total applications from the previous week.

MBA outlook: (Excerpted from mbaa.org)

Mortgage rates remained near record lows last week, as incoming data on the job and housing markets were weaker than anticipated.  As more homeowners locked in to these low rates, the level of refinance applications increased to a new 13-month high, said Michael Fratantoni, MBA’s Vice President of Research and Economics.  For the month of June, purchase applications declined almost 15% relative to the prior month, and were down more than 30%  compared to April, the last month in which buyers were eligible for the tax credit.

We predict that mortgage originations will fall to $1.4 trillion in 2010 from an estimated $2.1 trillion in 2009.  Purchase originations will fall slightly to $725 billion, as home prices continue to fall and the effect from the homebuyer tax credits wane.  Refinance originations will fall to $717 billion in 2010 from $1.4 trillion in 2009, but we continue to mark up our refinance origination forecast given the sharp drop in mortgage rates.
 
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Freddie Mac Weekly Mortgage Update: Mortgage Drops Slightly to Create Another New Low

30-year fixed-rate mortgage: Averaged 4.57 percent with an average 0.7 point for the week ending July 8, 2010, down from last week when it averaged 4.58 percent. Last year at this time, the 30-year FRM averaged 5.20 percent. This rate is yet another all-time low in Freddie Mac’s 39-year survey.

The 15-year fixed-rate mortgage: Averaged 4.07 percent with an average 0.7 point , up from last week when it averaged 4.04 percent. A year ago at this time, the 15-year FRM averaged 4.69 percent.

Five-year indexed hybrid adjustable-rate mortgages ARMs: Averaged 3.75 percent this week, with an average 0.7 point, down from last week when it averaged 3.79 percent. A year ago, the 5-year ARM averaged 4.82 percent. This rate is also an all-time low since Freddie Mac began tracking it in 2005.

One-year Treasury-indexed ARMs: Averaged 3.75 percent this week with an average 0.7 point, down from last week when it averaged 3.80 percent. At this time last year, the 1-year ARM averaged 4.82 percent.

Freddie Sayz

With mortgage rates falling to historic lows, refinance activity has been strong over the past three months,  said Frank Nothaft, Freddie Mac vice president and chief economist. “The Bureau of Economic Analysis reported that the effective mortgage rate of all loans outstanding was just below six percent in the first quarter of 2010, the lowest since the series began in 1977. Since the start of the second quarter, two out of three mortgage applications on average were for refinancing, according the Mortgage Bankers Association . Household balance sheets also improved in other ways over the first three months of the year. The Federal Reserve reported household net worth rose by almost $1.1 trillion in the first quarter of 2010. The share of credit card loans that were 30-days or more past due fell to the lowest since first quarter of 2002, according to the American Bankers Association . Finally, the aggregate household debt burdens were at a level not seen since the third quarter of 2000.
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Federal HomeBuyers Tax Credit Extensions

The U.S. House has passed a bill giving home buyers an extra three months to complete their purchases and still qualify for a generous tax credit.The Senate is working to reach an agreement with Republicans to pass the House-passed homebuyer tax credit closing date extension early as today.

Although the case shiller index  came in suggesting a fragile recovery is waning, it didnt include the sales figures representing market behavior after the end of the homebuyers tax credit. It got worse. Home sales fell more than 30% since the expectation of the end of the homebuyers tax credit. No doubt this didnt go unnoticed in Congress.

Its clear that the Case Shiller numbers indicated a real estate market that was having trouble holding ground in the face of the end Govt support of real estate markets, that the stimulus was necessary and effective.

The 20-city index

15 out of 20 cities showed month over month declines, though the overall index increased 0.3, showing a 5% comeback in April 09. When the Obama Administration said it would pull support on housing markets, it did caution us that if necessary, they would return.

Real estate markets suffer from serious supply and demand problems. The foreclosure and the shadow market present a huge inventory overhang. And 30% decline screams loudly that we still need support. If the stimulus program gave us a market that moved and soaked up inventory, then its pretty clear that that normal market forces are still not able to float this boat.The pending stimulus extension wont cure the markets ills, but it created sales and that will go a long way towards preventing a double dip.

There are those who are opposed to market supports. That are afraid we are moving more and more towards a managed economy and want the chips to fall where they may. Thats the American way. Others argue that the markets or Capitalism was not the issue, its just that financial engineering and technology got ahead of the regulators and that all we need to do is regulate better. Personally, all that matters is that we dont look that rabbit hole in the face again. Let the chips fall where they may smacks of chaos and regulation may be necessary, but its slow and we all know its the regulators that influence and create the rules anyway. And so to my mind. if all it takes is $8000  a pop, to soak up supply and get out of this morass, one house at a time...then so be it. Pass that bill!

REsourced from www.yourpropertypath.com
You may republish this article, as long as you do not edit and you agree to preserve all links to the author and www.yourpropertypath.com 

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Freddie Mac Weekly Mortgage Update: All Rates But 1-Year ARM Hit Record Lows

30-year fixed-rate mortgage: Averaged 4.58 percent with an average 0.7 point for the week ending July 1, 2010, down from last week when it averaged 4.69 percent. Last year at this time, the 30-year FRM averaged 5.32 percent.

The 15-year fixed-rate mortgage: Averaged 4.04 percent with an average 0.7 point, down from last week when it averaged 4.13 percent. A year ago at this time, the 15-year FRM averaged 4.77 percent.

Five-year indexed hybrid adjustable-rate mortgages ARMs: Averaged 3.79 percent this week, with an average 0.7 point, down from last week when it averaged 3.84 percent. A year ago, the 5-year ARM averaged 4.88 percent.

One-year Treasury-indexed ARMs: Average 0.7 point, up from last week when it averaged 3.77 percent. At this time last year, the 1-year ARM averaged 4.94 percent.

Freddie Sayz

Interest rates on fixed rate mortgages and the 5 year hybrid ARM fell once again to all time record lows this week in a period where the economy struggles to gain momentum and inflation remains very low, said Frank Nothaft, Freddie Mac vice president and chief economist. Growth estimates for first quarter GDP were revised down by a half percentage point over the past two months to 2.7 percent, according to the Bureau of Economic Analysis . Annual inflation, as measured by the 12 month change in the core CPI, held at 0.9 percent in April and May, which is the slowest pace in over 44 years, as reported by the Bureau of Labor Statistics .

Meanwhile, house prices are improving due in part to the homebuyer tax credit. The S&P/Case-Shiller® 20-city home price index grew 0.4 percent between March and April and was up 3.9 percent from April 2009, representing the largest annual gain since October 2006. Moreover, 17 of the metropolitan areas experienced monthly gains in April, compared to 10 in March and six in February 


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Mortgage Bankers Weekly Update: Mortgage Applications Decrease

Mortgage Bankers Association for the week of  6/30/2010

Market Composite Index: (loan application volume)   increased 8.8 percent on a seasonally adjusted basis from one week earlier.

Refinance Index: increased 12.6 percent from the previous week and is the highest Refinance Index observed in the survey since the week ending May 22, 2009.

Purchase Index: decreased 3.3 percent from one week earlier.

Refinance Share of Mortgage Activity: increased to 76.8 percent of total applications from 73.8 percent the previous week, which is the highest refinance share observed in the survey since April 2009.

Arm Share: decreased to 4.7 percent from 4.9 percent of total applications from the previous week.

MBA outlook: (Excerpted from mbaa.org)

We predict that mortgage originations will fall to $1.4 trillion in 2010 from an estimated $2.1 trillion in 2009.  Purchase originations will fall slightly to $725 billion, as home prices continue to fall and the effect from the homebuyer tax credits wane.  Refinance originations will fall to $717 billion in 2010 from $1.4 trillion in 2009, but we continue to mark up our refinance origination forecast given the sharp drop in mortgage rates.
  
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Federal HomeBuyers Tax Credit Extensions

The U.S. House has passed a bill giving home buyers an extra three months to complete their purchases and still qualify for a generous tax credit.The Senate is working to reach an agreement with Republicans to pass the House-passed homebuyer tax credit closing date extension early as today.

Although the case shiller index  came in suggesting a fragile recovery is waning, it didnt include the sales figures representing market behavior after the end of the homebuyers tax credit. It got worse. Home sales fell more than 30% since the expectation of the end of the homebuyers tax credit. No doubt this didnt go unnoticed in Congress.

Its clear that the Case Shiller numbers indicated a real estate market that was having trouble holding ground in the face of the end Govt support of real estate markets, that the stimulus was necessary and effective.

The 20-city index

15 out of 20 cities showed month over month declines, though the overall index increased 0.3, showing a 5% comeback in April 09. When the Obama Administration said it would pull support on housing markets, it did caution us that if necessary, they would return.

Real estate markets suffer from serious supply and demand problems. The foreclosure and the shadow market present a huge inventory overhang. And 30% decline screams loudly that we still need support. If the stimulus program gave us a market that moved and soaked up inventory, then its pretty clear that that normal market forces are still not able to float this boat.The pending stimulus extension wont cure the markets ills, but it created sales and that will go a long way towards preventing a double dip.

There are those who are opposed to market supports. That are afraid we are moving more and more towards a managed economy and want the chips to fall where they may. Thats the American way. Others argue that the markets or Capitalism was not the issue, its just that financial engineering and technology got ahead of the regulators and that all we need to do is regulate better. Personally, all that matters is that we dont look that rabbit hole in the face again. Let the chips fall where they may smacks of chaos and regulation may be necessary, but its slow and we all know its the regulators that influence and create the rules anyway. And so to my mind. if all it takes is $8000  a pop, to soak up supply and get out of this morass, one house at a time...then so be it. Pass that bill!

REsourced from www.yourpropertypath.com
You may republish this article, as long as you do not edit and you agree to preserve all links to the author and www.yourpropertypath.com 

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