Mortgage Bankers Association for the week of 11/25/2009
Market Composite Index:(loan application volume) decreased 4.5 percent on a seasonally adjusted basis from one week earlier.
Refinance Index:decreased 9.5 percent from the previous week Purchase Index:increased 9.6 percent from one week earlier.
Refinance Share of Mortgage Activity:decreased to 71.7 percent of total applications from 74.6 percent the previous week. increased to 5.3 percent from 5.1 percent of total applications from the previous week. ARM Refinance Activity:decreased to 5.4 percent from 5.5 percent of total applications from the previous week. MBA outlook: (Excerpted from mbaa.org)
In summary the MBAA sees another year of high employment, rising home sales and prices beginning to stabilize. But continued weakness in the job market and excess supply and shadow inventory will slow any recovery in the housing market.
The Federal Reserve will extend their agency MBS purchase program through the end of the first quarter of 2010. However, Fed and Treasury purchases have accounted for the vast majority of all new issuance in this sector in recent months, and rates will increase when the Fed steps out of the market completely.
30-year fixed-rate mortgage: Averaged 4.78 percent with an average 0.7 point for the week ending November 25, 2009, down from last week when it averaged 4.83 percent. Last year at this time, the 30-year FRM averaged 5.97 percent. The 30-year has not been this low since the week ending April 30, 2009, when it averaged 4.78 percent.
The 15-year fixed-rate mortgage: Averaged 4.29 percent with an average 0.6 point, down from last week when it averaged 4.32 percent. A year ago at this time, the 15-year FRM averaged 5.74 percent. The 15-year FRM has never been this low since Freddie Mac started tracking it in 1991.
Five-year indexed hybrid adjustable-rate mortgages ARMs: Averaged 4.18 percent this week, with an average 0.6 point, down from last week when it averaged 4.25 percent . A year ago, the 5-year ARM averaged 5.86 percent. The 5-year ARM has never been this low since Freddie Mac started tracking it in 2005.
One-year Treasury-indexed ARMs: Average 0.7 point, unchanged from last week when it averaged 4.35 percent. At this time last year, the 1-year ARM averaged 5.18 percent . The 1-year ARM has not been this low since the week ending July 7, 2005, when it averaged 4.33 percent
Freddie Sayz
Long term mortgage rates eased for the fourth consecutive week to record levels, said Frank Nothaft, Freddie Mac vice president and chief economist. Interest rates for 30 year fixed mortgage loans tied an all-time record low while both 15-year fixed mortgages and 5-year ARMs broke their corresponding records. Interest rates for 30-year fixed-rate loans are currently 0.8 percentage points below this years peak set in mid June, which shaves roughly $100 off the monthly payments on a $200,000 mortgage. House prices are slowly beginning to firm now.
For instance, annual house price declines slowed for the sixth consecutive month in September, down only 3 percent, and represented the smallest decline since February 2008, according the Federal Housing Finance Agency's purchase-only house price index. [PDF] Moreover, 11 of the 20 major metropolitan areas experienced monthly house price increases between August and September, based on the S&P/Case-Shiller® 20-city house price indexes
Mortgage Bankers Association for the week of November 18, 2009
Market Composite Index: (loan application volume) decreased 2.5 percent on a seasonally adjusted basis from one week earlier. . Refinance Index: decreased 1.4 percent from the previous week
Purchase Index: decreased 7.9 percent compared with the previous week and was 14.7 percent lower than the same week one year ago.
Refinance Share of Mortgage Activity: increased to 72.9 percent of total applications from 71.5 percent the previous week. This refinance share is the highest share since the week ending May 15, 2009
ARM Refinance Activity: decreased to 5.4 percent from 5.5 percent of total applications from the previous week.
MBA outlook: (Excerpted from mbaa.org) The delinquency rate for mortgage loans on one-to-four-unit residential properties rose to a seasonally adjusted rate of 9.64 percent of all loans outstanding as of the end of the third quarter of 2009. Its job loss that is now hurting people. Job losses continue to increase and drive up delinquencies and foreclosures because mortgages are paid with paychecks, not percentage point increases in GDP. A perfect observation by Jay Brinkmann, MBAs Chief Economist.
According to the MBAA.org site: T he outlook is that delinquency rates and foreclosure rates will continue to worsen before they improve. First, it is unlikely the employment picture will get better until sometime next year and even then jobs will increase at a very slow pace. Perhaps more importantly, there is no reason to expect that when the economy begins to add more jobs, those jobs will be in areas with the biggest excess housing inventory and the highest delinquency rates.
30-year fixed-rate mortgage: Averaged 4.83 percent with an average 0.7 point for the week ending November 19, 2009, down from last week when it averaged 4.91 percent. Last year at this time, the 30-year FRM averaged 6.04 percent.
The 15-year fixed-rate mortgage: Averaged 4.32 percent with an average 0.6 point, down from last week when it averaged 4.36 percent. A year ago at this time, the 15-year FRM averaged 5.73 percent.
Five-year indexed hybrid adjustable-rate mortgages ARMs: Averaged 4.25 percent this week, with an average 0.6 point, down from last week when it averaged 4.29 percent. A year ago, the 5-year ARM averaged 5.87 percent.
One-year Treasury-indexed ARMs: Averaged 4.35 percent this week with an average 0.6 point, down from last week when it averaged 4.46 percent. At this time last year, the 1-year ARM averaged 5.29 percent.
Freddie Sayz
Interest rate on 30 year fixed-rate mortgage loans fell for the third consecutive week to the lowest since the week ending May 21st, while 15 year fixed rates were the lowest since our records began in 1991, said Frank Nothaft, Freddie Mac vice president and chief economist. Low fixed rates throughout the third quarter prompted an estimated $1.1 trillion in refinancing activity, saving homeowners about $10 billion in aggregate monthly payments over the first 12 months of their new loan.
Moreover, for the fourth consecutive quarter, more than 95 percent of prime borrowers who originally had an ARM selected a conventional fixed rate mortgage in the third quarter of this year. Meanwhile, new home building showed some weakness in recent months. Residential construction eased 10.6 percent (annualized) between September and October, largely driven by a 33.3 percent decline in new condominium and apartment buildings and represented the slowest pace since records began in 1959. And homebuilder confidence in November remained a relatively low level, according to the National Association of Home Builders
There was so much interest in this new Fannie program that I dug a little deeper and wanted to share some of this. The problem is that many renters who pay rent on time are finding themselves under eviction, because their landlord has lost his property. Its made victims of well intentioned people who played by the rules. The magnitude of the problem is really quite sad.
More than 20% of the properties facing foreclosure nationwide are rentals. The Mortgage Bankers Association thinks as many as 20% of all foreclosed homes are not owner occupied. Many speculators did not have the deep pockets and couldnt hang on. The result is really a national tragedy.
Fannie Maes National REO Rental Policy
Now a National Landlord
Here are some of the highlights
1. The new policy applies only to renters occupying the home at the time of foreclosure or deed in lieu of foreclosure
2. You are the property's primary occupant, and it isnt an investment property.
3. You can't be in bankruptcy.
4. The rent cannot exceed 31% of your monthly gross income.
5. Family detached homes, and manufactured housing, where the homeowners associations (HOAs) do not prohibit rentals. The policy applies to all renter-occupied single-family Fannie Mae REO
6. Renters will be charged market rate rent under the new lease
7. No security deposit will be required
8. The occupant agrees to be responsible for regular maintenance, to keep the property in good condition, and to permit marketing of the property for sale.
9. Fannie Mae reserves the right to market the property while a tenant is occupying the property. The property may be sold to an investor subject to the lease.
So, Fannie Mae will allow renters to stay for one year with the possibility of month to month extensions. Fannie gets some needed rental income, the real estate community hopes to see some price stabilization in the market place. Fannie clearly hopes that one year down the banks and housing markets will be viable and prices higher. This is a good program, it will be interesting to see whether the private markets will institute similar programs and begin to tighten the supply flow and help homes recover.
What Do They Do FHA loan options make it easier to qualify for a home mortgage. Your loan is guaranteed by the government, making your application more attractive to lenders.
The FHA mortgage requires a low 3.5% down payment, and that money can come from a variety of sources including HUD down payment assistance grants. Typical closing costs for FHA home loans are around 2% or 3% of the total mortgage.
Loan Loss is Below Govt Mandate Its capital reserves have fallen below the threshold mandated by Congress. The FHA has no recourse but to find ways to reduce their portfolio risk. Generally, when an investment portfolio needs to lower its risk profile, it means that requirements will tighten and costs will rise until the risk profile is better balanced.
What it Means To You Harder to Qualify
The FHA is considering a variety of changes like requiring larger down payments for FHA insured mortgages, demanding higher credit scores and raising mortgage premiums. The FHA has taken on an enormous role in the marketplace. It dominates the new mortgage business. The FHA is one of the tools the Obama administration is using to take up the vacuum left by the banks. Generally, they are not lenders of such magnitude. In the second quarter, nearly 50% of all first-time buyers in the market used a loan insured by the FHA (via cbsmarketwatch.com).
Normally, a low risk lender because FHA home loans have income requirements, maximum loan amounts and most loans are 30 year fully amortizing fixed-rate mortgages. But the FHA has had its neck out since the housing crises began. They like many other Govt institutions are filling the gap left by private lenders. And will continue to do so until the market normalizes, but it clearly is taking a toll.
This same story has been playing our for quite a while now. The trend towards lower prices will probably continue even as the recession winds down. Continuing job loss, a weak recovery and real problems in all real estate sectors, now focused on commercial property and Alt A high end homes, should keep a lid on prices. That said people are beginning to feel good again, or at least less wary. They are stepping out and buying homes and that is a good good sign.
Existing-Home Sales Surge While Price Moderate
Most states saw rising existing-home sales in the third quarter, with price declines in many metro areas, according to the latest survey by the National Association of Realtors. NAR reports that total state existing-home sales of single-family and condos, increased 11.4 percent and are now 5.9 percent higher than the third quarter of 2008. Sales increased in 45 states and 28 states saw double-digit gains. Year over year sales were higher in 32 states and D.C. Buyers are coming back and in some parts of California we are seeing multiple bids and homes selling for more than list.
During the third quarter, 123 out of 153 metropolitan statistical areas, 2 reported lower median existing single-family home prices while 30 areas had price gains NAR chief economist,Lawrence Yun spoke of the the tax credit. The NAR cheif economist goes on to say: We cant underestimate just how powerful a catalyst the first-time home buyer tax credit has been for the housing sector. Its given buyers the confidence they needed to get off the fence and take advantage of extremely affordable housing conditions. The buying conditions this year are the most favorable on record dating back to 1970, but the tax credit is allowing buyers to set aside any reservations about waiting for a better deal. (via cbsmarketwatch.com)
The decline in the national median price has moderated recently, and a shrinking supply of unsold inventory suggests we are getting closer to price stabilization in many areas, but we need a steady stream of financially qualified buyers to further reduce inventory and get us to a self-sustaining market, Yun said. (via cbsmarketwatch.com)
Soaking up supply Foreclosures will continue to come on the market, but rising sales from the expanded tax credit should stabilize home prices by next spring and help to stem future foreclosures. To be sure the numbers are mixed and some areas are experiencing reversals, but over all we are beginning to pull ourselves up out of this slump. As long as we continue to see a Fed willing to support the markets until they are strong enough to stand on their own, we should be able top avoid a double dip. Encouraging was to hear the G20 come out with a continuation of supports. This recovery is still in the hands of policy makers.
Obama Extends the Home Buyers Tax Credit The home buyers' tax credit has been extended to April 30, 2010. Obama approved the extension as part of a $24 billion economic stimulus bill.
The housing tax credit Qualifiers
The measure limits the purchase price of the home to $800,000.
It also imposes income caps so that people who make more than $125,000 annually and couples who make more than $225,000 would not be eligible for a refund.
Anyone who collects the tax credit but sells their home within three years of buying it must return the refund.
Current homeowners who are buying a new primary residence would be eligible for a $6,500 tax credit starting Dec. 1 if they owned their home for five consecutive years in the previous eight.
Military families who have been deployed overseas for 90 days or more in 2008 or 2009, would have until April 30, 2011 to sign a contract.
The program is estimated at $11 billion
Double Bubble Trouble
Dr Shiller, co-developer of the Case Shiller home price index and Yale economist points out that the price recovery of the last few months is the sharpest snap back he has ever seen. he is concerned that that in supporting a real estate recovery we may again be fueling a bubble.
NAR reports that total state existing-home sales of single-family and condos, increased 11.4 percent and are now 5.9 percent higher than the third quarter of 2008. Sales increased in 45 states and 28 states saw double-digit gains. Year over year sales were higher in 32 states and D.C. Buyers are coming back and in some parts of California we are seeing multiple bids and homes selling for more than list.
Some homeowners will get an option to rent the home that they just lost. Its possible to stay in your home as a renter. Fannie Mae will give borrowers facing foreclosure an option to rent their homes for a year. Foreclosed home owners will be able to sign a one year lease, with possible month to month extensions with Fannie Mae. Good for everybody.
Homeowners get a little relief and are able to remain in their homes for a year or more. This will buy them the time they need to regroup. It will also help keep neighborhoods from going missing. Rather than rows of abandoned homes with all the crime and destruction that vandals create.. Neighbors that have not lost their homes will not see more equity loss as squatters and criminals move into vacant homes. The banks are reluctant landlords and they are allowing property to decline.
It will keep supply off the market for at least another year and that is good for all the handlers, Fanne Mae because it can put off the expense of a foreclosure, the banks because less supply will protect equity in homes they are off loading and everyone one because it will help stabilize home prices. I dont think we can have a strong recovery without real estate.
To qualify, homeowners have to live in the home as the primary residence and prove that they can afford the market rent, which will be established by the management company running the program. In many cases, rents will be less than the mortgage because properties that are now worth far less than they originally paid.
The downside is seems to be that homes that might normally have been foreclosed and sold will now remain owned by taxpayers. Homes, according to Dr Shiller have risen faster in the last few months than he has ever seen. Perhaps Fannie will profit a little while doing a good thing for families that must be a little traumatized by it all. And even if prices don't rebound quickly. Fannie Mae gets rental income, avoids foreclosure expenses gets to helps people.
The housing industry hasnt developed a reliable way of breaking down green versus conventional homes sales figures. But its clearly a hot button issue and will even become more important, perhaps mandatory, as we begin to seriously deal with global warming.
What Others are Saying....
Developers Those builders are seeing that they'll get more buyers coming to their developments when they have solar. They sell like hot cakes, Bernadette del Chiaro, an energy specialist at the advocacy group Environment California, told the Los Angeles Times. The Times also quoted Julie Blumden, a vice president at San Jose-based solar tile maker SunPower Corp., as pointing out that the increase in sales velocity is actually paying for the solar systems. (LA Times via the Daily Gre
NAR
According to a recent NAR survey, 90 percent of recent home buyers thought energy efficiency was a very important consideration when searching for a home, and the demand for green buildings and environmentally sensitive home features is growing.
Ris Media
Way back in 2007, Ris Media reported that the market for true green homes is expected to rise from $2 billion to up to $20 billion over the next five years. Green homeowners are happy with their homes because they are concerned about the health of their families, as well as energy savings and operating costs. Homeowners are buying green homes
National Association of Home Builders.
According to the National Association of Home Builders, the green homes market is expected to increase to 10 percent by 2010. The NAHB hits a new milestone this month, it just green certified its 500th home builder project.
Green Tools You Can Use
Appraisal
Congress may require all appraisers to consider energy efficient improvements in appraisals. Appraisal standards would be uniformly revised to include all energy efficient improvements, typically including double paned windows, extra insulation and solar hot water heaters.
EEM Mortgages
Buy more house. Fannie Mae, Freddie Mac, FHA, and VA all permit borrowers to qualify for larger mortgages using projected energy savings. Every home with retrofitted energy-efficient (EPA approved energy star rated) features is eligible.Green mortgage products may also include low down payments effectively increasing buying power. Generally lenders require a professional auditor to certify the energy efficient improvements before you can qualify for mortgage breaks.
Get Audited
A seller with a good energy audit is a plus. Sellers can call their local utility company for an energy audit. The audit includes the furnace, the water heater, and major appliances, windows, insulation and the heat seal in general. There is a small cost of about $100, but good results are a good marketing tool. A poor audit can be also be a good support tool for the selling agent. An independent third party recommendation to upgrade can be a powerful argument towards convincing sellers to invest in sale process. More on cost savings of green homes and how they boost equity
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
;)
;)
