20 May 10 Home Purchase Loan Applications Drop to 13 Year Low
Yesterday, the Mortgage Bankers Association released its Weekly Mortgage Applications Survey for the week ending May 14, 2010. The MBA’s Vice President of Research and Economics, Michael Fratantoni said: “Home loan applications fell 27% last week and have declined almost 20% over the past month, despite relatively low mortgage rates. The data suggests that the tax credit pulled sales into April at the expense of the remainder of the spring buying season. In fact, this decline occurred even as interest rates on thirty-year fixed-rate mortgage loans dropped to 4.83% which is the lowest level in the six months….However, homeowners seeking mortgage refinancing did respond to these lower interest rates, with refinance applications up almost 15%, hitting their highest level in nine weeks.”
The Mortgage Banker’s application survey covers over 50% of all US mortgage loan applications taken by mortgage bankers, commercial banks, and thrifts. The data gives economists a look into consumer demand for mortgage loans. In a low mortgage rate environment, a trend of increasing home refinance loan applications implies consumers are shopping for lower mortgage payments which can result in increased disposable income and consumer spending. Home purchase applications have widely been considered a strong indication of home buying interest nationally. Breaking it down further — Conforming loan applications declined 9% and FHA home loan applications rose nearly 5%.
The Market Composite Index, a measure of home loan application volume, decreased 1.5% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 3.1% compared with the previous week. The four week moving average for the seasonally adjusted Market Index is up 0.8%. The Refinance Index increased 14.5 % from the previous week. The four week moving average is up 4.5 % for the Refinance Index. The refinance percentage of home loan activity rose to 68.1% of total loan applications from 57.7% the previous week.
The seasonally adjusted Purchase Index decreased 27.1% from one week earlier. The unadjusted Purchase Index decreased 27.0 % compared with the previous week and was 24.1% lower than the same week one year ago. The four week moving average is down 4.6 % for the seasonally adjusted Purchase Index.
This is the lowest Home Purchase Index observed in the survey since May of 1997….The average contract interest rate for thirty-year fixed-rate home loans dropped to 4.83% from 4.96%, with points increasing to 1.08 from 0.91 (including the origination fee) for 80% loan-to-value (LTV) ratio loans. The effective rate declined from the previous week.
The average contract interest rate for fifteen-year fixed-rate home loans decreased to 4.19% from 4.32%, with points increasing to 1.36 from 0.81 (including the origination fee) for 80% LTV loans. This is the lowest 15-year contract interest rate ever recorded in the survey. However, due to the increase in points, the effective rate was essentially unchanged from last week.
The average contract interest rate for one-year ARMs decreased to 6.81% from 6.86%, with points increasing to 0.37 from 0.35 (including points) for 80 % LTV loans. The adjustable-rate mortgage share of activity remained constant at 6.3% of total applications from the previous week.
17 May 10 Current Mortgage Rates Remain Low
Current mortgage rates once again reached record lows for the year. The stock market mess in the equity markets sent investors scurrying for cover to buy bonds, according to Nathan Becker of The Wall Street Journal. With the home-buyer tax credit now expired, low home loan rates remain the most attractive incentive for buyers. FHA rates continued to be available for first time home buyers and borrowers trying to refinance.
Of course more when there are more bond buyers in the market it sends their yields lower and since the mortgage interest rates tend to track Treasury rates, homebuyers are rolling in clover. 5/1 Treasury-linked ARMS, which are adjustable rate mortgages that are fixed for five years and then float yearly, are at 3.95%. The Wall Street Journal notes that 3.95% is the lowest rate since Freddie began tracking those mortgage loans in 2005. Traditional 30-year fixed mortgages, meanwhile, dropped below April’s 5% levels again, making it in my humble opinion a good time for spring home buyers to lock into a fixed mortgage rate.
Zillow chief economist Stan Humphries suggested that the first-time homebuyer tax credit shifted home sales up from the summer to the spring. If we continue to see low rates and rising employment, however, we might see decent home-sale demand throughout the year, even though the credit expired on April 30th. There’s been unrest in the mortgage and real estate industry about the threat of rising mortgage interest rates, with many people, including myself, fearing the low-mortgage-rate party would end after the first quarter of this year. The fact that it hasn’t yet may be a good sign for home sales volume for 2010.
14 May 10 Lowest Mortgage Rates of 2010 for Refinancing and Home Buying
Reuters reported that mortgage interest rates fell this week to the lowest level of 2010. Mortgage rates dropped to 4.93 % for 30-year fixed rate mortgage loans. Fears about Greece’s precarious financial situation have benefited American consumers and the mortgage loan industry in general. The home mortgage rates in the United States are closely tied to interest rates paid for long-term Treasury bonds. Investors have shifted money from risky European debt to safer U.S. securities. The Federal Reserve ended a program to push down mortgage rates this spring, but rates for home refinance transactions and home buying have continued to be available at ridiculously low rates. Talk to your loan officer about no cost refinance options that have been advertised with many mortgage lenders on the radio. Many lenders are offering the no fee mortgages in an effort to increase business and lure borrowers with good credit scores to consider refinancing.
Tags: no cost refinance
07 May 10 Mortgage Lenders Slash 1,500 Workers
Mortgage companies cut 1,500 full-time workers from their payrolls in March after adding 4,400 full-time employees the previous month. Learn more at http://www.nationalmortgagenews.com/
04 May 10 Is First American Sue Happy?
Yes First American CoreLogic Inc. filed another lawsuit. First American filed a lawsuit against eight companies, including Zillow Inc. and Lender Processing Services Inc., claiming the companies’ automated property valuation services infringe on a 1994 patent. In their complaint, CoreLogic seeks an injunction against the companies to prohibit them from using or selling any products that fall within the scope of the patent, and for triple damages to “compensate CoreLogic for its profits lost.”
None of the companies named in the April 16 lawsuit have filed formal a response to the complaint, and none would comment to Inman News. The companies named in the lawsuit provide automated valuation model (AVM) services to businesses or consumers — computer-generated property value estimates that typically rely on a property’s unique characteristics, public property records and other market statistics.
A spokeswoman for Zillow — a site that became one of the Internet’s most popular real estate portals by offering instant, free property “Zestimates” to consumers — said the company was aware of the lawsuit, and “has no plans to change any aspect of our business as a result of this complaint.” Realizing that public housing records are made public, many mortgage insiders think that the Mortgage Giant is grasping at straws.
21 Apr 10 Loan Depot Promoting Honest Lending
Imagine calling a mortgage company and getting a true finance consultation that took into consideration your needs and qualifications. Imagine calling a mortgage lender to get some loan program information so you can compare loan quotes and having the loan officer actually follow up with federal loan disclosures the same day. This is what Loan Depot does — The Irvine based lender has taken the lemons from the mortgage industry and is now serving lemonade to loan applicants who are not used to this kind of financing service. According to former Loan Depot employee Adam Johnson, “There focus is honest lending, first and foremost.” Johnson continued, “A lot of people have a sour taste in their mouth from the mortgage melt-down and they want to change that.” Keep your eye on the Loan Depot…
Tags: Loan Depot
13 Apr 10 WAMU Defends Risky Mortgage Lending
Government officials claim they are investigating the roots of the mortgage crisis. Former executives from mortgage lender Washington Mutual appear before Congress. The testimony follows an 18-month investigation that discovered disturbing incongruities and gross negligence in WAMU’s banking practices.
Washington Mutual who was the biggest bank and mortgage lenders in U.S. history ever to fail; Congress is hoping to uncover some of what happened behind the scenes to cause such a gigantic failure, which eventually led to the crisis in the financial sector and the subsequent economic downturn currently in place. This marks the first time since the bank collapsed that WAMU execs have testified before Congress. The Seattle-based WAMU continuously practiced poor mortgage lending procedures with the loan officers processing home loans and bad credit mortgages too quickly, the more rewards they would get. The points based system even offered extra bonuses for those loan officers who overcharged borrowers on their mortgage loans.
Former WAMU CEO Kerry Killinger is quick to note that he was not at fault for WAMU’s failure, or for that matter, the financial crisis. Instead, Killinger blames the boom and bust of the housing market. “The severe downturn was caused by declining housing prices which in combination with a freezing of the capital markets fueled a vicious cycle of delinquencies, home foreclosures and further price declines,” said Killinger.
Moreover, WAMU’s former president described WAMU as “the worst managed business I had seen in my career.” The hearings are live and testimonies from WAMU’s former president, Stephen Rotella, David Schneider, former president of WAMU’s home loan division, and two former chief risk officers are underway. Killinger is also being questioned. The article was written by Lani Shadduck.
18 Mar 10 FHA Market Share
FHA has been in the mortgage news a lot over the last year because of the low mortgage rates and the increasing number of FHA loan defaults. In a recent article posted on the FHA Loan Blog, the topic of FHA market-share was evaluated. FHA credit guidelines were announced that the will accept lower fico borrowers who are willing to come up with a larger down-payment when buying a home.
Many industry insiders believe that FHA will lose some of their market share because of new FHA requirements and tighter FHA guidelines. FHA mortgage rates remain ridiculously low, but most first time home buyers are having a difficult time qualifying for a FHA home loan. Time will tell if American consumers will continue to use FHA mortgage loans for refinancing. Rising mortgage insurance premiums and their higher credit score requirements certainly are not helping matters. Read the original article – Is FHA Losing Market Share for Home Loans?
24 Feb 10 Fannie Mae and Freddie Mac Post Losses on Tax Credit
According to Bloomberg, Fannie Mae and Freddie Mac, the mortgage loan companies under government control, are reporting fourth-quarter losses after writing down the value of tax credits and setting aside money for housing-market losses.
Freddie Mac posted a $6.5 billion net loss as it marked down $3.4 billion in low-income housing tax credits that the U.S. Treasury Department barred the McLean, Virginia-based company from selling, according to a filing today. Fannie Mae, which plans to report official results this week, said it’s taking a $5 billion charge for the same reason.
Capping a “trying and turbulent year” with $7.1 billion in credit losses and foreclosure-related expenses, as well as $5.2 billion in annual dividends owed to the Treasury for emergency aid, Freddie Mac said there can be “no assurances regarding when, or if, we will return to profitability.” Regulators seized the company, along with Fannie Mae, in 2008 as mortgage delinquencies rose.
Freddie Mac, which buys mortgage loans and guarantees home-loan securities, has tapped $50.7 billion in Treasury preferred stock investment since November 2008 to remain solvent. While Freddie Mac avoided having to take more federal aid for a third straight quarter, the company said new accounting rules that took effect Jan. 1 will reduce its net worth by about $11.7 billion in the first quarter and require going back to for more aid.
A record 3 million U.S. homes will be repossessed by mortgage lenders this year as unemployment and depressed home values leave borrowers unable to make their house payment or sell, according to a RealtyTrac Inc. forecast last month. Last year there were 2.82 million foreclosures, the most since the Irvine, California- based company began compiling data in 2005.
24 Feb 10 Home Purchase Loan Demand Drops
According to Reuters, U.S. home loan applications fell for a third straight week, with demand for home purchase loans sinking to the lowest level in 13 years as inclement weather weighed, data from an industry group showed on Wednesday. The current mortgage rates remain the lowest interest rates in decades and high affordability helped the hard-hit U.S. housing market find some footing in 2009 after a three-year slump.
More key insight into the state of the housing market will emerge on Wednesday when the U.S. Commerce Department releases January new U.S. single-family home sales data.
18 Feb 10 Fed Hikes Discount Rate and Mortgage Rates Rise
Mortgage Rates Pulse announced that the Federal Reserve increased the discount rate today and mortgage rates rose almost immediately. This is the rate at which banks lend to each other. When banks stopped lending to each other overnight altogether in the fall of 2008, discount window for home mortgage loans became even more crucial. The Fed even narrowed the penalty banks paid for using discount window money, moving the discount rate closer to the Federal funds rate during the crisis.
httpv://www.youtube.com/watch?v=YecZrm-gKHQ
According to mortgage executive, Bryan Dornan, “Clearly, the Fed is signaling a change in direction for interest rates.” Dornan continued, “Now that the Fed is raising rates, expect mortgage rates to begin retreating upwards.” Now that the crisis has blown over, the Federal Reserve wants things to get back to normal.
Late Thursday afternoon, it surprised the markets by raising the discount rate it charges though its emergency window to 0.75% from 0.50% while keeping its targeted Federal funds rate at between zero and 0.25%. The change will take effect on Friday. Meanwhile, the duration of the mortgage loans will revert to the normal overnight period from 30 days come mid-March. Though many thought the Fed was headed in this direction, most everyone thought it wouldn’t act until its next Open Market Committee meeting next month. See the original post online at > Fed Reserve Raises Interest Rates.
03 Feb 10 FHA Credit Improving
The FHA home loans originated last year went towards borrowers with better credit scores than in previous years. These borrowers migrated to FHA when the subprime market disappeared. The average credit score of an FHA borrower is now 690, up from 630 only two years ago, agency officials said.
The agency banned 268 FHA lenders from making FHA mortgage loans last year, more than double the total terminated in the previous eight years. The FHA suspended six other firms. Among them were some of the largest FHA mortgage lenders –Taylor, Bean & Whitaker and Lend America, both of which shut their doors soon thereafter. Consumers taking out FHA mortgage loans will have to pay higher upfront fees, perhaps as early as this spring. Those with especially weak credit scores will also have to put down at least 10% instead of the usual 3.5% down-payment. Read the original article from the FHALoanBlog, > Better Credit FHA Loans Performing Well
08 Jan 10 Will the Fed Let the Mortgage Market Walk?
Many mortgage industry insiders believe the Federal Reserve will take their hands off the housing sector in 2010, when the central bank enables mortgage market to stand on its own two feet. The Fed is unlikely to step in again after its bad credit mortgage buying program devised at the height of the financial meltdown expires. That would take a renewed crisis, like a sudden and destabilizing hike in mortgage interest rates.
Besides conventional and FHA mortgage rates, there are other impediments to a fresh round of mortgage-backed debt purchases, including the Fed’s desire to keep inflation expectations under control. One of the reasons the Fed capped its bond-buying program, which included more than $1.4 trillion in mortgage-related securities and $300 billion in Treasury debt, was the perception that the central bank was “monetizing” federal deficits printing money to keep the government solvent. This latent fear, prevalent in financial markets and reflected in the elevated price of gold, has the potential to turn more than $1 trillion in dormant excess bank reserves into a runaway rise in prices, analysts say.
Barring a double-dip in housing, however, Fed officials are unlikely to meddle. Their reluctance to intervene anew has many roots. For one thing, it would signal a policy about-face that could adversely affect markets as investors reassess what they believed was an improving economic outlook. > Read the original article online.
