Mortgage rates fell this week as global market concerns resurfaced and government bond yields moved lower. Meanwhile, more data shed light on the housing market's strengthening recovery.
Sales slow down, prices inch up
Sales of existing homes fell from a downwardly revised, seasonally adjusted annual rate of 5.58 million in July to 5.31 million in August, which amounts to a 4.8% decrease, according to data released this week from the National Association of Realtors.
However, the August rate is 6.2% higher than the same time last year.
"The housing report may be viewed as negative, but I think we can dismiss the decline as being a normal down after several ups," says Joel Naroff, president and chief economist at Naroff Economic Advisors in Holland, Pennsylvania.
Also released this week was the Federal Housing Finance Agency's monthly house price index. Prices increased 0.6% on a seasonally adjusted basis from June to July, and were up 5.8% from July 2014.
2015%30-year fixedJulAugSept4.004.104.20
30 year fixed rate mortgage -- 3 month trend
Yields take a tumble
U.S. Treasury yields continued falling this week following the Federal Reserve's decision last week to hold off raising the federal funds rate.
"We did see a pretty decent drop in the 10-year (Treasury yield), which has a high correlation to where mortgage rates are priced," says Bryan Sullivan, chief investment and strategy officer at loanDepot in Foothill Ranch, California.
Falling oil prices and China's ongoing economic turmoil added to the demand for government bonds, MarketWatch reported Tuesday. With bonds, yields fall as prices rise.
A look at this week's rates
The benchmark 30-year fixed-rate mortgage fell to 4% from 4.06%, according to Bankrate's Sept. 23 survey of large lenders. A year ago, it was 4.3%. Four weeks ago, the rate was 4.03%. The mortgages in this week's survey had an average total of 0.26 discount and origination points. Over the past 52 weeks, the 30-year fixed rate has averaged 4%. This week's rate is equal to the 52-week average.
The benchmark 15-year fixed-rate mortgage fell to 3.18% from 3.25%.
The benchmark 30-year fixed-rate jumbo mortgage fell to 3.89% from 3.97%.
The benchmark 5/1 adjustable-rate mortgage fell to 3.19% from 3.28%.
Read more: http://www.bankrate.com/finance/mortgages/mortgage-analysis-092415.aspx
Thursday, September 24, 2015
Wednesday, September 16, 2015
Resilience of Refinancing About More Than Just Low Rates
The refinance mortgage market's unexpected resilience in 2015 has come as the result of a number of well-timed factors coalescing to create a welcomed surprise to lenders.
Traditional industry wisdom is for lenders to not over-rely on refinancing to support volume. While that continues to hold true, refis this year have had more life than expected.
The combination of still-low interest rates, rising home prices and government housing initiatives all had a hand in bolstering refinance originations, not to mention throwing industry forecasts for a loop.
For example, a year ago the Mortgage Bankers Association projected the refinance share of first quarter 2015 originations would be 38%. But refis ended up accounting for 53% of volume. Now, the MBA is expecting a 42% refinance share for all of 2015, up from its previous estimate of 35%.
"The primary influence is the rate drop. A secondary factor is that from 2011 to 2013, we had very low rates in the conforming sector but credit for jumbo borrowers was very tight. Now we're not quite as low as we were in 2013, but jumbo credit availability has expanded," said MBA chief economist Michael Fratantoni.
Lower-than-expected rates and concerns about when they might rise have been key drivers as they traditionally are, but there's more to it than that. Rates have been relatively low for a long time and burnout has long been anticipated.
A stronger housing market is another contributor.
"While it's clear that historically low interest rates have played a role in the pace of mortgage refinancing, rising home valuations, which have added to the pool of eligible borrowers in the government's Making Homes Affordable program, and a brisk national housing market, have been key drivers in the resilience of the sector," said Terry Moore, senior managing director at Accenture Credit Services.
Consumer confusion has plagued the Home Affordable Refinance Program and deterred some borrowers from taking advantage of the program, said Doug Duncan, senior vice president and chief economist at Fannie Mae. He added the government-sponsored enterprises have worked to clarify information for consumers.
"There were several misconceptions, like you have to bring a bunch of money to the table. Actually you don't," said Duncan. "The structure can be done so you don't have to bring any cash to the table," he said.
The reduction in the Federal Housing Administration's upfront premium also has bolstered refinancing. This "has led to a significant churning in the government space," said Duncan.
Another reason refinancing has continued to have legs is that some people are slow to respond to rate drops, ensuring demand continues.
"It's surprising the number of people who, if you look at their mortgage, they're in the money, but they don't act," said Duncan.
read more: http://www.nationalmortgagenews.com/news/origination/resilience-of-refinancing-about-more-than-just-low-rates-1061085-1.html
Traditional industry wisdom is for lenders to not over-rely on refinancing to support volume. While that continues to hold true, refis this year have had more life than expected.
The combination of still-low interest rates, rising home prices and government housing initiatives all had a hand in bolstering refinance originations, not to mention throwing industry forecasts for a loop.
For example, a year ago the Mortgage Bankers Association projected the refinance share of first quarter 2015 originations would be 38%. But refis ended up accounting for 53% of volume. Now, the MBA is expecting a 42% refinance share for all of 2015, up from its previous estimate of 35%.
"The primary influence is the rate drop. A secondary factor is that from 2011 to 2013, we had very low rates in the conforming sector but credit for jumbo borrowers was very tight. Now we're not quite as low as we were in 2013, but jumbo credit availability has expanded," said MBA chief economist Michael Fratantoni.
Lower-than-expected rates and concerns about when they might rise have been key drivers as they traditionally are, but there's more to it than that. Rates have been relatively low for a long time and burnout has long been anticipated.
A stronger housing market is another contributor.
"While it's clear that historically low interest rates have played a role in the pace of mortgage refinancing, rising home valuations, which have added to the pool of eligible borrowers in the government's Making Homes Affordable program, and a brisk national housing market, have been key drivers in the resilience of the sector," said Terry Moore, senior managing director at Accenture Credit Services.
Consumer confusion has plagued the Home Affordable Refinance Program and deterred some borrowers from taking advantage of the program, said Doug Duncan, senior vice president and chief economist at Fannie Mae. He added the government-sponsored enterprises have worked to clarify information for consumers.
"There were several misconceptions, like you have to bring a bunch of money to the table. Actually you don't," said Duncan. "The structure can be done so you don't have to bring any cash to the table," he said.
The reduction in the Federal Housing Administration's upfront premium also has bolstered refinancing. This "has led to a significant churning in the government space," said Duncan.
Another reason refinancing has continued to have legs is that some people are slow to respond to rate drops, ensuring demand continues.
"It's surprising the number of people who, if you look at their mortgage, they're in the money, but they don't act," said Duncan.
read more: http://www.nationalmortgagenews.com/news/origination/resilience-of-refinancing-about-more-than-just-low-rates-1061085-1.html
Saturday, September 5, 2015
Improved housing market means fewer underwater mortgages
Fewer South Florida homeowners are plagued with problem mortgages, a new report shows.
lRelated
First-time homebuyers can get $2K per year
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First-time homebuyers can get $2K per year
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8
In the second quarter of 2015, 16 percent of mortgaged homes and condominiums were "underwater" in Palm Beach, Broward and Miami-Dade counties, down from 22 percent a year earlier, real estate website Zillow.com said Thursday.
State program gives up to $2K a year to first-time homebuyers
Little-known program gives up to $2,000 a year to people buying their first homes.
In Broward County, 53,984 properties were underwater in the second quarter, while 34,276 properties in Palm Beach County were worth less than what's owed.
Fueled by rising home prices, the tri-county region's so-called negative equity rate has dropped in every quarter since early 2012.
During the height of the housing bust, close to half of all homes with mortgages were underwater, according to Zillow. Those owners likely bought or refinanced from 2004 to 2006, before prices plunged across the area.
Underwater mortgage holders can't sell without paying thousands of dollars at closing, and they can't easily leave the area for new jobs. Some frustrated owners have walked away from the homes.
Svenja Gudell, chief economist for Seattle-based Zillow, said lower-priced home values have shot up recently, helping to reduce the number of burdensome mortgages.
The least expensive third of homes in the three counties (below $159,100) saw values increase by about 11 percent in July from a year ago, while the most expensive tier (above $316,550) increased in value by about 4 percent, Gudell said.
Despite the steady improvement, home price appreciation is expected to slow in the coming months, meaning many homeowners won't soon shake their underwater mortgages, Gudell said.
"For some folks who are deeply underwater, it will still take years," she said. "We've made great strides, but we still have a ways to go to get back to a normal market."
South Florida's 16-percent negative equity rate is slightly above the national average of 14 percent. Among the nation's 35 largest housing markets, Las Vegas (25 percent), Chicago (22 percent) and Atlanta (21 percent) have the highest rates, Zillow said. San Jose, Calif., had the lowest rate at 3 percent.
see more at: http://www.sun-sentinel.com/business/realestate/fl-underwater-mortgages-20150903-story.html
lRelated
First-time homebuyers can get $2K per year
Personal Finance
First-time homebuyers can get $2K per year
See all related
8
In the second quarter of 2015, 16 percent of mortgaged homes and condominiums were "underwater" in Palm Beach, Broward and Miami-Dade counties, down from 22 percent a year earlier, real estate website Zillow.com said Thursday.
State program gives up to $2K a year to first-time homebuyers
Little-known program gives up to $2,000 a year to people buying their first homes.
In Broward County, 53,984 properties were underwater in the second quarter, while 34,276 properties in Palm Beach County were worth less than what's owed.
Fueled by rising home prices, the tri-county region's so-called negative equity rate has dropped in every quarter since early 2012.
During the height of the housing bust, close to half of all homes with mortgages were underwater, according to Zillow. Those owners likely bought or refinanced from 2004 to 2006, before prices plunged across the area.
Underwater mortgage holders can't sell without paying thousands of dollars at closing, and they can't easily leave the area for new jobs. Some frustrated owners have walked away from the homes.
Svenja Gudell, chief economist for Seattle-based Zillow, said lower-priced home values have shot up recently, helping to reduce the number of burdensome mortgages.
The least expensive third of homes in the three counties (below $159,100) saw values increase by about 11 percent in July from a year ago, while the most expensive tier (above $316,550) increased in value by about 4 percent, Gudell said.
Despite the steady improvement, home price appreciation is expected to slow in the coming months, meaning many homeowners won't soon shake their underwater mortgages, Gudell said.
"For some folks who are deeply underwater, it will still take years," she said. "We've made great strides, but we still have a ways to go to get back to a normal market."
South Florida's 16-percent negative equity rate is slightly above the national average of 14 percent. Among the nation's 35 largest housing markets, Las Vegas (25 percent), Chicago (22 percent) and Atlanta (21 percent) have the highest rates, Zillow said. San Jose, Calif., had the lowest rate at 3 percent.
see more at: http://www.sun-sentinel.com/business/realestate/fl-underwater-mortgages-20150903-story.html
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