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The Latest
October 29,2009: www.Bankrate.com By, Holden Lewis
Mortgage rates rose for the third week in a row, amid evidence that house prices could be making a turnaround. Maybe.
The benchmark 30 year fixed rate mortgage rose 1 basis point to 5.35 percent, according to the www.Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.37 discount and origination points. One year ago, the mortgage index was 6.77 percent (the highest rate of 2008); four weeks ago, it was 5.25 percent.
The benchmark 15 year fixed rate rose 2 basis points to 4.74 percent. The benchmark 5/1 Adjustable rate dipped 5 basis points to 4.64 percent.
Although the 30-year fixed has gone up three consecutive weeks, the increases haven't been much. It's probably not a coincidence that mortgage applications have fallen during that time, especially for refinances. The Mortgage Bankers Association says applications have fallen more than 25 percent in the past two weeks.
Falling loan applications are unwelcome news for Realtors and policymakers who want to encourage people to buy houses. The past week saw several reports on home prices and home sales. The news was mixed, but seemed to point toward signs of recovery.
The National Association of Realtors says that home resales increased by 9.4 percent in September over the previous month, and increased by 9.2 percent compared with September 2008. It was the briskest sales pace since July 2007. The Realtors' chief economist, Lawrence Yun, attributed the sales increase to the first time homebuyer tax credit, due to expire at the end of November.
First-timers tend to buy inexpensive houses, so there's little surprise that prices on resold homes dropped in September. Half the homes bought in September cost less than $174,900 -- an 8.5 percent decrease compared with the median price of $191,200 in September 2008.
How many houses for sale?
Sales were up and prices were down. The tiebreaker is supply. Based on September's sales pace, there were 7.8 months' worth of houses on the resale market. That's an improvement over August's supply of 9.3 months of houses on the market.The much-watched S&P/Case-Shiller home price index came out this week, too, and told a different story on prices. It showed an increase in home prices in August compared with July. The rise wasn't much -- just 1 percent, seasonally adjusted. And it showed a year-over-year price drop of 11.3 percent in its composite of home prices in 20 large metro areas. But the pace of the price decreases is slowing down.
"These are strong numbers, but not surprisingly strong numbers," says Susan Wachter, professor of real estate at the University of Pennsylvania's Wharton School of business. "It reflects the recovery which is upon us."
She believes that this is not a false bottom, and that "the fundamentals are in place for a recovery -- however, a slow recovery." It's contingent on continued low mortgage rates and avoidance of a double-dip recession.
Falling inventories mixed news on prices: "This information is extremely relevant for the rent-or-buy decision," Wachter says. "For renters sitting on the sidelines right now, waiting and wondering when they can be buyers, this is a time that they are likely considering coming into the market."
The Census Bureau's report on new home sales in September came out this week, too. It showed a 3.6 decline in sales from August to September, which surprised many analysts. But the bureau's margin of error is plus or minus 10.2 percent, which means that the decline might have been worse, or that there might even have been a modest increase in sales.
May 2009 - See www.Bankrate.com for this article and many other good articles and information:
March 2009.... www.bankrate.com
A refundable first-time homebuyer tax credit of up to $8,000 is the centerpiece of four housing incentives found in the 2009 American Recovery and Reinvestment Act. The new credit is designed to boost sales in the nation's sagging housing market. Lawrence Yun, chief economist for the National Association of Realtors, predicts homebuyers will purchase an additional 300,000 homes in 2009 as a result of the tax credit. "The impact will likely not be felt for at least three or four months, because it generally takes buyers that long to qualify for a mortgage and search for a home," says Yun. The new credit improves on a first-time homebuyer credit passed in 2008, Yun says. That credit had to be paid back over a period of 15 years, making it more of a loan than a true credit. "We think this year's tax credit will certainly have a much bigger impact because it is a true tax credit which is also refundable," Yun says. "For instance, if you owe $1,000 in taxes and qualify for the first-time homebuyers tax credit, you will receive a tax refund of $7,000." Yun believes activity spurred by the new credit will help bring down housing inventory and stabilize prices. Gibran Nicholas, chairman of the CMPS Institute, which certifies mortgage banker and brokers, says his group was in favor of a more generous tax credit. However, he still believes the credit will have a positive impact on the housing market. "This tax credit is more of a half-step, but at least it is in the right direction," says Nicholas.
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October 08
The benchmark 30-year, fixed-rate mortgage rose 7 basis points, to 5.41 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.45 discount and origination points. One year ago, the mortgage index was 6.41 percent. Four weeks ago, it was 5.48 percent.
The benchmark 15-year, fixed-rate mortgage was unchanged at 4.93 percent. The benchmark 5/1 adjustable-rate mortgage rose 3 basis points, to 5.4 percent.
Bankrate's weekly mortgage survey began in September 1985. In that time, there is only one period in which the 30-year fixed remained under 5.5 percent for longer than this three-week slide. That was May and June 2003, the height of a refinance boom. Americans were in a home-buying frenzy, too. Back then, it seemed that everyone was either refinancing or buying.
This is not the case now.
In the second week of June 2003, the benchmark 30-year fixed fell to 5.28 percent. Two-and-a-half times as many people applied for refinances that week in 2003 as they did last week, according to the Mortgage Bankers Association. Actually, the 60 percent decline in applications between then and now is probably bigger than that. Lenders say that people are applying at multiple places nowadays, on the theory that they'll be turned down by one lender but approved by another.
In 2003, about 6.1 million homes were resold. Last month, homes were resold at an annual pace of about 4.5 million. Nationally, about 45 percent of homes resold in January were short sales or foreclosures. The National Association of Realtors calls these "distressed sales," and they vary geographically. According to the Realtors, distressed sales accounted for four in five transactions in Santa Ana, Calif., last month, and one in five in Chicago.
July 2008.
Indymac goes under. Threats of collapse of Fannie and Freddie. I don't believe the hype and I think they're fine. Its the MI companies like GE and MGIC that will get crushed.
Goods news..... The North side from Anthem down to the 101 around I-17 has seen a surge in sales. Less homes on the market makes Jack a happy boy. Once these banks dump their "banked owned props"....we will see a leveling off and then the market should return to stable again.
March 2008
www.Bankrate.com update:
Maybe the sixth time will be the charm. Then again, it might ultimately create more issues than it resolves. The Federal Reserve will most certainly cut interest rates for a sixth time at today's meeting in an effort to erase payment increases on adjustable-rate mortgages, cushion the economic blow of a recession and vanquish the credit crunch.
A sixth interest rate cut, much as with the previous five, will be received with open arms by those with resetting ARMs. Homeowners with adjustable-rate mortgages facing a reset in the coming months have the Fed to thank for an adjustment that will be much ado about nothing, or can in some cases even cause the payments to decline. Talk about a mulligan. Millions of homeowners will get a yearlong reprieve from a painful payment adjustment thanks to the repeated Federal Reserve moves, something that will be far more significant to far more people than any foreclosure relief plan or coalition of government and lenders.
The full effects of Federal Reserve rate cuts are felt with a lag, and the sixth rate cut will, just as with moves four and five during January, represent significant juice to economic growth in the fourth quarter of 2008 and for 2009.
But the Fed rate cuts have proven completely ineffective at warding off the credit crunch, and at best have kept it from being worse. That is little consolation with the credit markets in intensive care, carrying a disease that can infect the entire economy.
What repeated Fed rate cuts may prove very effective at is inciting inflation. The February Consumer Price Index was flat versus the month prior, which may validate to some the Fed's long-held stance that inflation pressures would ultimately moderate. So let me ask, does it feel like inflation was flat in February? Not from where I'm standing. In fact, let's revisit just a few statistics. As I write this, oil is over $110 per barrel, the dollar is at yet another low against the euro ($1.56), gold is over $1,000 an ounce, and in the past 12 months the headline and core CPI are up 4 percent and 2.3 percent, respectively. If anyone truly believes that inflation is a non-issue, there is a bridge I want to sell you. If the headline CPI were to get back to a year-over-year rate of 2.5 percent -- what I would call a level where inflation is a non-issue -- the CPI would need to remain flat for the next four months!
Sooner or later, the Federal Reserve will have to contend with inflation. That is better done with some restraint on further rate cuts now, rather than with the painful fallout later once the inflation genie is completely out of the bottle.
March 2008
Your government leaders have once again ignored the Arizona Market. We all expected the conforming loan amount to be raised to at least $517,000 from its current $417,000. Instead, they raised ONLY the Flagstaff area to $450,000 and ignored the rest of Arizona. BUT....of course....the vast majority of California got an enormous boost to $729,000. VERY VERY disappointing and I am glad that your government can throw out a HUGE helping hand to those morons in California that pay too much for homes for the past 25 years. SAD!!!!!
January 2008
Game over. The government, Fannie Mae and Freddie Mac have given the final blow and destroyed the housing market in Phoenix. Several years ago, lenders and unprofessionals working for lenders took advantage and shoved home buyers and refinancers into horrific loans. People like "The Arizona Mortgage Coach" (as seen constantly on channel 12) who is not even licensed in the State of Arizona solicited his 1% Deferred Interest Deals. Now the backlash has begun with foreclosures and folks unable to sell OR refi.
THIS HAS NOTHING TO DO WITH THE "SUBPRIME" MARKET.
It is seen in ALL markets from million dollar homes down to less than 6 figures.
I ran a seminar on this exact problem in June of 2006. Do you know how many people attended? ZERO! People told me I was wrong, paranoid and jealous of other lender's programs. It was actually because people make bad decisions and believe the wrong people.
The "good guy" losses again.
Thank you for your patronage.
Oct 2007
The data this morning, which reported a decline in factory orders and an
increase in jobless claims, was not enough to move the markets. Bonds
remain flat and the equity markets are slightly higher. The real news
remains behind the scenes, even as many Fed officials and market
participants express the feeling that markets are returning to a state
of normalcy. Spreads remain excessive on many money market products,
with some trading near levels only seen during financial crises. So,
even as Dorothy found out, you do need to pay attention to the man
behind the curtain, as all is not well in the land of OZ. The jobs data
tomorrow morning will give us strong clues to what the near future
holds.
Sep 25 2007
Sorry, no good news today, as the National
Association of Realtors reported sales of previously owned U.S. homes
fell 4.3% to a five year low. The supply of homes for sale at the end of
the month rose to 4.58 million, the most ever, and at the current sales
pace represents a 10 months supply. It came as no surprise then, that
the Conference Board reported its index of consumer confidence dropped
to 99.8 from 105.6 in August, as workers stated they were less
optimistic about job prospects. The bond market had already improved
this morning in anticipation of the weak data, and is currently hanging
on to a slight improvement. Tomorrow we will get Durable Goods orders
for August and the Treasury has a 2 year note auction scheduled.
Sep 11 2007
Yesterday there were conflicting signs from Fed
officials with some signaling concern about consumer spending and
confidence while others remain generally encouraged about the economy,
as stated by Dallas Fed President Fisher. The current situation may best
be summed up by the Philadelphia Fed President Plosser's remarks over
the weekend as he noted that there are a lot of conflicting data.
Clearly, the market is way out ahead of the Fed with Fed Funds futures
priced at 4.81% in October and 4.37% in January. This morning bond
prices are lower as stocks rally. Two key items to note regarding bonds
are that key resistance on the 10 year note at 4.32% held yesterday, and
the put to call ratio on the Chicago Board of Trade was at 15 to 1 this
morning, a strong signal of an overbought condition.
September 7, 2007
The Labor Department delivered a shock to the markets this morning, reporting that 4,000 jobs were lost in the U.S. economy in the month of August. While some of the decrease can be attributed to seasonal adjustments, this is a clear sign the problems in the housing and credit markets are having a more significant impact on the economy than most officials have been willing to admit. Prior to this data, many were thinking the Fed would not lower its target rate at the September 18 meeting. However, given the amount of liquidity the European Central Bank and the Fed have been providing to the credit markets in the past few days, and given the weakness of the employment data, it is clear the Fed will continue to provide monetary support and the government will probably get involved and provide some sort of fiscal stimulus. I would vote for Congress releasing funds from the Highway Trust Fund to begin the much needed rehabilitation of the U.S. infrastructure. What of the bond market you ask? The yield on the 10 year note has fallen to 4.39% as investors sell stocks and seek the temporary safety of U.S. treasuries.
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