Friday, February 27, 2015

Mortgage Rates Continue to Move Up

Averages on fixed mortgage rates inched up again this week, amid solid housing data on new home sales and strong home price appreciation, Freddie Mac reports in its weekly mortgage market survey. Despite this week’s uptick, fixed-rate mortgage continue to hover near May 2013 lows.
Freddie Mac reports the following national averages with mortgage rates for the week ending Feb. 26:
  • 30-year fixed-rate mortgages: averaged 3.80 percent, with an average 0.6 point, rising from last week’s 3.76 percent average. A year ago, 30-year rates averaged 4.37 percent.
  • 15-year fixed-rate mortgages: averaged 3.07 percent, with an average 0.6 point, rising from last week’s 3.05 percent average. Last year at this time, 15-year rates averaged 3.39 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 2.99 percent, with an average 0.5 point, rising from last week’s 2.97 percent average. Last year at this time, 5-year ARMs averaged 3.05 percent.
  • 1-year ARMs: averaged 2.44 percent, with an average 0.4 point, dropping from last week’s 2.45 percent average. A year ago, 1-year ARMs averaged 2.52 percent.
Source: Freddie Mac

Fannie: Time for Housing to ‘Shift Up a Gear’

The economy has started the year on an upbeat note and it’s expected to continue to stay strong in 2015, led by a strengthening employment sector and rising income growth, according to Fannie Mae’s Economic & Strategic Research Group. That is all expected to translate into a drive in consumer spending and lift the pace of the housing recovery, Fannie Mae researchers note.
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The economy is predicted to see a 2.9 percent growth this year, up from a 2.5 percent growth in 2014, according to Fannie Mae’s economic report.
"We expect housing to shift up a gear in 2015 following the uneven and ultimately disappointing activity last year," says Doug Duncan, Fannie Mae’s chief economist. "Our forecast calls for a number of factors, including strong hiring and income growth, stabilized housing affordability, and modestly easing lending standards, to translate into improving housing demand throughout the year.”
Fannie Mae economists are predicting home sales to rise by about 6 percent for 2015, and total single-family mortgage production soaring to about $1.2 trillion.
The housing market will benefit as consumers get more upbeat about the economy and increase their spending, Duncan notes.
"Although we are beginning this year at a more modest pace compared to the above-trend numbers seen at mid-year 2014, the country’s aggregate income has benefitted from the improving labor market, which, combined with low gasoline prices, should help drive higher auto sales and overall consumer spending throughout 2015,” Duncan notes.
Source: “Strong Job Growth Foreshadows Solid Full-Year Economic Growth,” Fannie Mae (Feb. 26, 2015)

Nearly 80% of Housing Markets Are Stabilizing

Thirty-eight of the 50 states, plus the District of Columbia, are now showing an improving three-month trend in housing activity, according to Freddie Mac’s latest Multi-Indicator Market Index. What’s more, 40 of the 50 major metros Freddie Mac tracks are also showing a three-month improving trend.
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Yet, Freddie Mac’s national MiMi value stands at 74.9, which still indicates a weak housing market overall. The all-time MiMi high was 121.7, recorded in April 2006; its lowest point was 57.2 in October 2010, when the housing market was at its weakest point. Since its low in 2010, the housing market has rebounded 31 percent.
Freddie Mac’s MiMi index monitors the stability of the nation's housing market by assessing each single-family housing market relative to its long-term stable range. It takes into account such data as home purchase applications, payment-to-income ratios, on-time mortgage payments, and the employment market.
Overall, "housing markets are getting back on track,” says Len Kiefer, Freddie Mac’s deputy chief economist. “The national MiMi improved for the fourth consecutive month. Nearly 80 percent of the state and metro housing markets MiMi tracks are improving or in their stable range of activity. … Low mortgage rates and moderating house price growth are helping to keep payment-to-income ratios favorable for the typical family in most of the country. In fact, Los Angeles is the only metro market with an elevated MiMi payment-to-income indicator whereas most other markets remain quite affordable. And of course, labor markets are generally improving.”
The most improving states on a year-over-year basis, according to the index, were:
  • Nevada
  • Colorado
  • Rhode Island
  • Illinois
  • Ohio
Meanwhile, the most improving metros year-over-year were:
  • Las Vegas
  • Denver
  • Chicago
  • Providence, R.I.
  • Columbus, Ohio
Source: “U.S. Housing Stability Improves for Fourth Consecutive Month,” Freddie Mac (Feb. 25, 2015)

Friday, January 30, 2015

Mortgage Rates Up for the First Time This Year

Fixed-rate mortgages reversed course this week, inching up, following weeks of declines, Freddie Mac reports in its weekly mortgage market survey. Still, mortgage rates remained near historical lows with the 30-year fixed-rate mortgage well-below 4 percent this week and the 15-year fixed-rate mortgage remaining under 3 percent.
"Mortgage rates ticked up this week for the first time in 2015 following positive home sales reports,” says Len Kiefer, Freddie Mac’s deputy chief economist. New-home sales jumped 11.6 percent in December, beating market expectations, while existing-home sales rose 2.4 percent to an annual rate of 5.04 million homes in December.
Freddie Mac reports the following national averages with mortgage rates for the week ending Jan. 29:
  • 30-year fixed-rate mortgages: averaged 3.66 percent, with an average 0.6 point, increasing from last week’s 3.63 percent average. Last year at this time, 30-year rates averaged 4.32 percent.
15-year fixed-rate mortgages: averaged 2.98 percent, with an average 0.5 point, rising from last week’s 2.93 percent average. A year ago, 15-year rates averaged 3.40 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 2.86 percent, with an average 0.4 point, rising from last week’s 2.83 percent average. Last year at this time, 5-year ARMs averaged 3.12 percent.
  • 1-year ARMs: averaged 2.38 percent, with an average 0.4 point, rising from last week’s 2.37 percent average. A year ago, 1-year ARMs averaged 2.55 percent.
Source: Freddie Mac

Inventory Problems Stall Home Sales

Pending home sales dropped in December, despite interest rates being at the lowest levels in more than a year, the National Association of REALTOR® reports. All regions across the country posted declines in December.
In December, pending home sales nationally fell 3.7 percent month-over-month. Still, NAR’s Pending Home Sales Index, a forward-looking indicator based on contract signings, remained about 6 percent above year-over-year levels for the fourth consecutive month.
Lawrence Yun, NAR’s chief economist, says that inventory problems mixed with slightly higher home prices attributed to December’s decline in contract signings.
Total inventory dropped in December for the first time in 16 months, which left homebuyers with fewer choices of homes for-sale.
“With interest rates at lows not seen since early 2013, the strength in existing-sales in upcoming months will largely depend on the willingness of current home owners to realize their equity gains from the past couple years and trade up,” Yun says. “More jobs, increasing consumer confidence, less expensive mortgage insurance, and new low down payment programs coming into the marketplace will likely lead to more demand from first-time buyers.”
Regional Look
Across the country, here’s how pending-home sales fared in December:
  • Northeast: posted the largest decline of any other region, dropping 7.5 percent in December month-over-month. Pending home sales, however, remain 6.3 percent above year ago levels.
  • Midwest: decreased 2.8 percent in December, but remains 1.9 percent above December 2013.
  • South: decreased 2.6 percent in December, but pending-home sales are 8.6 percent above the prior December’s levels.
  • West: declined 4.6 percent in December, but pending-home sales are 6.3 percent above a year ago.
Source: National Association of REALTORS®

Home Ownership Rate Falls to 20-Year Low

The U.S. home ownership rate posted declines across all four regions of the U.S. in the fourth quarter, plunging to its lowest level since the third quarter of 1994. But a sharp rebound in household formation during the quarter has more economists optimistic that a turnaround in the home ownership rate is on the horizon.
The home ownership rate fell from 64.3 percent in the third quarter to 63.9 percent in the fourth quarter, reaching a 20-month low, the Commerce Department reported Thursday. In 2004, the home ownership rate peaked at 69.4 percent.
While the home ownership rate fell, however, household formation more than quadrupled during the fourth quarter to 1.7 million from 356,000 a year ago. The gains were mostly driven by renter households, the Commerce Department reported.
Still, housing analysts are optimistic from signs that household formation is picking up, particularly as the labor market strengthens too and credit requirements for qualifying for a mortgage are loosened up. Economists are expecting a rise in first-time buyers and a regain of momentum in housing this year.
"The combination of a high share of young adults living in the parental home, falling mortgage rates, and loosening credit means that the outlook for household formation is strengthening," says Paul Diggle, a property economist at Capital Economics in London. "That's one of the reasons why we are optimistic about the prospects for homebuilding over the next few years."
Many economists are predicting that the home ownership rate will stabilize in the coming quarters.
"The decade-long decline in the share of the population who own their home may now be drawing to an end," Diggle told Reuters News. "Wage growth may soon accelerate, helping young households to make the leap into home ownership. The survey evidence certainly suggests that owning a home remains part of most people's perception of the American dream."
Source: “U.S. Home Ownership Hits 20-Year Low, But New Households Growing,” Reuters (Jan. 29, 2015)

Thursday, January 29, 2015

Mortgage Applications Cool Off

After recent highs—driven mostly by a refinancing rush—mortgage applications reversed course and tumbled 3.2 percent in the week ending Jan. 23, the Mortgage Bankers Association reported Wednesday in its weekly mortgage activity survey. The decrease occurred as mortgage rates posted a slight increase during the week.
Still, mortgage applications remain up 36 percent from a year ago.
"A 3.2 percent weekly decrease, after the two gigantic previous increases, leaves the index in stellar territory,” Matthew Graham of Mortgage News Daily told CNBC.
Low mortgage rates have boosted loan demand in recent weeks, particularly among refinancers looking to lock in lower monthly mortgage payments. The 30-year fixed-rate mortgage rose slightly to 3.83 percent last week, from 3.80 percent the week prior, MBA reports.
Applications for refinancings decreased 5 percent last week due to the slight uptick in rates, but for loans backed by the government, refinancings showed continued gains, MBA reports.
"We are closely watching for the impact of the FHA mortgage insurance premium decrease,” says Michael Fratantoni, MBA’s chief economist. “This week, it showed up in the refinance numbers.” The FHA share of total applications rose to 9.1 percent this week from 8 percent the prior week, while conventional refinances were down week-over-week.
Applications for home purchases—viewed as a gauge of future home buying activity—were mostly in a holding pattern compared to the previous week, dropping only 0.1 percent. These applications are one percent higher than the same week one year ago, MBA reports.
Source: “Weekly Mortgage Applications Drop After Tiny Rise in Rates,” CNBC (Jan. 28, 2015)