Mortgage Rate News
A survey of attitudes toward housing released on Thursday by The Demand Institute indicates that the Baby Boom generation still has no intention of aging gracefully. In fact, when it comes to housing it appears few intend to yield at all to their advancing years.
The Institute, a nonprofit run by the Conference Board and the Nielson ratings people, surveyed 4,000 households last year in which residents qualified as members of that huge post-war generation born between 1944 and 1963 about their future housing plans.
The survey found that as a group Baby Boomers had a median net worth of $200,000 in 2007 and were on their way to accumulate nearly $370,000 by 2013. Instead the recession sent many off the rails and at the time of the survey that median net worth was down to a median of $143,000. Although many Boomers have delayed or modified their plansdue to the recession they have, the Institute says, not abandoned them entirely. Over the next five years it is expected they will spend $1.9 trillion on new home purchases and $500 billion on rent.
A recent motion filed by a mortgage company to dismiss portions of a class action suit against it shows, according to an attorney familiar with the matter, that a consent order settling charges brought by the Consumer Financial Protection Agency (CFPB) "does not necessarily bring finality to the issues it covers." At least not in the absence of releases from affected consumers.
Barbara S. Mishkin, writing in the Ballard & Spahr CFPB Monitor says that earlier this week Castle & Cooke Mortgage, LLC filed a motion to dismiss three counts in a class action complaint filed against it in federal court last July. The named plaintiff, a consumer, had received redress under a consent order from CFPB against Castle & Cooke finalized in November 2013. The order had settled charges that the mortgage company had violated the Regulation Z loan originator compensation rule by establishing a quarterly bonus system giving loan officers greater bonuses for originating loans at higher interest rates. CFPB maintained that the bonus system was not reflected in the company's compensation agreements and while payroll records reflected the bonuses there was nothing indicating what portion of a bonus was attributable to which loan
"A real estate market that should be flying highis instead a real estate market that is faltering," according to Brian Mushaney, Executive Vice President, Data Solutions, for RealtyTrac. Writing in the current issue of RealtyTrac's Housing News Reporthe points to a market which he says should be a buyer's paradise in many ways, with property values well below historic affordability levels, banks with tons of cash to loan, interest rates near their all-time lows, and foreclosures abating.
"So why," he asks, writing, "have home sales stalled in recent months? It is an issue of affordability he says, but not the way we usually think about it....(read more)
Completed foreclosures rose slightly in September CoreLogic said today, but the long-term trend continues to be a relatively precipitous drop from the record high numbers of the last six years. The company's September National Foreclosure Report notes a 4.7 percent increase in the number of homes lost to foreclosure during the month relative to the August number, 46,000 units compared to 44,000. The September total however represents a year-over-year drop of 32.6 percentfrom 68,000 foreclosures the previous September 2013 and is 61 percent below the number at the peak of activity in 2010.
Mortgage application numbers during the week ended October 24 backed off a bit from the numbers posted during the week ended October 17 but were still elevated compared to other recent weeks. The Mortgage Bankers Association's (MBA's) Weekly Mortgage Applications Survey for last week reported almost entirely declining numbers but for context we will include the increases from the previous week in which there was unusually high refinancing volume.
MBA's Market Composite Index, a measure of mortgage loan application volume fell 6.6 percent on a seasonally adjusted basis from the previous week when it had posted an 11.6 percent increase. On an unadjusted basis the Index was down 7 percent following a 12 percent gain.
August data released this morning by S&P Dow Jones Indices reveals that, while home prices throughout the U.S. continue to increase, the rapid pace in those gains seen earlier continues to decelerate. The S&P/Case-Shiller National Index as well as both composite indices eked out 0.2 percent increases from July to August but all three slipped to lower year-over-year gains than they posted the previous month.
The 10-City Composite Index was up 5.5 percent compared to August 2013 and the 20-City gained 5.6 percent. Bothcomposites had posted 6.7 percent increases from July 2013 to the same period in 2014. The National Index, which covers all nine U.S. Census divisions, had a 5.1 percent annual growth in August against 5.6 percent in July.
Home price increases wound down further in August. The Home Price Index released by Black Knight Financial Services today rose a negligible 0.1 percent from July to Augustand was 4.9 percent higher than a year earlier. In August of 2013 the year-over-year price gain was 9 percent and as recently as April increases were running 6.4 percent on an annual basis.
The company said that nearly halfof the 20 largest states actually saw price declines from July to August although eight of the largest metro areas hit new peak price levels. Black Knight's Home Price Index for the U.S. was $241,000 in August, the same number as in July. The HPI registered $230,000 in August 2013.
Pending home sales, while increasing only slightly in September, exceeded those of a year earlier, the first time in 11 months this has occurred. The National Association of Realtors® (NAR) also said that its Pending Home Sales Index (PHSI), which rose 0.3 percent to 105.0 is at its second-highest level since last August.
The index is a forward indicator based on contracts signed for the purchase of a home. The September reading is 1.0 higher than in September 2013 and it is the fifth consecutive month in which the PHSI has exceeded 100. Contract signings are generally expected to turn into home sales within 60 to 90 days.
New home sales increased only slightly in September, up 0.2 percent over August, bringing the annual rate of those sales to 467,000. Sales were up 17.0 percent from the September 2013 pace of 399,000 units.
Perhaps bigger news in today's joint release from the Census Bureau and the Department of Housing and Urban Development was the revision to the August new home sales number. The initial report of those sales indicated a very significant 18 percent increase over July's number, sending sales to a seasonally adjusted annual rate of 504,000 and over the half-million mark for the first time since May 2008. The estimate was well over analysts' expectations; the consensus had been 430,000 units. Turns out the analysts were closer to the mark than the government agencies which today downgradedthe August estimate to an annual rate of 466,000.
This takes what had been a potential trend of improvement back into the stagnant sub-500k range that's been intact throughout the post-crisis period.
Fannie Mae said on Thursday that real economic growth in the last two quarters of 2014 appear poised to exceed 3.0 percent, providing a solid basis for growth in 2015. However the housingrecovery will remain "choppy."
The October Economic and Housing Outlookpublished by Fannie Mae says reduced fiscal uncertainty and slowing monetary intervention has enabled momentum in the private sector to build while total government spending no longer declined. Those government cutbacks had been masking improvement in the private economy. Housing contributed to growth as well, rebounding strongly in the second quarter from sharp drops in the previous two quarters
September appears to have been another month in which loan performance improved and the states continued to slog through the overhang of delinquent mortgages left over from, in some cases, the early days of the housing crash. Black Knight Financial Services released a "first look" at its data for the month showing overall improvement in delinquency and foreclosure metrics.
The inventory of delinquent loans - those for which one or more payments have been missed but the loan is not yet in foreclosure - declined by 3.90 percent or 117,000 loans in September, nearly reversing a huge 146,000 delinquent loan increase in August. This brought the 30+ day rate down to 5.67 percent and was a 12.22 percent drop representing 388,000 fewer loans compared to September 2013.
Builders who engage in home remodeling continue to display confidence in their market the National Association of Home Builders (NAHB) said today. NAHB's Remodeling Market Index (RMI) rose from 56 in the second quarter of 2014 to 57 in the third quarter.
NAHB described the current index reading as a "high water mark" and said it was the sixth consecutive quarter that the reading has been above the benchmark of 50. This indicates that more remodelers report a higher level of activity compared to the previous quarter than those who see activity as down.
The RMI averages responses about currentactivity with those about futureexpectations for work. Both current and future responses are based on calls for bids, amount of work committed for the next three months, backlog of jobs, and appointments for proposals.
The percentage of American homeowners a mortgage that was seriously underwater fell to 15 percentin the third quarter of 2014 RealtyTrac said on Thursday. There were 8.1 million properties with mortgages that met the company's definition of seriously underwater - where the combined loan amount of the homes mortgage(s) is at least 25 percent higher than the properties market value. The combined market value of negative equity in these properties is an estimated $1.4 trillion.
In the second quarter of 2014 there were an estimated 9.1 million residential properties in a negative equity situation or 17 percent of all mortgaged homes. The new third quarter figures were the lowest since RealtyTrac began following the issue in the first quarter of 2012. Negative equity, which is a leading indicator of the possibility of foreclosure and seriously dampens a homeowner's ability to refinance or sell the property, peaked according to RealtyTrac's data in the second quarter of 2012 at 12.8 million properties or 29 percent.
Frank E. Nothaft and Leonard Kiefer, Freddie Mac's chief and deputy chief economists have come up with a formulafor lifting the economy from its continuing low-growth status to a trajectory of robust sustainable growth. And that's what they are calling it, L.I.F.T. The acronym stands for Labor, Income, Fixed Investment, and Trust and in the current edition of the company's U.S. Economic and Housing Market Outlook they lay out the parameters for each.
The labor market must fully recover, providing solid employment gains, less long term unemployment, and broad-based income growth. Unless the labor market recovery accelerates, any improvement in the housing market will also lag. Last month the unemployment rate finallyfell below 6 percent for the first time since the recovery began but that number does not tell the full story....(read more)
Falling interest rate precipitated a major refinancing rally during the week ended October 17 even though Columbus Day shortened the business weeks in some locations. The Mortgage Bankers Association's (MBA's) Refinance Index jumped 23 percent compared to the previous week, the largest increase for the index this year, far surpassing an 11 percent gain in January and taking the index to its highest level since November 2013. Applications for refinancing made up a 65 percent share of all applications compared to 59 percent the previous week and the average size of a loan for refinancing rose to $306,000 the highest level since MBA started its survey in 1990.