Mortgage Rate News
FICO, the company that develops proprietary scoring models for credit bureaus and lenders, announced August 7 that a new model (FICO Score 9) would be released this fall. FICO's press release caught buyers', Realtors', and lenders' attention, as the new model was touted as significantlymore “borrower friendly”. Paid collections would no longer impact credit scores. Medical debts (paid or not) would hurt scores less as well. FICO predicted some consumers' scores could rise by 25 points, an amount that would significantly reduce their loan costs or interest rates.
The pending changes (which followed a CFPB study on the fairness of FICO's scoring models) ignited a frenzy of optimism from Steve Brown, president of the National Assn of Realtors who gushed they would “make a real difference in the lives of millions of American who have been shut out of the mortgage market or forced to pay higher mortgage interest rates because of flawed credit scores.”
RealtyTrac estimated that home sales in July were at an annualized rate of 4.63 million units, a decrease of 3 percent from June and down 12 percent from July 2013. This would be the third consecutive month in which RealtyTrac has projected a decrease in sales volume and the report is sharp contrast to the Existing Home Sales report issued last week by the National Association of Realtors® (NAR). That report showed existing home sales rose 2.4 percent from June to July, the fourth straight month-over-month increases, to an annualized total of 5.15 million sales and a rate down only 4.3 percent from the previous July.
What's this? The borrower receives a cat when their mortgage closes? What would the CFPB say? Will fleas lead to a class action lawsuit a year down the road? Would the DOJ claim canine disparate treatment? Besides, for many people, not receiving a cat would be a better selling point.
Favorable housing conditions were credited for leading pending home sales higher in July to their best level since August 2013. Pending sales as measured by purchase contract signings rebounded from a slight dip in June that interrupted three straight months of steady gains.
The Pending Home Sales Index (PHSI) compiled by the National Association of Realtors (NAR) rose 3.3 percent to 105.9 from 102.5 in June but is still 2.1 percent below the July 2013 level. It is the third straight month the Index has been above 100, considered an average level of contract activity. The gains were broad-based with only a slight decline in the Index in the Midwest.
Freddie Mac said today that the housing recovery continues to be a primarily local phenomenon. While markets with strong economies and favorable demographics are continuing to improve at a strong pace most markets are still generally weak and the housing market as a whole continues to plod along
The company released its most recent Multi-Indicator Market Index (MiMi)on Wednesday, with a current value of 73.7. This indicates a weak housing market overall, with only a slight improvement (0.04 percent) from May to June and a 3-month positive trend of 0.16 percent. On a year-over-year basis the MiMi has risen by 7.67 percent.
Home prices have now increased on a quarterly basis 12 consecutive times. The Federal Housing Finance Agency (FHFA) said yesterday that the 12th increasein its purchase-only seasonally adjusted House Price Index (HPI) was a 0.81 percent rise in the second quarter of 2014. The seasonally adjusted monthly index for June was up 0.4 percent from May, its seventh consecutive monthly increase and the 23rd month it has gained out of the last 24.
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