The surge in mortgage applications last week was attributed to a jump in refinance applications, which rose 13 percent for the week. Refinance applications make up nearly 75 percent of all mortgage applications.

Surprisingly, mortgage applications for home purchases dropped 2.4 percent last week.

“Low rates have convinced many home owners to refinance their mortgages, though tougher lending requirements still keep many prospective home buyers from taking out new debt,” The Wall Street Journal reports. We agree, your thoughts?  

Source: “Mortgage Application Volume Rose 9.2% Last Week: MBA,” The Wall Street Journal (5/16/12)

Rents are increasing at about the same pace that home values are dropping, says Stan Humphries, Zillow’s chief economist, who says, according to their surveys, home prices have dropped 3.1 percent year-over-year whereas rents have increased 2.5 percent. “Herein lie the seeds to eventually more interest in buying on the part of consumers, which will help put a floor under home prices,” Humphries told Investors Business Daily.

Recent housing surveys, including Zillow’s, are showing home prices are starting to rise in recent months. Since this varies by local areas, how’s your market doing?

Source: “Rising Rents Prompt Buys, May Help Housing Recover,” Investors Business Daily (May 10, 2012)

The 30-year fixed-rate mortgage averaged 3.83 percent for the week ending May 10, posting a new record low from last week’s 3.84 percent average. The 15-year fixed-rate mortgage also posted a new record, averaging 3.05 percent this week.

Here’s a closer look at mortgage rates for the past week:

30-year fixed-rate mortgages: averaged 3.83 percent, with an average 0.7 point, down from last week’s previous record of 3.84 percent. A year ago at this time, 30-year mortgages averaged 4.63 percent. The 30-year fixed-rate mortgage, the most popular choice among home buyers, has averaged below 4 percent for nearly every week — except for one — since Dec. 8, 2011, according to Freddie Mac.

15-year fixed-rate mortgages: averaged 3.05 percent, with an average 0.7 point, dropping from last week’s previous record low of 3.07 percent. Last year at this time, the 15-year fixed-rate mortgage averaged 3.82 percent.

5-year adjustable-rate mortgages: averaged 2.81 percent, with a 0.5 point, dropping from last week’s 2.85 percent average. Last year, 5-year ARMs averaged 3.41 percent.

Source: Freddie Mac

Fannie posted a profit in the first quarter of the year, reporting a net income of $2.7 billion compared to a $6.5 billion loss they reported in the first quarter of 2011.

“We expect our financial results for 2012 to be significantly better than 2011,” says Susan McFarland, Fannie Mae’s chief financial officer. “As our serious delinquency rate declines and home prices stabilize, we expect to reduce our reserves, which combined with revenue from our high-quality new book of business, will drive our future results.”

Freddie Mac, also a government-sponsored enterprise and mortgage giant, recently reported a profit as well — a $577 million quarterly net income for the first quarter.

Our region is showing other signs of the housing market stabilizing: The decline in home prices is slowing, more are buying homes than a year ago, and housing starts have climbed in the last year. Comments about your local market conditions improving? 

Source: “Fannie Mae Profit Signals a Stabilizing Housing Market,” The New York Times (May 9, 2012)

The number of people who say now is a good time to buy is also on the rise, increasing to 73 percent—also the highest level in more than a year. The percentage who said it’s a good time to sell a home also increased one point to 14 percent in March.

Meanwhile, more Americans expect rental prices to rise and are projecting an increase by 4.1 percent over the next year, the highest number recorded to date.

“Conditions are coming together to encourage people to want to buy homes,” says Doug Duncan, Fannie Mae’s chief economist. “Americans’ rental price expectations for the next year continue to rise, reaching their record high level for our survey this month. With an increasing share of consumers expecting higher mortgage rates and home prices over the next 12 months, some may feel that renting is becoming more costly and that home ownership is more compelling house choice.”

Source: “Americans’ Expectations Align to Encourage Home Buying,” RISMedia (5/6/12)

“Signs of slowing economic growth and inflation remaining subdued allowed yields on Treasury bonds to ease somewhat and brought most mortgage rates to new all-time record lows this week,” says Frank Nothaft, Freddie Mac’s chief economist.

Here’s a closer look at average rates for the week ending May 3:

•30-year fixed-rate mortgages: averaged 3.84 percent, with an average 0.8 point, reaching a new historical low. The previous record for 30-year rates was 3.87 percent, which was set on Feb. 9 of this year. A year ago at this time, rates averaged 4.71 percent.

•15-year fixed-rate mortgages: averaged 3.07 percent, with an average 0.7 point, another historical low. The previous record for 15-year rates was 3.11 percent set on April 12 this year. A year ago at this time, 15-year rates had averaged 3.89 percent.

•5-year adjustable-rate mortgages: averaged 2.85 percent, with an average 0.7 point, holding the same as last week. Last year at this time, 5-year ARMs averaged 3.47 percent.

Source: Freddie Mac

Our suggestions are in line with a recent article at Money Magazine highlighting some of the following tips when shopping for a mortgage:

1. High credit scores count. The lowest mortgage rates go to home shoppers with credit scores of 760 or higher. Avoid opening new lines of credit or loans for at least three months prior to getting a loan. Also, on your open accounts, try to pay off those balances. “One large balance — even if it’s paid off at the end of the month — can ding your score by 20 points or more,” according to the article at Money Magazine.

2. Gather plenty of quotes. Most experts say shopping around can pay off. Gather at least six quotes from lenders on mortgage rates because they can vary quite a bit from lender to lender. Request quotes from local and regional lenders as well as national ones for comparison. Be sure to ask about estimated closing costs, too, which can be anywhere from 2 percent or more of the loan balance.

3. Ask about lock-ins. To make sure the rate doesn’t go up when you’re under contract, ask about a lock-in period on the loan, in which lenders agree to not raise the interest rate within a certain time period. Home shoppers should ask their lender and REALTOR® how long it takes to close loans similar to theirs and see how long they can lock a rate in for. Some lenders will charge several hundred dollars to extend a lock-in agreement, so experts recommend learning the lock-in terms beforehand when shopping for the best mortgage deal.

Source: “6 Ways to Get a Great Mortgage Deal,” Money Magazine (April 30, 2012)

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For every week but one this year, the 30-year fixed-rate mortgage, the most popular choice among home buyers, has been below 4 percent. We recommend you check with a couple of  local lenders to see what your qualifying guidelines are before rates go up! 

Here’s a closer look at average rates for the “week ending” April 26: 

• 30-year fixed-rate mortgages averaged 3.88 percent, with an average 0.7 point, dropping from last week’s 3.90 percent average. A year ago at this time, 30-year rates averaged 4.78 percent. The record low for 30-year rates averaged 3.87 percent, a record reached in February. 
• 15-year fixed-rate mortgage averaged 3.12 percent, with an average 0.6 point, dropping from last week’s 3.13 percent. Last year at this time, 15-year rates averaged 3.97 percent. The all-time record low is 3.11 percent, a record reached recently during the week ending April 12. 
• 5-year adjustable-rate mortgages averaged 2.85 percent this week, with an average 0.6 point, rising slightly from last week’s 2.78 percent average. Last year at this time, 5-year ARMs averaged 3.51 percent.

Source: Freddie Mac

As of now, housing reports continue to show month-over-month drops in foreclosures. CoreLogic released a report late last week that showed completed foreclosures fell from 71,000 in January to 65,000 in February.

But as more banks look to clear a backlog of defaulting home loans from their books, economists say the public should expect a turn with foreclosures and the numbers are expected to soar in the coming months. Mark Fleming, CoreLogic’s chief economist, expects the wave to hit this summer.

However, Fleming doesn’t view the increase as a bad thing for the overall housing market. “I would like to see the pace increase, because that means we’ll be able to work off the inventory faster,” Fleming told AOL Real Estate. He says that recent improvements in the real estate market and economy may mitigate any traditional downward pressure seen on overall home prices by foreclosures.

In fact, despite an increase, Fleming still expects home prices to rise in some markets.

“All of this will result in more foreclosure pain in the short term as some of the foreclosures that should have happened last year instead happen this year,” Daren Blomquist, vice president of RealtyTrac, said in February.

Source: “Home Prices May Withstand Foreclosure Wave,” ”AOL Real Estate (3/30/12)

“The housing market is showing some signs of shaking off the depression-like conditions that have plagued it for much of the past few years,” according to the report. “As if awakening from hibernation, housing starts and home sales moved to higher levels of activity.”

In fact, the signs have prompted Freddie Mac to revise its forecast upwards for home sales and originations. One economic contributor that’s helping to stabilize housing: The drop in the unemployment rate to 8.3 percent, its lowest level in three years, according to the report.

“A variety of encouraging indicators suggest that the housing market may be feeling a nascent recovery … and more neighborhoods may see a stabilization in overall demand and housing values this spring,” says Frank Nothaft, Freddie Mac’s chief economist. Please proide your thoughts or comments!?!

Source: “Freddie Mac: Economic Growth Expected to Stabilize Housing Market” Dow Jones Newswires (March 28, 2012)