Mortgage Prepayments Climb

Mortgage prepayments, a common gauge for housing and refinancing demand, jumped to its highest level since May 2013—a good sign for the market, according to a new analysis from data and analystics firm Black Knight. Mortgage prepayments were at 1.81% in October, more than double the figure a year ago. That represents a 134% year-over-year increase, Black Knight reports.

What’s causing the improvement? Low mortgage rates are prompting more people to refinance their mortgage or buy a home. Consumers typically pay off previous loans when they buy a new home.The uptick is apparent: Existing-home sales increased 1.9% in October to a seasonally adjusted annual rate of 5.46 million—4.6% higher than a year ago, the National Association of REALTORS® reported last week.

Source: “Mortgage Prepays Surge to 6-Year High, Black Knight Says,” HousingWire (Nov. 25, 2019)

High Rents, Low Rates = ‘Top Draws to Owning’

Sixty-two percent of potential home buyers say that now is a better time to purchase a home than it was a year ago, according to Chase’s new national survey, “Insights From the Mind of the Homebuyer.” The top reasons that are motivating more Americans to get off the fence are rising rental costs and historically low interest rates, the survey found.

Thirty-two percent of more than 1,000 consumers surveyed say they want to buy soon in order to take advantage of low rates. What’s more, 35 percent say that the 30-year fixed-rate mortgage rising above 4 percent would delay their decision to buy.

Twenty percent of consumers surveyed say that the rising cost of rent is making home ownership look like a better value and is the top reason why they want to buy. Also, 20 percent of those surveyed say that their desire to make an upgrade from their current home was their top motivation for buying.

Nearly 70 percent say they are worried they may have already missed the best time to buy because of rising home prices. Three out of four home buyers say they’re concerned their offer will be outbid by others, and three in five say they think they’ll need to buy a smaller home or consider other neighborhoods outside of their top choices because of rising prices, the survey finds.

Source: Chase

Mortgage Interest Rates Drop Even Lower This Week

For the second consecutive week, mortgage rates continued to fall, with the 30-year fixed-rate mortgage still well below 4 percent and 15-year rates dipping below 3 percent, Freddie Mac reports in its weekly mortgage market survey.

“Low mortgage rates are a welcome sign for those in the market to buy a home this spring season and will help to support homebuyer affordability,” says Len Kiefer, deputy chief economist at Freddie Mac.

Freddie Mac reports the following national averages for the week ending March 26:

  • 30-year fixed-rate mortgages: averaged 3.69 percent, with an average 0.6 point, dropping from last week’s 3.78 percent average. Last year at this time, 30-year fixed-rates averaged 4.40 percent.
  • 15-year fixed-rate mortgages: averaged 2.97 percent, with an average 0.6 point, dropping from last week’s 3.06 percent average. A year ago, 15-rates averaged 3.42 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 2.92 percent, with an average 0.4 point, dropping from last week’s 2.97 percent average. Last year at this time, 5-year ARMs averaged 3.10 percent

Source: Freddie Mac

Fixed-Rate Mortgages Losing Popularity?

A resurgence is occurring with adjustable-rate mortgages, as more borrowers explore their options beyond 30-year fixed-rate mortgages, according to Freddie Mac’s annual ARM survey. As 30-year rates trend higher, more borrowers are being lured to the low introductory rates of ARMs, which remain near historical lows, the report shows.

“Home buyers have preferred fixed-rate mortgages the past few years because of the low interest rates and the certainty of the monthly principal and interest payment,” says Frank Nothaft, Freddie Mac’s chief economist. “As longer-term rates rise, ARMs with their lower initial interest rates will become more appealing to loan applicants. Hybrid ARMs are particularly attractive because they have an initial extended fixed-rate period of three to 10 years.”

Hybrid ARMs — particularly the 5/1 — are the most popular loan product chosen by ARM borrowers, according to the Freddie Mac survey.

“Borrowers who have taken out ARMs generally prefer hybrids, because these products include an extended initial period where the interest rate is fixed,” Nothaft says.

For a borrower taking out a 30-year, 5/1 hybrid ARM instead of a 30-year fixed-rate mortgage, the savings was about 1.36 percentage points in January, Freddie shows. This would amount to a savings on the monthly principal and interest payment of about $194 on a $250,000 loan for the first five years.

Source: “Fixed-rate mortgages tumble in popularity,” HousingWire (Jan. 28, 2014) and “Higher Rates Should Lead to ARM Resurgence, Freddie Mac Says,” Mortgage News Daily (Jan. 28, 2014)


“Vacation Home Market” Heating Up!

As consumer confidence, the economy, and job market all make gains, more Americans are feeling like they have money to spend on second residences and summer homes. Low interest rates are still a big draw.

Vacation home sales increased 10 percent nationwide in 2012, according to the National Association of REALTORS®. Real estate professionals are also reporting sales have been strong this spring in many vacation home hot spots.

“A lot of buyers who were sitting on the sidelines decided last year was probably a good time to take advantage of buying a vacation home,” says Paul Bishop, NAR’s vice president of research. “They were feeling pretty good about their own financial situation, given the growth in the market and in the economy.”

Source: “Vacation home sales sizzle; rentals book up,” CNBC (May 20, 2013) and “Desire For Vacation Homes Heating Up, Sales Strong,” Investor’s Business Daily (May 16, 2013)

Real Estate ‘Loan Demand Rises’ as Rates Fall!

Mortgage applications climbed 2 percent last week as several key interest rates dropped, the Mortgage Bankers Association reports.

Mortgage applications for refinancing, which make up the biggest bulk of MBA’s index, rose 3 percent for the week ending April 26, reaching its highest level since January. Meanwhile, mortgage applications for home purchases fell last week by 1.4 percent compared to a week earlier.

“Low interest rates have attracted new buyers and persuaded many home owners to refinance their mortgages,” Dow Jones reports. “However, tightened credit restrictions still bar many borrowers from filing loan applications.”

The 30-year fixed-rate mortgage averaged 3.6 percent last week, its lowest rate since December, MBA reports.

Source: “U.S. Mortgage Applications Up 2%,” Dow Jones Newswires (May 1, 2013)

Where Are the First-time Home Buyers?

Fewer first-time home buyers are in the housing market nowadays, accounting for 34 percent of all buyers in July. While that percentage has inched up slightly as of late, it still remains far from the 40 percent levels first-time home buyers generally account for in the housing market, according to the National Association of REALTORS®.

One of the biggest obstacles? Saving for the down payment, according to recent home buyer surveys. The second-biggest hurdle cited was poor credit history, which was making it difficult for first-timers to qualify for a mortgage. A high unemployment rate among younger adults — who often make up the biggest group of first-timers — is also holding many back. Also, first-time home buyers, who need financing for their home purchase, are increasingly losing out to investors who are willing to pay entirely in cash.

“First-time buyers are vital to boosting sales, especially during downturns, since when they buy a home, they aren’t also selling a previous home to finance the purchase,” according to MarketWatch.

More info. at source: “Fewer Home Buyers Are First-Timers,” MarketWatch (8/22/12)

Calif. Bankruptcies decline faster than U.S. filings

Almost 99,000 individuals and businesses filed for bankruptcy in California during the first six months of 2012, down 22 percent from the same period in 2011, according to federal court data compiled by the American Bankruptcy Institute and Epiq Systems Inc.

California accounts for almost one in six bankruptcies filed nationwide and more than any other state. However, because of its large population, the Golden State ranks 10th in the number of bankruptcies per capita, 5.35 filings per 1,000 population.

Nationwide, individuals filed 601,184 bankruptcies during the first half of 2012, a 13 percent drop from a year earlier, and commercial enterprises filed 30,946 bankruptcies, down 22 percent, the ABI reports.

“We are on pace for perhaps the lowest total new bankruptcies since before the financial crisis in 2008,” said ABI Executive Director Samuel J. Gerdano. “With sustained low interest rates and weak consumer spending, we expect bankruptcies to stay at relatively low levels through the end of 2012.”

More information at source:

Banks Fearing “Prolonged Mortgage Slowdown”

The Mortgage Bankers Association says loan originations plummeted 35 percent to $325 billion in the first quarter and likely will hover around $1 trillion for all of 2011 and stay put next year.

Despite low interest rates, lenders have seen a drop in refinancings that has not been offset by home purchases. In response, some lenders are reducing their staff; while others are closing retail branches, consolidating, cutting costs, or branching into new markets.

Source: “Banks Fearing Prolonged Mortgage Slowdown,” (Login required) American Banker, Kate Berry (June 6, 2011) 

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