Fixed-rate mortgages pushed lower for the fifth-consecutive week, with low mortgage rates further driving the housing recovery over the near term, says Frank Nothaft, Freddie Mac’s chief economist.
This week, the 30-year fixed-rate mortgage hovered near its all-time record low, while 15-year rates set a new record.
Freddie Mac reports the following national averages with mortgage rates for the week ending May 2, 2013:
- 30-year fixed-rate mortgages: averaged 3.35 percent, with an average 0.7 point, just shy of its 3.31 percent record set during the week of Nov. 21, 2012. A year ago at this time, 30-year rates averaged 3.84 percent.
- 15-year fixed-rate mortgages: sank to an all-time record low of 2.56 percent, with an average 0.7 point, dropping from last week’s previous record of 2.61 percent. Last year at this time, 15-year rates averaged 3.07 percent.
- 5-year adjustable-rate mortgages: averaged 2.56 percent, with an average 0.5 point, dropping from last week’s 2.58 percent average. Last year at this time, 5-year ARMs averaged 2.85 percent.
Source: Freddie Mac
Home prices will likely climb 10 percent in 2013 and 8 percent in 2014, according to Barclays analyst Stephen Kim, who recently upgraded his view of the housing market from neutral to positive.
Kim told The Wall Street Journal recently that low mortgage rates are helping to make buying more affordable than renting in many markets.
About “18 months ago, the industry was nothing much to look at: dilapidated foreclosures were flooding the market, home equity had suffered the worst retrenchment in a generation, and housing starts and sentiment were far below historic troughs levels,” Kim notes. “But after stabilizing in 2012, both new and existing home prices are now accelerating much more rapidly than in the 1990s cycle.”
Source: “The Housing Market: Not Your Analyst’s Oldsmobile?” The Wall Street Journal (April 23, 2013)
In some parts of the country, energy efficient and eco-friendly homes are easier to find. The real estate brokerage Redfin recently ranked cities that have the greenest homes, basing its rankings on the number of homes for sale that boast green features—such as solar panels, LEED certification, and Energy Star appliances—as well as taking into account each city’s carbon-dioxide emissions ranking.
“The residents of these cities are reducing their environmental footprint and saving money at the same time” by lowering their monthly utility bills, says Julie Jacobson, a real estate agent with Redfin.
The 3 cities emerged on the top of the list for greenest cities for homes:
- San Francisco
- Washington, D.C.
- Sacramento, Calif.
Source: “10 Cities With the Greenest Homes,” AOL Real Estate (April 19, 2013)
Loan requests for home purchases — viewed as a leading indicator of future home sales — surged 6.7 percent last week, the Mortgage Bankers Association reports. Applications for refinancing also rose, jumping 8 percent.
MBA’s index of mortgage application demand had declines six of the past nine weeks as mortgage rates have inched higher. Last week, mortgage rates dropped for the first time in three weeks, helping to lift loan demand, the MBA reports.
MBA’s overall index of mortgage application activity, which reflects applications for home purchases and refinancing, increased 7.7 percent for the week ending March 22.
The MBA reports that the 30-year fixed-rate mortgage averaged 3.79 percent during the week, down from 3.82 percent the week prior.
Source: “Mortgage applications rebounded last week as rates fell: MBA,” Reuters (March 27, 2013)
Changes to the tax code for 2013 earnings largely left real estate untouched. The mortgage interest tax deduction (MID) is still safe and sound, just as sacred as ever. The Mortgage Forgiveness Debt Relief Act (Debt Relief Act) was extended for another year, ensuring short sales will continue at pace.
Although income tax breaks were extended for the middle class, the payroll tax break was allowed to expire. The payroll tax increased by two percentage points for middle income earners in 2013. This increase has noticeably diminished the take-home pay of approximately 77% of American households.
Many first tuesday readers believe that this will negatively affect home sales volume in 2013. We disagree.
While consumer spending may suffer, buyer purchasing power will remain strong through 2013. Buyer purchasing power is determined by interest rates and a buyer’s gross income, which obviously has not been affected by the increased payroll tax. This is tracked monthly by first tuesday’s Buyer Purchasing Power Index (BPI).
Results of vote and more information at source: http://firsttuesdayjournal.com/the-votes-are-in-2013-tax-code-is-no-good-for-real-estate-sales/
Now that we’ve entered the tax filing season, many taxpayers’ thoughts naturally turn to the subject of IRS audits. What are the chances you’ll be audited by the IRS? It depends.
The overall audit rate is low. In 2012 only 0.94 percent of all individual taxpayers with incomes under $200,000 were audited. Taxpayers with incomes of $200,000 to $1 million were audited at a 3.7 percent rate.
There are a number of ways to greatly increase your audit odds. Therefore , you may enjoy this article by Stephen Fishman is a tax expert, attorney and author at: “6 Ways to Increase Your Chances of Being Audited,” Inman News (Feb. 8, 2013)
Mortgage rates were on their way up this week, with the 30-year fixed-rate mortgage moving to its highest reading since Sept. 29, 2012, Freddie Mac reports in its weekly mortgage market survey.
Still, mortgages remain near all-time record lows and “should continue to aid in the ongoing housing recovery,” according to Frank Nothaft, Freddie Mac’s chief economist.
Freddie Mac reports the following national averages with mortgage rates for the week ending Jan. 24:
- 30-year fixed-rate mortgages: averaged 3.42 percent, with an average 0.7 point, rising from last week’s 3.38 percent average. A year ago at this time, 30-year fixed-rate mortgages averaged 3.98 percent. The record low for 30-year rates is 3.31 percent, set on Nov. 21, 2012.
- 15-year fixed-rate mortgages: averaged 2.71 percent, with an average 0.7 point, rising from last week’s 2.66 percent average. Last year at this time, 15-year rates averaged 3.24 percent.
- 5-year adjustable-rate mortgages: averaged 2.67 percent, with an average 0.5 point, holding the same as last week. Last year at this time, 5-year ARMs averaged 2.85 percent.
Source: Freddie Mac
Home prices are increasing across the country as the number of homes for-sale continues to fall. At a time when buyer demand is picking up, why is inventory still low?
Inventories fell to 1.82 million at the end of last year, a 21.6 percent drop from one year earlier, the National Association of REALTORS® reports.
The Wall Street Journal recently highlighted several reasons behind the dropping inventories, including:
- Sellers hesitant to sell: About 22 percent of home owners with a mortgage are still underwater, owing more than their home is currently worth. Home owners don’t tend to sell unless a life-changing event occurs when they’re underwater because they don’t want to take a loss on the sale of their house. CoreLogic data shows that inventories are the most constrained in areas with the highest number of underwater borrowers.
- Not enough equity to trade up: Often times, home owners rely on the equity from their home to make a down payment on their next home. With fewer home owners seeing equity in their houses, they may not have enough money to move into a pricier home, which is constraining the would-be “trade up” buyer from moving.
- Investors continue to snatch up properties: Investors are snapping up properties, but they’ve changed their strategy from past years, which is also constraining inventories. Now they’re holding onto properties and turning them into rentals instead of rehabbing properties and flipping them for profit. This is keeping fewer homes on the market.
- Banks are slowing down foreclosures: Banks have new rules to meet with the foreclosure process, and it’s causing them to move at a slower pace in foreclosing on homes. Banks also are showing a preference for short sales and loan modifications, which are curbing the number of foreclosed homes on the market.
- Builders are doing less building: Housing starts were at record lows from 2009 through 2011 so there’s less inventory being added to the market. A rebound in the new-home market has only recently started to occur.
Source: “Six Reasons Housing Inventory Keeps Declining,” The Wall Street Journal (Jan. 22, 2013)
Short sales are getting much shorter, Freddie Mac says. The mortgage giant launched a Freddie Mac Standard Short Sale program on Nov. 1 that sought to speed up the short sale process and make it easier and more transparent.
“We estimate that the time to complete a short sale will decrease by approximately 50 percent to 75 percent,” as a result of the changes, writes Tracy Mooney, Freddie Mac’s EVP in a recent blog post.
Among the changes that took effect Nov. 1, 2012:
- Mortgage servicers have 30 days to make a decision on a short sale once they receive an application. If they need to negotiate with a third party, they have 30 additional days. A final decision on the short sale must be made within 60 days.
- Mortgage servicers are required to acknowledge they received the short sale application within three days of submission. Servicers must provide weekly status updates if they end up needing more time to review the application past the initial 30-day period.
- Mortgage servicers have authority now to approve short sales when qualifying financial hardships for home owners who are past due or current on their mortgage payments.
- Mortgage servicers are also now able to approve short sales without seeking a separate review by the mortgage insurance company.
- Following a short sale, home owners may be able to qualify for up to $3,000 in relocation assistance.
Source: “The Shorter Short Sale: Long on Borrower Benefits,” Freddie Mac Executive Perspectives Blog (Jan. 22, 2013)