“The European debt crisis overshadowed improving economic indicators for the U.S. and allowed Treasury bond yields and fixed mortgage rates to ease for another week,” Frank Nothaft, Freddie Mac’s chief economist, said in explaining why mortgage rates continue to inch down.

Here’s a closer look at how rates fared for the week ending May 17, according to Freddie Mac’s weekly mortgage market survey:

•30-year fixed-rate mortgages: averaged a new record low of 3.79 percent this week, with an average 0.7 point, down from last week’s previous record of 3.83 percent. Thirty-year mortgage rates have been below 4 percent since December. A year ago at this time, 30-year fixed-rate mortgages averaged 4.61 percent.

•15-year fixed-rate mortgages: also dipped to new record lows this week, averaging 3.04 percent, with an average 0.7 point, dropping from last week’s previous record of 3.05 percent. Last year at this time, 15-year fixed-rate mortgages averaged 3.80 percent.

•5-year adjustable-rate mortgages: averaged 2.83 percent, with an average 0.6 point, rising slightly from last week’s 2.81 percent average. Last year at this time, 5-year ARMs averaged 3.48 percent.

Source: Freddie Mac

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

The agency is proposing a ban on mortgage companies from charging origination fees, which can fluctuate with a loans amount, The New York Times reports. The fees can often get confused with upfront discount points that borrowers often pay.

The agency is also looking at implementing a new rule that would require lenders to offer a reduced interest rate when a borrower chooses to pay discount points on a loan upfront. Lenders would be required to offer a loan option to not include any points.

“Mortgages today often come with so many different types of fees and points that it can be hard to compare offers,” Richard Cordray, the director of the consumer bureau, told The New York Times. “We want to bring greater transparency to the market so consumers can clearly see their options and choose the loan that is right for them.” What are your thoughts for this being transparency for the housing recovery in your local market?

Source: “New Rules May Curtail Some Fees in Mortgage, ” The New York Times 5/9/12)

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)

In fact, one in five boomers surveyed say they’ve already loaned their children money, cosigned a mortgage, or given a cash gift for a down payment on a home.

Even baby boomers not considered wealthy are willing to offer help on down payments. While baby boomers who make more than $75,000 a year were found to be the most willing to offer help, 46 percent of baby boomers who make less than $75,000 per year say they also plan to help their child with a future home purchase, according to the survey. 

So why are baby boomer parents so willing to help their children out with a home down payment? About 75 percent of boomers said they believe owning a home is a good investment for their children, and 58 percent said they think it’s still part of the American dream. 

Source: “Survey: Most Boomers Would Cover Kids’ Down Payment,” AOL Real Estate (Nov. 30, 2011)

Other information about the Sierra Foothills, El Dorado, Placer, Amador or Sacramento Counties of California at: www.sierraproperties.com or www.dougandbudzeller.com

Christmas season now add to the attractions. Holiday decorations accent the foothills region introduced by numerous Christmas Trees beside Highway 50 in Placerville. Take a stroll on “Main Street” to embrace the holiday themes of the local merchant shops.

Just to the east toward Camino are some of El Dorado County “Christmas Tree Farms” offering choose and cut your own tree benefits. Truly family fun, especially for the kids For information about some of  the growers or farms visit: www.ChooseandCut.com or refer to a map of the region at:  http://www.chooseandcut.com/map.html

 “Apple Hill” orchards, farms, ranches and their restaurants welcome visitors with bakeries and fall harvest treats are still open to add other family fun.

For a video tour and information about the Placerville, El Dorado County, California, region visit:  http://www.youtube.com/watch?v=mGPoK87artA

According to the California Taxpayers Association, nearly fifty local tax proposals will appear on ballots this month throughout the state.  They include proposals for local school bonds, business license taxes, hotel taxes, parcel taxes, sales taxes and utility users taxes.  With 18 measures on local ballots, parcel taxes are the most common this election.

The high number of proposals is no doubt a reflection of the hard times most local governments are facing.  But the news is not all bad.  According to the Cal-Tax data, two cities, Modesto and South Pasadena, have placed proposals on their local ballots to reduce the existing utility users tax rate. El Dorado County has 3 on their ballots.

More information at: http://www.caltax.org/homepage/local_tax_elections.htm

An increase of 1.4 million households moved into rental housing in the year ending June 2011–a 4 percent rise in the number of tenant households in one year alone, the Census Bureau reports. Meanwhile, the home ownership rate dropped about 1.5 percent over the past year. Data concurrent with general trends in Placerville, El Dorado County, CA.

“While home sales remain sluggish despite the most affordable purchase market in decades, households have turned to rental to meet their shelter needs,” Nothaft writes in the report. 

The increase in rental demand is due partially to some households who may have faced a short sale or foreclosure of a home they owned, Nothaft notes. However, he says most of the rental demand is coming from young and newly formed households, who are postponing home ownership. The home ownership rate for household heads under 30 years of age has fallen the sharpest in recent years.

As demand increases, vacancy rates are dropping and rents are rising. New construction for larger apartment buildings is also increasing, as property sales rise. Dollar-sales volume of apartment buildings was at its highest point in the second quarter since 2007, according to Real Capital Analytics. New construction starts of apartment buildings with at least 20 dwellings is also on the rise, posting its highest level since the end of 2008 in the second quarter too. 

 Source: Freddie Mac: October 2011 Economic Outlook