Rising Rates Soften Loan Demand in Latest Week

Interest rates rose last week, prompting a sharp fall in applications for home mortgages, the Mortgage Bankers Association reported Wednesday.

Loan applications dropped 9.2 percent in the week ending June 13, according to the MBA’s index of mortgage application activity. The MBA’s survey, which reflects 75 percent of the residential mortgage market, measures application demand for both refinancing and home purchases.

Broken out, applications for refinancing fell 12.7 percent last week. Applications for home purchases, viewed as a major indicator of future home purchases, dropped 4.7 percent, the MBA reports.

Mortgage rates were on the rise last week, with the 30-year fixed-rate mortgage rising 2 basis points to 4.36 percent.

The decrease in applications this week comes after a report last week that showed mortgage applications for home purchases had reached a five-month high.

Source: “U.S. Mortgage Applications Drop in Latest Week: MBA,” Reuters (June 18, 2014)

Mortgage Applications Fall as Rates Surge!

Mortgage applications for home purchases and refinancing continued to fall, dropping 11.5 percent last week, amid rising mortgage rates. Interest rates rose above 4 percent for the first time in a year, according to the Mortgage Bankers Association.

Applications for refinancings saw the largest declines, with applications falling 15 percent last week, the MBA reports. Meanwhile, applications for home purchases, an indicator for future home sales, fell 1.6 percent last week.

Many analysts blame the decreasing applications on rising mortgage rates. The fixed 30-year mortgage rate averaged 4.07 percent for the week ending May 31, its highest level since April 2012, the MBA reports. Fed chairman Ben Bernanke recently indicated that the Fed may soon scale back its bond purchase program, which has helped to keep mortgage rates near all-time record lows.

Source: “Mortgage applications drop as rates surge: MBA,” Reuters (June 5, 2013)

As Interest Rates Rise, Mortgage Applications Drop!

Loan demand dropped last week as interest rates rose for the fourth straight week, the Mortgage Bankers Association reports. 

The index measuring mortgage application activity, which includes applications for refinancing and home purchases, fell 6.4 percent for the week ending Feb. 8.

Separated out, refinancing applications during the week dropped 5.5 percent while applications for home purchases, viewed as a leading indicator of home sales, fell 9.5 percent. 

The 30-year fixed-rate mortgage averaged 3.75 percent last week, up from 3.73 percent the previous week. The 30-year rate is at its highest level since September 2012, according to the MBA. 

Source: “U.S. Mortgage Applications Slumped Last Week as Rates Rose,” Reuters (2/13/13)

Low Mortgage Interest Rates, “Out of Reach?”

Although the average 30-year fixed-rate mortgage has been below 4% almost every week this year, experts say few home owners or buyers qualify for that rate.

Using data from CoreLogic, The Los Angeles Times calculated that about 69% of home owners who had mortgages as the second quarter of this year ended had rates of 5% or higher, and about a third of those owners had rates above 6%.

Fed’s taking steps to encourage lower mortgage rates? Economists say those actions may have limited results if these low rates continue to stay out of reach for many home owners. “The irony is the people who need the help the most have not been helped — the people who are underwater,” says Nobel Prize-winning economist Joseph Stiglitz.

Many industry observers agree that lower mortgage interest rates would free up income for underwater home owners and thus stimulate the economy. Along with the Fed’s recent action, some bills have been introduced into the U.S. Senate with the aim of assisting both home buyers and home owners interested in refinancing, but may linger as the November elections approach.

Source: “Two-thirds of Americans with mortgages pay 5% interest or higher,” The Los Angeles Times (9/18/2012)

Could the “New Mortgage Deal” lead to a Jump in Foreclosures?

A $25 billion mortgage settlement announced between major banks and state and government officials is supposed to bring aid to troubled home owners, but it could also bring a wave of new foreclosures, CNNMoney reports. 

During the year long negotiations, some banks slowed down repossessing homes, and now they may have a backlog of troubled loans on the books — loans that can’t be saved by the deal’s aid on refinancing or mortgage principal reduction. 

“The bottom line is that 2012 will see a lot of foreclosures that should have taken place in 2011 and didn’t,” Rick Sharga, executive vice president for Carrington Holdings, told CNNMoney.

Last year, foreclosure filings dropped 34 percent. This year, Daren Blomquist, vice president of RealtyTrac, estimates that new foreclosure filings will increase to between 2.2 million and 2.5 million compared to last year’s 1.9 million filings in 2011. 

The mortgage deal is aimed at helping home owners avoid foreclosure. One million struggling home owners may see their mortgage principal reduced as part of the deal. But the home owners must be able to afford new, lower payments. The banks will have no choice but to foreclose on home owners who stop making payments altogether or cannot afford a new payment structure on their loan.  

The backlog of foreclosures may not be all bad for the housing market, some experts say. We believe the “Short Sale” trend may come to the rescue? What do you think?

 Source: “Mortgage Deal Means More Foreclosures,” CNNMoney (Feb. 10, 2012)

“Mortgage Applications Surge” Amid Falling Rates

More people are applying for mortgages: Applications for home mortgages had their largest increase in three months due to falling record-low interest rates, the Mortgage Bankers Association reports.

MBA’s seasonally adjusted index of mortgage application activity increased 13 percent for the week ended June 10. That marks the index’s biggest gain since March. The index measures applications for refinancing and purchase demand.

Most of the spike was from refinancing applications, which increased 16.5 percent from last week. However, requests for mortgage applications for home purchases also rose 4.5 percent.

“Mortgage rates have declined for 8 of the past 9 weeks,” Michael Fratantoni, MBA’s vice president of research and economics, said in a statement. “Coming off of the Memorial Day holiday, refinance application volume increased significantly, as borrowers jumped to lock in the lowest mortgage rates since last November.”

Source: “Mortgage Applications See Biggest Gain in 3 Months: MBA,” Reuters News (June 14, 2011 

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

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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) 

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

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“Mortgage Rates Reach Another Low” for 2011

For the fifth straight week, mortgage rates inched down again–this time reaching the lowest level of the year as well as lowest year-to-date. The 30-year fixed-rate mortgage averaged 4.61 percent this week, while the 15-year rate averaged 3.80 percent, Freddie Mac reports in its weekly mortgage market survey.

The 30-year mortgage hasn’t reached 4.61 percent or below since December 2010. Last year at this time, it averaged 4.84 percent while the 15-year fixed-rate mortgage averaged 4.24 percent.

The falling rates may be yet another lure to buyers during real estate’s traditionally prime home buying season. Owning a home has also recently been found to be more affordable than renting in 78 percent of the major U.S. cities, according to the latest data from Trulia.

Mortgage applications, meanwhile, are increasing as interest rates continue to fall. Mortgage loan application volume increased 7.8 percent this week when compared to the week prior, according to the Mortgage Bankers Association. Refinancings,  hit the highest level since mid-December, increasing 13.2 percent over the prior week, while the purchase index for mortgage applications dropped 3.2 percent.

Source: “Fixed-Rate Mortgages Hit a New Year-to-Date Low,” Freddie Mac (May 19, 2011) and “Mortgage Applications Grow Again on Home Refinancings,” HousingWire (May 18, 2011) 

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

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California, “reintroducing anti-deficiency protection bill”

California Association of Realtors is sponsoring SB 458 (Corbett), a re-introduction of SB 1178 (Corbett) from 2010, which proposes to extend anti-deficiency protections to cover the refinance of purchase money mortgages that include debt incurred to acquire, construct or improve the home for homeowners facing foreclosure.

A loophole in the law has allowed California homeowners, already facing the possibility of foreclosure, to be sued by their lender for the difference between the value of the foreclosed property and the outstanding balance on the mortgage loan.  SB 1178 would have closed that loophole and expanded anti-deficiency protections to consumers who have refinanced their original mortgage loans and now are facing foreclosure.

During the 2010 legislative session, C.A.R. sponsored SB 1178 and urged REALTORS® and their clients to call their senator to vote “yes” on SB 1178.  Although this bill was approved by Congress, it was ultimately vetoed by Gov. Schwarzenegger. 

Other articles about real estate in the Sacramento and Placerville, California regions at: www.sierraproperties.com

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Mortgage Applications Rise

Applications to purchase homes rose 5.5 percent last week compared to the previous week on a seasonally adjusted basis, according to the Mortgage Bankers Association weekly survey.

On an unadjusted basis, purchases increased 3.1 compared over the previous week. This was the third consecutive week that purchase applications rose. They are at the highest level since May.

“The increases in purchase applications we have seen over the past couple of weeks align with the better than expected news from October’s employment report and other data indicating some improvement in the economy’s growth prospects,” says Michael Fratantoni, MBA’s vice president of research and economics.

Mortgage rates held steady:

· 30-year fixed-rate mortgages remained unchanged at 4.28 percent.
· 15-year fixed-rate remained unchanged at 3.64 percent.

Source: Mortgage Bankers Association (11/10/2010)

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