Welcome to the "Z" Team!

Talking Points:

For the first time in six weeks, fixed-rate mortgages reversed course and climbed higher this week, Freddie Mac reports in its weekly market survey.

“Fixed mortgage rates edged up following a solid employment report for April,” says Frank Nothaft, Freddie Mac’s chief economist. “The economy gained 165,000 new jobs on net last month, more than the market consensus forecast and the largest monthly increase this year.”

Freddie Mac reports the following national averages with mortgage rates for the week ending May 9:

• 30-year fixed-rate mortgages: averaged 3.42 percent, with an average 0.7 point, rising from last week’s 3.35 percent average. A year ago at this time, 30-year rates averaged 3.83 percent.
• 15-year fixed-rate mortgages: averaged 2.61 percent, with an average 0.7 point, rising from last week’s 2.56 percent average. Last year at this time, 15-year rates averaged 3.05 percent.
• 5-year adjustable-rate mortgages: averaged 2.58 percent this week, with an average 0.5 point, climbing from last week’s 2.56 percent average. Last year at this time, 5-year ARMs averaged 2.81 percent.

Source: Freddie Mac

Individual home buyers comprised a quarter of all house purchases last year, according to National Association of REALTORS® data. Single women purchase homes at double the rate of single men, according to the data.

However, solo buyers can face particular challenges in qualifying for a mortgage. During and following the recession, banks tightened their underwriting standards, which also made it more difficult for single home buyers without dual incomes to qualify for a loan.

Between 2010 and 2012, home purchases made by singles dropped 7 percent — unprecedented, according to NAR. Low mortgage rates and high home affordability have drawn more singles back to home buying.

Home purchases are often a means of self-expression for singles, Jennifer De Vivo, a real estate professional, told MSN Real Estate. “It’s a way for singles to express their lifestyles and values,” De Vivo says. “They are able to focus on the exact communities, home styles, and features that cater to their individuality with much less compromise.”

“I always counsel them to try to keep their current home as an investment property and rent it out. It’s a big step toward helping create long-term financial security,” De Vivo says.

Source: “Solo Homebuyer? You’re not Alone,” MSN Real Estate (May 2013)

The number of homes for sale is at the lowest point in more than 10 years, but with buyer demand still high, many markets are seeing bidding wars. A TIME magazine article recently asked: “Are buyers being manipulated into overbidding for the relatively few attractive homes on the market?” Some real estate professionals say that homes are being underpriced in order to ignite a bidding war.

“Most people are not pricing at market value,” a real estate professional told the San Francisco Chronicle. “Even in this market, you don’t want to overprice.”

Bidding wars have become commonplace in markets like Denver, where half of the new homes on the market are selling in less than 30 days. In Northern and Southern California nine in 10 homes are attracting bidding wars, as well as two-thirds of the homes for sale in Boston, New York City, Seattle, and Washington, D.C., the TIME magazine article notes.

“The only question is not whether a new listing will get multiple bids but how many it will get,” says a Sacramento, Calif.-based real estate professional.  Your comments!?!

Source: “Forget Lowballing: Bidding Wars Return in Hot Housing Markets,” TIME (April 30, 2013)

More and more retirees looking to obtain a home loan may find that solid retirement accounts and a sterling credit rating are not enough.

Lenders increasingly are looking for a consistent monthly income in line with their usual debt-to-income standards. When they look at dividends, most lenders want to see a regular annual amount on the tax return paid out over at least the past couple of years. In terms of part-time employment, borrowers need to prove they are actually working at the moment of application. In some cases, a two-year work history is required.

Social Security income is always counted, of course. Borrowers, though, need to be informed that current Fannie Mae guidelines permit lenders to increase that income by 25 percent if the beneficiary is not paying taxes on it.

A handful of portfolio lenders are still issuing loans without verifying income.  However, their interest rates are higher, as are their down payment requirements — which are in the range of 30 to 40 percent.

Source: “Loan Qualifications for Retirees,” New York Times (05/05/13)

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)

Sixty-five percent of the millennial generation, ranging in age roughly from 18 to 34, say that their intention to purchase a house has significantly increased in the past year, according to a survey from PulteGroup.

“As the economy continues to stabilize, more young adults will wean off of mom and dad and start to live on their own, spurring added economic growth,” HousingWire reports.

Nearly 20 percent of men ages 25 to 34 reportedly live with their parents, while 9.7 percent of women that age still live at home.

As this generation gains greater financial security, more millennials will begin to embark on their own.

A recent article from Barron’s notes that Generation Y could surprise the nation in upcoming years with their spending power and economic growth. The generation is 7 percent larger than the baby boom generation.

“Millennials have witnessed the housing boom and bust, but still believe home ownership is a good investment,” says Fred Ehle, vice president for PulteGroup.

Source: “Millennials Rightly Positioned to Boost Economy,” HousingWire (April 29, 2013)

The 15-year fixed-rate mortgage reached a new all-time record low this week, averaging 2.61 percent, Freddie Mac reports in its weekly mortgage market survey. The 5-year adjustable-rate mortgage also reached a new record low this week of 2.58 percent.

This marked the fourth-consecutive week mortgage rates inched lower.

“The housing market is getting a boost with mortgage rates hovering at or near record lows,” says Frank Nothaft, Freddie Mac’s chief economist.

Freddie Mac reports the following national averages for mortgage rates for the week ending April 25:

• 30-year fixed-rate mortgages: averaged 3.40 percent, with an average 0.8 point, dropping from last week’s 3.41 percent average. A year ago at this time, 30-year rates averaged 3.88 percent.
• 15-year fixed-rate mortgages: averaged the new low of 2.61 percent, with an average 0.7 point. The previous record low for 15-year rates was set the week of Nov. 21, 2012, when 15-year rates averaged 2.63 percent. A year ago at this time, 15-year rates averaged 3.12 percent.
• 5-year adjustable-rate mortgages: also averaged a new all-time record low of 2.58 percent this week, with an average 0.5 point, dropping from last week’s 2.60 percent average. Last year at this time, 5-year ARMs averaged 2.85 percent.

Source: Freddie Mac

Fannie Mae economists say that “the broadening housing recovery could very well be more robust” than they anticipated, according to the mortgage giant’s lately monthly economic outlook report.

Low inventories of homes for sale are contributing to rapid price increases all across the country, which are expected to continue throughout this year.

Fannie Mae economists predict that existing-home prices will rise 5.1 percent in 2013, reaching a median $186,000. They also predict home prices will increase another 3.8 percent in 2014, reaching $193,000.

However, higher-than-expected price jumps mixed with a shortage of for-sale houses could constrain existing-home sales this year and next, according to the economists.

Existing-home sales were up 9.4 percent last year, but Fannie economists predict sales to lessen that pace, growing by 6.9 percent this year and 5.5 percent in 2014. Sales of new single-family homes, however, are expected to post an 18 percent gain this year and a whopping 35.8 percent by 2014.

The economists say that 2016 should be the year where housing activity returns to “normal.” Do you agree? Please comment on your market forecast.

Source: “Fannie Mae: Housing recovery could be ‘more robust’ than anticipated,” Inman News (April 17, 2013)

Mortgage applications rose 5 percent last week as mortgage rates declined, the Mortgage Bankers Association reported in its weekly mortgage market survey for the week ending April 12, which was released Wednesday.

Applications for refinancing’s, which make up the biggest bulk of the index, rose 5 percent, reaching its highest level since mid-January.

Meanwhile, mortgage applications for home purchases, viewed as a leading indicator of future home sales, ticked up 4 percent for the week, reaching its highest level since May 2010.

MBA reported 30-year fixed-rate mortgages, which are the most popular choice among home buyers, saw rates drop slightly last week averaging 3.67 percent, compared to 3.68 percent the prior week.

Source: “U.S. Mortgage Applications Rose 5% Last Week – MBA,” The Wall Street Journal (April 17, 2013)