Month: August 2012

Mortgage Rates Drop For The First Time In 4 Weeks

After 4 weeks of increases, mortgage rates finally recede nationwide.

Freddie Mac mortgage rates

After 4 weeks of rising costs, Hendersonville mortgage rates finally recede.

According to Freddie Mac’s weekly Primary Mortgage Market Survey, the average 30-year fixed rate mortgage rate dropped 7 basis points to 3.59% this week. Depending on where you live, however, you may find that your offered mortgage rates varies. Freddie Mac’s “published rate” is a national average based on a survey of more 125 banks.

The rates you receive as an individual vary by bank, and vary by region.  

Mortgage applicants in the North Central Region were most likely to get the lowest rates of all applicants nationwide last week. By contrast, applicants in the Southeast Region were most likely to get the highest rates.

Average mortgage rates in the five U.S. regions, as tracked by Freddie Mac :

  • Northeast Region : 3.59 percent for a 30-year fixed rate mortgage
  • West Region : 3.58 percent for a 30-year fixed rate mortgage
  • Southeast Region : 3.64 percent for a 30-year fixed rate mortgage
  • North Central Region : 3.57 percent for a 30-year fixed rate mortgage
  • Southwest Region : 3.61 percent for a 30-year fixed rate mortgage

Across all 5 regions, mortgage rates were quoted with an accompanying 0.6 discount points, on average, plus a full set of closing costs. 1 discount point is equal to one percent of your loan size. Closing costs vary by county.

One year ago, the 30-year fixed rate mortgage rate averaged 4.22%. Today, it averages 3.59%. This 63 basis point difference yields a $36 monthly savings per $100,000 borrowed. 

On a $250,000 mortgage, that’s $1,080 in savings per year.

If watched mortgage rates rise through August and felt as if you missed the market bottom, consider this week your second chance. The 30-year fixed rate mortgage does remains above its all-time low of 3.49 percent, but this week’s drop in rates in encouraging. It’s the biggest one-week drop in rates in more than 3 months.

Talk to your loan officer about how today’s mortgage rates can work for your budget. 

Pending Home Sales Index Makes New High For 2012

In July, the third time this year, the Pending Home Sales Index crossed its benchmark value of 100, moving to 101.7.

Pending Home Sales Index

In July, the third time this year, the Pending Home Sales Index crossed its benchmark value of 100, moving to 101.7. 

A “pending home sale” is a home under contract to sell, but not yet sold. Data for the index is collected by the National Association of REALTORS® and published monthly.

The rise in July’s Pending Home Sales Index reading is important for two reasons — both of which highlight a U.S. housing market in recovery. Buyer and sellers in Asheville and across the country would do well to pay attention.

First, the Pending Home Sales Index is at its highest point since April 2010, the last month of that year’s federal home buyer tax credit.

From this, we can infer that the rate at which homes are selling in South Carolina and nationwide is approaching the same “stimulated” levels that the tax credit afforded two-plus years ago. The difference is that today there are no buyer tax incentives.

The Pending Home Sales Index readings have climbed steadily since the tax credit’s expiration, too :

  • July 2010 : 78.4 reading
  • July 2011 : 90.5 reading
  • July 2012 : 101.7 reading

Second, because the Pending Home Sales Index is a relative index; and, because it was assigned a value of 100 when it was launched by the real estate trade group in 2001, when the PHSI reads higher than 100, it tells us that homes are going under contract at a faster pace than they did during the index’s first year.

2001 was a strong year for the U.S. housing market. 2012 is on path to be a stronger one.

80% of homes go to closing within two months of contract so, based on the July 2012 Pending Home Sales Index, we should expect for the Existing Home Sales report to rise through the rest of summer and into fall. Home supplies may drop and home prices may rise.

The housing market has expanded slowly and steadily dating to October 2011. Based on last month’s PHSI, that momentum will continue. 

New Home Sales Reach Multi-Year High

As reported by the U.S. Department of Commerce, 372,000 new homes were sold in July on a seasonally-adjusted, annualized basis.

New Home Sales 2010-2012The market for newly-built homes remains strong.

As reported by the U.S. Department of Commerce, 372,000 new homes were sold in July on a seasonally-adjusted, annualized basis. A “new home” is a home that can be considered new construction.

July’s New Home Sales report highlights what today’s buyers of new construction and the nation’s home builders have witnessed for themselves already — that the market for newly-built homes is improving in Hendersonville and nationwide.

The number of new homes sold in July on a seasonally-adjusted, annualized basis matches the tally from May 2012, and is the highest reading since April 2010, the last month of that year’s federal home buyer tax credit.

The South Region continues to account for the majority of new construction sales, posting a 48% market share in July. South Region sales were up 9.1 percent as compared to one year ago. The other 3 regions posted higher sales volume as well :

  • South Region : +9.1% from July 2011
  • Northeast Region : +30.4% from July 2011
  • Midwest Region : +21.7% from July 2011
  • West Region : +63.8% from July 2011

Also noteworthy is that the increase in new home sales is coming at a time when new home supplies are slipping.

At the end of July 2012, there were just 142,000 new homes for sale nationwide. This is the smallest new home housing stock in at least 7 years, and a signal that buyers are buying homes faster than builders can build them. At the current pace of sales, the national supply of new homes would sell out in 4.6 months.

Because economists believe that a 6.0-month supply represents a market in balance, the current new home market is decidedly a “sellers market”. Buyers throughout South Carolina should expect higher new home prices ahead.

Dating back to October 2011, the housing market has shown slow, steady growth. Home prices have moved higher and so has builder confidence. If you’re in the market for new construction consider going into contract soon. The longer you wait to buy, the more you may be asked to pay.

Government : Home Prices Up 3.0% In Last 12 Months Nationwide

According to the Federal Home Finance Agency’s Home Price Index, home prices rose by a seasonally-adjusted 0.7 percent between May and June 2012. The index is now up 3.0% over the past 12 months, and made its biggest quarterly gain since 2005 last quarter.

Home Price Index, monthly since April 2007

The housing market recovery appears to be sustainable.

According to the Federal Housing Finance Agency’s Home Price Index, home prices rose by a seasonally-adjusted 0.7 percent between May and June 2012. The index is now up 3.0% over the past 12 months, and made its biggest quarterly gain since 2005 last quarter.

The FHFA’s Home Price Index measures home price changes through successive home sales for homes whose mortgages are backed by Fannie Mae or Freddie Mac, and for which the property type is categorized as a “single-family residence”. 

Condominiums, multi-unit homes and homes with jumbo mortgages, for example, are excluded from the Home Price Index, as are all-cash home sales.

June’s HPI gives buyers and seller in Hendersonville reason to cheer, but it’s important to remember that the Home Price Index — like so many other home valuation trackers — has a severe, built-in flaw. The HPI uses aged data. It’s nearly September, yet we’re talking numbers from June.

Data that’s two months old has limited meaning in today’s housing market. It’s reflective of the housing market as it looked in the past.

And, even then, to categorize the HPI as “two months old” may be a stretch. Because it often takes 45-60 days to close on a home sale, the home sale prices as reported by the July Home Price Index are the result of purchase contracts written from as far back as February 2012.

Buyers and sellers in search of real-time home price data, in other words, won’t get it from the FHFA.

The Home Price Index is a useful housing market gauge for law-makers and economists. It highlights long-term trends in housing which can assist in allocating resources to a particular policy or project. For home buyers and sellers throughout North Carolina , however, it’s decidedly less useful. Real-time data is what’s most important.

For that, talk to a real estate professional.

What’s Ahead For Mortgage Rates This Week : August 27, 2012

Conforming mortgage rates fell last week for the first time this month, breaking a 4-week losing streak.

Greece bailout plans revisitedMortgage markets improved last week. Mixed data highlighted the U.S. economy’s slow, steady expansion; the Federal Reserve changed market expectations for the new stimulus; and, sovereign debt concerns moved back to the forefront in Europe.

Conforming mortgage rates fell last week for the first time this month, breaking a 4-week losing streak that had stymied would-be refinancing households in South Carolina and nationwide.

Mortgage rates had been higher since the start of August.

In published minutes from its July 31-August 1, 2012 Federal Open Market Committee meeting, the Federal Reserve revealed that, absent “substantial and sustainable” economic growth, many of its members believe further monetary easing would be warranted.

Recent data shows that growth may be sustainable, but it’s hardly substantial. 

  • Job growth is higher in 22 straight months, but averaging less than 100,000 net new jobs per month over the past three months
  • Housing data shows a steady home sales growth, but a dwindling home inventory of new homes and home resales
  • GDP grew 1.5% in Q2 2012, down from 2 percent during the first three months of the year

Should the Fed add new stimulus, it would likely come in the form of a third round of quantitative easing, a program by which the Federal Reserve purchases government-backed bonds on the open market, including mortgage-backed bonds.

The new-found demand for bonds helps raise their respective prices which, in turn, moves down their respective yields.

“QE3” would push mortgage rates lower, likely. It’s not expected to be released (if at all) until the FOMC’s next scheduled meeting, September 12-13, 2012. There is a small chance it’s announced this Friday, however; the Federal Reserve is meeting in Jackson Hole, Wyoming for its annual retreat.

For this week’s rate shoppers, this week is filled with data and rhetoric. New U.S. housing data will be released along with recent inflation statistics. Both have the ability to cause mortgage rates to rise. In addition, second quarter GDP figures will be revisited and revised. If they’re revised lower, Fed-led stimulus may be more likely.

Lastly, Eurozone leaders reconvene to discuss the terms of Greece’s bailout. If terms are changed for the worse for Greece, mortgage rates may drop in a bout of safe-haven buying.

What’s Ahead For Mortgage Rates This Week : August 13, 2012

Mortgage markets worsened last week as the investors moved back into risk-taking mode.

30-year mortgage ratesMortgage markets worsened last week as the investors moved back into risk-taking mode. Better-than-expected economic data in the U.S. plus a general feeling that the ongoing Eurozone issues will be soon be resolved (or lessened) contributed to a second straight week of rising mortgage rates.

One such data point was the weekly Initial Jobless Claims report.

According to the U.S. Department of Labor, the number of U.S. workers filing for first-time unemployment benefits unexpectedly dropped 6,000 from the week prior on a seasonally-adjusted basis. Economists had expected a week-over-week increase.

In addition, government-backed mortgage securitizers Fannie Mae and Freddie Mac both announced quarterly profits last week of a combined $8.3 billion. This, too, reflects well on the economy because both companies attributed strong results to a recovering housing market.

Conforming rates rose for the second straight week, according to Freddie Mac’s weekly mortgage rate survey.

The 30-year fixed rate mortgage rate now averages 3.59% nationwide for mortgage applicants willing to pay 0.6 discount points plus a complete set of closing costs where 1 discount point is a loan fee equal to one percent of your loan size.  This is a 10 basis point increase from late-July, when rates averaged 3.49%.

The 15-year fixed rate mortgage also moved higher, registering 2.84% last week after recently posting at 2.80%, on average.

This week, there won’t be much data to move markets. We’ll see the release of the Producer Price Index and the Consumer Price Index — two inflationary gauges for the U.S. economy — as well as July’s Retail Sales report. Beyond that, however, there won’t be much. Therefore, be wary of day-to-day momentum in the mortgage bond market.

Between January and July, momentum took mortgage rates lower; eventually to an all-time low. Since August 1, however, that momentum has reversed.

If you’re floating a mortgage rate or are otherwise not yet locked, get with your loan officer quickly. Mortgage rates may fall between today and Friday, but there’s much more room for rates to rise instead.

5 States Home To 50% Of Foreclosure Activity Nationwide

According to data from RealtyTrac, a national foreclosure-tracking firm, the number of foreclosure filings dipped below 192,000 in July 2012, a 3 percent decrease from the month prior.

Foreclosure stats July 2012Foreclosure pipelines are re-filling nationwide.

According to data from RealtyTrac, a national foreclosure-tracking firm, the number of foreclosure filings dipped below 192,000 in July 2012, a 3 percent decrease from the month prior.

RealtyTrac defines a “foreclosure filing” as any foreclosure-related action, including a Notice of Default, a Scheduled Auction, or a Bank Repossession.

July marks the 22nd straight month during which foreclosure filings fell on a year-over-year basis. At some point soon, however, that streak may end. This is because, for the third straight month, on an annual basis, foreclosures starts are on the rise.

More than 98,000 homes started the foreclosure process in July, a 6 percent increase from July of last year. Connecticut, New Jersey and Pennsylvania experienced the biggest increases, rising 201%, 164% and 139%, respectively.

Each is a judicial foreclosure state, which means that foreclosures must go through the state court system prior to auction.

Nationwide, just a few states accounted for the majority of July’s total foreclosure activity. 5 states were home to more than half of all tracked activity, according to RealtyTrac.

  • California : 21.9 percent
  • Florida : 13.3 percent
  • Illinois : 7.2 percent
  • Georgia : 5.7 percent
  • Texas : 5.2 percent

Collectively, these 5 states represent just 33 percent of the nation’s population.

In contrast to the five states above, the bottom 14 states accounted for just 1 percent of the nation’s foreclosure activity, led by North Dakota. In North Dakota, just 3 foreclosure filings were made in July. Other “fewest foreclosure” states in July included District of Columbia (7 filings), Vermont (31 filings), and South Dakota (63 filings).   

For home buyers , with more foreclosed properties expected to go for sale this year and next, there will be some excellent “deals” and discounts — foreclosed homes typically sell at discounts of 20% or more as compared to comparable, non-distressed homes. However, foreclosed homes are often sold as-is, which means they may have defects.

Before placing a bid on a foreclosed home, therefore, make sure to have an experienced real estate agent on your side. Buying a foreclosed home may save you money at your closing, but may cost you money longer-term.

Improving Market Index Spans 32 States, District Of Columbia

80 U.S. metropolitan markets are showing “measurable and sustained growth” this month, according to the National Association of Homebuilders’ Improving Market Index.

Improving Market Index

80 U.S. metropolitan markets are showing “measurable and sustained growth” this month, according to the National Association of Homebuilders’ Improving Market Index.

It’s good news for the economy and good news for housing. 

The NAHB’s Improving Market Index is meant to identify U.S. markets in expansion. It’s a composite of the three distinct data sets which, as a group, present a more holistic view of a given city’s growth :

  1. From the Bureau of Labor Statistics, the IMI tracks employment figures
  2. From Freddie Mac, the IMI tracks home price data
  3. From the Census Bureau, the IMI tracks single-family building permits

The home builder trade group compiles this data and, in order for a given metropolitan area to earn the label “improving”, the area must meet two specific growth conditions.

First, in a given city, each of the above data sets must show growth or expansion in the current calendar month. If one of the three do not show growth, the city cannot qualify.

Second, in a given city, at least six months must have passed since the most recent trough of all of the above metrics.  It’s this second clause that can make the Improving Market Index meaningful.

By focusing on long-term growth trends within a city, the IMI ignores “blips” and seasonal irregularities. 

The August IMI shows 80 improving markets nationwide, a 4-city decrease from July 2012. 5 new cities were added to the index including Miami, Florida; Terre Haute, Indiana; and Lubbock, Texas. Nine cities fell off the list.

Overall, 32 states are represented in the IMI, and the District of Columbia, too.

For today’s home buyers, the IMI doesn’t provide much actionable information. It doesn’t show home prices, for example, nor the current demand for homes. What it shows is the strength of local economies, though, and in many cases, as the economy heats up, so do home prices.

The complete Improving Markets Index is available for download at the NAHB website.

Mortgage Standards Stop Tightening; Lending Soon To Loosen?

As another signal of an improving U.S. economy, the nation’s biggest banks have started to loosen mortgage lending standards.

Fed Senior Loan Officer SurveyAs another signal of an improving U.S. economy, the nation’s biggest banks have started to loosen mortgage lending guidelines.

As reported by the Federal Reserve, last quarter, no “big banks” reported stricter mortgage standards as compared to the quarter prior and “modest fractions” of banks reported easier mortgage standards. 

The data comes from the Fed’s quarterly Senior Loan Officer Survey, a questionnaire sent to 64 domestic banks and 23 U.S. branches of foreign banks. The survey is meant to gauge, among other things, direct demand for consumer loans and banks’ willingness to meet this demand.

Not surprisingly, as mortgage rates fell to all-time lows last quarter, nearly all responding banks reported an increase in demand for prime residential mortgages where “prime residential mortgage” is defined as a mortgage for an applicant whose credit scores are high; whose payment history is unblemished; and, whose debt-to-income ratios are low.

Consumers were eager to buy homes and/or refinance them last quarter and 6% of the nation’s big banks said their credit standards “eased somewhat” during that time frame. The remaining 94% of big banks said standards were left unchanged.

The ease of getting approved for a home loan, however, is relative.

As compared to 5 years ago, home buyers and rate shoppers face a distinctly more challenging mortgage environment. Not only are today’s minimum FICO score requirements higher by up to 100 points, depending on the loan product, applicants face new income scrutiny and must also demonstrate a more clear capacity to make repayments.

Tougher lending standards are among the reasons why the national home ownership rate is at its lowest point since 1997. It is harder to get mortgage-approved today as compared to late-last decade.

For those who apply and succeed, the reward is access to the lowest mortgage rates in a lifetime. Mortgage rates continue to push home affordability to all-time highs.

If you’ve been shopping for a home, or planning to refinance, with mortgage rates low, it’s a good time to commit. 

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