Mortgage application volume falls to a four-year low

As per National Mortgage News, Mortgage application activity dropped to its lowest level since December 2014 as interest rates reached an eight-year high, according to the Mortgage Bankers Association.

The MBA's Weekly Mortgage Applications Survey for the week ending Nov. 2 had a 4% decline from one week earlier as the refinance index decreased 3% over the same period. The refinance share of mortgage activity decreased to 39.1% of total applications from 39.4% the previous week.

The seasonally adjusted purchase Index decreased 5% from one week earlier to the lowest level since November 2016, while the unadjusted purchase index decreased 1% compared with the previous week and was 0.2% lower than the same week one year ago.

"Rates increased slightly last week, as various job market indicators showed a bounce back in job gains and an acceleration in wage growth in October," Joel Kan, the MBA's associate vice president of economic and industry forecasts, said in a press release. "The survey's 30-year fixed-rate, at 5.15%, was the highest since April 2010."

"The purchase index declined to its lowest level since November 2016, but remained only slightly below the same week a year ago. It's evident that housing inventory shortages continue to impact prospective homebuyers this fall," Kan said.

Adjustable-rate loan activity increased to 7.8% from 7.6% of total applications, while the share of Federal Housing Administration-guaranteed loans decreased to 10.1% from 10.3% the week prior.

The share of applications for Veterans Affairs-guaranteed loans increased to 10.1% from 9.8% and the U.S. Department of Agriculture/Rural Development share remained unchanged from 0.7% the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased 4 basis points to 5.15%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100), the average contract rate increased 3 basis points to 4.97%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased 7 basis points to 5.15%. For 15-year fixed-rate mortgages the average remained unchanged at 4.55%.

The average contract interest rate for 5/1 ARMs increased 3 basis points to 4.36%.

Mortgage application volume rebounds but refis fall to 18-year low

Mortgage applications rose due to year-over-year progress in the job market, snapping a two-week skid. It was a 2.5% increase from the week prior, according to the Mortgage Bankers Association.
The purchase application volume drove the overall numbers. The seasonally adjusted purchase index increased by 7% from one week earlier, however, it decreased by 15% on an unadjusted basis. It stands at 8% higher year-over-year.
Despite the total applications rising, the refinance index decreased 4% for the week ending July 6 from the previous week. That is the lowest level of activity since December 2000. The refinance share of application activity went to 34.8% from 37.2%, the lowest since August 2008.
"The strong job market continues to bolster demand for homes, with purchase volume up 8% year-over-year, even as the lack of inventory still is holding back the pace of sales. Nevertheless, the mix of business continues to move towards loans for home purchase," said MBA Chief Economist Mike Fratantoni.

Employers added 213,000 jobs in June, while the unemployment rate also increased to 4% as more unemployed people resumed looking for jobs. If hiring increases continue, that could translate to more house hunters in the real estate market.
Adjustable-rate loan activity decreased to 6.3% from 6.7% of total applications.
The share of applications for Federal Housing Administration-guaranteed loans decreased to 10% from 10.2%, Veterans Affairs-guaranteed loans jumped to 11.3% from 10.7% and U.S. Department of Agriculture/Rural Development remained unchanged at 0.8%.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased to 4.76% from 4.79%. The average for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) also dropped, going to 4.68% from 4.71%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 4.80% from 4.78%. The average for 15-year fixed-rate mortgages dipped to 4.18% from 4.22%.

The average contract interest rate for 5/1 ARMs reached its historical high point of 4.13%, gaining 10 basis points from last week. The MBA began tracking 5/1 ARMs interest rates in January 2011.

Sales of New Homes Surged in May to Highest Since 2008

Another day, another source, similar news !!! Purchases of new homes in the U.S. rose in May by the most in 22 years, indicating the industry is rebounding from a winter-induced lull at the start of the year.Sales increased 18.6 percent, the biggest one-month gain since January 1992, to a 504,000 annualized pace, figures from the Commerce Department showed today in Washington. The reading exceeded all forecasts in a Bloomberg survey of 74 economists and was the strongest since May 2008.

Today’s report, following data yesterday that showed a pickup in existing home sales, shows housing is gathering momentum as employment improves and borrowing costs stabilize. Builders such as Hovnanian Enterprises Inc. are optimistic the recovery is on track after harsh weather in early 2014 hurt demand.

“Housing is beginning to revive,” said Stephanie Karol, an economist at IHS Global Insight, the top forecaster of new home sales in the past two years, according to data compiled by Bloomberg. “It’s a step in the right direction. The job market is helping, and there was an expansion of supply the past couple of months.”

The job market directly helps push the housing market up ... and we also predict that the uncertainty in the global crude oil prices (reaching high levels due to the Iraq crises) will help propel transportation costs of goods manufactured in China so high that it would make them more attractive to be manufactured in the US itself. That could help the economy considerably.

Peoples Privo Processing supports the American dream by helping lenders and brokers close loans faster. (www.peoplesprocessing.com)

Mortgage Rates Drop Abruptly; Now Approaching 4%

After tying the record for most consecutive days with no change, mortgage rates moved significantly lower today.  The significance isn't due to the size of the move--as far as day to day changes go, there have been bigger.  Rather, the impressive part of today's rally is that it occurred while rates were already effectively at the lowest levels in 11 months, further extending an already strong move lower over the past two months. 

Through yesterday, rates had been giving the impression that the string of recent improvements was leveling-off and waiting for more important information on the horizon.  In that context, today was an utter blindside.  It wouldn't have been as surprising if rates merely began drifting lower ahead of those key events.  They sometimes do that after leveling-off in such a manner, but today was anything but a drift.
The most prevalently quoted conforming 30yr fixed rate for best-case scenarios (best-execution) is already close to 4.0%.  Some lenders are there already while others are offering substantially lower costs at 4.125%.  After today's move, few lenders remain competitively-priced at 4.25%.  For imperfect loan files, however, 4.25% is still a sweet-spot in terms of up-front cost vs contract interest rate.

While today's drop in rates is encouraging, markets will now be more sensitive to data and events that suggest a move in the other direction (such as a stronger-than-expected GDP revision tomorrow).  Despite that sensitivity, the first move higher in rate after this rally runs its course isn't likely to be the biggest one.  That affords some decision-making time to those inclined to float (but who also accept that they might be faced with the decision to lock at slightly higher rates than the previous day.  

2014 - a new beginning

Wishing all our readers, customers, partners and associates a very happy new Year in 2014. Hope the year brings the best out of each and every one of you. 

The mortgage industry has been going through its ups and downs over the course of the past several months, and in typical fashion, the holiday season - from after Thanksgiving to January - has been slow. This is nothing new - and the contract processing business has experienced this slowdown every year. The big picture is however based on the following trends

* Interest rate hike: the fed has firmly decided to increase rates once unemployment hits 6.5%. 

* QE: Here again the fed has decided to scale back on its bond buying program from the current $85 B level in stages in anticipation of a better economy.

* The Mortgage Bankers association has predicted that the number of Purchases is set to increase as a percentage of all mortgages in the country and this is reflected in their projections (data upto Oct 2013)

Here's wishing that the new year brings new jobs and better employment prospects to those that already have them. We are here to support you all ! Visit www.privocorp.com for more information.

More People Will Buy Homes if Prices go Up - nice theory by Fed senior economists

According to the Mortgage News Daily, sale inventories have been slow to rebound from the Great Recession even though home prices have increased steadily since 2012. Two Federal Reserve Bank of San Francisco senior economists, William Hedberg and John Krainer theorize that prices are still not high enough to entice many sellers.  For some this is because the value of their home is still below the outstanding balance on their mortgage (also known as a negative amortization in mortgage parlance), meaning that sellers would have to bring cash to the closing.  For others it may be that their equity is not back to a level that motivates them to sell.

Economic theory suggests that all homes are for sale if the price is right, but at any point in time, the price may not be right. Sellers have their own ideas about what is "right" and must also consider that selling a house can be costly because of brokerage fees, and necessary or cosmetic changes to the house.  For these reasons and others the active listing a home is viewed by economists as a strong signal of an intent to sell and they measure the short-run supply of homes for sale, the inventory, by the listing numbers.

Good times or bad, there is always some level of inventory in the housing market.  Some owners sell to move up, others to downsize, other move for employment reasons, or to free up cash.  These are life-cycles motives not necessarily tied to the business cycle and produce a general level of churning in the market.  Nevertheless the authors say there is a distinct cyclical pattern to inventories which rise in good times and fall in bad times. 

Credit conditions, which are also cyclical, can account for some of this.  Risk premiums charged by lenders and their willingness to lend, tend to ease during good economic times, allowing more potential buyers to enter the market. But it is the level of house prices which is by far the variable that most influences the inventory of homes for sale.

Even though not all listed homes are vacant Census Bureau data on the numbers and price level of vacant homes have a long history of indicating the relationship between inflation-adjusted house prices and for-sale inventory.  As Figure 1 shows, inventories generally move with prices and changes in house prices have a causal effect on inventories.  The two series are tied together in a long-run relationship and the authors say this makes sense as rising house prices should encourage home owners to sell and thus inventories to rise.

Vacancies for sale over the years

Inventories do not instantly react to house price changes and other economics can disrupt the price/inventory relationship as is evident in the most recent time period in the figure above.  House prices have been recovering broadly since 2012 but inventories have been declining.  Only recently have they begun to rise.

The relationship between inventory and prices may have broken down for an extended period as the market rebounded in 2012 because of fallout from the housing boom and bust.   The boom saw an unprecedented rise in homeownership rates with younger households more willing to buy and eased lending allowing in less qualified borrows.  When those trends reversed the inventory shifted from homes for sale to homes for rent with the later rising steadily during the recession and the for-sale inventory dropping and only recently stabilizing.

The authors say the data does not go back far enough to show if this is a typical reaction but some Census Bureau data suggest it is unprecedented since the 1960s.  The phenomenon is widespread and cannot be accounted for solely by the surge in foreclosures.  The inventory of homes in foreclosure has recently been falling in most markets but the ratio of owner occupied and renter occupied units has remained down. Thus, either preference for home ownership has shifted or, more likely, credit constraints have affected household home purchase decisions.

The changes in for-sale and for-rent inventories are seen most dramatically in markets like Las Vegas, Phoenix and Miami where foreclosures were high and investors have been buying large numbers of the foreclosed properties.  In these market the total inventory of homes for rent is approaching that of homes for sale, a remarkable shift that has continued throughout the recovery.  But, in addition to the investor-effect the decline in homes for sale is very closely linked with the large downward shift in the home ownership rate in these markets. It is impossible to say though whether declining sales are pushing down home ownership rates or falling home ownership is pushing down sales, or both are interacting with each other in a complicated feedback process.

Tight credit conditions may be affecting both the ownership decisions of young buyers and the supply side of the market.  In theory, falling house prices alone may keep some home owners from selling. It may seem logical that decisions to sell should be based only on information about current and future market conditions and the authors point to research that shows home owners take more time to sell if home prices have fallen since the original purchase. That is, two similar home owners experiencing similar housing market conditions will behave differently if one of those home owners has an unrealized loss on his or her house.

Falling prices may hold down home sales for several reasons. An underwater home owner may be unwilling or unable to make up the difference between sale proceeds and mortgage balance and chose to delay selling.  Even if there is equity, it may be reduced enough that no cash is available for the down payment on another home.

Since early 2008, homes for sale and homes underwater have been negatively correlated.  Counties with a high share of underwater mortgages have tended to have smaller for-sale inventories.  The authors say that while this relationship is significant, its strength diminished as the recovery got under way. Underwater borrowers may have been locked into their houses in a way that impaired the normal functioning of the housing market. But that effect seems to be waning.

Another explanation for this breakdown is that home owners may be taking a longer view of the market.  In the housing cycle price changes are persistent, that is both price rises and price drops are likely to be followed by more of the same.  Home owners who can be flexible on timing a sale can take advantage of this persistence, waiting and gambling that increases will continue and they can sell at a higher price.

Figure 4 confirms on a county level the negative relationship between prices and inventories shown at the aggregate level in Figure 1. Where counties experienced relatively large price increases they also saw for-sale inventories decline.

The authors say it turns out that that variables such as recent house price appreciation and changes in employment are the most robust predictors of recent changes in housing inventory. Once these are accounted for other variables, such as changes in the for-rent inventory, the underwater share, or local price-rent ratios, do little to explain the inventory of houses for sale. "Thus, current home owners may be making a rational choice to postpone selling in the hope that prices will rise further. However, this behaviour tends to be short run. In the longer run, the link between the level of house prices and for-sale inventories is strong. If prices continue to rise, inventories for sale should eventually rise too."

Conclusion of the article:

History shows a long-run relationship between house prices and the number of houses available for sale. Thus, current inventories of homes for sale are low given more than a year of house price appreciation. County-level data suggest that many home owners are waiting for prices to rise further in their markets. Markets that have seen the strongest house price appreciation and job growth are the ones where for-sale inventories have declined the most.

Economist Believes Refinance Applications Will Remain Strong

If the latest Mortgage Bankers Association application survey results are any indicator, the refinance business has not started to dissipate, and one observer believes it will stay strong for some time to come. For the second consecutive week, refis are driving the increase in application volume, this time up 4.8% on a seasonally adjusted basis for the week ended April 12.
However, purchase applications also had a strong week as well.
The unadjusted Refinance Index increased 5% and is at its highest level since mid-January. The seasonally adjusted Purchase Index increased 4% from one week earlier and it is at its highest level since May 2010. The MBA noted that conventional application volume increased 3% to its highest level since October 2009. On an unadjusted basis, purchase applications are up 20% when compared with the same week in 2012.
Quicken Loans chief economist Bob Walters commented, “Projections of declining refinance activity seem to be premature as rates dipped amid the Bank of Japan moving into quantitative easing, causing a rally in the bond market. Look for refinance volume to stay strong driven by historically low rates and aided by the millions of HARP-eligible underwater homeowners who still could benefit from refinancing.”
Don’t expect rates to rise anytime soon. Zillow said on Tuesday afternoon that on a real-time basis it found the average 30-year fixed rate being offered through Zillow Mortgage Marketplace fell one basis point from last week to 3.34%.
The 30-year FRM hovered between 3.41% and 3.32% for the majority of the week.
"Rates fell slightly this past week after lower-than-expected retail sales numbers raised concerns about softening consumer confidence," said Erin Lantz, director of Zillow Mortgage Marketplace. "We expect mortgage rates will remain depressed this week due to apprehension related to the Boston Marathon bombing and threats from North Korea."
The MBA said the share of refi applications remained at 75%.
The average contract rate for the 30-year conforming FRM (MBA defines this as a loan with a balance of $417,500 or under) for the survey period decreased one basis point to 3.67%. Federal Housing Administration-insured loans had an average contract rate for the week of 3.37%, a drop of six basis points from the previous week.
Jumbo 30-year FRMs saw its average contract rate decrease two basis points to 3.77%. The MBA said the rate for the 15-year FRM fell by one basis point to 2.91%.
The share of adjustable-rate mortgages remains at 5% of the week’s loan applications; the average contract rate for the 5/1 ARM decreased by one basis point to 2.57%.

Mortgage Applications Recover from Holiday Doldrums

As per Mortgage news daily ..Applications for mortgages increased substantially during the week ended January 11 as purchase applications soared to their highest levels in nearly two years.  The Mortgage Bankers Association's (MBA)  Market Composite Index for the first full working week of the New Year increased 15.2 percent on a seasonally adjusted basis and 45 percent on an unadjusted basis compared to the holiday shortened week ended January 4.
The seasonally adjusted Purchase Index was up 13 percent on a seasonally adjusted basis from the previous week to the highest level since April 2011.  The unadjusted index was 47 percent higher than the previous week and 5 percent above that of one year earlier.  The Refinance Index increased 15 percent from the previous week and the refinance share of mortgage activity remained unchanged at 82 percent of total applications.

Interest rates for the week were mixed. The average contract rate for 30-year fixed-rate mortgages (FRM) with conforming balances of $417,500 or less remained unchanged at 3.61 percent with points decreasing to 0.38 from 0.41.  The effective loan rate decreased from the previous week.
Jumbo 30-year FRM - loans with balances over $417,500 - rose 10 basis points to 3.88 percent with points unchanged at 0.38.  The effective rate increased.

The average contract rate for 30-year FRM backed by FHA increased to 3.39 percent with 0.58 point from 3.35 percent with 0.69 point and the effective rate increased.  

The average contract interest rate for 15-year fixed-rate mortgages remained unchanged at 2.88 percent, with points decreasing to 0.27 from 0.39 and the effective rate decreased. .

The average contract interest rate for 5/1 adjustable rate mortgages (ARMs) increased to 2.66 percent from 2.64 percent, with points decreasing to 0.34 from 0.37. The effective rate increased from last week.   The ARM share of activity increased to 3 percent of total applications.

MBA's Weekly Application Survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990.  Respondents include mortgage bankers, commercial banks and thrifts.  Rates are based on loans with an 80 percent loan-to-value ratio and points include the origination fee.  Base period and value for all indexes is March 16, 1990=100.

MBA: Mortgage Applications Decrease in Weekly Survey

According to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 9, 2012.

The Market Composite Index, a measure of mortgage loan application volume, decreased 2.4 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1.8 percent compared with the previous week. The Refinance Index decreased 4.1 percent from the previous week to its lowest level since January 6, 2012. This is the fourth consecutive weekly decline in the Refinance Index. The seasonally adjusted Purchase Index increased 4.4 percent from one week earlier to its highest level since January 13, 2012. The unadjusted Purchase Index increased 6.0 percent compared with the previous week and was 0.4 percent lower than the same week one year ago. For more information on this check the link http://goo.gl/wz3JL

Questions to Expect From Mortgage Lenders, Know what to expect before you apply.

According to a report in realtor,

Your mortgage lender will want to know a lot about you before approving your loan application, and justifiably so; they and their underwriters want to be assured that you meet their minimum level of creditworthiness before lending you money.

Areas of questioning : -

Here are the general areas of questioning you can expect from a lender:
1. Employment and income
2. Outstanding debts
3. Cash reserves and assets
4. Down payment
5. Loan purpose
6. Property use
7. Property type

Employment and income : -

Where do you work?
How much do you make?
How long have you been at your job?
How is your income derived -- steady salary or irregular income? If it's the latter, you may need to provide more details to obtain a favorable interest rate.

Outstanding debts : -

What recurring debts do you have?
How much do you pay a month for auto loans?
Credit cards? How much of your monthly pretax income do these debts consume?
Cash reserves and assets
How much money do you have in the bank?
How much will be left after you pay your down payment and closing costs?

Down payment : -

How much money are you putting down?
Is this your own money?
If not, is it a gift from your parents?
A nonprofit agency grant?

Loan purpose : -

Is this mortgage for a home buy or refinance?
If it's a refinance, do you want to take cash out at closing to pay off other debts? If so, how much?

Property use : -

Do you plan to live in the house?
Is it investment property?

Property type : -

A condominium?
A duplex?

The following responses tend to work in your favor:

Steady employment (two or more years) with the same employer or in same line of work.
Low debt: no recent major buys (such as automobiles) and a debt-to-income ratio of 36 percent or less.
Loan is for straight home purchase (or rate-and-term refinance).
Property is detached single-family home to be used as primary residence.
Down payment of at least 5 percent of sales price with your own money.
You'll have at least two months' worth of mortgage payments in the bank after closing.

These responses tend to work against you:

Self-employed or contract worker.
High debt: credit cards maxed out, total debt-to-income ratio more than 36 percent.
Property is a duplex or condominium, to be used as a vacation home or rental.
No cash left after home buy and closing costs.
Down payment is 3 percent or less of buy price and money is borrowed.

Read more visit : - http://www.realtor.com/home-finance/pre-funding-closing/questions-from-mortgage-lenders.aspx

House flippers a good thing for the market?

During the boom days and in initial days of the bust - the "dreaded" houseflipper was a "bad person"; and unwanted character in the whole real estate landscape. But now with the real estate markets the way they are and the unemployment picture what it is - it seems like now these flippers are a welcome sign to the markets. 

A recent Business Week article talks about the number of foreclosed homes that are changing hands within 6 months of being purchased is a sure sign of flippers getting in on the action.

PrivoCorp - the best contract mortgage processing company in the country for FHA loans -has been seeing a lot of previously foreclosed homes coming back in to the market and being purchased in a short time frame.This is an obvious sign of good things to come in the future.

BW: Home prices in 20 cities rose 0.3% in Jan 2010

According to a recent article in business week online, home prices in 20 U.S. cities unexpectedly rose in January, indicating the housing market is stabilizing as the economy expands. The article mentions that the S&P/Case-Shiller home-price index climbed 0.3 percent from the prior month on a seasonally adjusted basis, matching the gain in December, the group said today in New York. The gauge was down 0.7 percent from January 2009, the smallest year- over-year decrease in three years.

The probable causes for the increase ...??

• Cheaper homes
• low borrowing costs 
• government incentives

Gains in hiring are the best bet to overcome mounting foreclosures that keep the pressure on prices and pose a threat of renewed declines in real estate.

Growth in new home sales will definitely help companies like PrivoCorp which help close mortgage loans as contract processors. PrivoCorp specializes in the contract processing of FHA loans across the country.

WSJ: Supply of Foreclosed Homes on the Rise Again

According to the Wall Street Journal the supply of foreclosed homes that banks need to sell is rising again, signaling further downward pressure on home prices in some parts of the U.S.

Mortgage analysts at Barclays Capital in New York estimated that banks and mortgage investors held a total of 645,800 foreclosed homes in January, up 4.6% from 617,286 a month earlier.

The question in everyone's minds is how long will this last? The answer to this can only be got if one is able to accurately predict the jobs scenario; what the unemployment numbers will be, how many jobs will be added to the economy, etc.

PrivoCorp - the fastest processor of home loans in the state - have seen a lot of purchases recently, quite a few of which are purchases of foreclosed homes (which is a good sign of sorts).

Average loan size up slightly to $173k

The average loan file size processed by PrivoCorp increased slightly to $173,807. This is about 10% up from last month.

Would definitely like to get thoughts on what others are seeing out there? Not that this is a scientific predictor, but could be used as an indicator of where things are headed.

It would be nice to get thoughts on what others out there are seeing. PrivoCorp (http://www.privocorp.com/) is a contract processor of mortgage home loans in several states in the country. Please contact us for any information on mortgage home loan processing.

Mortgage applications plummet (CNN Money)

As rates ticked higher to above 5% mortgage applications plummeted 13.7% in the week ended Oct. 16 from the prior week.

Uncertainty about a possible extension and expansion of an $8,000 tax credit for first-time homebuyers could be another damper to the housing recovery. The tax credit now can be claimed by anyone buying a home who has not owned one for three years and who closes the deal by Nov. 30. For more details visit the CNN website

The only sustainable scenario under which mortgage applications will increase is when employment creation is encouraged and jobs are created that will not only give jobs to the existing unemployed population by the hundreds of thousands entering the workforce.

PrivoCorp processes residential mortgage loans for clients across the US.

MBA Forecasts: Unemployment Will Continue to Slow Economic Growth in 2010

According to a report by the Mortgage Bankers Association (MBA) and DSNews, economic growth will continue through the rest of 2009, but will slow down in the first half of 2010 under the weight of continued unemployment, before resuming a sustained pace and recording a 3 percent gain for all of 2010, the Mortgage Bankers Association (MBA) forecasts.

For all of 2009, the economy will show a decline of 0.5 percent, the group predicted.

Unemployment will continue to climb from its current 9.8 percent, to peak at 10.2 percent in the second quarter of next year, the group said.

Mortgage originations should reach $1.5 trillion in 2010, MBA said, depending on how much interest rates increase and dampen activity in the refinancing market. Modest increases in home sales should drive purchase originations, the group said.

“Perhaps the biggest unknown is the level and volatility of interest rates,” said MBA chief economist Jay Brinkmann.

While the lack of inflation, high unemployment, and excess capacity in the economy should hold interest rates down, the termination of the Federal Reserve’s purchase of mortgage-backed securities will put upward pressure on all long-term rates as well as the spread between mortgage rates and Treasuries, he said.

“The size of any resulting rate move will largely determine the size of the refinance market,” Brinkmann said.

The MBA forecasts fixed mortgage rates will average about 5 percent in the fourth quarter of 2009 and increase to 5.6 percent by the end of 2010.

Other highlights of the forecast:

• Total existing home sales for 2009 will end up about 2 percent higher than those for 2008, and will increase by about 11.2 percent in 2010.

• New home sales for 2009 will be down by about 18 percent from 2008, though sales seemed to have bottomed in the first quarter of 2009 and have been rebounding since then. For 2010, new home sales should increase about 21 percent from 2009’s low levels.

• National average home price declines should abate by early 2010, but will vary by state and home value. Demand will be highest for entry-level homes.

• Purchase originations for 2009 will be $718 billion, about 2 percent below $731 billion in 2008. Purchase originations should rise about 12 percent in 2010, as existing home sales recover and home prices stabilize.

• Refinance originations will end 2009 at $1.245 trillion, up about 60 percent from $777 billion in 2008. Refinance activity will likely decrease in 2010 to about $745 billion as mortgage rates increase.

Existing home sales surge

Price drop and the tax credit for home buyers are said to be the reason for the surge. According to the National Association of Realtors that home sales rose 7.2% to a seasonally adjusted annual rate of 5.24 million in July, from a pace of 4.89 million in June. It was the fourth-straight monthly increase and the highest level of sales since August 2007. For further details and the complete story check USAToday.

PrivoCorp (http://www.privocorp.com) processes the loans for the brokers and is not involved with the actual origination of these loans.

Mortgage Rates Lowest Since Late May

According to an article in the Memphis Daily quoting Freddie Mac sources, the average rate for a 30-year fixed-rate mortgage was 5.12 percent, down from 5.29 percent last week. At this time last year, the average rate for 30-year fixed-rate mortgages was 6.47 percent. For more information visit the Memphis Daily.

The hope in the mortgage banking industry would be that these low rates spur refinance activity (and possibly purchases), but the overall unemployment and real estate prices are the ones that will drive economic growth and will be real proof of the country coming out of the recession.

PrivoCorp (http://www.privocorp.com/) is one of the fastest processors of conventional and FHA mortgages in the country.

Flash: FHA suspends TBW

According to an article in the Wall Street Journal, the Federal Housing Administration suspended Taylor, Bean & Whitaker Mortgage Corp. from making loans insured by the federal agency, and raised questions about the company's business practices and financial disclosures.

Also, BoA just released that they were @ 5 days on FHA refis and 3 days on FHA purchases. I guess it would not be too difficult to see where all the TBW loans are going to go!

We can only hope that TBW is able to extricate itself from this situation and continue to lend, or else the consequences may be far reaching as TBW was the 12th largest FHA lender in Q1 and Q2 of 2009.

Rates rocket up quickly - Bankrate.com

By rising abruptly, mortgage rates bared their claws this week, putting an end to three months of docility.

The benchmark 30-year fixed-rate mortgage rose 21 basis points, to 5.45 percent, according to the Bankrate.com national survey of large lenders. One year ago, the mortgage index was 6.02 percent; four weeks ago, it was 5.23 percent.

The benchmark 15-year fixed-rate mortgage rose 12 basis points, to 4.86 percent. The benchmark 5/1 adjustable-rate mortgage declined 2 basis points, to 4.94 percent. (Data courtesy - Bankrate.com)

We at PrivoCorp - one of the leading processors of residential mortgages in the state of IL - have found that while there are signs of an uptick in new home sales, refis continue to dominate the mortgage market. An uptick in Purchases (from new home starts as opposed to people making purchases of foreclosed homes, etc).