U.S. mortgage rates hold steady

Long- and short-term mortgage rates saw little change this week, but they remain below year-ago levels.

A 30-year fixed-rate averages 4.88 percent this week, up from 4.87 percent last week. A year ago, 30-year mortgages averaged 4.95 percent.

The average rate on a 15-year fixed-rate mortgage is 4.15 percent, unchanged from last week.

A one-year adjustable rate fell to 3.21 percent from 3.23 percent.

Mortgage applications jumped nearly 16 percent last week, according to the Mortgage Bankers Association, as potential buyers and existing homeowners continue to try to lock in rates before they rise. Applications to refinance rose 17.2 percent while purchase applications rose 12.5 percent, to the highest level of the year.

“An improving job market is beginning to pave the way for an improving housing market,” said MBA vice president of research Michael Fratantoni.

Low mortgage rates have continued to help nudge housing sales higher nationwide. However, home sales in Dayton have continued to lag and dropped 5 percent in 2010.

Read more: http://www.bizjournals.com/dayton/news/2011/03/10/mortgage-rates-hold-steady.html?ed=2011-03-10&s=article_du&ana=e_du_pub

Foreign buyers picking up US Homes at record rate

This is an interesting read - particularly if one is in the processing business, and trying to figure out the implications on our own business impact ... NAR report shows that these foreigners are snapping up great deals, and they are doing so for a number of purposes. Some are wealthy investors who are reacting positively to the slow signs of economic recovery in the U.S., and who are bullish on the real estate market. Others are looking for vacation homes in tourist destinations such as Miami and Orlando. There are some new immigrants in the mix as well; foreigners who have filed for extended visas and are applying for residency status for academic, business and lifestyle reasons.

Real Estate Agents Welcome Foreign Buyers

The strong demand for single-family residences and apartments has prompted the NAR to make changes to its website to make it more attractive to foreigners. More than 4 million listings across the U.S. can now be browsed from several countries in different languages.

Foreign home buyers are welcomed by real estate agents and even some mortgage brokers. Real estate financing has become difficult for many Americans, and for foreigners it is even more restrictive. As a result, many of the housing acquisitions by foreigners are closed in cash. The sunnier regions of the country are thus far favored by foreign home shoppers, and not just because of the warmer climates. Arizona, California, Florida, and Texas are also attractive due to the large inventory of unsold and distressed homes available.

What the Future Holds

Those who are concerned that foreigners will one day rule the American real estate market underestimate the huge inventory of the domestic market, valued at over one trillion dollars. At this moment, foreign real estate investors are doing their part to shore up the ailing housing market.

Real estate agents are naturally welcoming foreign buyers with open arms, and some lawmakers have proposed bills that would allow foreigners to obtain U.S. visas if they specifically make a significant investment in American housing. While there are a number of visa programs in place for foreigners who wish to buy a home in the U.S., this bill aims to attract investors willing to purchase homes valued at more than $500,000.

Anyone with half a million - will they require a mortgage? And if so who will finance these homes? And on what basis? Would be interesting to see ...

Great news for everyone ! - More Homeowners Returning to Positive Equity

Thousands of homeowners are seeing improvements in their home equity as the housing market continues its recovery, however, they represent a dent in the surface of total underwater mortgage holders. Approximately 200,000 residential properties returned to a state of positive equity during the fourth quarter of 2012, according to data from CoreLogic.

This brings the total number of properties that moved from negative to positive equity in 2012 to 1.7 million, bringing the total of mortgaged residential properties with equity to 38.1 million.

Despite steady gains in home prices, the number of homeowners who have moved into positive territory is overshadowed by a vast number of those still underwater. Negative equity, often referred to as “underwater” or “upside down,” can occur because of a decline in value, an increase in mortgage debt or a combination of both.

Data show that 10.4 million, or 21.5% of all residential properties with a mortgage were still in negative equity at the end of the fourth quarter of 2012, down from 10.6 million (22%) in the third quarter.

Also of note is that out of the 38.1 million properties with positive equity, 11.3 million have less than 20% equity.

Underwriting constraints may make it more difficult for these borrowers to obtain new financing for their homes, according to CoreLogic. Even more disadvantaged are the 2.3 million properties that had less than 5% equity by the end of the fourth quarter 2012. These “near-negative equity” borrowers are at risk should home prices drop, writes CoreLogic. Under-equited mortgages accounted for 23.3% of all residential properties with a mortgage nationwide in the fourth quarter of 2012, the average amount of equity for all properties with a mortgage being 31%. “The scourge of negative equity continues to recede across the country. There is certainly more to do but with fewer borrowers underwater, the fundamentals underpinning the housing market will continue to strengthen,” said Anand Nallathambi, president and CEO of CoreLogic. “The trend toward more homeowners moving back into positive equity territory should continue in 2013.”

Of the 38.1 million residential properties with positive equity, 11.3 million have less than 20 percent equity. Borrowers with less than 20 percent equity, referred to as "under-equitied," may have a more difficult time obtaining new financing for their homes due to underwriting constraints. At the end of the fourth quarter, 2.3 million residential properties had less than 5 percent equity, referred to as near-negative equity. Properties that are near negative equity are at risk should home prices fall. Under-equitied mortgages accounted for 23.2 percent of all residential properties with a mortgage nationwide in the fourth quarter of 2012. The average amount of equity for all properties with a mortgage is 31 percent.

Mortgage bill faces tough road in Congress

As per USA Today ,A sharply divided Congress isn't likely to jump at President Barack Obama's challenge for quick passage of a mortgage refinancing bill that supporters say could help millions of homeowners save big each year and boost the economy.
Obama praised the legislation in his State of the Union speech last week, saying the proposal would help more homeowners with mortgages backed by Fannie Mae and Freddie Mac take advantage of low interest rates and refinance their loans.

Even with mortgage rates near a 50-year low, Obama said, too many families that have never missed a payment and want to refinance are being turned down.
"That's holding our entire economy back, and we need to fix it," the president said. "Right now, there's a bill in this Congress that would give every responsible homeowner in America the chance to save $3,000 a year by refinancing at today's rates. Democrats and Republicans have supported it before."


HOUSING: States' foreclosure pace affects home Prices

The economy's slow recovery from the recession gives the idea urgency, Obama said. "Send me that bill," he told members of Congress listening to his speech in the House chamber.
The proposal is part of a push by Democrats and the White House to help homeowners take advantage of low interest rates as a way to help the housing market recover and to give the economy a shot in the arm.
While the bill could gain traction in the Democratic-controlled Senate, it faces a rough road in the GOP-run House, where many Republicans favor scaling back the government's role in the housing market as a way of aiding the economy. Similar versions of the measure died in the House and Senate's lame duck sessions last year.
"At the moment, it's an uphill battle," said Rep. Peter Welch, D-Vt., who plans to file the House version of the bill.


JOBS: Housing holds key to full job growth rebound

Welch said he will reach out to Republicans this year in hopes of building more support, but the bill's association with the government-controlled Fannie Mae and Freddie Mac, the federal housing agencies partly blamed for the collapse of the housing market, hurts its support base among GOP lawmakers.
"The American taxpayers have already sunk $190 billion dollars into the operations of Fannie and Freddie," said Rep. Randy Neugebauer, R-Tex., a member of the House Financial Services Committee. "It's time that we wind their operations down instead of using them as a piggy bank for failed programs that further delay the housing recovery.

 "In the Senate, Democrats Bob Menendez of New Jersey and Barbara Boxer of California have legislation to aid borrowers who are current on their loans backed by Fannie Mae and Freddie Mac, but who are not able to refinance because their home values have declined too much.

Nearly 12 million homeowners have Fannie Mae and Freddie Mac loans and stand to benefit refinancing, the two senators said. Many can't refinance at a lower rate because of red tape and high fees. The red tape has reduced competition among banks, so borrowers pay higher interest rates than they would if they were able to shop around more, according to the senators.

The bill also would reduce up-front fees that borrowers pay on refinances and eliminate appraisal costs for all borrowers. The measure seeks to expand the Obama administration's Home Affordable Refinancing Program, which saves an average homeowner about $2,500 per year, they said.

"Homeowners will have more money in their pockets, Fannie and Freddie will see fewer foreclosures, and the housing market and economy will continue building momentum," Boxer said.

Among the bill's supporters are the Mortgage Bankers Association, the National Association of Realtors and the National Association of Home Builders.

"It is another tool that can be out there to help stabilize the housing market and kick start the economy if consumers can, in fact, put another $100 bucks in their pockets every month," said John Hudson, government affairs chairman of the Association of Mortgage Professionals.

Similar proposals by Boxer and Menendez last year got bogged down in the Senate Banking, Housing and Urban Affairs Committee. Republican attempts to add amendments on other housing issues beyond refinancing led to a stalemate.

Twenty Senate Democrats are co-sponsors of this year's bill, but no Republicans have signed on."I support finding ways to smartly streamline the refinance process, but I'm not sure that eliminating all documentation requirements makes sense," said GOP Sen. Bob Corker of Tennessee, a committee member. "I also think we need to quickly move beyond short-term stimulus and start focusing on the structural issues in our housing finance system."Sen. Mike Crapo, the committee's top Republican, declined through a spokeswoman to comment on the bill.Welch's House bill also died during the last Congress. Welch accused Republicans of not wanting to give Obama an election-year boost by passing the mortgage refinance measure.

"Last year was even tougher because it was an election year," said Welch. "The Republican leadership wanted Obama to fail."

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.