Jul 23, 2012

Long-Term Rate-Indicative Yield Returns to Its Record Low

The benchmark 10-year Treasury’s yield on Monday morning matched its all-time low of 1.44%, putting more downward pressure on long-term mortgage rates.The 10-year last was this low on June 1, according to Yahoo Finance. Subsequently in June it had rebounded to levels as high as 1.65% or so, hovering around 1.6% until July got underway. After July hit, it began sliding toward 1.5%. The downward trend in the rate-indicative bond yield began intensifying during the latter half of last week, when the yield started to dip below 1.5%.

Jul 18, 2012

Zuckerberg’s Loan Gives New Meaning to the 1%

Billionaire Mark Zuckerberg is giving new meaning to the term “the one percent.”

The Facebook Inc. (FB) founder refinanced a $5.95 million mortgage on his Palo Alto, California, home with a 30-year adjustable-rate loan starting at 1.05 percent, according to public records for the property.While almost all lending rates have reached historical lows this year, the borrowing costs available to high-net-worth individuals are even lower if the person is willing to bear the risk of monthly interest rate adjustments, said Greg McBride, senior financial analyst with Bankrate Inc., a North Palm Beach, Florida-based firm that tracks interest rates. Large increases are unlikely anytime soon with the Federal Reserve signaling it will keep interest rates near zero for at least two years.

“When you can borrow at a rate below inflation, you’re borrowing for free,” McBride said in an e-mail. “This is the concept of using other people’s money and it preserves financial flexibility for the borrower.”
“The one percent” is a phrase popularized last year by the Occupy Wall Street movement to protest growing U.S. income inequality. The top one percent of Americans earns a fifth of the country’s income and controls more than a third of its wealth, according to Joseph E. Stiglitz, a Nobel Prize-winning economist, whose book “The Price of Inequality,” was published last month.
The average rate on a one-year adjustable mortgage was 2.69 percent on July 12, up from a record low 2.68 percent a week earlier, according to Freddie Mac, the McLean, Virginia-based mortgage-finance company. The average rate for a 30-year fixed loan fell to a record low 3.56 percent on July 12. Freddie Mac doesn’t survey rates for loans that adjust monthly.

This is from Bloomberg online ... and more information can be got from http://www.bloomberg.com/

Jul 16, 2012

Wells Fargo Calls it Quits on Wholesale Lending

Wells Fargo — the nation's largest funder of home mortgages through loan brokers — is calling it quits on wholesale lending, dealing yet another devastating blow to this struggling origination channel.
"We will still fund loans through correspondents," a Wells spokeswoman confirmed to National Mortgage News, "but for independent mortgage brokers things will change."
She said the cut-off date is Friday, July 13. Further clarification on the issue will come later today.
According to NMN and the Quarterly Data Report, Wells ranked first in 1Q in wholesale lending, table funding $7.3 billion of mortgages through brokers. Provident Funding Associates, Burlingame, Calif., ranked a close second with $7 billion.
After those two, the next largest player is Flagstar Bank FSB with $2.9 billion.
Wells' decision to exit the channel comes in the wake of a fair lending settlement with the Justice Department. "While not part of the DOJ settlement, Wells Fargo, on its own volition, also announced today that on July 13 it will discontinue funding mortgages that are originated, priced and sold by independent mortgage brokers through its mortgage Wholesale channel," the company said in a press statement.
It added: "Mortgages sold by independent brokers in this manner currently represent five percent of the Company's home mortgage funded volume. Mortgage brokers operate as independent businesses and are not employed by Wells Fargo. Therefore, Wells Fargo cannot set loan prices for independent mortgage brokers nor control the combined effect of the negotiations that thousands of these independent mortgage brokers conduct with their customers.
After July 13, 2012, the Company will no longer accept new applications for loans originated by independent mortgage brokers through its Wholesale channel, but will work to ensure existing applications are processed and closed."

Jul 11, 2012

Wells Fargo economists see 'budding recovery' in housing, but don't get too excited

Wells Fargo Securities senior economists Mark Vitner and Anika Khan say the nation's housing market is improving, but that new home sales and construction are nowhere near what they once were. It is really great to hear economists "observe" that new home sales are "improving" - but I dont think it takes a major MBA and a fancy corner office to determine that they are "nowhere what they once were". My fourth grader  - if given the numbers - might be able to deduce that one number is greater than the other.

"Even with the overall economy slowing, the budding recovery in the housing market appears to be gradually gaining momentum," the two economists say in a July 5 report to Wells Fargo (NYSE: WFC) clients. "We have continuously stressed the need to keep the recent improvement in the housing market in perspective. Even with the recent gains, new home sales and residential construction remain shadows of their former selves."

In January, Vitner made headlines, at least in the San Francisco Business Times, by saying a "true" housing recovery could be a decade away. He's sticking to that prediction. At least that's what he told me when we met over coffee earlier this week. He was visiting from Charlotte, where the heat wave was shattering records, so he was eager to share with me his immediate impressions of the Bay Area: the weather's cool and the economy's hot.

Jul 10, 2012

U.S. home sales up 20% from last year: DataQuick

During the 30-day sales period ending July 5, approximately 211,000 homes were sold in 98 of the top 100 metropolitan statistical areas, research firm DataQuick said Thursday.

Sales overall rose 12% from the same period a year earlier and 10.6% from 2009 levels.

Home prices also went up with the median price hitting $193,000 on July 5, up 6% from a year ago and 4.3% from three years ago.
In a little over a month, the median sales price rose from $186,000 to $193,000.
The DataQuick report analyzes 66.25% of all U.S. home sales, excluding the key markets of Louisville and Wichita.

Jul 9, 2012

The red-hot real estate market is getting hotter

According to Niche Report., the red-hot real estate market is getting even hotter thanks to regional property appreciation. This situation was recently reported by online real estate market analysis site Trulia, and it is bound to attract more real estate investors to some metropolitan areas where urban dwellers are taking a break from the American Dream of home ownership in favor of lease agreements.

According to the figures released by Trulia, monthly rents in the United States climbed by 5.4 percent on an average basis since June 30th of the previous year. This increase is not surprising given the pace of foreclosures over the last few years, as well as the incredibly strict credit and lending guidelines imposed on mortgage applicants.

In some metropolitan areas like San Francisco, renters are now paying almost 15 percent more than in 2011. This has had a positive, yet disproportionate, effect on real estate values in the San Francisco market, where residential properties are now priced 2.5 percent higher than they a year ago. A similar situation can be observed in nearby Oakland, where rents went up by 10 percent, although home purchase prices barely inched up compared to twelve months ago.

Refinancing Applications Spike by 13%

A 13% increase in refinance applications led to a 9.2% seasonally adjusted increase in overall application volume for the week ended May 11, according to the Mortgage Bankers Association. As in the previous week, the activity was spurred by record low rates for all four categories of fixed-rate loans the trade group tracks.

The one thing that the rise in refi apps cannot be attributed to is the Home Affordable Refinance Program, said Michael Fratantoni, MBA's vice president of research and economics.

"A flare-up of the sovereign debt troubles in Europe once again led investors to flee to the safety of U.S. Treasury securities last week. As a result, mortgage rates have reached new lows in our survey, and refinancing application volumes picked up substantially as a result.

"Survey participants indicated that this was not due primarily to HARP volume—the HARP share of refinances fell to 28% of refinance applications, down relative to last week and last month, when the share was just above 30% in April. The increase in refinance activity last week was concentrated in the conventional sector, which was up around 14% for the week, while government refinance applications were up only 4%," Fratantoni explained.

The Purchase Index decreased 2.4% compared with the previous week and was 1% lower on an unadjusted basis than the same week one year ago. The refi share of apps increased to 74.9% from 72.1% in last week's survey.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased by five basis points from the previous week to 3.96%. The average contract interest rate for 30-year Federal Housing Administration-insured loans declined by six basis points to 3.75%.
The rate for 30-year FRMs with jumbo loan balances fell by nine basis points to 4.2%. The average contract interest rate for 15-year FRMs declined three basis points to 3.26%.

For more details on this and other mortgage related information visit www.mbaa.org