NEW YORK--U.S. mortgage rates rose in the latest week for a fourth straight week and hit the highest level since August, a closely watched mortgage survey showed on Thursday.
Interest rates on U.S. 30-year fixed-rate mortgages, the most widely used loan, averaged 5.14 percent for the week ended Dec. 31, the highest since the week ending Aug. 27 and up from the previous week's 5.05 percent, according to a survey released by Freddie Mac, the second-largest U.S. mortgage finance company.
"Although long-term mortgage rates rose for the fourth week in a row, they still remain affordable by historical standards," Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.
Based on today's median loan amount of $138,000, monthly principal and interest payments for a 30-year fixed-rate mortgage are close to one-third less than a decade ago when rates peaked at 8.6 percent in May 2000, Nothaft said .
"This translates into almost 50 percent less in interest payments over the full 30-year term," he said.
The rate of the latest week tops that of the year-ago period when the 30-year mortgage rates averaged 5.10 percent.
The 30-year rate had fallen to 4.71 percent four weeks ago, the lowest since Freddie Mac started the survey in 1971.
Mortgage rates are linked to yields on Treasuries and yields on mortgage-backed securities.
Freddie Mac said the 15-year fixed-rate mortgage averaged 4.54 percent in the latest week, up from 4.45 percent the prior week.
The Mortgage Bankers Association last week said U.S. mortgage applications fell in its most recent survey.
One-year adjustable-rate mortgages (ARMs) were 4.33 percent in the latest week, down from 4.38 percent the prior week. The rate on the "5/1" ARM, set at a fixed rate for five years and adjustable each following year, was 4.44 percent, compared with 4.40 percent a week earlier.
A year ago, 15-year mortgages averaged 4.83 percent, the one-year ARM 4.85 percent and the 5/1 ARM 5.57 percent. (Editing by Leslie Adler)
Housing: Undervalued and Stuck There
Wells Fargo & Co. economists wrote in a note to clients last week, “The calculus of home buying and finance has changed,” summing up succinctly something that is troubling housing experts all over the country.
Housing researcher Global Insight recently released a study of U.S. housing prices that points to the magnitude of the collapse of values.
Nationwide, Global found housing values were about 10 percent undervalued, based on a model that examines interest rates, household incomes, population, and historical price patterns. That’s a modest number compared to metro areas hardest hit by the housing recession.
In Fort Lauderdale, Fla., Global calculated that housing prices were 24 percent undervalued as of the third quarter of 2009. Three years ago, it said the area was 44 percent overvalued. Global calculates that Las Vegas is now undervalued by 41 percent compared to being 33 percent overvalued in 2006.
The trillion-dollar question is: When will things turn around? As long as there is high unemployment and tight credit, many experts believe it won’t be anytime soon.
Source: Reuters News, Emily Kaiser (12/20/2009)
Housing researcher Global Insight recently released a study of U.S. housing prices that points to the magnitude of the collapse of values.
Nationwide, Global found housing values were about 10 percent undervalued, based on a model that examines interest rates, household incomes, population, and historical price patterns. That’s a modest number compared to metro areas hardest hit by the housing recession.
In Fort Lauderdale, Fla., Global calculated that housing prices were 24 percent undervalued as of the third quarter of 2009. Three years ago, it said the area was 44 percent overvalued. Global calculates that Las Vegas is now undervalued by 41 percent compared to being 33 percent overvalued in 2006.
The trillion-dollar question is: When will things turn around? As long as there is high unemployment and tight credit, many experts believe it won’t be anytime soon.
Source: Reuters News, Emily Kaiser (12/20/2009)
Construction of new homes rebounds in Nov.
WASHINGTON - Construction of new homes, helped by better weather, rebounded in November following a setback in the previous month.
The gain is a hopeful sign that the housing recovery is continuing, a development viewed as critical to lifting the overall economy out of recession.
The Commerce Department said construction of new homes and apartments rose 8.9 percent in November to a seasonally adjusted annual rate of 574,000 units. The gain represented strength in all areas of the country although the increase was slightly lower than economists had expected.
Real Estate Outlook: Housing Warmer Than Weather
If new applications to buy homes are any gauge, the U.S. housing market is warming up, and that's despite the fact that we're now into the traditionally quiet holiday season.
Applications for home purchase loans soared 42 percent last week on a non-seasonally-adjusted basis compared with the week before, according to the Mortgage Bankers Association.
That burst of activity may have been influenced in part by the long Thanksgiving week layoff. Or it could have been an early reaction to the extension of the $8,000 tax credit or the start-up of the new $6,500 credit.
Either way, it was an exceptional week for mortgage lenders.
But here's another possibility: With the economy gaining a little momentum, interest rates have begun edging up again.
Mortgage rates are still close to historic lows, 4.9 percent on average for 30-year fixed and 4.3 percent for 15 year fixed, but MBA chief economist Jay Brinkmann says they're likely to exceed 5.2 percent by this coming March.
So, maybe the rush to nail down financing by home buyers is a smart move … compared with paying half a point higher rates by early spring.
On other economic fronts, we're looking at a mixed bag of reports this week, though mainly positive:
Freddie Mac's found home prices nationwide up by about one point on average during the third quarter. That's on top of a two percent gain for the second quarter. Clear Capital, a real estate data company, also found prices up marginally - by 1.4 percent - during the month of November, though a few local markets came in with double digit gains.
But not all surveys agree on that. The well-regarded “IAS 360” index came in with a contrarian result. It found that overall prices in the U.S. were down slightly on average -- by about half a percent.
Since there's not a huge variation among the three reports, we can probably safely conclude that -- at the very worst -- prices have stabilized in most markets -- and at the very best, they're up a little.
There were also positive indications on lower delinquencies and foreclosures across the country. Realty Trac says foreclosure filings in November dropped by 8 percent - the fourth consecutive month of declines.
And Trans Union, the big credit bureau, forecasts three percent fewer mortgage delinquencies next year - after three straight years of rising delinquency rates.
Applications for home purchase loans soared 42 percent last week on a non-seasonally-adjusted basis compared with the week before, according to the Mortgage Bankers Association.
That burst of activity may have been influenced in part by the long Thanksgiving week layoff. Or it could have been an early reaction to the extension of the $8,000 tax credit or the start-up of the new $6,500 credit.
Either way, it was an exceptional week for mortgage lenders.
But here's another possibility: With the economy gaining a little momentum, interest rates have begun edging up again.
Mortgage rates are still close to historic lows, 4.9 percent on average for 30-year fixed and 4.3 percent for 15 year fixed, but MBA chief economist Jay Brinkmann says they're likely to exceed 5.2 percent by this coming March.
So, maybe the rush to nail down financing by home buyers is a smart move … compared with paying half a point higher rates by early spring.
On other economic fronts, we're looking at a mixed bag of reports this week, though mainly positive:
Freddie Mac's found home prices nationwide up by about one point on average during the third quarter. That's on top of a two percent gain for the second quarter. Clear Capital, a real estate data company, also found prices up marginally - by 1.4 percent - during the month of November, though a few local markets came in with double digit gains.
But not all surveys agree on that. The well-regarded “IAS 360” index came in with a contrarian result. It found that overall prices in the U.S. were down slightly on average -- by about half a percent.
Since there's not a huge variation among the three reports, we can probably safely conclude that -- at the very worst -- prices have stabilized in most markets -- and at the very best, they're up a little.
There were also positive indications on lower delinquencies and foreclosures across the country. Realty Trac says foreclosure filings in November dropped by 8 percent - the fourth consecutive month of declines.
And Trans Union, the big credit bureau, forecasts three percent fewer mortgage delinquencies next year - after three straight years of rising delinquency rates.
TransUnion Predicts Lower Delinquencies
In an estimated 22 states, mortgage delinquencies are likely to decline in 2010 as tougher standards take effect and lenders remove bad debt from their books, according to credit-information company TransUnion.
TransUnion also expects to see mortgage loans that are 60 or more days overdue decline to 6.39 percent at the end of 2010 from 6.56 in December 2009.
Five states are likely to report increases, led by Florida and Arizona, TransUnion said.
Source: The Wall Street Journal, Tess Stynes (12/08/2009)
TransUnion also expects to see mortgage loans that are 60 or more days overdue decline to 6.39 percent at the end of 2010 from 6.56 in December 2009.
Five states are likely to report increases, led by Florida and Arizona, TransUnion said.
Source: The Wall Street Journal, Tess Stynes (12/08/2009)
Home Values Have Been Stabilizing
U.S. homes lost $489 billion in value during the first 11 months of 2009. That’s significantly less than the $3.6 trillion lost during 2008 and evidence that home values are stabilizing, says Zillow.com, online real estate research firm.
Properties in 48 of the 154 markets tracked by Zillow rose in value this year, but Zillow’s Chief Economist Stan Humphries believes prices could decline again in 2010.
“We believe that demand will come under downward pressure as mortgage rates creep back up after the first quarter and that housing supply will experience upward pressure as the volume of foreclosures continues to remain high. Both these factors will challenge the recent stabilization of home prices," Humphries said in a statement.
Areas where home prices rose the most in 2009 were: *Boston *Providence *Denver, Colo. *Atlanta, Ga. *Rochester, N.Y.
Areas where homes continued to lose the most value: *Los Angeles *Chicago *New York *Miami-Fort Lauderdale *Phoenix
Source: Zillow.com (12/0920/09)
Properties in 48 of the 154 markets tracked by Zillow rose in value this year, but Zillow’s Chief Economist Stan Humphries believes prices could decline again in 2010.
“We believe that demand will come under downward pressure as mortgage rates creep back up after the first quarter and that housing supply will experience upward pressure as the volume of foreclosures continues to remain high. Both these factors will challenge the recent stabilization of home prices," Humphries said in a statement.
Areas where home prices rose the most in 2009 were: *Boston *Providence *Denver, Colo. *Atlanta, Ga. *Rochester, N.Y.
Areas where homes continued to lose the most value: *Los Angeles *Chicago *New York *Miami-Fort Lauderdale *Phoenix
Source: Zillow.com (12/0920/09)
Bernanke Promises Low Rates
Federal Reserve Chair Ben Bernanke said Monday that he could make no guarantees that the current economic recovery will last, but he promised to keep interest rates at low levels for “an extended period.”
Central bank officials will discuss monetary policy when they meet Dec. 15-16.
Bernanke, who was speaking to the Economic Club of Washington, D.C., is seeking a second term. He provided a light-hearted answer to the question, “What do you like best about being Fed chief?”
"I get to go through the security lines at the airport much more quickly, and I can take along even three ounces of fluid if I want to," Bernanke told a laughing audience.
Source: Associated Press, Jeannine Aversa (12/07/2009)
Central bank officials will discuss monetary policy when they meet Dec. 15-16.
Bernanke, who was speaking to the Economic Club of Washington, D.C., is seeking a second term. He provided a light-hearted answer to the question, “What do you like best about being Fed chief?”
"I get to go through the security lines at the airport much more quickly, and I can take along even three ounces of fluid if I want to," Bernanke told a laughing audience.
Source: Associated Press, Jeannine Aversa (12/07/2009)
IRS Sets New Rules for Tax Credit
The IRS has spelled out guidelines for eligibility for the home buyer credit when co-borrowers purchase a property.
When a home-owning parent of an adult child co-signs for a mortgage and both names appear on the note, the IRS says that under some circumstances, the first-time home buyer can qualify for the whole amount.
The IRS says the parent doesn’t qualify for any portion of the credit, but if the child hasn’t owned a home during the three years preceding the current purchase and can qualify based on income, he or she can be allocated the entire $8,000 credit.
When unmarried individuals co-purchase a home and only one of them is eligible for the credit, then the full $8,000 can be allocated to the eligible buyer.
Source: Washington Post Writers Group, Kenneth R. Harney (12/04/2009)
When a home-owning parent of an adult child co-signs for a mortgage and both names appear on the note, the IRS says that under some circumstances, the first-time home buyer can qualify for the whole amount.
The IRS says the parent doesn’t qualify for any portion of the credit, but if the child hasn’t owned a home during the three years preceding the current purchase and can qualify based on income, he or she can be allocated the entire $8,000 credit.
When unmarried individuals co-purchase a home and only one of them is eligible for the credit, then the full $8,000 can be allocated to the eligible buyer.
Source: Washington Post Writers Group, Kenneth R. Harney (12/04/2009)
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