Home Sales In West Increase 20.6% From Last July

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via: DSNews.com Krista Franks

Pending home sales decreased overall and in three of the four national regions in July, according to the National Association of Realtors (NAR) Pending Home Sales Index. However, nationally and in all four regions, pending home sales remain higher than one year ago.

The West was the only region to post a month-over-month increase. Pending sales in the region increased 3.6 percent for the month and 20.6 percent from last July.

At 110.8, the West was also the only region to surpass a ranking of 100 for the month.

NAR’s pending home sales are measured on a point scale with 100 being a historically healthy average.

The South came close to the historic average last month but slipped 4.8 percent to 94.4 for the month of July. This rate is 9.5 percent above last year’s rate.

The Midwest was third on the scale at 79.1 for the month of July. Pending home sales in the Midwest fell 0.8 percent from the previous month but have risen 18.8 percent from the previous year.

The Northeast’s pending home sales ranked lowest at 67.5 on NAR’s scale. The rate is 2 percent below last month’s rate but 9.7 percent above last year’s rate.

“Looking at pending home sales over a longer span, contract activity over the past three months is fairly comparable to the first three months of the year, and well above the low seen in April,” said NAR’s chief economist, Lawrence Yun.

“The underlying factors for improving sales are developing, such as rising rents, record high affordability conditions and investors buying real estate as a future inflation hedge,” Yun said.

He added: “It is now a question of lending standards and consumers having the necessary confidence to enter the market.”

NAR’s Pending Home Sales Index measures contracts but not closings. Yun notes that not all contracts become closings, so there is some discrepancy between pending sales for a month and later-reported existing sales.

Pre-Foreclosure Short Sales Jump 19% in Second Quarter

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via: dsnews.com by Carrie Bay

Short sales shot up 19 percent between the first and second quarters, with 102,407 transactions completed during the April-to-June period, according to RealtyTrac.

Over the same timeframe, a total of 162,680 bank-owned REO homes sold to third parties, virtually unchanged from the first quarter.

RealtyTrac’s study also found that the average time to complete a short sale is down, while the time it takes to sell an REO has increased.

Pre-foreclosure short sales took an average of 245 days to sell after receiving the initial foreclosure notice during the second quarter, RealtyTrac says. That’s down from an average of 256 days in the first quarter and follows three straight quarters in which the sales cycle has increased.

REOs that sold in the second quarter took an average of 178 days to sell after the foreclosure process was completed, which itself has been lengthening across the country. The REO sales cycle in Q2 increased slightly from 176 days in the first quarter, and is up from 164 days in the second quarter of 2010.

Discounts on both short sales and REOs increased last quarter, according to RealtyTrac’s study, but homes sold pre-foreclosure carried less of a markdown when compared to non-distressed homes.

Sales of homes in default or scheduled for auction prior to the completion of foreclosure had an average sales price nationwide of $192,129, a discount of 21 percent below the average sales price of non-foreclosure homes. The short sale price-cut is up from a 17 percent discount in the previous quarter and a 14 percent discount in the second quarter of 2010.

Nationally, REOs had an average sales price of $145,211, a discount of nearly 40 percent below the average sales price of non-distressed homes. The REO discount was 36 percent in the previous quarter and 34 percent in the second quarter of 2010.

Commenting on the latest short sale stats in particular, James Saccacio, RealtyTrac’s CEO, said, “The jump in pre-foreclosure sales volume coupled with bigger discounts…and a shorter average time to sell…all point to a housing market that is starting to focus on more efficiently clearing distressed inventory through more streamlined short sales.”

Saccacio says short sales “give lenders the opportunity to more pre-emptively purge non-performing loans from their portfolios and avoid the long, costly and increasingly messy process of foreclosure and the subsequent sale of an REO.”

Together, REOs and short sales accounted for 31 percent of all U.S. residential sales in the second quarter, RealtyTrac reports. That’s down from nearly 36 percent of all sales in the first quarter but up from 24 percent of all sales in the second quarter of 2010.

States with the highest percentage of foreclosure-related sales – REOs and short sales – in the second quarter include Nevada (65%), Arizona (57%), California (51%), Michigan (41%), and Georgia (38%).

States where foreclosure-related sales increased more than 30 percent between the first and second quarters include Delaware (33%), Wyoming (32%), and Iowa (30%).

Mortgage Rates Plunge to Lowest Level in Over Five Decades

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via: dsnews.com by Carrie Bay

Investors’ growing appetite for the safety of U.S. Treasury bonds in the wake of European debt troubles and domestic policy decisions aimed at jump-starting a stagnant economic recovery have driven mortgage interest rates to their lowest level in over 50 years.

Freddie Mac says both fixed- and adjustable-rate mortgages have reached all-time record lows, providing further incentive for homeowners looking to refinance.

Data released by Freddie Mac Thursday puts the average 30-year fixed-mortgage rate at 4.15 percent (0.7 point) for the week ending August 18th, a 17 basis-point drop from 4.32 percent in one week’s time.

The 15-year fixed-rate fell 14 basis points, from 3.50 percent last week to 3.36 percent (0.6 point) this week.

“Not surprising, many homeowners took advantage of this low mortgage rate environment and have already refinanced their loans,” said Frank Nothaft, Freddie Mac’s chief economist.

“The refinance share of applications averaged nearly 70 percent of all mortgage activity in the first half of this year,” Nothaft contined. “In addition, an increasing share of refinancing borrowers chose to shorten their loan terms during the second quarter.”

Adjustable-rate mortgages (ARMs) also headed lower in Freddie’s study, with the 5-year ARM falling from 3.13 percent to 3.08 percent (0.5 point), and the 1-year ARM slipping from 2.89 percent to 2.86 percent (0.6 point).

Freddie Mac’s weekly mortgage rate survey averages quotes gathered from about 125 lenders across the country.

A separate study released Thursday by Bankrate also put rates at or near record lows. The tracking firm’s results are based on data provided by the top 10 banks and thrifts in the top 10 U.S. markets.

In Bankrate’s survey, the benchmark conforming 30-year fixed-mortgage rate slipped to 4.45 percent (0.45 point), down from 4.46 percent last week.

The average 15-year fixed mortgage reset a record at 3.58 percent (0.42 point). That’s down from the 3.61 percent average reported last week.

Bankrate says the larger jumbo 30-year fixed rate fell below the 5 percent mark for the first time ever, landing at 4.89 percent. It was 5.02 percent last week.

Adjustable rate mortgages saw the biggest decreases in Bankrate’s survey, with the average 5-year ARM dropping from 3.24 percent to 3.15 percent and the 10-year ARM falling from 3.93 percent to 3.83 percent.

Renting Versus Buying in 2011

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via: California Association of Realtors www.car.org

This year California housing market conditions make a strong and compelling case for homeownership. With prices still well below the historic highs of just a few years ago and attractive mortgage rates, qualified buyers have a unique opportunity to own their own home. As seen below, a rigorous analysis of renting versus buying hears this conclusion out. As shown in the following chart, the monthly housing costs (principle, interest, taxes, and insurance or PITI) associated with buying a median-priced home of $301,430 is $1,590 (Fourth Quarter 2010 median priced home in California).  This assumes the buyer is making a 20 percent downpayment and financing with a 30-year fixed rate mortgage at 4.62 percent. In comparison, the median rent on a three-bedroom two-bath apartment with renter’s insurance in California is $1,810. That means buying a home would save the homeowner $220 per month when compared to renting and the homeowner would save over $2,600 a year.

                        click on graph for larger view  

In addition, existing tax laws allow homeowners to itemize and deduct the mortgage interest and property taxes from their taxable income. For example, compare the tax implications for two households both earning $63,430 a year, the minimum income required to purchase the statewide median-priced home of $301,430.* The household that purchases the home with a 20 percent downpayment and finances the mortgage at the current rate of 4.62 percent will receive a tax deduction of over $14,000 in the first year of ownership. The renter household will most likely utilize the IRS Standard deduction of $11,400, $2,600 less than their homeowner counterparts. The homebuyer reduces their total tax liability by $400 compared to the renter in the first year of ownership. Accounting for the out-of-pocket savings as well as the tax savings, the homebuyer saves over $3,000 in their first year of ownership.

                         click on graph for larger view

The mortgage rate is a significant factor in determining just how much a homebuyer can afford. Today’s low mortgage rate environment tips the scale—for some—in favor of buying versus renting. For a home priced at $400,000, with a 20 percent downpayment and a 4 percent mortgage rate, the monthly PITI will be $1,990 for the homebuyer. The monthly PITI jumps to $2,180 at 5 percent and to $2,380 at 6 percent. For each one percentage point increase in the mortgage rate, the payment goes up by almost $200 under these assumptions. Even for a lower priced home at $200,000, the difference in the monthly payment is significant as each percentage point rise in the mortgage rate tacks on $100 to the monthly PITI.

                       click on graph for larger view

Of course, there are many other socioeconomic benefits that homeownership brings to communities. And there are other costs associated with homeownership above and beyond the downpayment and monthly PITI. So as long as one has considered all of the costs and benefits of owning a home and is in the financial position to do so, there are some pretty compelling reasons to strive for the “American Dream.”

 

*Assumptions:

1. Underlying assumptions for the Mortgage Interest Deduction and Property Tax (1 percent of the purchase price) deduction are based on the Traditional HAI Q4-2010 assumptions of: The prevailing median price in the 4th quarter 2010 (Median Price $301,430), effective FRM interest rate of 4.62%, a 20% downpayment, and a $241,144 loan amount.

2. Incomes are based on the underlying assumptions for the Traditional HAI. The same income is used for both Renters and Buyers and is assumed to be the Minimum Qualifying Income needed to purchase a median priced home in the 4th quarter 2010.

3. Tax rate based on 2010 IRS Schedule Y-1 Married Filing Jointly in 15% tax bracket (latest available from the IRS) assuming no changes over the 5 year horizon

4. Interest deduction based on the Traditional HAI Q4-2010 underlying effective FRM interest rate
of 4.62%, a 20% downpayment, and a $241,144 loan amount.

5. Property taxes are assumed to be constant over this 5 year analysis, thereby assuming the underlying market value remains unchanged. If the home value were to increase, under Proposition 13, the property tax assessment would increase at a rate of 2 percent per year. Along these same lines, income is also assumed to be constant over this 5 year analysis in order to keep the analysis simple and determine the basic 5 -year tax benefit of buying a home in 2010.

Mortgages rates keep falling: 30-year nears record low

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NEW YORK (CNNMoney) -- Just when it seemed mortgage rates weren't going to get any lower, they started testing new lows.

In the tumultuous days following Standard & Poor's debt downgrades, rates on 30-year fixed mortgages fell to 4.32%, down from 4.39% last week and closed in on a record low of 4.17% set last November, according to Freddie Mac's Primary Mortgage Market Survey.

Rates on 15-year fixed mortgages set a new record for the second week in a row, falling to 3.5%, down from 3.54% last week.

"It's a crazy time," said Doug Lebda, the CEO of online lending exchange LendingTree. "I'd say rates can't get much lower, but I was saying that last week, too."

The savings for borrowers who lock in rock-bottom rates over the length of a mortgage loan can be sizable. Take, for example, a borrower with a $200,000, 30-year loan. If their mortgage carries a 4.32% rate their monthly payment is just $992 and they make total interest payments of $157,153. However, if the rate on their 30-year fixed mortgage is 5% (ordinarily considered a low rate), they'd pay $1,074 a month and $29,357 more in interest over the 30-year period.

The low rates are sparking a rash of refinancing activity, according to the Mortgage Bankers Association. Last week, total mortgage borrowing, most of it refinancings, jumped nearly 22%. This week's activity could be even higher, according to Greg McBride, chief economist for Bankrate.com.

"Rates have been below 5.5% for two years," he said. "For most people who have refinanced or purchased since then, there's little benefit to refinancing. But when rates drop below 4.5%, then it's worth looking into."

Rates could go even lower

Treasury yields near all-time lows

Rates could drop even lower, according to Keith Gumbinger of HSH Associates, a provider of loan information.

"Low Treasury interest rates are still not being fully passed through to mortgage borrowers," he said.

While mortgage rates do not move in lockstep with Treasury yields, they are closely correlated. The yield on the 10-year bond plunged to 2.24% Thursday from 2.56% at the end of last week.

The difference between the 30-year fixed mortgage rate and the 10-year Treasury yield is usually about 1.6 to 1.7 percentage points, so a bond rate of 2.24% should mean that mortgage rates should be at 3.84% to 3.94%.

"That argues that mortgage rates could go lower," said Gumbinger. "Will the spread shrink again, though? That's hard to say."

One reason to question a further drop: S&P's downgrade of the credit ratings of Fannie Mae and Freddie Mac. The downgrade could make borrowing more expensive for the two mortgage giants, which represent, along with FHA loans, close to 90% of mortgage lending these days. And those costs may get passed along to borrowers.

Another factor is that investors in mortgage securities backed by Fannie/Freddie may stop buying mortgages if the yields fall much further. The low rates would provide too puny a return.

Investors may also balk, according to Gumbinger, because the attractive rates give borrowers less incentive to prepay their mortgages. That means investors would get stuck with a low rate of return on their investment for a long time.

To compensate for that risk, according to Gumbinger, investors may demand greater yields and keep mortgage rates a little higher, even though they are already very low indeed.

via: http://money.cnn.com  - Les Christie

Delinquencies Register Greatest Drop Since Recession End: TransUnion

TransUnion recorded the largest percentage drop in delinquencies since the end of the recession two years ago.

According to TransUnion, mortgage delinquencies improved 5.98 percent during the quarter.

Information and risk management company, TransUnion, compiles data from 27 million consumers randomly sampled each quarter.

The rate of homeowners 60 or more days delinquent declined to 5.82 percent in the second quarter of 2011.

TransUnion predicts delinquencies will continue to decline throughout the year.

“While relatively low home prices and high unemployment continue to exert upward pressure on delinquency rates, they are more than offset by the impact of more conservative lending policies reflecting consumers with higher credit scores,” said Tim Martin, group vice president of the U.S. Housing Market in TransUnion’s financial services business unit.

“Not only are these consumers less likely to default if house prices continue to edge downward throughout the year, but their willingness to repay their debt obligations in the face of high unemployment rates is greater,” Martin said.

“It is because of these dynamics that lenders today take a much closer look at the borrower’s income history and overall debt situation than before the recession began in 2007,” he added.

Excluding Vermont, all states and the District of Columbia registered declines in delinquencies during the second quarter of 2011. Vermont posted an increase.

States with the highest delinquency rate in the second quarter of 2011 were Florida, Nevada, California, and Arizona.

States with the lowst delinquency rate for the quarter were North Dakota, South Dakota, Nebraska, and Alaska.

At the same time, delinquencies decreased in 79 percent of metropolitan statistical areas (MSA), an increase from the previous quarter when 69 percent of MSAs showed decreases in delinquencies.

The rate is a significant increase from one year ago when delinquencies decreased in 44 percent of MSAs.

“Mortgage delinquencies have shown six straight quarters of improvement and the pace of the improvement seems to be picking up speed. This is encouraging news,” Martin said.

“However, at their current level, nearly three times the pre-recession ‘norm,’ and the current pace of improvement, we may not see ‘normal’ delinquency rates until the end of 2015,” Martin concluded.

via: www.dsnews.com - Krista Franks

Fed Reports Slight Decline in Mortgage and Other Debt

The Federal Reserve found a small increase in consumers’ willingness to borrow and banks’ willingness to lend, according to the Household Debt and Credit Report for the second quarter of 2011 released Monday.

According to the report, most types of loans showed small decreases in balances.

Both mortgage loans and home equity lines of credit decreased by about $20 billion during the second quarter of 2011. This was a 0.2 percent drop for mortgage balances and a 3 percent drop for home equity lines of credit (HELOC).

At the end of the second quarter, the Fed calculated mortgage indebtedness at 8.3 percent below its peak.

Mortgage debt now makes up 71 percent of total household debt.

At the same time, HELOC indebtedness was 12.7 percent below its peak.

During the second quarter of 2011, about 2.2 percent of mortgages moved from performing status to delinquent. This rate has been improving for three consecutive quarters.

At the end of the quarter, 9.9 percent of outstanding debt was reportedly delinquent. This is down from 10.5 percent the previous quarter and 11.4 percent one year ago.

This was the sixth consecutive quarterly decline in delinquency, according to the Federal Reserve report.

New foreclosure filings decreased 22.8 percent from the previous quarter. In total, about 284,000 new foreclosure notes were filed in the second quarter of 2011.

“Outstanding consumer debt remained essentially flat, down just $50 billion, in what was basically a repeat of the previous quarter, said Andrew Haughwout, vice president in the Research and Statistics Group at the New York Fed.

“This is more evidence that the pace of consumer deleveraging that began in late 2008 has slowed,” Haughwout said. “During the next few quarters we will gain a better understanding of whether this is a permanent or temporary break in the decline of total outstanding consumer debt.”

via: www.dsnews.com  - Krista Franks

Market Concerns Produce New Record Low Mortgage Rates

Freddie Mac (OTC: FMCC) recently released the results of its Primary Mortgage Market Survey® (PMMS®), showing mortgage rates continuing to decline with the 30-year fixed averaging 4.32 percent marking a new low for 2011, and the 15-year fixed, 5-year ARM, and 1-year ARM averaging new all-time record lows this week.

News Facts

• 30-year fixed-rate mortgage (FRM) averaged 4.32 percent with an average 0.7 point for the week ending August 11, 2011, down from last week when it averaged 4.39 percent. Last year at this time, the 30-year FRM averaged 4.44 percent.

• 15-year FRM averaged 3.50 percent with an average 0.7 point, down from last week when it also averaged 3.54 percent. A year ago at this time, the 15-year FRM averaged 3.92 percent.

• 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.13 percent this week, with an average 0.5 point, down from last week when it averaged 3.18 percent. A year ago, the 5-year ARM averaged 3.56 percent.

• 1-year Treasury-indexed ARM averaged 2.89 percent this week with an average 0.5 point, down from last week when it averaged 3.02 percent. At this time last year, the 1-year ARM averaged 3.53 percent.

For more information, visit www.freddiemac.com.

via: rismedia.com

Where To Find The Biggest Foreclosure/Short Sale Discounts

Foreclosure filings fell to a 44-month low last month nationwide.

Are Foreclosure Problems Past Their Peak?

According to RealtyTrac, foreclosure filings nationwide fell 35 percent as compared to July 2010, a statistic that hints at the ongoing housing recovery. "Foreclosure filing" is a catch-all term encompassing default notices, scheduled auctions, and bank repossessions.

Despite the improvement, though, foreclosure activity remains concentrated in just a handful of states.

Of all of July's bank repossessions, more than half came from just 6 states in the union. Those states were California (19%); Georgia (8%); Florida (7%); and 6% each from Texas, Michigan, and Arizona.

On a per-household basis, the numbers were similarly skewed. Nevada's foreclosure rate was twice the next closest state.

1. Nevada : 1 filing for every 115 households
2. California : 1 filing for every 239 households
3. Arizona : : 1 filing for every 273 households

These same three states have dominated foreclosure markets since the housing downturn began in 2007.

The national average is 1 foreclosure for every 611 households.

Selling Homes At Discounts

Distressed homes, which includes foreclosures and short sales, remain in high demand with today's buyers, account for 30% of all home resales, according to the National Association of REALTORS®.

That's no surprise, either. Distressed homes typically sell at 20 percent discounts as compared to non-distressed ones.

You can even buy them with cash, then refinance them immediately afterward because of Fannie Mae's new guidelines. Under the Delayed Financing Rule, the long-standing 6-month "waiting period"  for a cash-out refinances has been waived in full.

Click here for a mortgage rate quote.

Foreclosure Mortgage Rates

If you're buying a foreclosure or short sale, you'll need a mortgage rate quote, too. The purchase process is a little bit different (and a little bit longer) so make sure you tell your loan officer.

Also, if you own more than 4 properties, you're still mortgage-eligible, too. Again, be sure to tell your loan officer.

 

Via TheMortgageReports.com - Dan Green

Mortgage Rates Sink After Strong Jobs Report

Via: TheMortgageReports.com Dan Green

Is the job market better than they say?

"Strong" Rebound For Payrolls

 

The latest Non-Farm Payrolls survey  shows 117,000 net new jobs created in July. The figure handily beat analyst estimates and surprised Wall Street investors.

In addition, the Bureau of Labor Statistics looked back at May and June's originally-reported figures and revised them both higher:

• May 2011 was revised higher by 28,000 jobs
• June 2011 was revised higher by 28,000 jobs

In other words, news of a sagging jobs market may have been grossly overstated; the jobs market may have been healthier than for what it's been given credit.

Unemployment slipped to 9.1 percent to July.

Mortgage Rates Rally

The jobs report's strong readings would typically be a boon to stock market and a threat to mortgage rates.

This is because more employed Americans means more disposable income spent on products and services; and more taxes paid to governments at the federal, state and local level, a combination that fuels consumer spending and supports new job growth.

It's a self-reinforcing cycle that spurs economic growth and draw investors to equities.

This month, however, the market reaction has been different.

Since the Friday release of the July Non-Farm Payrolls report, the Dow Jones Industrial Average has lost close to 6 percent of its value. Furthermore, mortgage bonds -- which typically sink on a strong jobs figure -- have thrived.

High demand for bonds has pushed rates down.

Lowest Rates In History

If you've been shopping for a mortgage, or recently bought a home, use this week's action to your advantage. Mortgage rates have dropped to an all-time low. Finally.

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How Low Are Current Mortgage Rates? 3 Convincing Answers

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via: www.Money-Rates.com - Richard Barrington | Money-Rates Columnist

There can be a fair amount of hype associated with products like mortgages, so when you hear a phrase like "current mortgage rates are historically low," how seriously should you take it?

 

It turns out that there are at least three reasons you should take it very seriously indeed. Current mortgage rates are historically low in three distinct ways:

1. Current mortgage rates are barely half of their historical average. Since the early 1970s, 30-year mortgage rates have averaged 8.86 percent. Current mortgage rates, at 4.50 percent for 30 years, are just over half that average, and barely above the all-time low of 4.23 percent.
2. Current mortgage rates are low compared to inflation. Like any interest rate, mortgage rates have to be considered in the context of inflation. There are, after all, two components to an interest rate: an inflation assumption, which is merely an attempt by the lender to get the same purchasing power back when the loan is repaid, and a premium over the inflation assumption, which is the real (i.e., after inflation) profit the lender hopes to earn. Historically, that premium over inflation has averaged 4.42 percent. Given the 3.6 percent inflation rate over the past year, at 4.50 percent current mortgage rates represent a premium over inflation of under 1 percent, or less than one-fourth the historical average.
3. Current mortgage rates are even low relative to themselves. You have a choice between a 30-year and a 15-year mortgage. As low as current 30-year rates are, 15-year rates represent an even better bargain. Since the early 1990s, 15-year mortgages have typically been 0.46 percent lower than 30-year mortgages. Now, they are 0.83 percent lower. In no year has the discount for a 15-year mortgage exceeded an average of 0.66 percent, so 15-year mortgages are in especially rare territory right now.

If you are thinking of buying a house or refinancing a mortgage, there are many factors to consider. One thing you can be sure of, though, is that current mortgage rates really do offer an exceptional opportunity.