August 25th, 2010

U.S. sales of new homes scored a better-than-expected rebound in June after having plumbed record lows a month earlier, government data showed Monday.

Sales rose 23.6% in June to a seasonally adjusted annual rate of 330,000, the Commerce Department reported.

Economists said the gain wasn’t a sign of strength but was welcome nonetheless, coming after a reading for May that turned out more dismal than first projected.

New-home sales for May plummeted a revised 36.7% to a record low 267,000 level after a federal subsidy for home buyers expired. This is a steeper drop than the 32.7% fall and 300,000 in annualized sales that the government initially estimated.

“Builders sold almost no new homes in May so the sharp rise in June shouldn’t be taken as a sign the housing market is suddenly on fire,” wrote Joel Naroff, president of Naroff Economics Advisers.

All the same, stocks got an immediate lift from the data and Wall Street remained broadly higher at midday. See Market Snapshot for the current market activity.

Despite the big bounce, this is still the second lowest sales rate on record.
News Hub: Investors punish expansion plans

Matt Phillips discusses why it hasn’t been wise lately for C.E.O.’s to tell skittish investors about expansion plans.

Economists had been expecting a slight bounce back to a 316,000 rate for June. See MarketWatch calendar of all major indicators.

Shares of home builders rallied, easily outpacing gains in the broader U.S. equity benchmarks.

Hovnanian Enterprises Inc. /quotes/comstock/13*!hov/quotes/nls/hov (HOV 3.79, +0.05, +1.34%) , Beazer Homes USA Inc /quotes/comstock/13*!bzh/quotes/nls/bzh (BZH 3.60, +0.13, +3.75%) , and Pulte Group Inc. /quotes/comstock/13*!phm/quotes/nls/phm (PHM 8.00, +0.16, +2.04%) all gained more than 5% in afternoon trading.

By region, last month’s sales rose in all regions except the West, where sales hit a new record low. Compared with June 2009, last month’s sales were down 16.7%.

In June, the number of unsold new homes on the market slipped 1.4% to 210,000, the fewest since September 1968. That represented a 7.6-month supply at the June sales pace, less than the 9.6-month supply in May.

The median sales price of $213,400 in June was down 0.6% compared with a year earlier. Read full government release.
Where from here?

Economists said the weakness in the housing sector has been laid bare since government support for the sector, which lasted for more than two years, ended.

The government had been providing up to $8,000 to qualified buyers. But the sales contract had to be signed by the end of April to receive the credit. In addition, the sale must close by Sept. 30.

The big question is whether the housing sector can strengthen from here.

Despite the rebound in sales of newly built homes, most other recent housing data have pointed to further weakness. Mortgage applications are trending lower in July and a measure of home builder confidence also fell.

Moreover, sales of existing homes fell 5.1% in June to a 5.37 million rate, according to the National Association of Realtors. See full story.

The government cautions that its housing data are subject to large sampling and other statistical errors. Large revisions are common.

The standard error this month was 15.3%.

It can take up to six months for a trend in sales to emerge. New-home sales have averaged 354,000 per month over the past six months, roughly unchanged from the same period ended in May.

The inventory of completed-but-unsold homes fell to 81,000, down about 37% in the past year and the lowest level since October 2003

Tweet This Post

Posted in Home Loan | No Comments »

August 25th, 2010

Mortgage applications rose last week as record low rates lifted demand for home refinancing loans to its highest level in over 15 months, a development that could provide a much-needed jolt to the economy.

Home loan refinancing puts extra cash into consumers’ hands that they can save, use to pay off existing debt or funnel into the economy through extra spending.

With worries of deflation and a double-dip recession rising, an uptick in consumer spending could be just what the flailing economy needs.

The Mortgage Bankers Association on Wednesday said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended August 20 increased 4.9 percent. The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was up 5.0 percent.

The MBA’s seasonally adjusted index of refinancing applications increased 5.7 percent, reaching the highest since the week ended May 1, 2009.

“The volume of refi applications last week was up 26 percent over their level four weeks ago,” Michael Fratantoni, the MBA’s Vice President of Research and Economics, said in a statement.

“With rates this low, many borrowers who refinanced in the past two years may well have an incentive to refinance again, and this is likely increasing refi application activity,” he said.

The housing market has been struggling since the April 30 expiration of popular home buyer tax credits. The National Association of Realtors on Tuesday said sales of previously owned U.S. homes took a record plunge in July to their slowest pace in 15 years.

To take advantage of the tax credits, buyers had to sign purchase contracts by April 30. Contracts originally had to close by June 30, but that was extended by three months.

More insight into the U.S. housing market will emerge on Wednesday when the Commerce Department releases July new home sales data.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 4.55 percent, down 0.05 percentage point from the previous week. That is a lowest level in the survey, which has been conducted weekly since 1990.

Interest rates were also below their year-ago level of 5.24 percent.

Paul Anastos, president of Mortgage Master in Walpole, Massachusetts, said overall production at his company has almost doubled in the last two months with 76 percent of the total new applications being for home refinancing loans.

“Our overall volume is dominated by refinances due to historically low rates, but pure purchase volume has remained consistent in recent months and I believe it could actually increase as we enter the fall purchase market,” he said.

“If rates stay low as we head into the fall, I believe there will be a nice little increase in purchase applications given these low rates and the values available in the market,” he said.

Rock bottom rates, however, failed to make a significant impact on demand for loans to purchase a home last week.

The MBA’s seasonally adjusted purchase index, a tentative early indicator of home sales, increased 0.6 percent.

The MBA said fixed 15-year mortgage rates averaged 3.91 percent, down from the previous week’s 3.99 percent, a record low. Rates on one-year adjustable-rate mortgage, or ARMs, decreased to 6.84 percent from 6.90 percent.

Tweet This Post

Posted in Home Loan | No Comments »

July 23rd, 2010

Home sales are lagging ever since all the special government home buyer incentives and tax credits dried up, so banks are pushing down mortgage interest rates to lows not seen in the past 30 years. Many people, especially those who bought their homes in the last 10 years or so, are asking themselves, “Should I refinance my mortgage?” and “Should I refinance my home loan and pay off other debt with these low rates?”

Only you can ultimately decide if this is the best finance move for you, but are are some of the things you should think about when you’re considering refinancing your home loan:

Current Mortgage Interest Rate Vs. New Mortgage Interest Rate: This is the most obvious thing to think about. If you originally bought your home with an 8% fixed interest rate loan or if you adjustable rate has risen over the year and yet you can get a fixed rate home loan today for about 5%, then refinancing your mortage could work out to be a good deal for you. But remember, when you refinance your home you have to pay a number of fees for filing paperwork, new home inspections, legal review and other services, so it won’t be all savings. Generally, when the new rate is more than 2% less than your old mortgage rate you should seriously look into whether or not you can save a fair bit of money over the long run.

Adjustable Rate vs Fixed Rate: If you have an adjustable rate mortgage now and your rates are good, you may still want to consider switching over to an equally low fixed-rate mortgage. While there are no guarantees, the chances are good that rates will rise again at some point over the life of your home loan, so locking in a fixed rate mortgage when you have a chance could end up saving you lots of money over the life of the loan, even though it may not make much difference in your monthly payments at the moment.

The Home Equity Problem: A lot of people have lost a fair amount of home equity over the past several years as home values have plummeted. This means that even though you’ve been paying your mortgage for years you may actually be underwater on the home loan or still not have much equity built up. Most mortgage companies and banks require your mortgage refinancing amount to be no more than 80% of your home’s actual value. So if your home is now valued at $200,000 you would only be able to refinance $160,000 ($200,000 x .80 = $160,000). In this example you could probably only refinance your home if the amount of money you owed on your existing mortgage was less than $160,000.

All About Mortgages: Insider Tips to Finance or Refinance Your Home in Today’s Economy

Another Thirty Years of Payments: Most mortgages are still 30-year terms. If your current mortgage was a 30-year mortgage but you’ve already been paying for 5 years, then you only really have 25 more years of payments until you own your home outright. If you refinance your home then the clock is essentially reset and you’ll once again be making home loan payments for 30 years from the day you sign the papers. This extra five years could push back your retirement investing plans or even impact when ultimately decide to quit working.

Are you Selling Your Home Soon: You probably don’t want to refinance your home if you’re going planning to be moving within the next several years. You may save some money on your monthly payments, but the refinancing fees may still end up costing more than you would ultimately save in the next few years. It also doesn’t help improve your credit score and it may actually hurt your chances of getting a decent interest rate on the loan you take out for your new home.

Do You Really Need the Extra Cash: Many people take advantage of home loan refinancing so that they can essentially borrow more money at the same or lower rate than they are paying now. They then use that extra money to pay off additional bills or car loans or other outstanding debt. But loan interest rates across the board are much lower these days, so many people are finding that borrowing money from a home loan at 5% to pay off a car loan that only has a 2% or lower interest rate simply doesn’t make sense. Many people have also downsized their economic needs in this recession and are now saving more money than ever. Overall, the “need” for money is not as great as it once was. If you’re happy with your current home loan and you find that refinancing won’t really save you very much money in monthly payments then it may not be worth borrowing just for the sake of taking out another loan.

While simple online loan calculators are good for giving you a general estimate of what you might pay with a refinanced mortgage, the exact fees and monthly payments will have to be worked out by individual lenders. One bank or institution may charge for certain services that another lender offers for free. You’ll also want to keep in mind that there is usually a lot of paperwork, phone calls and other things that you have to do to refinance your home loan, so it’s not something you want to jump into unless you have are willing to commit some time and energy into making sure you find the best deal you can. That being said, the low mortgage rates being offered by different banks and lending institutions are definitely making refinancing a home loan a much more attractive offer for many existing homeowners!

Tweet This Post

Posted in Home Loan | No Comments »

July 5th, 2010

An odd scene has been playing out lately in the offices of mortgage brokers and bankers around the country.

Mortgage rates have sunk to levels not seen in more than a half-century — a seductive 4.58 percent for an average 30-year fixed loan. Yet brokers and lenders report not a flood but a trickle of customers.

So what’s going on?

Call it a tale of the haves and have-nots.

The haves are those who stand to save money from refinancing and have the financial standing to do so. Since mortgage rates have been low for so long, most of them already have refinanced in the past 18 months. Doing so again wouldn’t be worth the cost for most.

The have-nots? Those are the millions of Americans pummeled by the housing collapse. They have little or no home equity or no money for down payments. Or they lack the credit or steady income to get or refinance a mortgage.

The result is that brokers like Ginny Ferguson are filling their days doing something other than handling a stampede of customers buying homes or refinancing.

Ferguson, CEO of Heritage Valley Mortgage in Pleasanton Calif., has managed to stay busy: She’s archiving files, reviewing marketing plans and calling previous clients and agents to try to drum up business.

“Am I sitting around playing Solitaire on my computer? No,” she says.

The 4.58 percent average for a 30-year fixed-rate loan last week was the lowest on records that mortgage company Freddie Mac has kept since 1971. The last time rates were lower was the 1950s, when most long-term home loans lasted just 20 or 25 years.

Under normal circumstances, 4.58 percent would be irresistible. A decade ago, if you’d told David Christensen, owner of Mountain Lake Mortgage in Lakeside, Mont., that rates would drop this low, he wouldn’t have believed you. And if rates did somehow fall this far, he never thought he would lack for customers, as he does now.

Yet both have come true.

Christensen argues that mortgage lending standards have tightened so much since the financial crisis that many people with decent but not-stellar credit can’t qualify. Lenders are demanding stronger credit scores and higher down payments or home equity.

“The pendulum has swung too far the other way,” Christensen said. “It needs to come back to the middle.”

Overall lending has ticked up in recent weeks, driven by borrowers looking to refinance. But it remains only about half the level of early 2009.

Stricter lending rules aren’t the only factors behind the restrained demand. A tax credit for home buyers that helped lift home sales expired April 30. The result is that fewer people are taking out loans to buy homes.

And some borrowers who do have good credit and solid jobs are still being rejected for refinanced loans. It’s because their homes are worth less than they owe on their mortgage. They’re “under water,” in real estate parlance. About a quarter of American households with a mortgage are in this predicament.

Blame the housing bust. It shrank home values and depleted home equity.

Most people in the lending industry acknowledge that lending standards were far too lax during the boom. Yet these days, some brokers recall the boom times with a tinge of nostalgia. Buyers and refinancers were everywhere. And yet rates were higher than they are now.

Tweet This Post

Tags: mortgage rates
Posted in Home Loan | No Comments »

February 21st, 2010

HENDERSON, Nev. – President Barack Obama used a campaign push for Senate Majority Leader Harry Reid on Friday to announce a new fund to support homeowners in five states hit hardest by the U.S. housing crisis.

Housing was at the center of the financial crisis that threw the U.S. economy into deep recession in late 2007. While signs of stabilization are appearing, home foreclosures are still rising in much of the country.

Obama said he was designating $1.5 billion from the Troubled Asset Relief Program to fund programs at local housing finance agencies in California, Florida, Nevada, Arizona and Michigan, which have seen home prices decline more than 20 percent from their peaks.
“This fund’s going to help out-of-work homeowners avoid preventable foreclosures,” Obama told a town hall-style meeting near Las Vegas. “It will help homeowners who owe more than their homes are worth find a way to pay their mortgages that works for both the borrowers and the lenders alike.”

Nevada is still struggling from the housing market crash, and Obama’s choice to make the announcement there was no accident.

The president is trying to boost Reid, a Nevada Democrat who trails potential Republican opponents by double digits in opinion polls before November elections that could change the balance of power in Congress.

Reid has helped push Obama’s agenda to boost the economy, overhaul the U.S. healthcare system and fight climate change, but Republican critics say he has neglected his home state.

Trying to limit his party’s losses in November, Obama heaped praise on Reid, saying the former amateur boxer “knows what he believes in and he’s willing to fight for it.”

Housing woes
After a prolonged boom that began in the late 1990s when banks loosened lending standards and took on excessive risk, the sector suddenly lost steam and prices deflated abruptly after 2006.

While falling values have left many mortgage-holders with homes worth less than the loans on them, soaring unemployment has led to even more mortgage defaults.

There has been some recent positive news, notably a report this week showing that construction starts on new homes hit a six-month high in January. Over the past 12 months through January, housing starts were up 21 percent, a sign that underlying demand was beginning to firm again.

“There is not enough money in the Treasury to stop every foreclosure,” Obama said later in a speech to the Las Vegas Chamber of Commerce. “But what government can do is help responsible homeowners stay in their homes.”

Obama also used his Nevada trip to push for a healthcare overhaul, saying reform “cannot wait” because it is vital to the economy. He will host a bipartisan summit at the White House on Thursday to try to jump-start his stalled effort.

A senior Obama administration official said the administration knew many homeowners were still hurting.

“We are extremely cognizant of just how difficult the housing situation remains,” the official told reporters.
“But (we are) very relieved that we are in a dramatically different place today where we have very significant stabilization in prices across most of the country.”

The $1.5 billion would be distributed to state agencies based on which states were suffering the most. Money could go to programs to help unemployed homeowners, for example, or borrowers who owe more on their houses than they are worth.

The official said the program came on top of the Treasury Department’s recent $23 billion program for all 50 state housing finance agencies.

Tweet This Post

Tags: home owners, housing aid
Posted in Home Loan | 1 Comment »

February 21st, 2010

WASHINGTON – The end of the foreclosure crisis is finally in sight. For the first time in almost three years, the number of homeowners falling behind on their loans is declining.

The drop means the number of people losing their homes will start to fall. But some pain from the crisis is sure to persist. Because millions of people are already in foreclosure, deeply discounted houses will put pressure on home prices for years.

“Housing is on a path to recovery,” said Mike Larson, a real estate analyst with Weiss Research. “It’s going to be a very long, gradual process.”
In high-foreclosure cities like Las Vegas, Phoenix and Miami, homes have lost roughly half their values from their peaks. But a report Friday from the Mortgage Bankers Association showed Nevada, Arizona and Florida had some of the biggest declines in new delinquencies.

The figures probably mark “the beginning of the end” of the crisis, said Jay Brinkmann, the trade group’s chief economist.

However, more than 15 percent of homeowners with a mortgage have missed at least one payment or are in foreclosure, a record. Worse, nearly half of all delinquent borrowers were at least three months behind on their payments, up from a typical level of less than 20 percent.

“The bad news is that we still have a big problem,” Brinkmann said. “The good news is it looks like it may not get much bigger.”

That’s because the percentage of borrowers who missed just one payment on their home loans fell to 3.6 percent in the October-to-December quarter from 3.8 percent in the third quarter, according to the Mortgage Bankers Association. That decline was even more surprising because delinquencies usually rise at that time of year due to higher heating bills and holiday spending.

In another encouraging sign, the number of borrowers who had missed at least one payment but were not yet in foreclosure also fell for the first time since the beginning of 2007.
Banks are delaying the foreclosure process, traditionally between four and six months, as they evaluate borrowers for help under the Obama administration’s $75 billion mortgage-relief effort. It lowers borrowers payments to as low as 2 percent for five years and extends loan terms to as long as 40 years.

But experts warn that hundreds of thousands of borrowers will not be eligible or will not complete the process. So far, only 116,300 borrowers out of 1 million who enrolled have had the terms of their mortgages changed permanently.

Despite the government’s efforts, there may be 6 million foreclosed homes that are put on the market over the next three years, according to Barclays Capital.

Timing is key. If banks unload them suddenly, “it will be much more detrimental to the housing recovery than if it’s a slow, gradual bleed,” said Michelle Meyer, a Barclays economist.

On Friday, Obama announced that housing agencies in the five hardest-hit states will receive $1.5 billion to help spur local solutions. Those five are Arizona, California, Florida, Michigan and Nevada.

“Government alone can’t solve this problem,” Obama said. “But government can make a difference.”

© 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Tweet This Post

Tags: foreclosure, Home Loan
Posted in Home Loan | 1 Comment »