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The government's fiscal cliff resolution helped average weekly mortgage rates during the January 4 week. The 30-year average weekly fixed-rate mortgage reported by Freddie Mac fell to 3.34 percent during the week from 3.35 percent in the previous week. The 15-year average weekly FRM was also one basis point lower, falling from 2.65 percent to 2.64 percent.

The Mortgage Bankers Association reported lower weekly mortgage applications in its January 3 report, which stated a decrease of 21.6 percent for the last two week period of the 2012 calendar year. The MBA's Refinance and Purchase Indexes also ended the year lower, falling 23.3 percent and 14.8 percent, respectively.

In other real estate news, the Commerce Department's Construction Spending report showed market improvements and CoreLogic stated significant reductions in distressed property inventory.

Construction spending was slightly lower in November falling 0.3 percent from October. Residential construction, however, was higher increasing 0.4 percent from October to November and up 18.0 percent from November 2011. Cumulative construction spending for the year through November was also higher, increasing 9.2 percent.

CoreLogic's January 3 National Foreclosure Report, stated total foreclosures of 55,000 in November, a decrease of 17,000 from November 2011. Foreclosures were also down on a monthly basis falling from 59,000 in October 2012.

During the week, CoreLogic also released its October 2012 Shadow Inventory Report which showed a 12.3 percent decrease in pending distressed property supply from October 2011 to October 2012.

The week's fiscal cliff resolution was also positive news for the mortgage market. The continuation of tax breaks for the middle class alleviates pressure on middle income earners. The resolution's effects should also help mortgage markets to remain on a positive track towards full recovery.

Source: Mortgage Market Weekly Update: December 31, 2012 - January 4, 2013