Mortgage Rates Falling [Housing Tracker]

Seeking Alpha's Housing Tracker is a collection of housing-related excerpts from various sources, grouped by topic. Feel free to post any interesting links on the subject in the comments section below.

Mortgage Trends

FHFA Looks to Expand Access to FHA Loans. “New, interim changes to the Federal Housing Finance Agency’s Affordable Housing Program will allow the use of AHP subsidies in conjunction with the FHA’s Hope for Homeowners Program. Current AHP regulation requires each of the 12 Federal Home Loan Banks to contribute 10% of their previous year’s net earnings to assist member institutions engaged in lending for owner-occupied and rental housing to low- and moderate-income households. The set-aside funds [will] be used for two new purposes. First, FHLBanks may use AHP funds to reduce the outstanding principal balance of the refinanced loan below the established maximum 90% loan-to-value ratio established in the Hope for Homeowners underwriting criteria; fund may also be used to pay FHA-approved loan closing costs.” (Housing Wire, Oct. 9) 

Rates On Fixed Mortgages Fall: Freddie Mac. “Freddie Mac: Rates on fixed mortgages fell for the first time in three weeks, with the 30-year fixed-rate mortgage again below 6%. The 30-year loan averaged 5.94% nationally for the week ending Oct. 9, compared with 6.10% last week. It averaged 6.40% a year ago. The 15-year fixed-rate mortgage also fell, averaging 5.63%, down from 5.78% a week ago and 6.06% a year ago. Five-year Treasury-indexed hybrid adjustable-rate mortgages also dropped, averaging 5.90% this week, compared with 6.00% last week. The ARM averaged 6.12% a year ago. One-year Treasury-indexed ARMs, however, ticked up, averaging 5.15% this week versus 5.12% a week ago [vs.] 5.73% a year ago.” (MarketWatch, Oct. 9) 

U.S. MBA's Mortgage Applications Index Rose 2.2% Last Week. “Mortgage applications in the U.S. rose last week as lower interest rates lifted purchases from a six-year low.  The Mortgage Bankers Association's index of applications to purchase a home or refinance a loan increased 2.2% to 465.5 from 455.4 the prior week. The group's purchase index gained 3.2% and its refinancing gauge rose 0.9%… The refinancing gauge increased to 1,345.8 from 1,333.9. The average rate on a 30-year fixed-rate loan fell to 5.99% from 6.07% the prior week... The share of applicants seeking to refinance loans decreased to 43.4% of total applications from 44% the previous week.” (Bloomberg, Oct. 8)

Mortgage Applications: Rise or Fall? “MBA's Oct. 3 [weekly] survey... found that loan application volume increased a slight 2.2% on a seasonally adjusted basis from one week earlier, and fell 28.6% compared to the same week in 2007… Mortgage Maxx Inc.’s mortgage application index, which corrects for multiple applications by the same borrower, reported that application volume actually fell 7.3% from the prior week… This indicates that buyers chose to shop around this week. The MAX is now down 13% the past two weeks.” (Housing Wire, Oct. 8)

Lower Mortgage Rates May Be Silver Lining in Turmoil. “Bankrate.com: A nationwide survey of consumer credit rates showed 30-year fixed-rate mortgages averaged 5.8% yesterday. Rates were 6.26% on Aug. 29 and also July 31, in the same survey… Mortgage rates are relatively low now, and they'll get cheaper if there's a recession, said David Burrows, president of Crescent Mortgage… Bankrate: Fixed mortgage rates generally track long-term rates such as the 10-year Treasury note, so the Fed's half-a-percentage point reduction in their benchmark rate today is unlikely to have much effect. Mortgage rates are more dependent on the overall outlook for the economy and inflation, he said.” (Bloomberg, Oct. 8)

Survey Finds Expansion of Housing in the U.S. “The 2007 American Housing Survey report: Among owners who reported making a down payment on the homes they occupied, about a third put down only 6% or less of the purchase price. Among black homeowners, about half made down payments of less than 6%.  Housing costs consumed 24% of income over all. Those costs were 13% for owners without a mortgage, 28% for co-op residents with a mortgage and 33% for renters. Among the more than 75 million homes occupied by their owners, one in three had no mortgage.” (NY Times, Oct. 6)

Loan-Modification Plan Gets Mixed Reviews. “Bank of America's (BAC) new program to enable some homeowners to modify existing Countrywide mortgages… could create a fresh round of problem loans and foreclosures a few years from now, warned Sean O'Toole, founder and CEO of ForeclosureRadar.com... In more than a few instances, Countrywide's restructured loans featured payments based on super-low interest rates of 2%, with payments rising over time. Put another way, the loans bear similarities to the ones at the heart of the current problems… BofA should restructure the loans so that the payments are high enough to pay down the principal on the mortgages, O'Toole said.” (San Jose Mercury News, Oct. 6)

                                             

                                                                 

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Comments

[billddrummer:]

Hi Judy, great stuff!!

I think BAC is postponing the pain on those borrowers. Let's hope they get really good jobs and can afford higher payments down the road.

2008 Oct 10 06:58 PM

[Mortgage Br...:]

Hopefully mortgage rates stay low for a while It's one of a few things that could help the real estate market get better quickly.

2008 Nov 02 11:56 PM