After hitting near record lows last week, the 30-year fixed-rate mortgage moved up for the first time in three weeks, according to the Primary Mortgage Market Survey from Freddie Mac.
The 30-year rate averaged 3.95 percent (0.8 point) for the week ending February 23, up from last week’s average at 3.87. The rate is still lower than the average of 4.95 percent from a year ago at this time.
Amid the slight hike after continuing declines for the 30-year rate were reports that the housing market is on a slow road to recovery.
“New data releases this week suggest the housing market is continuing to gradually improve,” said Frank Nothaft, VP and chief economist for Freddie Mac, in a statement. “Loans that were seriously delinquent (90 days or more past due plus the foreclosure inventory) fell to 5.3 percent of prime mortgages at the end of 2011, representing the lowest quarterly share since the start of 2009, according to the Mortgage Bankers Association.” Northaft also mentioned data from the National Association of Realtors that showed existing-home sales were at the strongest pace in January since May 2010.
The 15-year fixed rate mortgage averaged 3.19 percent (0.8 point), up from 3.16 percent. At this time last year, the 15-year rate was 4.22 percent. The 5-year adjustable rate mortgage (ARM) saw a slight decrease at 2.80 percent (0.7 point) this week compared to 2.82 percent last week. A year ago this time, the 5-year ARM was at 3.80 percent. The 1-year ARM also continued to drop at 2.73 percent (0.6 point), down from 2.84 percent last week. During this time last year, the average was 3.40 percent.
Mortgage interest rates continue to head south. Freddie Mac reported Thursday that the average 30-year fixed-mortgage rate sank to 3.91 percent this week, setting a new all-time record low. Adjustable-rate mortgage (ARM) products also hit new record lows. The 15-year fixed rate settled in to match last week's historic low at 3.21 percent. To put the declines into perspective, Freddie says today's homebuyers are paying over $1,200 less per year on a $200,000, 30-year fixed-rate loan than they would have just 12 months ago.
Thirty-Year Rate Jumps Back Up Above 4% Mark In One Week's Time
The run for below-four-percent 30-year mortgage rates was short-lived. After a history-making drop to 3.94 percent last week, Freddie Mac has recorded an 18 basis point jump in the average interest rate on a conventional fixed-rate mortgage with a 30-year term. Mortgage rates across the board rose sharply this week. Freddie Mac attributes the sudden upward movement to last Friday's better-than-expected employment report, but the GSE stressed that even with the increases, mortgage rates remain near their 60-year lows.
Thirty-Year Mortgage Rate Falls Below 4%
The average rate for the conventional 30-year fixed mortgage has dropped below the 4 percent mark for the first time in history, according to numbers released Thursday by Freddie Mac.
The GSE’s market analysis also shows that the 15-year fixed rate – which has become a popular refinancing option among existing homeowners – fell to its lowest level on record for the sixth consecutive week.
Freddie Mac’s regular weekly survey of mortgage rates is based on data collected from about 125 lenders across the country.
The GSE puts the average rate for a 30-year fixed mortgage at 3.94 percent (0.8 point) for the week ending October 6, 2011. That’s down 7 basis points from its average of 4.01 percent last week. As a point of comparison, last year at this time, the 30-year rate was 4.27 percent.
The 15-year fixed-rate mortgage came in at 3.26 percent (0.8 point) this week, dropping 2 basis points from 3.28 percent last week. A year ago at this time, the 15-year rate was averaging 3.72 percent.
Frank Nothaft, Freddie Mac’s chief economist, attributed the decline in fixed mortgage rates to a sharp drop in 10-year Treasuries earlier in the week as concerns over a global recession grew.
Adjustable-rate mortgages (ARMs) were mixed this week in Freddie’s study. The 5-year ARM dropped from 3.02 percent to 2.96 percent (0.6 point), while the 1-year ARM rose from 2.83 percent to 2.95 percent (0.5 point).
At this time last year, the 5-year ARM was averaging 3.47 percent, and the 1-year ARM was 3.40 percent.
Nothaft tied the rise for 1-year ARMs to shorter-term Treasuries, noting that the Federal Reserve began replacing $400 billion in short-term Treasury securities with longer-term bonds this week.
Mortgage rates mostly edged higher in the latest week, with the average on 30-year fixed-rate mortgages rising slightly to 4.87%, according to Freddie Mac's weekly survey. Mortgage rates generally track U.S. bond yields, which move inversely to Treasury prices. Rates have climbed this year after slumping most of last year when prices rallies on economic uncertainty. Freddie Chief Economist Frank Nothaft noted that rates were little changed after what he called "an encouraging employment report" from the Bureau of Labor Statistics. The 30-year fixed-rate mortgage averaged 4.87% in the week ended Thursday, up from 4.86% the prior week but down from 5.21% a year earlier. Rates on 15-year fixed-rate mortgages were 4.1%, up from 4.09% the previous week but down from 4.52% a year earlier.
Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 3.72%, up from the prior week's 3.7% but down from 4.25% a year earlier. One-year Treasury-indexed ARMs were 3.22%, down from 3.26% and 4.14%, respectively. To obtain the rates, the five-year ARMs required payment of an average 0.6 point and the others required an average 0.7 point. A point is 1% of the mortgage amount, charged as prepaid interest.
"Bank of America and Fidelity National Financial have reached an agreement confirming that Fidelity will provide title insurance on the sale of foreclosed properties," said B of A spokesman Dan Frahm.
Under the agreement, Fidelity will defend the new homeowner in court if a foreclosed owner challenges the title. B of A will cover the costs and, if necessary, any damages awarded to the previous owner.
"Bank of America and Fidelity National are taking this step to facilitate the continued availability of title insurance that is vital to the marketability of foreclosed properties," Frahm said.
The giant bank is seeking similar agreements with other title insurers.
American Land Title Association chief executive Kurt Pfotenhauer welcomed the B of A/Fidelity agreement.
“Title insurers are looking to lenders to provide appropriate indemnities," he said. ALTA also has approached the GSE regulator about title indemnifications.
"We will continue to work with federal and state regulators, Fannie Mae, Freddie Mac and lenders to bring certainty to the marketplace," Pfotenhauer said.
One in every 29 Nevada homes received a foreclosure filing during the third quarter. Looking at total numbers of foreclosures, neighboring California was worst, with 191,016, followed by Florida, Arizona, Illinois and Michigan. Combined, the five states accounted for half of all foreclosures last quarter. Of course, once the moratorium ends, we can expect a new tidal wave of foreclosures. John McGeough, a broker, said that the current foreclosure freeze may give distressed homeowners extra time to do a short sale and avoid having their homes repossessed by the banks. "Foreclosure should be the last resort."
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California new and existing home sales totaled 33,176 in September, down 17.5% from a year ago and 3.1% from the previous month, according to the San Diego-based real estate provider DataQuick. Despite record low mortgage rates, the entire housing market is still waiting for new demand to replace the boost from the homebuyer tax credit that expired in April. While transactions are down, prices are still up for the 11th month in a row, following more than two years of straight declines. The median price on a California home was $265,000, a 5.6% increase from last year and a 1.9% bump from the previous month. The trough came in April 2009 at $221,000. The peak was $484,000 in early 2007. Of the existing home sales completed in September, 35.8% were properties that had been foreclosed on in the last year, down from 41.7% a year ago and flat from the previous month. Foreclosure accounted for more than 58% of the market in February 2009, the all-time high. Homeowners made an average $1,055 monthly payment in September, down more than 60% from the peak in June 2006.
The 30-year, fixed-rate mortgage hit its lowest point in more than 50 years. The Freddie Mac Primary Mortgage Market Survey reported the average rate for a 30-year, fixed-rate mortgage at 4.19% with an average 0.8 origination point for the week ending Oct. 14, down from last week's average of 4.27%. A year ago the average was 4.92%. This is the lowest rate the survey has recorded since its inception in 1971. Mortgage rates were last at this level in April 1951, according to Freddie Mac. The Bankrate survey of large banks and thrifts reported the average rate for a 30-year, fixed mortgage is 4.47% with a 0.32 origination point, slightly above the 25-year-old survey's record low of 4.45% posted last month. Rates for 15-year FRMs are falling steeply, setting a new low for Freddie Mac.
The GSE said the rate was down to 3.62% with an average origination point of 0.8. The rate for a 15-year FRM was 4.37% a year earlier. Bankrate said the average rate for 15-year, FRMs of 3.85% is a new record low and down from 3.87% a week earlier. Frank Nothaft, vice president and chief economist at Freddie Mac, attributed the declining rates to the loss of 95,000 nonfarm payroll jobs in September. The GSE said the average for a 5-year, adjustable-rate mortgage is 3.47% with an average 0.6 origination point, down from 4.38% a year ago. The average remained flat with last week. Bankrate reported the average rate for a 5-year, ARM fell last week to 3.62% from 3.64% previously. The one-year Treasury-indexed ARM averaged 3.43% with an average 0.7 point up slightly from 3.4%. At this time last year, the one-year ARM averaged 4.6%.
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All Rights Reserved.
The mortgage-foreclosure crisis spilled into the financial markets on Thursday, driving down bank stocks and weighing on mortgage bonds as investors took a grim view of the potential costs. Shares of U.S. banks fell, while the broader stock market was essentially flat. Bank of America Corp., potentially among the most affected, dropped more than 5%. Bank bonds also fell, and the cost of buying protection against a possible debt default by banks climbed. "The level of uncertainty in the economy is at extraordinarily high levels to begin with," said Jack Scott, chief investment officer at BlackHawk Capital Management, a Charlotte, N.C., money manager that owns mortgage securities. "The foreclosure problem adds another layer of acute uncertainty."
So far, the foreclosure crisis hasn't affected consumer mortgage rates, which remain near record lows. They are closely linked to rates on U.S. Treasurys, which have tumbled in recent months. Until recently, investors hadn't fled financial stocks. If the issues raised about foreclosure practices in recent days are easily resolved technical glitches, with most foreclosures resuming after brief delays, then the impact on most investors would be small. "The [mortgage] market seems to be functioning relatively well, but that could change depending on how we see this play out," said BlackRock Inc. portfolio manager John Vibert. But some fear that it may be difficult to do any foreclosures for a while.
The risk is that foreclosure flaws are so widespread, or the political furor so heated, that the entire process grinds to a halt, as Citigroup analyst Joshua Levin said in a conference call this week. In some cases, that would choke off much of the cash flow used to pay mortgage bondholders. Another concern is that banks could be forced to modify billions of dollars in loans, including reducing principal, which could leave bondholders as big losers. Banks, meanwhile, could be hit with investor lawsuits, and foreclosure delays could bring short-term losses. Some investors are pushing for banks to take back nonperforming mortgages in cases of faulty documentation.