Tag Archives: Home Buying

Business, Finance, Occupation & Industry

Demand for Mortgages Falls as Rates Remain Unchanged

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By Reuters

mortgage loan applications economy housing market home sales refinancing interest rates

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David Paul Morris/Bloomberg via Getty Images

By Leah Schnurr

Applications for U.S. home mortgages decreased last week with potential buyers shying away from the market as rates held steady just below their two-year highs.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, declined 3.7 percent in the week ended July 26. It was the seventh week in a row the index has been lower.

The MBA’s seasonally adjusted index of loan requests for home purchases, a leading indicator of home sales, fell 3.4 percent.

Fixed 30-year mortgage rates averaged 4.58 percent, unchanged from the week before and only 10 basis points below a two-year high hit earlier in July.

Rates have risen sharply since early May, pushed higher by the Federal Reserve’s plan to start slowing its economic stimulus later this year if the economy progresses as expected.

The Fed is currently buying $85 billion in bonds a month to keep borrowing costs low. The cheap mortgage rates have helped lure homebuyers and worries have emerged that higher costs could take some of the strength out of the housing market’s recovery.

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Still, most economists don’t expect it to derail housing’s growth altogether. Rates have risen about 1 percentage point since early May, but still remain low by historical standards.

Refinancing activity has been hit harder than purchases by the rise in rates, which makes refinancing less lucrative. The gauge of refinancing applications fell 3.8 percent.

The refinance share of total mortgage activity was unchanged at 63 percent of applications.

The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.

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Source: FULL ARTICLE at DailyFinance

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Home Prices Heat Up in May as Pace of Gains Cools

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By Reuters

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Nick Ut/AP

By Leah Schnurr

U.S. single-family home prices rose in May, though the pace of gains cooled compared to the month before, a closely watched survey showed Tuesday.

The S&P/Case Shiller composite index of 20 metropolitan areas gained 1 percent on a seasonally adjusted basis, shy of economists’ forecast for a 1.5 percent increase. That marked a slower pace from April’s 1.7 percent rise.

On a non-adjusted basis, prices rose 2.4 percent.

Compared to last May, prices also fell short of expectations, rising 12.2 percent from a year earlier. Still, it was the biggest annual gain since March 2006, matching a record set in April.

The report was unlikely to alter economists’ views that the housing sector continues to recover, making it a bright spot for the economy.

All 20 cities rose on a yearly basis, led by a 24.5 percent surge in San Francisco.

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Sales of New Homes Rise to 5-Year High as Prices Soar

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By Reuters

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Mike Groll/AP

By Lucia Mutikani

WASHINGTON — Sales of new U.S. single-family homes vaulted to a five-year high in June, showing little signs of slowing in the face of higher mortgage rates.

The Commerce Department said Wednesday sales increased 8.3 percent to a seasonally adjusted annual rate of 497,000 units, the highest level since May 2008.

Sales increased 1.3 percent in May.

Economists polled by Reuters had expected new home sales to rise to a 482,000-unit rate last month.

Compared with June last year, sales were up 38.1 percent, the largest increase since January 1992.

The third straight month of gains in new home sales, which are measured when contracts are signed, suggested the housing market was gaining more muscle and should allay concerns that higher mortgage rates could slow down momentum.

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Mortgage rates have spiked in anticipation of the U.S. Federal Reserve starting to taper its generous monetary stimulus later this year. Rates still remain low and Fed Chairman Ben Bernanke last week expressed optimism the housing market recovery would continue.

Last month, the inventory of new homes on the market increased 1.3 percent to 161,000, the highest since August 2011, as builders continue to ramp up production to meet the growing demand.

Still, supply remains tight, putting upward pressure on prices. The median new home price increased 7.4 percent from a year ago.

At June’s sales pace it would take 3.9 months to clear the houses on the market, down from 4.2 months in May. A supply of 6.0 months is normally considered as a healthy balance between supply and demand.

Sales last month rose in three regions, but fell in the Midwest.

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How Much Financial Advice Do You Need? (Hint: Less Than You Think)

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By CNBC

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How much financial advice do we need? It’s a question we all ask ourselves, whether we pay a certified financial planner handsomely or go it alone.

But with a troubling national shortfall in retirement savings and the lingering effects of a foreclosure crisis, policymakers and researchers are asking the same question in the hope of coming up with low-cost ways to keep people on the right track.

The answer, to judge from a rash of recent studies, is not much.

The credit-rating agency Experian recently conducted a study with Neighborworks, a nonprofit that helps lower-income families buy homes, measuring the effectiveness of Neighborworks’ weekend workshops. It showed that as little as eight hours of counseling on real estate basics reduced mortgage delinquencies by more than a third.

The study included experienced homeowners as well as first-time buyers, and Experian was careful to control for those who required remedial advice.

“The study looked at pre-home ownership credit behavior, so you didn’t only have people who already had bad credit,” said Douglas Robinson, a Neighborworks spokesman. He added that middle- and even high-income buyers could also benefit from a brief acquaintance with what to expect from home ownership.

“We reduce the ‘unknown knowns,’ ” Robinson said.

Other studies have shown that the unknowns can be reduced with far less effort.

At Stanford University’s Institute for Economic Policy Research, a group looking for ways to spur higher retirement savings found that employees who got occasional, customized projections from their employer of how much income their IRAs and 401(k)s would provide them responded by increasing their annual contributions.

Similar results can be realized simply by using an online retirement calculator. A recent paper from the Employee Retirement Research Institute showed that those who figured their retirement needs with a Web tool increased the adequacy of their savings targets as much as 18 percent. In fact, those who used an online calculator ended up with more realistic savings targets than people who relied on a financial adviser.

That evidence raises another question: What kind of financial advice do we need?

Jack VanDerhei, research director of EBRI and co-author of the paper about online calculators, suspects that most people seek out advisers for guidance on other investment matters, such as asset allocation. “That tells me nothing as to what my overall savings targets should be,” VanDerhei said.

And it does little to connect our picture of home ownership or retirement with reality.

“All of us sort of dream in color,” said Anna Behnam, a financial adviser with Ameriprise Financial Services in Rockville, Md. “When we think about buying a

From: http://www.dailyfinance.com/2013/04/18/how-much-financial-advice-do-you-need/

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Home Foreclosures Fall to Lowest Level in 5-Plus Years

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By The Associated Press

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Paul Sakuma/AP

By ALEX VEIGA

LOS ANGELES — The number of U.S. homes repossessed by lenders last month fell to the lowest level in more than five years, the latest evidence that the nation’s foreclosure crisis is abating amid an improving housing market.

While some states still saw increases in homes taken back by banks, nationally home repossessions fell 3 percent in March from the previous month and were down 21 percent from a year earlier, foreclosure listing firm RealtyTrac Inc. said Thursday.

Thirty-four states posted annual declines in completed foreclosures. Among those bucking that trend: Arkansas, Maryland, Washington and Pennsylvania.

All told, lenders repossessed 43,597 homes last month, the lowest level since September 2007.

At the current monthly pace, completed foreclosures will total roughly 550,000 this year, down from 671,000 last year, RealtyTrac said.

An uptick in homes that entered the foreclosure process last month, however, may end up pushing that total to 600,000, said Daren Blomquist, a vice president at RealtyTrac.

Several factors are contributing to the decline in completed foreclosures: Steady job growth and ultra-low mortgage rates are helping the once-battered housing market recover, driving demand for homes and prices upward.

Higher home values help restore equity to homeowners, which can help those at risk of foreclosure by improving their chances of refinancing their mortgage to a lower payment or place them in a better position to sell their home.

Meanwhile, states like California, Nevada and others have passed laws to increase homeowners’ protections from foreclosure. Those laws have effectively delayed the pace of homes entering the foreclosure process, which has helped to thin the pipeline of completed foreclosures in those states.

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Even so, the number of foreclosure starts, or homes that entered the foreclosure process, edged higher for the second month in a row in March.

Foreclosure starts rose 2 percent from February to 73,113. That’s still down 28 percent from March last year, the firm said.

Twelve states, including New York, Maryland and Washington saw annual increases in foreclosure starts last month.

During the housing downturn, about half of the homes that entered the foreclosure process ended up as bank-owned homes that could potentially to be sold at a sharp discount, hurting the value of nearby homes.

But with the housing market apparently on a sustained, if gradual, turnaround path, it’s more likely that a home entering the foreclosure process now will be able to avoid being lost to foreclosure, Blomquist said.

“A lot of these won’t end up as vacant bank-owned homes, dragging down the market,” he said. “These foreclosures are happening in the context of a housing market that’s recovering. They’re not a sign that the housing market is going downhill again.”

As of end of March there were about 1.5 million

From: http://www.dailyfinance.com/2013/04/11/realtytrac-home-foreclosures/

Business, Finance, Occupation & Industry

Should We Get Rid of Fannie Mae and Freddie Mac?

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By John Grgurich

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Andrew Harrer, Bloomberg via Getty Images

What if the two government-owned housing agencies that backstop so many of the nation’s mortgages ceased to exist? A new report from an influential think tank says that’s what should happen.

But while the plan isn’t quite as radical as it first sounds, if implemented it would mean a significant change if another housing bubble builds and bursts — a change that would have more of the risk falling onto individual homeowners instead of the federal government.

“Housing America’s Future: New Directions for National Policy” was authored by the Bipartisan Policy Center, a Washington, D.C.-based group founded by former Senate luminaries Howard Baker, Tom Daschle, Bob Dole, and George Mitchell.

Among other things, the report recommends slowly winding down Fannie Mae and Freddie Mac — the government-owned housing agencies that had to be bailed out at great taxpayer expense after the most recent real-estate bust — and replacing them with what the report’s authors call the “Public Guarantor.”

Taking the heat off taxpayers and putting it on homeowners

As the name suggests, the Public Guarantor would serve a similar function as Fannie and Freddie, but with a twist that would take the heat off the taxpayer in the event of another catastrophic housing-market event, like the one we saw in 2007.

Right now, Fannie and Freddie buy mortgages originated by the nation’s banks, package them up into mortgage-backed securities, and sell them to investors. In return, Fannie and Freddie pay interest on the securities back to the investors.

But unlike Fannie and Freddie, the Public Guarantor wouldn’t buy mortgages or issue mortgage-backed securities. The private sector would now handle that. And in the event of another burst housing bubble, the Public Guarantor would only guarantee investors their interest payments and the return of their initial investments.

This guarantee would only be triggered after the private capital in line ahead of it had been exhausted. Specifically, the government would be fourth in line to take a loss, which means, of course, the taxpayer is also fourth in line.

Mission accomplished, right? Yes, but it’s a double-edged sword.

Goliath Wins This Match, for David’s Own Good

While it’s great that the taxpayer is less on the hook for mortgage-market trouble, that default risk has to land somewhere.

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With this new plan, part of that somewhere is back onto the borrower, who would be first in line to take the hit if the Public Guarantor guarantee is ever triggered. Next in line after borrowers are private-credit enhancers and finally the corporate resources of mortgage issuers and servicers.

So in the end, under this proposed plan the government would only be giving an ironclad guarantee to investors in privately issued mortgage-backed securities.

Why favor the big investor over the little homeowner? …read more
Source: FULL ARTICLE at DailyFinance