Are credit standards loosening for mortgages and home loans?
What we are seeing in the industry is stringent documentation to meet lending standards that have not changed over the “tight” post-bubble real estate market…. MORE
Mortgage Process Explained
This straightforward, step-by-step guide breaks down the mortgage process using graphics, pictures and expert insight. Good for any level of understanding:
National Mortgage News
2 Million Few Underwater Mortgages in 2012
The fourth quarter saw the percentage of total mortgages that were underwater fall to 27.5%, down from 28.2%.
FHA fees to jump after April 1: make sure to plan ahead
The FHA recently announced that loans originated after April 1st, 2013 will have life of loan mortgage insurance.
Mortgage insurance is a monthly fee that is built into your monthly loan payments. Luckily, borrowers have the ability to refinance their loan and eliminate or reduce mortgage insurance fees, thus saving up to hundreds of dollars on monthly payments. Read more
High interest rates continue to decrease the demand for refinancing loans, leading to a decrease in mortgage applications. Purchase applications rose by 1.0 percent, but refinancing applications continued to decline and are now at a 2-year low after decreasing by 4.0 percent.
Additionally, when looking at the adjusted index of mortgage application activity, which includes refinancing and purchase applications, there was an overall decrease of 2.6 percent in the week ended July 12.
Although mortgage rates have seen sharp increases in the last two months, the July 12 week did not. The average 30-year mortgage rate for conforming loans remained unchanged at 4.68 percent.
The Department of Housing and Urban Development (HUD) has altered the fee structure for FHA loans, which increases the annual “mortgage insurance” payment. The changes went into effect on April 1, 2013 and June 3, 2013.
Jobless claims increased by 16,000 to a seasonally adjusted 360,000. However, seasonal factors, such as factories in the auto sector shutting down regularly in July for retooling, make this week and all weeks in July hard to read.
Even with this increase in initial claims, layoffs are still consistent with our dropping unemployment rate and remain within the range of levels seen over the past year.
Additionally, when looking at the four-week moving average of new claims, there was a more modest increase of 6,000 to 351,750. This four-week average is considered a better measure of labor market conditions.
Results for continuing claims for the June 29 week are mixed. Continuing claims rose 24,000 to 2.977 million. However, the 4-week average is down 3,000 to a new recovery low of 2.971 million.
With 195,000 jobs added to payrolls in June, the U.S. labor market has shown signs of strength in recent weeks. This also points toward strong expectations that the Fed will start winding down its massive stimulus program as early as September.
For the ninth week in a row, interest rates on fixed 30-year mortgages have jumped. During the the week ending July 5, the 30-year fixed rose to an average 4.68 percent, according to the Mortgage Bankers Association. This was a 10 basis point increase over the week before and the highest level since July of 2011.
Rising mortgage rates continue to decrease demand for mortgage applications. For the July 5 week, the purchase index was down 3.0 percent while the refinance index was down 4.0 percent.
Higher mortgage costs have raised concern that the housing recovery may slow. However, economists do not expect the recovery to be derailed, as rates remain historically low despite the recent increase. (And we agree… see: The Future of Mortgage Rates and the Housing Market in 2013)
Initial claims dropped 9,000 to 346,000 for the June 22 week which is right around market expectations. The month-ago comparison is slightly lower, with the 4-week average down 2,750 to 345,750. So, although the general trend for jobless claims is favorable, the improvement is far from dramatic.
Similarly, continuing claims showed slight improvement dropping 1,000 to 2.965 million for the June 15 week. Additionally, the 4-week average is down 10,000 to 2.973 million. This is just off the recovery best of 2.972 million which was posted in the June 1 week.
However, the unemployment rate for insured workers is unchanged. The rate remains at a recovery low of 2.3 percent.
According to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey, mortgage applications decreased 3.0 percent from one week earlier, falling to its lowest level since November 2011.
The Refinance Index fell 5.0 to the lowest level since November 2011.
Purchases, however, increased by 2.0 percent from the previous week. The unadjusted Purchase Index increased 1.0 percent from last week and was 16 percent higher compared to the same week one year ago.
The data reflects the recent rate hike, and we would expect to see a further drop in refinance applications moving forward. Purchases may prove to be more resilient, but if rates continue to rise, we would expect to see less demand for the housing market in general.
Although claims had been moving lower, jobless claims jumped 18,000 in the past week to 354,000. That is 10,000 higher than the May sample week a month ago. The comparison of the of 4-week averages is also grim, at 348,250 versus 340,500.
Continuing claims fell 40,000 to a new recovery low of 2.951 million. However, the 4-week average is up, and off a recovery low to 2.979 million.
No special factors specifically explain the jump in initial claims during this past week. Even with expectations for the Federal Reserve policy and economic growth, today’s report will not lift confidence in the jobs market.
The San Luis Obispo County real estate market is booming in 2013, but uncertainty about the future Federal Reserve stimulus policy has resulted in much higher mortgage rates. While the drama plays out on a national level, rising rates threaten to curtail the local recovery.
Stocks, bonds, and mortgage rates plummeted on Wednesday, June 20 after the Federal Open Market Committee’s (FOMC) decided to maintain its policy of fiscal stimulus by applying downward pressure to both short- and long-term interest rates. The announcement came after the FOMC concluded its two-day policy meeting.