Posted: January 17th, 2010 | Author: Joe | Filed under: Debt, Economy, Real Estate | Tags: Adjustable Rate Mortgages, ARMs, Economy, Mortgage Rates, Mortgages, news, Real Estate | 1 Comment »
It seems like only yesterday that we were hearing about Option ARM Mortgage rates resetting, and that holders of those loans were unable to refinance because their house was worth less than the mortgage…. Oh, wait… it was yesterday. 
Well, even so, things appear to be confusing in the housing market and mortgage industry still.
According to a recent Reuters article, the rise in mortgage applications the 1st week of this year is a reflection on the demand for refinancing loans. Demand for mortgages for new purchases only rose marginally.
According to the Mortgage Bankers Association, the index of mortgage applications (both purchase and refinance mortgages) was up 14.3%, though the index was less than half of what it was a year ago. And the 4-week moving average of mortgage applications was down 6.4%.
The article quotes Bob Walters, chief economist at Quicken Loans as stating:
“What makes the (applications) increase interesting is that nothing exceptional occurred to prompt people to return to the market,”
But I’m wondering if it isn’t the threat of those option and interest only ARMs resetting staring people in the face. But, I’m only a blogger, what do I know?
Another factor that ties in with the ARM reset is the anticipated rise in mortgage rates when the Federal Reserve stops buying mortgage-related securities at the end of March. Part of the purpose of this program was to bring rates down and keep them down to allow the market to at least stabilize, if not start to see some growth.
Things look to stay rough for the time being though. The Mortgage Bankers Association forecasts that mortgage originations will drop a further 40% in 2010, to the lowest level in a decade. And the Yale University economist Robert Shiller has said that he expects housing prices in the U.S. to continue falling in the next few months.
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Posted: November 8th, 2009 | Author: Joe | Filed under: Debt | Tags: Mortgages, Real Estate, Refinancing | 2 Comments »
A recent report released by Freddie Mac shows that half of the borrowers who refinanced their mortgage in the 3rd quarter of 2009 lowered the mortgage rate by an average of 1.1%.
This totaled a whopping $3 billion in dollars saved.
This is in large part due to The Home Ownership Affordability Refinance Program that allowed home owners with a Freddie Mac mortgage to modify the terms of their mortgages.
In perhaps the biggest change from the go-go days of cheap and easy borrowing, most of those refinancing did so without taking any equity out. In fact, 64% refinanced the same principal balance or less.
This is the most telling change since the real estate bubble. It used to be the norm that people would refinance 100% of what they were told was available and cash out an equity. This would essentially reset their mortgage payoff back to square one, and it’s a big reason why so many homeowners are underwater on their mortgage now and can’t refinance – they paid for yesterday’s lifestyle with today’s equity.
The fact that the majority (64%) are refinancing for the same or less is an indication of how this mindset has shifted since the bubble burst.
Time will tell if this trend continues, but I wouldn’t be surprised if we’ll see a generation of more conservative borrowers when it comes to mortgages.
Source: Monitor Bank Rates
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Posted: May 8th, 2009 | Author: Joe | Filed under: Economy, Real Estate | Tags: Economy, Real Estate | 2 Comments »
Pop quiz:
The majority of foreclosures are concentrated in which four states?
If you’ve paid even minor attention to housing news for the past two years or so, you should at least be able to guess Florida and Nevada.
My guess was: Florida, Nevada, California and ???
I wasn’t quite sure where the 4th state was. It turns out it was Arizona.
This is according to a recent AP article.
It’s not surprising since these states saw unprecedented double-digit growth in the year or so leading up to the collapse. All this goes to show that old adage of what goes up must come down is alive and well.
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Posted: January 27th, 2009 | Author: Joe | Filed under: Real Estate | Tags: home sales, Home Selling, Real Estate | 1 Comment »
Las Vegas, of all places, is seeing an increase in home sales!
This is a good sign, because Vegas was one of the hardest hit when the bubble burst. Since last year, home sales have risen 15%.
The flip side of this coin is that the home prices have fallen 28%. Ouch! But this is all part of what has to happen.
The nature of a bubble is that prices get bid up to an unsustainable level. When the bubble pops, or deflates, prices must fall in order to reach the sustainable point.
I found this in an article on Yahoo! finance:
“The reason? Motivated sellers–those in distress or foreclosure–or banks with too many homes on the books are slashing asking prices in order to unload their properties.”
I think it’s also non-foreclosure sellers coming to terms with reality.
Back when we sold our house, my wife an I were in awe at the other houses in our neighborhood. Every house was identical, save for a window or two over the front door, it was a real cookie cutter neighborhood. Great starter homes though.
Our house was the first (and only in the last 6 months!) to sell. Our secret was that we priced our house at fair market value. There were 7 other homes for sale at the time our sold. Each one of them was asking a price that was the going rate – 6-12 months earlier! They were out of touch with the market place. I can understand that, but I never did understand what realtor in his right mind would take a client that was going to ignore reality and ultimately bring down the realtor’s sales statistics.
Eventually, even these stubborn and fanciful sellers face reality and lower their prices (usually much lower than where they could have started).
That’s what’s happening in Vegas, Phoenix and San Diego where home sales are up 10% and 90% respectively.
Eventually the prices will bottom out, sales will level off and prices will begin to rise again.
Also, remember that real estate is local, even in the post-bubble era. The part of the country where I live never saw the outrageous hyper-inflation of housing prices, and the median home price has gone up 3% over the past year.
Whether you’re a buyer or a seller, you must know your market.
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