Thirst for bonds shows growing fear that recovery is in jeopardy

Mortgage rates headed deeper into record territory this week as rumblings from Europe continue to make the guaranteed bonds that fund most mortgage loans look like a safe bet to investors.

Fears that the European debt crisis will derail the global economic recovery may also be weighing on would-be homebuyers, as demand for purchase loans slipped last week, with applications back down to levels seen a year ago.

Economists at Fannie Mae said in a monthly outlook report released today that they continue to see “a number of threats that could dampen growth” this year, including “substantial risk that investors will lose confidence in the ability of Europe to solve its problems over the intermediate term.”

Recent elections in Greece and France indicated “waning public support for austerity, igniting fears that the sovereign debt crisis could develop into a more significant credit crisis that could spill over to countries around the globe,” Fannie Mae economists Doug Duncan and Orawin T. Velz said.

With the U.S. again approaching its debt ceiling, there’s also uncertainty over whether the lawmakers here will reach a long-term budget agreement and forestall more than $1 trillion in automatic spending cuts set to begin taking effect at the end of this year.

With Republicans demanding spending cuts and Democrats angling for tax increases, the debate over raising the debt ceiling is “likely to weigh heavily on financial markets and consumer confidence, potentially dampening growth late in the year,” Duncan and Velz said.

Several members of the Federal Reserve committee that determines the central bank’s monetary policy are worried that uncertainty over the budget could lead businesses to defer hiring and investment, according to minutes of the committee’s last meeting in April.

Although housing sales appeared to be losing steam at the end of the first quarter, Fannie Mae economists are sticking to their projections that total home sales will increase by a little more than 7 percent this year, and that housing starts will jump nearly 20 percent.

Modest economic growth, and uncertainty about the European debt crisis and the U.S. budget talks, should at least serve to keep interest rates low, Fannie Mae economists said. They expect rates on 30-year fixed-rate mortgages to rise slowly back toward 4 percent by the end of the year.

Freddie Mac’s weekly Primary Mortgage Market Survey showed rates on 30-year fixed-rate mortgages averaged 3.79 percent with an average 0.7 point for the week ending May 17, down from 3.83 percent last week and 4.61 percent a year ago. That’s a new low in Freddie Mac records dating to 1971.

For 15-year fixed-rate loans, rates averaged 3.04 percent with an average 0.7 point, down from 3.05 percent last week and 3.8 percent a year ago. That’s a new low in records dating to 1991.

Rates on five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans averaged 2.83 percent with an average 0.6 point, up from 2.81 percent last week but down from 3.48 percent a year ago. Rates on five-year ARMs hit an all-time low in records dating to 2005 of 2.78 percent during the week ending April 19.

For one-year Treasury-indexed ARM loans, rates averaged 2.78 percent with an average 0.5 point, up from 2.73 percent last week but down from 3.15 percent a year ago. Rates on one-year ARMs hit an all-time low in records dating to 1984 of 2.72 percent during the week ending March 1.

Looking back a week, a separate survey by the Mortgage Bankers Association showed demand for purchase mortgages fell a seasonally adjusted 2.4 percent during the week ending May 11 compared to the week before. Demand for purchase mortgages was down 1 percent from a year ago.

There was a 13 percent increase in applications to refinance from the week before, with 28 percent of applicants seeking loans through the Home Affordable Refinancing Program (HARP), which is targeted at underwater borrowers.

In their monthly economic outlook, Fannie Mae economists said the latest numbers show “some loss of momentum” in housing activity late in the first quarter.

After a “robust gain” in January, existing-home sales fell in March for the second consecutive month. Although first-quarter existing-home sales were much stronger than a year ago, they remained below the pace seen during the first three months of 2010, when federal homebuyer tax credits were still in place.

“Housing will continue to face many challenges,” Duncan and Velz said. While the Census Bureau’s latest housing vacancy survey suggests that the inventory of homes available for sale or rent is shrinking, it also shows a continued rise in the number of vacant homes held off the market.

“Combined with the still elevated number of seriously delinquent loans, the current environment indicates that the shadow inventory will remain an issue for the housing recovery in coming years,” Fannie Mae economists said. “The overhang of the shadow inventory will continue to weigh on home prices.”

Although low mortgage rates are “one positive for the housing market,” lending standards for mortgages remain tight, they noted.

Fannie Mae’s latest survey of consumer’s views of housing market conditions, conducted in April, showed some improvement in sentiment among buyers and sellers.

The survey found that on average, Americans expected home prices to increase by 1.3 percent over the next year, up 0.4 percentage points from March and the highest value recorded in the survey’s two-year history.

Although 71 percent of those surveyed said it’s a good time to buy, only 15 percent thought it was a good time to sell. And 32 percent of those surveyed said they would rent if they were going to move, up 2 percent from March and the highest level since November 2011.

Mortgage Rates Head Deeper Into Record Territory is a post from: Whittier, Fullerton, La Habra and Fullerton Real Estate-Whittier Homes For Sale

Hi, Frances Trinity Realty and Investment bringing you our Monthly Market Update Report for the city of La Habra Heights. Currently, there are 44 homes on the market with 23 recently sold, 27 foreclosures and the average listing price is actually down in La Habra Heights 3.9% to 1.1%, $96,237. For more information on La Habra Heights or your particular neighborhood, visit our website: trinityrealtyandinvestment.com

Monthly Market Update Report – La Habra Heights April 2012 is a post from: Whittier, Fullerton, La Habra and Fullerton Real Estate-Whittier Homes For Sale

Bank of America began mailing out more than 200,000 letters this week targeting borrowers thought to be eligible for principal-reducing modifications under terms of the recent settlement the company and four other servicers reached with the federal government and 49 state attorneys general.

To be eligible, a homeowner must owe more on the mortgage than the property is worth today and must have been at least 60 days behind on payments on January 31, 2012.

In addition, the homeowner’s monthly housing costs must be more than 25 percent of gross household income, and the loan must be owned and serviced by Bank of America or serviced for another investor that has authorized the bank to grant principal writedowns.

Officials at Bank of America estimate average monthly savings of 30 percent for customers who qualify for the program.

The North Carolina-based lender said Tuesday that it has already extended about 5,000 trial modification offers involving principal reductions since March, with a potential total of more than $700 million in forgiven mortgage debt. Homeowners are required to make at least three timely trial payments before the modification can be made permanent.

“Building on home retention and payment assistance programs already in place, we are meeting our obligation to deliver this additional relief to our customers following the completion of the recent global mortgage settlement,” said Ron Sturzenegger, Bank of America’s executive over legacy asset servicing.

“To the extent principal reduction and other modification tools help us turn mortgages headed for possible foreclosure into long-term performing loans, it will be positive for homeowners, mortgage investors, and communities,” Sturzenegger added.

The first letters of Bank of America’s mail blitz should start landing in mailboxes this week with the majority of the 200,000-plus identified candidates receiving notice by the third quarter of this year.

Bank of America has committed to slashing $11 billion in mortgage debt for struggling homeowners as part of the settlement agreement reached. But with BofA expecting an average principal reduction of $150,000 for each borrower, crude estimates put the tab potentially as high as $28 billion to $30 billion if a large majority of those targeted respond to the company’s outreach efforts and satisfy the qualifying criteria.

DSNews.com

B of A to Offer Principal Writedowns to 200K Delinquent Borrowers is a post from: Whittier, Fullerton, La Habra and Fullerton Real Estate-Whittier Homes For Sale

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Monthly Market Update Report – Fullerton April 2012 is a post from: Whittier, Fullerton, La Habra and Fullerton Real Estate-Whittier Homes For Sale

Economic growth seems to be slowing, inflation remains subdued

Mortgage rates hit all-time lows this week, but demand for purchase loans is only slightly higher than it was a year ago as tight lending standards and worries about what’s been dubbed the “jobless recovery” continue to weigh on homebuyer demand.

Rates on 30-year fixed-rate mortgages averaged 3.84 percent with an average 0.8 point for the week ending May 3, down from 3.88 percent last week and 4.71 percent a year ago, Freddie Mac said in releasing the results of its weekly Primary Mortgage Market Survey. That’s a new low in Freddie Mac records dating to 1971, breaking the old record of 3.87 percent set during the first three weeks of February.

For 15-year fixed-rate mortgages, rates averaged 3.07 percent with an average 0.7 point, down from 3.12 percent last week and 3.89 percent a year ago. That’s also a new low in records dating to 1991, breaking the previous record of 3.11 percent set just three weeks ago.

Rates on five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans averaged 2.85 percent with an average 0.7 point, unchanged from last week but down from 3.47 percent a year ago. Rates on five-year ARMs hit an all-time low in records dating to 2005 of 2.78 percent during the week ending April 19.

For one-year Treasury-indexed ARM loans, rates averaged 2.7 percent with an average 0.6 point, down from 2.74 percent last week and 3.14 percent a year ago.

“Signs of slowing economic growth and inflation remaining subdued allowed yields on Treasury bonds to ease somewhat and brought most mortgage rates to new all-time record lows this week,” said Freddie Mac’s chief economist, Frank Nothaft, in a statement.

Nothaft noted that real gross domestic product rose at a 2.2 percent annual rate during the first quarter of this year, down from 3 percent during the final quarter of 2012 and below the consensus forecast of 2.5 percent.

Annual growth in the core price index of personal consumption expenditures (PCE) was 2 percent in March, which matches the Federal Reserve’s implied inflation target, Nothaft said.

Although the Federal Reserve’s Open Market Committee said last week that it expects to maintain “a highly accommodative stance for monetary policy” to support a stronger economic recovery, the committee announced no changes to existing policies.

Labor market conditions have improved in recent months but unemployment remains elevated, the committee said in a statement. Despite some signs of improvement, the housing sector “remains depressed,” the statement said.

Mortgage broker and syndicated columnist Lou Barnes believes the Fed “has neither the intention nor capacity to inflate away our debt burden. With (PCE) above 2 percent, the Fed won’t even embark on something as mild as QE3,” Barnes said, referring to speculation over a possible third round of “quantitative easing.”

Looking back a week, a separate survey by the Mortgage Bankers Association showed demand for purchase loans was up a seasonally adjusted 2.9 percent during the week ending April 27 compared to the week before. Purchase loans demand was up 3 percent from the same week a year ago

The National Association of Realtors last week reported that pending sales of existing homes jumped a seasonally adjusted 4.1 percent from February to March, to the highest level since April 2010. Pending sales were up 10.8 percent from the same time a year ago on a non-seasonally adjusted basis.

By Inman News
Inman News®
May 03, 2012

Mortgage Rates Chart New Lows is a post from: Whittier, Fullerton, La Habra and Fullerton Real Estate-Whittier Homes For Sale

Hi, Frances Trinity Realty and Investment bringing you our Monthly Market Update Report for the city of Whittier. Currently there are 528 homes for sale, 1018 recently sold, 1132 of those were foreclosures and the good news is Whittier is up 1.3% in pricing so the average listing price is $362,479. For more information on Whittier or your particular neighborhood, visit our website: trinityrealtyandinvestment.com

Monthly Market Update Report – Whittier April 2012 is a post from: Whittier, Fullerton, La Habra and Fullerton Real Estate-Whittier Homes For Sale

VIDEO: Stunned Home Buyers Find the Bidding Wars Are Back is a post from: Whittier, Fullerton, La Habra and Fullerton Real Estate-Whittier Homes For Sale

A new development is catching home buyers off guard as the spring sales season gets under way: Bidding wars are back!