Lenders Easing Up on Down Payment Requirements?

Tight credit conditions are showing more signs of easing, just in time for the spring buying market to heat up, CNBC reports. Home buyers may be able to qualify with lower down payments—a big shift from the last four years when 20 percent down payments on a loan were practically required. But mortgage giants such as Fannie Mae are reportedly approving more loans with lower down payments, even buying loans with as little as 3 percent down, CNBC reports. However, these loans do require private mortgage insurance. Fannie Mae is seeing its share of the market rise as FHA—which used to be one of the only agencies to offer low down payment loans—is seeing its market share shrink as it raises its premiums. Loans with between 3 and 10 percent down payments accounted for 18 percent of Fannie Mae’s business for home purchase loans in the third quarter of 2012, the latest data available. "In general lenders have been willing to do more than they may have been willing to do in the past," says John Forlines, chief credit officer for Fannie Mae's single family business. "Our requirements have not changed significantly, but other parties taking risk, the lenders and mortgage insurance companies in particular, have been more flexible than they may have been in the past."

Wekly Info: 03/08/2013

At dawn today came glorious news: in February the nation added 236,000 jobs, and the prior two months were revised up another 61,000, in sum double the forecast. When you're hit by one of these surprises, you stare at the market effect before studying the report: stock market futures rocketed before the open, and bonds tanked. But by midday today markets no longer believed the job data: the Dow up only 23, the 10-year T-note damaged, but trading 2.06%, above the 2013 top by only 0.03%, mortgages holding in the high threes. The ISM reports in the mid-50s showed some modest health in February. Next week we'll hear from small business, at all accounts still stalled. Housing is still the darling of all optimists... change there? MGIC every 90 days releases a regional summary for its underwriters; of 73 markets covered, suddenly 25 are rated as "improving," the best since 2005. But, improving from what? 32 metro areas are rated "stable," 23 are "soft," and the last 18 are "weak." Not one, single market rates "strong." MGIC's adjectives are based on price appreciation. Housing is better, and will get better yet, but is not yet pulling the economy forward.

Big Foreclosure Discounts Are Fading Away

During the mortgage crisis, foreclosed homes were selling, on average, for a 25 percent discount compared to original market values. In the fourth quarter of 2012, the average foreclosure discount dropped to 12.2 percent, according to the latest data from FNC’s Foreclosure Market report. The median sales price of foreclosures is $93,000; the median price of non-distressed home is $183,000, FNC reports. "The fact that we are seeing a combination of rising home prices and a bottoming out of foreclosure prices is a very good sign the housing recovery is taking hold," says Yangling Mayer, FNC senior research economist. "This is the very first time in the long housing recession that the two are happening at the same time."

Home Prices in 2012: Best Year-on-Year Gain in Six Years

CoreLogic®, a leading residential property information, analytics and services provider, recently released its December CoreLogic HPI® report. Home prices nationwide, including distressed sales, increased on a year-over-year basis by 8.3 percent in December 2012 compared to December 2011. This change represents the biggest increase since May 2006 and the 10th consecutive monthly increase in home prices nationally. On a month-over-month basis, including distressed sales, home prices increased by 0.4 percent in December 2012 compared to November 2012. The HPI analysis shows that all but four states are experiencing year-over-year price gains. Excluding distressed sales, home prices increased on a year-over-year basis by 7.5 percent in December 2012 compared to December 2011. On a month-over-month basis, excluding distressed sales, home prices increased 0.9 percent in December 2012 compared to November 2012. Distressed sales include short sales and real estate owned (REO) transactions. The CoreLogic Pending HPI indicates that January 2013 home prices, including distressed sales, are expected to rise by 7.9 percent on a year-over-year basis from January 2012 and fall by 1 percent on a month-over-month basis from December 2012, reflecting a seasonal winter slowdown. Excluding distressed sales, January 2013 house prices are poised to rise 8.6 percent year over year from January 2012 and by 0.7 percent month over month from December 2012. The CoreLogic Pending HPI is a proprietary and exclusive metric that provides the most current indication of trends in home prices. It is based on Multiple Listing Service (MLS) data that measure price changes for the most recent month. “December marked 10 consecutive months of year-over-year home price improvements, and the strongest growth since the height of the last housing boom more than six years ago,” says Mark Fleming, chief economist for CoreLogic. “We expect price growth to continue in January as our Pending HPI shows strong year-over-year appreciation.” “We are heading into 2013 with home prices on the rebound,” said Anand Nallathambi, president and CEO of CoreLogic. “The upward trend in home prices in 2012 was broad based with 46 of 50 states registering gains for the year. All signals point to a continued improvement in the fundamentals underpinning the U.S. housing market recovery.” Highlights as of December 2012: Including distressed sales, the five states with the highest home price appreciation were: Arizona (+20.2 percent), Nevada (+15.3 percent), Idaho (+14.6 percent), California (+12.6 percent) and Hawaii (+12.5 percent). Including distressed sales, this month only four states posted home price depreciation: Delaware (-3.4 percent), Illinois (-2.7 percent), New Jersey (-0.9 percent) and Pennsylvania (-0.5 percent). Excluding distressed sales, the five states with the highest home price appreciation were: Arizona (+16.4 percent), Nevada (+14.7 percent), California (+12.8 percent), Hawaii (+11.7 percent) and North Dakota (+10.8 percent). Excluding distressed sales, this month only three states posted home price depreciation: Delaware (-1.9 percent), Alabama (-1.0 percent) and New Jersey (-0.5 percent). Including distressed transactions, the peak-to-current change in the national HPI (from April 2006 to December 2012) was -26.9 percent. Excluding distressed transactions, the peak-to-current change in the HPI for the same period was -20.8 percent. The five states with the largest peak-to-current declines, including distressed transactions, were Nevada (-52.4 percent), Florida (-43.5 percent), Arizona (-39.8 percent), Michigan (-36.5 percent) and California (-35.4 percent). Of the top 100 Core Based Statistical Areas (CBSAs) measured by population, only 16 are showing year-over-year declines in November, two fewer than in November.

As Prices Rise, Home Owners Tap Into Equity

As home prices are edging up, home equity lines of credit are on the rise again, CNBC reports. Originations of home equity lines of credit jumped 19 percent at the end of last year, according to Equifax. JPMorgan Chase says it’s seen a 31 percent increase year-over-year in HELOCs its originated. "Home prices are definitely a factor" in the recent rise home equity lines of credit, says Brad Blackwell, an executive with Wells Fargo Home Mortgage. "As they increase, people have more available equity." Increased consumer confidence also may be at play, as more home owners feel more confident about being able to one day repay these loans, Blackwell says. Reportedly, more home owners are spending the extra cash on their homes. "We are seeing more responsible uses today, like home improvements, education expenses, or other major expenses that would be a more responsible use of a customer's home equity," Blackwell told CNBC. The average home equity line was slightly below $90,000 as of October 2012, according to Equifax. In October 2006—during the housing boom—average lines of credit were just over $100,000. While home equity lines of credit are up, they’re still a far cry from 2006 numbers, however. In 2012, borrowers took out $7.2 billion in home equity lines of credit through last October, compared to about $28 billion in 2006. Source: “Americans Are Tapping into Home Equity Again,” CNBC (Feb. 9, 2013)

Weekly Info 2/8/2013

Long-term rates slid back a bit this week, the 10-year T-note holding 2.00%, mortgages near 3.75%, higher than 2012 second-half, but nothing dramatic. It was a thin week for data, but two reports were startling. First, the US trade deficit in December arrived 20% lower than forecast because of a surge in exports of… oil. Second, consumer credit continued its rise: a $15.9 billion jump in November, and $14.6 billion in December. The usual suspects have seized on this run as a sign of normal, cyclical recovery ahead, and it is not. The only two components growing: student loans and car paper, one crushing the next generation, the other available only because it's the only consumer collateral that's easy to repossess. All other categories of consumer credit are falling, from credit cards to mortgages. February 8, 2013 PRODUCT 0 pts w/pts 30 Yr Fixed 3.75% 3.5% +1.125pt FHA 30 Yr Fixed 3.25% n/a 5 Yr ARM 2.75% 2.5% +.6pt 7 Yr ARM 2.875% 2.625% +.7pt 5 Yr Jumbo ARM* (purchase loans) 2.75% 2.5% +1pt 7 Yr Jumbo ARM* 3.0% 2.75% +1.1pt

January Home Sales Reach 16-year High!

Home Remodeling Pickup to Trigger Higher Sales Prices

After years of sluggish growth, home remodeling is rebounding and more home owners are tackling long-delayed house projects to spruce up their homes. The growth in remodeling is coming at a time when more home owners are once again seeing equity in their homes as the overall housing market picks up. “Home improvements can further boost home values and help sustain both the housing recovery and economic growth,” Realty Times reports. Spending on home improvement projects rose 9 percent in 2012 — the first increase since 2007, according to a study by the Joint Center for Housing Studies at Harvard University. "With the U.S. economy and housing market now recovering, investment in the nation's housing inventory is also picking up,” according to the JCH report. “Lenders and new owners are rehabilitating millions of foreclosed properties. Older home owners are retrofitting their homes to accommodate their future needs... And with the huge echo-boom population moving into the home buying market over the coming decade, the remodeling industry can look to an even more promising future.” The National Association of the Remodeling Industry expects growth to continue in home remodeling, particularly as more clients feel more stable in their finances and employment situations.

Today's Rates

February 1, 2013 PRODUCT 0 pts w/pts 30 Yr Fixed 3.625% 3.5% +.6pt FHA 30 Yr Fixed 3.25% n/a 5 Yr ARM 2.75% 2.5% +.7pt 7 Yr ARM 2.875% 2.625% +.9pt 5 Yr Jumbo ARM* (purchase loans) 2.75% 2.5% +1pt 7 Yr Jumbo ARM* 3.0% 2.75% +1.1pt * Up to $1.5 million - - - - - This information is for real estate professionals only and is not intended for distribution to consumers. - - - - - Rates fluctuate and are always subject to credit approval. These rates are based on FICO scores of 740 and greater and loan amounts of at least $200k. - - - - - Conforming ARM's assume 25% down payment. - - - - - All loans assume no origination fee.

Weekly Info 02/01/2013

The sustained rise in long-term rates in January has stabilized for the moment. Mortgages have risen from 3.50% or below in the prior five months to roughly 3.75%, and the almighty 10-year T-note from a centerline near1.75% to almost 2.00%. The rise has been puzzling. The Fed committed just last fall to buy $85 billion each month in MBS and long Treasurys, with the expressed purpose of holding rates down until our economy turns sharply better. Which it hasn't. So, why the rate rise, one nearly always reflecting an improving US economy? In a precursor of our long-term future, rates have risen because forces overseas are larger relative to the US economy than at any time in more than a century.

New-Home Prices Pick Up Strength

Sales of new single-family homes posted the first annual gain in seven years as median prices continued to rise, the Commerce Department reports. The median price of new homes increased to $248,900 last month, a 1.3 percent increase compared to November. The median price of new homes sold was up 9.6 percent in December compared to a year ago. Meanwhile, new home sales increased nearly 20 percent from 2011 to 2012, the Commerce Department reports. While the gains were large, sales last year were still the third worst on record (2010 and 2011 also marked record lows in sales). For all of 2012, 367,000 new homes were sold—about a third of the record number of sales reached in 2005. Just for December—the latest month available—new-home sales dropped 7.3 percent compared to the previous month to a 369,000-unit annual rate. But numbers are subject to substantial revisions, as in November where sales were revised much higher to a 398,000-unit rate—marking the highest pace in nearly three years.

Loan Demand Rises as Rates Inch Up

For the third consecutive week, mortgage applications rose, even as mortgage rates inched up slightly, the Mortgage Bankers Association reports. The bulk of the increase in applications this week came from a 7.7 percent rise in applications from refinancings. Applications for home purchases, viewed as a leading indicator for future home sales, rose 2.5 percent. Overall, the mortgage application index -- which includes both refinancings and loans for purchase -- increased 7 percent in the week ending Jan. 18, the MBA reports. Meanwhile, 30-year fixed-rate mortgages averaged 3.62 percent last week, an increase of 1 basis point over the prior week, the MBA reports. Source: “U.S. Mortgage Applications Up for Third Week Despite Rate Rise,” Reuters (Jan. 23, 2013)

4 Ways Buyers Can Mess Up a Loan Approval

Your home buyers have gotten approved for a mortgage and now they’re just waiting to make it to the closing table. Make sure they don’t throw their loan approval into jeopardy by making one of these common mistakes: Making a big purchase: Tell your buyers to avoid making major purchases, like buying a new car or furniture, until after they close on the home. Big purchases could change the buyer’s debt-to-income ratio that the lender used to approve the buyer’s home loan and could throw the approval into jeopardy. Opening new credit: Inform your buyers that now isn’t the time to open up any new credit cards. Missing any payments: Home buyers need to be extra vigilant about paying all their bills on time, even if they’re disputing one. Cashing out: Avoid any transfers of large sums of money between your bank accounts or making any undocumented deposits — both of which could send up “red flags” to your buyer's lender.

Weekly info 1/11/2013

Markets barely moved this week, and there was no new data of note except the NFIB survey of small business. Its economist, Bill Dunkelberg: "The current Index value of 88 is a recession level reading." The index has had some better days recently, but is in the same basic place it has been since early 2008. The NFIB work is so sound, so long-running (same format since 1973), that those claiming a stronger national recovery underway have some explaining to do. The Consumer Financial Protection Bureau created by the Dodd-Frank spasm released its long-awaited Thou Shalt Not to the mortgage industry. After more than a year of probing, at who knows what taxpayer cost, the CFPB report and new rules found not one single mortgage practice underway today which should be stopped. A witch hunt worthy of Massachusetts in 1692 could not find a solitary agent of Satan.

4 Strategies for Selling in 2013

4 Strategies for Selling in 2013

From all the MLS's Highlights 1/10/13

Residential Highlights: 7.7% increase in the number of closed sales year-over-year (194) 18.2% increase in the number of closed sales year to date (5727) 29.9% decrease in average days on market (75) 28.1% decrease in number of active listings 14.5% increase in average price - sold ($315,451) Condo Highlights: 14.9% increase in number of closes sales year-over-year (1185) 36.8% decrease in average days on market (67) 37.4% decrease in number of active listings 12.3% increase in average price - sold ($186,877)

Week Info 1/4/2013

Long-term interest rates rose sharply this week, the 10-year T-note's 1.93% the highest since last April, and mortgages above 3.50% the top since summer. Three forces are in play: the Fed's December meeting minutes released yesterday indicated a 2013 end to QE4 bond-buying; second, hints of a better economy; and third, markets less than thrilled by fiscal substance-abusers. As always the economy trumps all, and the first week of each month brings the freshest data. December payrolls grew on forecast, 155,000 jobs, but no change in trend. The ISM manufacturing index in December flipped from just below stall speed at 49.5 to just above, 50.7; and its service-sector twin popped from 54.7 to 56.1. No recession, no acceleration; theories behind either are as suspect as ever since 2009.