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