Fewer U.S. homeowners are falling behind on their mortgage payments, aided by rising home values, low interest rates and stable job gains.
The trend brought down the national late-payment rate on home loans in the third quarter to a five-year low, credit reporting agency TransUnion said Tuesday. The percentage of mortgage holders at least two months behind on their payments fell in the July-September quarter to 4.09 percent from a revised 5.33 percent a year earlier, according to the firm, whose data go back to 1992. The latest rate also declined from 4.32 percent in the second quarter. The last time the mortgage delinquency rate was lower was the third quarter of 2008. Within a few years of setting that mark, foreclosures began to mount as home values tumbled from housing-boom highs, leaving many homeowners in negative equity — owing more on their mortgage than the value of their home. The dynamic drove mortgage delinquencies higher, peaking at nearly 7 percent in the fourth quarter of 2009. The rate of late payments on home loans has been steadily declining over the past five quarters. At the same time, U.S. home sales and prices have been rebounding over the past two years, while foreclosures have been declining. Moderate but stable job gains, still-low mortgage interest rates, and tight supply of homes for sale have helped fuel the housing rebound. That's also made it easier for homeowners to refinance, catch up on payments or sell their home, avoiding foreclosure. Even so, the mortgage delinquency rate is still above the 1 to 2 percent average historical range. That suggests that many homeowners still are struggling to make their payments. It also reflects that many home loans made during the housing boom remain unpaid but have yet to work their way through the foreclosure process. Loans made in the years after the housing boom are generally being paid on time, so as more of the older loans listed on banks' books as unpaid get resolved, the overall mortgage delinquency rate should continue to decline, said Tim Martin, group vice president of U.S Housing for TransUnion's financial services business unit. "The new mortgages are still performing very well, at very low delinquency rates," Martin said. "That's why we're expecting more improvement to come." TransUnion forecasts that the national mortgage delinquency rate will drop to just under 4 percent by the end of year. All the states posted an annual drop in late-payment rates during the third quarter, with California, Nevada, Arizona, Colorado and Utah registering declines of more than 30 percent. TransUnion draws its data from 52 million installment-based mortgages in the U.S. Source: www.abcnews.go.com/US/wireStory/late-payment-rate-mortgages-3q-20858939 Follow me: (CNN) - There's good news for homebuyers who don't have a lot of cash on hand.
Some banks are offering loans with down payments of just five percent. After the housing bubble burst, buyers needed to come to the table with as much as 20 percent down, or they had to turn to the Federal Housing Administration for a low down payment loan. But now banks like TD Bank, Bank of America, and Wells Fargo are loosening the purse strings, offering loans with down payments that are as low as five percent. Analysts say banks are taking advantage of a growing market as home sales pick back up, and more potential buyers enter the market. Source: http://www.live5news.com/story/23881017/banks-offer-small-down-payment-mortgages Follow me: This was supposed to be the year that Herb Harrison found a newer, bigger home to replace his current house in Framingham, Massachusetts. Then, in May, mortgage rates began to rise and he put his hunt on hold.
“My wife and I looked at each other and said ‘no way,’” said Harrison, who works in information technology. “It was something we thought about when rates were at rock-bottom, but once the rates spiked, we decided to stay where we are.” Now shoppers like the Harrisons are getting another chance, thanks to Federal Reserve Chairman Ben S. Bernanke. After five months of public speculation about when the Fed would end its housing stimulus sent mortgage costs to a two-year high in September, the U.S. central bank last week pledged a continuation of the bond buying responsible for last year’s all-time low 3.36 percent for a 30-year fixed loan. Interest rates may now hold at close to 4 percent through early next year, said Joel Naroff, president of Naroff Economic Advisors. “People who were priced out of the market by the jump in rates are getting a do-over,” saidNaroff, based in in Holland, Pennsylvania. “Rates aren’t going back down into the low 3s, but we may see the high 3s and we’ll see those rates remain stable through at least February or March. That’s going to restore buyer confidence.” The four-year economic expansion has been buttressed since early 2012 by a housing recovery that lifted construction and supported consumer spending. That rally was helped by borrowing costs that fell to a record low in December. Rate Spike Demand for properties began to weaken after Bernanke said in May that the Fed could slow the pace of its bond purchases. Speculation intensified in June and rates reacted with a surge that sent pending home sales tumbling 9 percent in the four months through September to the lowest level of 2013 while home affordability fell to a five-year low. Homebuilders, among the biggest beneficiaries of monetary stimulus, have slumped more than 20 percent since a May peak. Last week, the Fed policy-making board headed by Bernanke issued a statement saying “the recovery in the housing sector slowed” in recent months. That was a shift from its assessments in prior months when it said housing demand was strengthening, said Diane Swonk, chief economist at Mesirow Financial Inc. in Chicago. “It’s clear the Fed became concerned about housing over the last month, and that’s why it came out so firmly on the side of bond-buying,” Swonk said. “After months of talking about ending the program, the statement was crystal clear it would continue, open-ended.” ‘Stuck Buying’ The Fed might have jumped the gun with talk about tapering because of Bernanke’s desire to end the stimulus by the end of his final term in January, Swonk said. President Barack Obama has nominated Janet Yellen to replace Bernanke. “Bernanke wanted to exit the stimulus before his goodbye, and now the Fed is in a no-man’s land where they’re stuck buying,” Swonk said. “For now, they can’t stop because of the market reaction.” The Fed began purchasing bonds guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae in January 2009 with the aim of bolstering the housing market by reducing financing costs. In that first phase of the stimulus, the Fed bought $1.25 trillion of the mortgage securities by the end of March 2010. The month before the purchases began, the spread between the 10-year government bond yield and the average U.S. 30-year fixed mortgage rate had been about 3 percentage points, the widest since 1986, showing how investors who had little competition in the market were demanding higher payment for risk. Three Rounds The Fed announced a second round of purchases, known as QE2, for the second phase of quantitative easing, in November 2010, and a third round, QE3, in September 2012, with the Fed buying $85 billion of long-term bonds a month, including $40 billion of mortgage-backed securities. By then, the spread had dropped below 2 percent. When the Fed began talk about tapering in May, rates were near last year’s record, and without the Fed’s comments they might have fallen even lower, said Christopher Sebald, who oversees $26 billion of assets, including mortgage bonds, as president of Advantus Capital Management. “The housing and mortgage markets responded very poorly to the scare in May about tapering,” Sebald said. “The Fed doesn’t want to take that chance again until the economy is a lot stronger, so we saw this very clear statement the program will continue.” Average Rates Just before speculation grew in May that the Fed could reduce its bond-buying program, the average U.S. 30-year fixed mortgage rate was at a 2013 low of 3.4 percent. The rate peaked in the beginning of September at 4.7 percent, according to Bankrate Inc., based in Jacksonville, Florida. The commitment last week to extend the program reassured the market, Sebald said. The average fixed rate fell to 4.13 percent the day the Fed made the announcement, the lowest since June, according to Bankrate. The Fed is now expected to delay the first reduction of its bond-buying program until March, according to the median estimate in a Bloomberg survey of 30 economists conducted Oct. 17-18. Tapering will begin with Treasuries in March, and mortgages will follow “shortly after,” according to analysts at Goldman Sachs Group Inc. in a Nov. 1 report. “I think if rates stay close to 4, we won’t feel locked in to staying where we are,” said Harrison, the Framingham homeowner. “It’s going to give us options we didn’t have a few months ago when rates had gone so much higher.” The continued bond-buying will strengthen housing demand, said Fed Governor Jerome Powell in an Oct. 11 speech. He was one of the Fed policy makers who voted with Bernanke to continue the stimulus. At some point, though, the housing market will have to function without support from the Fed, he said. “‘Open ended’ does not mean unending,” he said. Source: http://www.bloomberg.com/news/2013-11-05/bernanke-giving-homebuyers-second-chance-with-pledge-mortgages.html Follow me: Nearly half of the homes sold so far this year in California went for more than their asking price. Such sales usually result from so-called "bidding wars" when multiple sellers submit competing offers. The California Association of Realtors® (C.A.R.) reports that the 49.5 percent of homes that sold over list in 2013 is almost double the number of such sales in 2012 (25.9 percent) and triple the 16.6 percent share in 2011. The 20-year average for above-list price sales is an 18 percent share.
C.A.R's released this and other data from its 2013 Annual Housing Market Survey. The Survey also found that the tight inventories in the state led to multiple officers in more than 72 percent of sales compared to 57 percent in 2012. This was the highest incidence of multiple officers in at least 15 years and for each home that sold at a higher amount there were an average of 5.7 offers compared to 4.2 offers last year and 3.5 in 2011. The survey also found that an increasing number of home sellers, nearly half of those responding, planned on purchasing another home in the future. This was the third consecutive year that statistic has increased. "Sellers are more upbeat about the housing market and are more comfortable with their financial situation. As the real estate industry and the economy continue to recover, many sellers regained confidence in owning a home since the Great Recession," said C.A.R. President Don Faught. "The number of home sellers planning on repurchasing, in fact, increased to the highest level since 2007, which suggests that repeat buyers could be the driving force in the housing market in 2014." Read More: http://www.mortgagenewsdaily.com/10302013_california_real_estate.asp Follow me: Applications for U.S. home loans increased in the latest week as rates continued to edge lower, data from an industry group showed on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, jumped 6.4 percent in the week ended Oct. 25. The index had dipped 0.6 percent in the previous week. The figures came against the backdrop of a 16-day U.S. federal government shutdown in the first half of the month. The potential economic damage from the shutdown fueled views that the U.S. Federal Reserve will maintain its bond-buying program for longer than previously thought to prop up the economy. The Fed is currently buying $85 billion per month in Treasuries and mortgage-backed securities. MBA data showed 30-year mortgage rates edged down 6 basis points to 4.33 percent, the lowest rate since June. The refinancing index rose 8.7 percent. The gauge of loan requests for home purchases, a leading indicator of home sales, rose 2.3 percent. The mortgage survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA. Source: http://www.cnbc.com/id/101154883 Follow me: The government’s Home Affordable Refinance Program (HARP) has helped millions of homeowners save money on their monthly mortgage payments, and it might help you, too — even if you owe more on your loan than your home is worth. But what if you have a “piggyback” loan — a second mortgage that you took out at the same time you bought your home?
Good news! Even with a piggyback loan, you may still save money by refinancing through HARP. What is a piggyback mortgage? Piggyback mortgages, also called second mortgages, are sometimes used by home buyers who don’t have the funds to make a large down payment and may want to avoid paying for private mortgage insurance (PMI). If you closed on a second mortgage at the same time you closed on your first mortgage and are currently paying on two mortgages for one home, you probably have a piggyback mortgage. Your “first” mortgage is the primary mortgage on your home and likely is larger than your second mortgage. It’s important to understand that your first and second mortgages are separate obligations, and only first mortgages are eligible for HARP. Tale of 2 mortgages If you are eligible to refinance through HARP, you’ll take out a new mortgage and use those funds to pay off your existing first mortgage. Your piggyback (or second) mortgage cannot be refinanced under HARP, and you cannot pay off your piggyback mortgage with funds from your HARP refinance. However, you can work with your current mortgage company, or another mortgage company, to refinance your piggyback mortgage at the same time that you complete a HARP refinance. Whether you decide to refinance your existing second mortgage or keep it as is when you refinance your first mortgage through HARP, your mortgage company will need to take steps to “subordinate” that second mortgage. That just means that your first mortgage obligation takes precedence over the second. Is HARP right for you? By taking advantage of today’s low interest rates, you may still save money on your monthly payments by refinancing your first mortgage through HARP. Your mortgage company can estimate what your new monthly payment would be with a HARP refinance. To find out your HARP eligibility, contact your mortgage company. Be sure to mention that you have a piggyback (second) mortgage, so the lender can take any necessary steps to either “re-subordinate” your second mortgage or help you refinance your second mortgage at the same time you are refinancing under HARP. Finally, if your mortgage company is unable to help you with a HARP refinance, ask another lender to assist you. Any lender participating in HARP may be able to help refinance a loan. A list of participating HARP lenders is available through HARP.gov Source: http://www.foxbusiness.com/personal-finance/2013/10/28/can-get-harp-refinance-if-have-piggyback-mortgage/ Follow me: |