Low mortgages have borrowers cutting their mortgage loan time in half. Approximately 16% of the fixed-rate mortgages sold to Freddie Mac in the third quarter were 15-year loans, as opposed to the standard 30 year mortgage loans. This percentage is up almost 10% from 2011, according to the agency’s data. 15 year mortgages have been increasing since 2007 making up 8.5% of refinancing. Stu Feldstein, who tracks mortgage data at SMR Research and who is also the president of the company said, “the 15-year loan has gone from really being almost a non-issue item to a new trend”. Researchers suggest the reason 15 year mortgages are becoming much more desirable is due to the change in lower interest rates. More here
RealtyTrac’s U.S. Foreclosure Market Report for October 2012 shows foreclosure filings, including default notices, scheduled auctions, and bank repossessions, are down 19 percent from October 2011, though they rose 3.0 percent from the month before. Daren Blomquist, vice president of RealtyTrac, said foreclosure trends vary widely across the country primarily depending on how well each state was able to handle the high volume of delinquent loans during the worst of the foreclosure crisis. According to the report, foreclosure starts were filed on 89,209 properties in October, which represents a 19 percent drop from last year and the third consecutive month with an annual decrease. Also, the report shows one in every 706 housing units with a foreclosure filing during the month. More here.
Freddie Mac’s November U.S. Economic and Housing Market Outlook defines what a healthy housing market will look like over the next five years. Using recent trends, key indicators, and shifting demographic patterns, Freddie Mac’s forecast sets expectations for a healthy market at a more realistic level, below the peaks of the housing bubble. Frank Nothaft, Freddie Mac’s vice president and chief economist, said the long-term prognosis is promising but a healthy housing market should not be compared to what it was during its peak years. According to the report, housing starts should increase to 1.8 million units per year compared to 2.1 million in 2005. Also, home sales should rise to about 5.0 percent of the housing stock rather than 7.0 percent and prices should gain approximately 3.0 percent per year compared to 11 percent in 2005. More here.
According to the Mortgage Bankers Association’s Weekly Applications Survey, total mortgage loan application volume rose 12.6 percent last week, following the previous week’s decline. Michael Fratantoni, MBA’s vice president of research and economics, said the East Coast suffered large decreases following the effects of the hurricane but rebounded strongly last week. The Refinance Index was up 13 percent over the previous week and the seasonally adjusted Purchase Index increased 11 percent. Also, average mortgage rates reached a new survey low. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances fell to 3.52 percent from 3.61 percent the week before. The refinance share of total mortgage activity rose to 81 percent. More here and here.
Americans are growing ever more confident in the housing market, according to Fannie Mae’s October 2012 National Housing Survey. The survey gauges consumers’ attitudes toward owning a home, renting, prices, mortgage rates, household finances, and overall confidence in the economy. October’s results found Americans’ expectations on the rise. Among the highlights, only 10 percent of respondents said they expect home prices to fall over the next year, the lowest level in the survey’s history. Participants also believe it is a good time to buy a home and an increasing number said it’s a good time to sell. Doug Duncan, senior vice president and chief economist of Fannie Mae, said increasing household formation and an improving labor market has added additional momentum to the housing recovery. According to Duncan, expected increases in home prices and rent may encourage more consumers to buy, which would add further strength to the recovery. More here and here.
According to the Mortgage Bankers Association’s Weekly Applications Survey, mortgage application demand fell last week due to the effects of the storm on the East Coast. The Market Composite Index, which measures total mortgage loan application volume, was down 5.0 percent from the previous week, due to a 5.0 percent drop in both the Refinance and Purchase Index. Michael Fratantoni, MBA’s vice president of research and economics, said the storm had a significant impact on application volumes on the East Coast, with dramatic declines in New York, New Jersey, and Connecticut. According to Fratantoni, many other areas of the country experienced increases in application volume. The average contract interest rate for 30-year fixed-rate mortgages fell to 3.61 percent from 3.65 percent the week before. The MBA’s survey covers more than 75 percent of all U.S. retail residential mortgage applications. More here and here.
According to the outlook of a group of economists recently gathered by the National Association of Home Builders, the housing market is recovering steadily and should continue to gain momentum though next year and beyond. David Crowe, NAHB’s chief economist, said we’re seeing a more robust housing sector than other parts of the economy due to rising home prices across the nation. The NAHB is forecasting a 21 percent increase in housing starts this year and an additional 26 percent climb in 2013. Mark Zandi, chief economist of Moody’s Analytics, believes low mortgage rates, job market gains, and less economic uncertainty will lead to an acceleration in GDP growth as well as new home construction. A big part of this optimism is the housing market, Zandi said. Also, NAHB’s vice president of forecasting and analysis, Robert Denk, said that housing production should be 55 percent back to normal by the end of next year. More here.
RealtyTrac’s Q3 2012 Metropolitan Foreclosure Market Report tracks foreclosure activity in cities with populations of 200,000 or more. In the third quarter of this year, foreclosure activity fell from a year ago in 131 of the 212 metropolitan areas included in the report. Daren Blomquist, vice president of RealtyTrac, said two-thirds of the nation’s largest metros posted decreases in foreclosure activity in the third quarter, indicating that most of the nation’s housing markets are past the worst of the foreclosure problem. Foreclosure activity fell from the previous quarter in 63 percent of included metros. More here.
Freddie Mac’s recently released Economic and Housing Market Outlook for October shows housing contributed 0.3 percentage points to GDP growth in the first half of 2012 after being a net drag from 2006 through 2010. The housing sector is also expected to contribute to growth during the second half of the year. Frank Nothaft, Freddie Mac’s vice president and chief economist, said the recovery has been unlike any other over the past 65 years but we are now seeing housing resume its traditional role of leading the charge. Also in the report, Freddie Mac projects 7 million borrowers will refinance their loans in 2012, resulting in $15 billion in mortgage-payment savings over the first year. That savings will help further boost the economy by strengthening homeowners’ financial situations and overall consumer confidence. More here.
The results of Fannie Mae’s September 2012 National Housing Survey show consumers’ optimism about the economy and housing market continued to climb as the summer season wound down. Doug Duncan, senior vice president and chief economist of Fannie Mae, said consumers are showing increasing faith in the housing recovery due to improved home-price expectations, gains in the job market, and low mortgage rates. Among the highlights of the survey, 41 percent of respondents said the economy is on the right track, which is the highest level ever recorded and an 8.0 percent jump from the month before. Also, home-price expectations remained positive for the eleventh straight month, with 37 percent of Americans anticipating rising home values over the next year. The percentage of respondents who said they’d buy rather than rent their next home increased to 69 percent and the number of participants who said it was a good time to sell rose to 19 percent. More here and here.