Mortgage applications increased 13.9% from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending Sep. 18, 2015.
The previous week’s results included an adjustment for the Labor Day holiday.
The Market Composite Index, a measure of mortgage loan application volume, increased 13.9% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 26% compared with the previous week. The Refinance Index increased 18% from the previous week. The seasonally adjusted Purchase Index increased 9% from one week earlier to its highest level since June 2015. The unadjusted Purchase Index increased 20% compared with the previous week and was 27% higher than the same week one year ago.
“We saw significant rate volatility last week surrounding the FOMC meeting, and rate declines toward the end of the week likely drove applications from both prospective home buyers and borrowers looking to refinance. The 30-year fixed rate remained unchanged over the week even though there was substantial intra-week fluctuation, but we saw rate decreases in other loan products like the 15-year fixed, 5/1 ARM, and 30-year jumbo,” said Mike Fratantoni, MBA’s Chief Economist.
The refinance share of mortgage activity increased to 58.4% of total applications from 56.2% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.9% of total applications.
The FHA share of total applications decreased to 12.9% from 14.2% the week prior. The VA share of total applications decreased to 10.0% from 10.7% the week prior. The USDA share of total applications decreased to 0.7% from 0.8% the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) remained unchanged at 4.09%, with points increasing to 0.45 from 0.42 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate remained unchanged from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 3.99%, its lowest level since May 2015, from 4.04%, with points increasing to 0.36 from 0.26 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA remained unchanged at 3.88%, with points decreasing to 0.33 from 0.35 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
read more: http://www.housingwire.com/articles/35130-mortgage-apps-skyrocket-on-lower-interest-rates
Thursday, September 24, 2015
Wednesday, September 16, 2015
Phoenix homeowners rank above average for underwater mortgages, Zillow report says
s underwater mortgages continue to drop nationally, many Phoenix homeowners still grapple with negative equity, according to a report released this month by Zillow Inc.
The report indicated 18 percent of Phoenix homeowners had underwater mortgages ¬¬– when homeowners owe more than their house is worth– in the second quarter of 2015.
Although negative equity decreased from 22 percent since last year, Phoenix ranks sixth out of the 35 metro areas surveyed for the highest number of homeowners with negative equity, trailing behind Las Vegas, Atlanta and Chicago.
“Phoenix was definitely one of the hardest-hit markets during the housing bust,” said Svenja Gudell, Zillow’s chief economist.
Phoenix condo owners are experiencing a higher rate of negative equity than single-family homeowners.
About 26 percent of Phoenix condo owners are underwater on their mortgages, also above Zillow’s national average of 20 percent.
Because condos took a much harder nosedive after the Great Recession, it’s taking longer for values to rebound, Gudell said.
“If we go back to the high point of the underwater time period, there were just a ton of $20,000 to $30,000 to $40,000 condos being sold,” said Jim Sexton, president of the Arizona Association of Realtors. “We don’t have those any more. Our prices have improved in some areas significantly.”
Zillow splits data into three tiers based on estimated home values.
The bottom tier of homes, which includes low-end or “starter” residences, are more likely to have negative equity. However, these low-end homes are appreciating in value and are fueling the national decline in underwater mortgages.
Nationally, underwater mortgages dropped to 14.4 percent – the first time it’s been below 15 percent since the housing bubble burst, according to Zillow, a real-estate database company.
read more: https://cronkitenews.azpbs.org/2015/09/14/phoenix-homeowners-rank-above-average-for-underwater-mortgages-zillow-report-says/
The report indicated 18 percent of Phoenix homeowners had underwater mortgages ¬¬– when homeowners owe more than their house is worth– in the second quarter of 2015.
Although negative equity decreased from 22 percent since last year, Phoenix ranks sixth out of the 35 metro areas surveyed for the highest number of homeowners with negative equity, trailing behind Las Vegas, Atlanta and Chicago.
“Phoenix was definitely one of the hardest-hit markets during the housing bust,” said Svenja Gudell, Zillow’s chief economist.
Phoenix condo owners are experiencing a higher rate of negative equity than single-family homeowners.
About 26 percent of Phoenix condo owners are underwater on their mortgages, also above Zillow’s national average of 20 percent.
Because condos took a much harder nosedive after the Great Recession, it’s taking longer for values to rebound, Gudell said.
“If we go back to the high point of the underwater time period, there were just a ton of $20,000 to $30,000 to $40,000 condos being sold,” said Jim Sexton, president of the Arizona Association of Realtors. “We don’t have those any more. Our prices have improved in some areas significantly.”
Zillow splits data into three tiers based on estimated home values.
The bottom tier of homes, which includes low-end or “starter” residences, are more likely to have negative equity. However, these low-end homes are appreciating in value and are fueling the national decline in underwater mortgages.
Nationally, underwater mortgages dropped to 14.4 percent – the first time it’s been below 15 percent since the housing bubble burst, according to Zillow, a real-estate database company.
read more: https://cronkitenews.azpbs.org/2015/09/14/phoenix-homeowners-rank-above-average-for-underwater-mortgages-zillow-report-says/
Saturday, September 5, 2015
Fewer Chicagoans underwater on mortgages
Fewer Chicagoans are underwater on their mortgages these days, but local homeowners — particularly those with condominiums — are in worse shape than borrowers elsewhere in the country.
In its second-quarter report on negative equity, Zillow found that 14.4 percent of homeowners nationally were underwater on their mortgages, meaning they owed more on their loans than their homes were worth. That's the first time the level has been below 15 percent since the real estate bubble burst in 2008.
In the Chicago area, however, the negative equity rate fell, but it remained much higher than elsewhere. It was 22 percent in the second quarter, down from 23.7 percent earlier in the year and from 26.8 percent a year ago.
Underwater homeowners have proven to be one of the impediments to a speedier recovery of the housing market, as homeowners couldn't sell properties bought during headier times for the sums necessary to get them out from under crushing debt burdens. If they sought to sell them for less than the loan amount due, in what's called a short sale, they were at the mercy of lenders.
In turn, that kept down the inventory of homes made available for sale, creating a seller's market for desirable properties. Only in the past year or so have property values in the Chicago area risen, making it easier for more once-underwater homeowners to at least come close to breaking even, and making it easier for them to consider putting their homes on the market.
Still, among the nation's biggest housing markets, Chicago, Las Vegas and Atlanta have the highest rates of homeowners with underwater mortgages.
The range is large, however, depending on whether one owns a condo or a house, Zillow found.
Nearly a third of condos in the Chicago area were underwater, compared with 19.2 percent of single-family homes. Condo owners were also in far worse shape in Orlando and Las Vegas.
Among all homes in the Chicago area, ZIP codes with the largest year-over-year improvements in the percentage of underwater mortgages included 60537, Millington; and 60545, near Plano. Both communities are southwest of Aurora. The percentage of underwater homeowners in 60537, for example, went to 22.7 percent of homes with a mortgage, from 40.4 percent a year ago.
read more at: http://www.chicagotribune.com/business/ct-chicago-negative-equity-0907-biz-20150904-story.html
In its second-quarter report on negative equity, Zillow found that 14.4 percent of homeowners nationally were underwater on their mortgages, meaning they owed more on their loans than their homes were worth. That's the first time the level has been below 15 percent since the real estate bubble burst in 2008.
In the Chicago area, however, the negative equity rate fell, but it remained much higher than elsewhere. It was 22 percent in the second quarter, down from 23.7 percent earlier in the year and from 26.8 percent a year ago.
Underwater homeowners have proven to be one of the impediments to a speedier recovery of the housing market, as homeowners couldn't sell properties bought during headier times for the sums necessary to get them out from under crushing debt burdens. If they sought to sell them for less than the loan amount due, in what's called a short sale, they were at the mercy of lenders.
In turn, that kept down the inventory of homes made available for sale, creating a seller's market for desirable properties. Only in the past year or so have property values in the Chicago area risen, making it easier for more once-underwater homeowners to at least come close to breaking even, and making it easier for them to consider putting their homes on the market.
Still, among the nation's biggest housing markets, Chicago, Las Vegas and Atlanta have the highest rates of homeowners with underwater mortgages.
The range is large, however, depending on whether one owns a condo or a house, Zillow found.
Nearly a third of condos in the Chicago area were underwater, compared with 19.2 percent of single-family homes. Condo owners were also in far worse shape in Orlando and Las Vegas.
Among all homes in the Chicago area, ZIP codes with the largest year-over-year improvements in the percentage of underwater mortgages included 60537, Millington; and 60545, near Plano. Both communities are southwest of Aurora. The percentage of underwater homeowners in 60537, for example, went to 22.7 percent of homes with a mortgage, from 40.4 percent a year ago.
read more at: http://www.chicagotribune.com/business/ct-chicago-negative-equity-0907-biz-20150904-story.html
Monday, August 31, 2015
‘Kosher’ Reverse Mortgages: Fixing a Dysfunctional Market
A high number of retirees have equity in a home that could generate additional income, but few see the Home Equity Conversion Mortgage (HECM) as a viable option. In this opinion piece, Wharton emeritus finance professor Jack Guttentag, who runs a website called The Mortgage Professor, offers suggestions on how the HECM market could be substantially improved.
People reaching retirement age are living longer than ever, and retiring with less capacity to maintain their living standards. The Center for Retirement Research at Boston College estimates that more than half of the households entering retirement “may be unable to maintain their standard of living in retirement.”
Yet a sizeable segment of retirees have equity in a home that could generate additional funding through the use of a Home Equity Conversion Mortgage – the only variety of reverse mortgage insured by the federal government. The HECM program is well-designed and provides options for meeting a wide variety of retirees’ financial needs. Yet few seniors use it. At current rates, only about 60,000 HECMs will be written in 2015, which is a drop in the bucket compared to the need. To put this in perspective, about 3 million homeowners turn 65 every year.
The stunted growth of the HECM program mainly reflects market failure, as opposed to a considered preference by senior homeowners not to participate. For reasons explored in my working paper titled, “HECM Reverse Mortgages: Is Market Failure Fixable?,” the HECM market is the most dysfunctional and least competitive of all the major financial service markets. Lenders don’t display their prices anywhere, and borrowers don’t price shop. Most originators always charge the maximum origination fee allowed by law, regardless of how much they are making on the transaction. Markups are 2.5 to 3 times larger than in the standard mortgage market, though the work load involved in writing an HECM is much the same.
Some years ago, I decided to invest the money I had made in a moderately successful business venture in developing and maintaining a website to help consumers deal with home mortgages, later extended to reverse mortgages. My partners in this effort were Daryl Tubbs, Jack Pritchard and Allan Redstone. As I became aware of how and why the reverse mortgage market was so dysfunctional, I also realized that some of the tools my colleagues and I had developed to improve decision-making, if deployed more widely, could substantially improve the market. This article summarizes our game plan, which requires help from a number of quarters.
Establishing an Identity: Our approach to fixing the dysfunctional HECM market is to create an identifiable segment of the market that is functional, which over time will replace the segment that is not. For this to work, the new segment must have an easily recognizable identity that is associated with the features that distinguish it from the dysfunctional segment. Thus was born the “Kosher HECM,” with apologies to my Orthodox Jewish friends, for whom the term kosher means so much more.
read more: https://knowledge.wharton.upenn.edu/article/kosher-hecms-fixing-a-dysfunctional-reverse-mortgage-market/
People reaching retirement age are living longer than ever, and retiring with less capacity to maintain their living standards. The Center for Retirement Research at Boston College estimates that more than half of the households entering retirement “may be unable to maintain their standard of living in retirement.”
Yet a sizeable segment of retirees have equity in a home that could generate additional funding through the use of a Home Equity Conversion Mortgage – the only variety of reverse mortgage insured by the federal government. The HECM program is well-designed and provides options for meeting a wide variety of retirees’ financial needs. Yet few seniors use it. At current rates, only about 60,000 HECMs will be written in 2015, which is a drop in the bucket compared to the need. To put this in perspective, about 3 million homeowners turn 65 every year.
The stunted growth of the HECM program mainly reflects market failure, as opposed to a considered preference by senior homeowners not to participate. For reasons explored in my working paper titled, “HECM Reverse Mortgages: Is Market Failure Fixable?,” the HECM market is the most dysfunctional and least competitive of all the major financial service markets. Lenders don’t display their prices anywhere, and borrowers don’t price shop. Most originators always charge the maximum origination fee allowed by law, regardless of how much they are making on the transaction. Markups are 2.5 to 3 times larger than in the standard mortgage market, though the work load involved in writing an HECM is much the same.
Some years ago, I decided to invest the money I had made in a moderately successful business venture in developing and maintaining a website to help consumers deal with home mortgages, later extended to reverse mortgages. My partners in this effort were Daryl Tubbs, Jack Pritchard and Allan Redstone. As I became aware of how and why the reverse mortgage market was so dysfunctional, I also realized that some of the tools my colleagues and I had developed to improve decision-making, if deployed more widely, could substantially improve the market. This article summarizes our game plan, which requires help from a number of quarters.
Establishing an Identity: Our approach to fixing the dysfunctional HECM market is to create an identifiable segment of the market that is functional, which over time will replace the segment that is not. For this to work, the new segment must have an easily recognizable identity that is associated with the features that distinguish it from the dysfunctional segment. Thus was born the “Kosher HECM,” with apologies to my Orthodox Jewish friends, for whom the term kosher means so much more.
read more: https://knowledge.wharton.upenn.edu/article/kosher-hecms-fixing-a-dysfunctional-reverse-mortgage-market/
Tuesday, August 25, 2015
The Loan Program With Today’s Lowest Mortgage Rates
TODAY'S LOWEST MORTGAGE RATES ARE VA
With today's low mortgage rates low, it's getting cheaper to finance a home for purchase or refinance.
Purchasing power is higher by 6% as compared to last year, which has added $6,000 to a buyer's maximum purchase price for every $100,000; and, low rates have put 6.5 million U.S. homeowners within striking distance to refinance.
Freddie Mac reports 30-year mortgage rates below 4% nationwide, but the lowest rates are those linked to the VA Loan Guaranty program.
Backed by the Department of Veterans Affairs, the VA loan program's mortgage rates are cheapest among the most common mortgage loan types for the 15th straight month.
Conventional loans, which include all loans backed by Fannie Mae and Freddie Mac, also for the 15th consecutive month, were the highest of all mortgage rates.
VA MORTGAGE RATES 0.27% BELOW CONVENTIONAL RATES
Want to lock the lowest mortgage rate out there? Start your search with the VA Loan Guaranty program.
According to Ellie Mae, which handles more than 3.5 million mortgage applications annually via its software, VA mortgage rates beat rates for comparable loan programs via other agencies of the government month after month after month.
Ellie Mae's July Origination Insight Report puts the average mortgage rate on a closed VA loan 27 basis points (0.27%) below the average rate for a conventional loan, marking the second-biggest discount in 12 months.
July's next-lowest mortgage rates were linked to loans insured by the Federal Housing Administration (FHA). FHA mortgage rates beat conventional ones by 12.5 basis points (0.125%), on average.
"Effective" FHA mortgage rates remain near their lowest in recorded history. It's never been cheaper to use FHA financing to buy or refinance a home.
By contrast, conventional mortgage rates averaged over 4.36% in July -- the highest reading this year and, as astute observers will notice, a rate which is substantially higher than conventional rates as reported by another rate-tracking survey, the Freddie Mac Primary Mortgage Market Survey.
There's actually a good reason for this.
see more at : http://themortgagereports.com/18059/loan-ellie-mae-va-mortgage-interest-rates
With today's low mortgage rates low, it's getting cheaper to finance a home for purchase or refinance.
Purchasing power is higher by 6% as compared to last year, which has added $6,000 to a buyer's maximum purchase price for every $100,000; and, low rates have put 6.5 million U.S. homeowners within striking distance to refinance.
Freddie Mac reports 30-year mortgage rates below 4% nationwide, but the lowest rates are those linked to the VA Loan Guaranty program.
Backed by the Department of Veterans Affairs, the VA loan program's mortgage rates are cheapest among the most common mortgage loan types for the 15th straight month.
Conventional loans, which include all loans backed by Fannie Mae and Freddie Mac, also for the 15th consecutive month, were the highest of all mortgage rates.
VA MORTGAGE RATES 0.27% BELOW CONVENTIONAL RATES
Want to lock the lowest mortgage rate out there? Start your search with the VA Loan Guaranty program.
According to Ellie Mae, which handles more than 3.5 million mortgage applications annually via its software, VA mortgage rates beat rates for comparable loan programs via other agencies of the government month after month after month.
Ellie Mae's July Origination Insight Report puts the average mortgage rate on a closed VA loan 27 basis points (0.27%) below the average rate for a conventional loan, marking the second-biggest discount in 12 months.
July's next-lowest mortgage rates were linked to loans insured by the Federal Housing Administration (FHA). FHA mortgage rates beat conventional ones by 12.5 basis points (0.125%), on average.
"Effective" FHA mortgage rates remain near their lowest in recorded history. It's never been cheaper to use FHA financing to buy or refinance a home.
By contrast, conventional mortgage rates averaged over 4.36% in July -- the highest reading this year and, as astute observers will notice, a rate which is substantially higher than conventional rates as reported by another rate-tracking survey, the Freddie Mac Primary Mortgage Market Survey.
There's actually a good reason for this.
see more at : http://themortgagereports.com/18059/loan-ellie-mae-va-mortgage-interest-rates
Tuesday, August 18, 2015
How retirees can benefit from reverse mortgages
You may have heard of reverse mortgages through Fred Thompson's ubiquitous daytime television ads, but you may not know much about them or how they work. So let us take over for Fred and explain them in detail.
In essence, the reverse mortgage is a variation of a home equity loan that is used to provide income during the retirement years. You are borrowing a certain amount of money using the equity in your house as collateral. The difference is that with a reverse mortgage, repayment is not required until the borrower passes away, chooses to sell the home, or permanently moves out of the home. At that time, the home is sold to repay the loan plus accrued interest and other charges. Any surplus from the sale beyond these costs is remitted to the borrower or his/her estate.
Fixed-rate reverse mortgages must be tapped as a lump sum, while variable-rate loans may be structured as regular payments or as an available line of credit.
To qualify, you must be at least 62 years old, own your home outright or have sufficient equity in the home (usually 50 percent or greater), and live in the home as your primary residence. Additionally, the loan requires that you pay all applicable property taxes and regularly maintain the home.
As a safeguard against borrowers overextending themselves, new rules as of April 27, 2015, require lenders to review the borrower's finances prior to approval to ensure that the borrower has enough stable income to pay those ongoing costs. Lenders must assess your "capacity to pay" via income, and your "willingness to pay" via your history of recent payments. Have this proof in hand when you apply.
see more: http://www.thedenverchannel.com/financial-fitness/how-retirees-can-benefit-from-reverse-mortgages
In essence, the reverse mortgage is a variation of a home equity loan that is used to provide income during the retirement years. You are borrowing a certain amount of money using the equity in your house as collateral. The difference is that with a reverse mortgage, repayment is not required until the borrower passes away, chooses to sell the home, or permanently moves out of the home. At that time, the home is sold to repay the loan plus accrued interest and other charges. Any surplus from the sale beyond these costs is remitted to the borrower or his/her estate.
Fixed-rate reverse mortgages must be tapped as a lump sum, while variable-rate loans may be structured as regular payments or as an available line of credit.
To qualify, you must be at least 62 years old, own your home outright or have sufficient equity in the home (usually 50 percent or greater), and live in the home as your primary residence. Additionally, the loan requires that you pay all applicable property taxes and regularly maintain the home.
As a safeguard against borrowers overextending themselves, new rules as of April 27, 2015, require lenders to review the borrower's finances prior to approval to ensure that the borrower has enough stable income to pay those ongoing costs. Lenders must assess your "capacity to pay" via income, and your "willingness to pay" via your history of recent payments. Have this proof in hand when you apply.
see more: http://www.thedenverchannel.com/financial-fitness/how-retirees-can-benefit-from-reverse-mortgages
Friday, August 14, 2015
Average rate on 30-year mortgage edges up to 3.94%
WASHINGTON (AP) — Average long-term U.S. mortgage rates edged up this week after three straight weeks of declines. The key 30-year loan rate remained under 4%.
Mortgage giant Freddie Mac said Thursday the average rate on a 30-year fixed-rate mortgage rose to 3.94% from 3.91% a week earlier. The rate on 15-year fixed-rate mortgages increased to 3.17% from 3.13%.
A solid U.S. employment report for July out last Friday — with employers adding 215,000 jobs and the jobless rate steady at 5.3 percent — means there’s a strong chance that the anticipated interest rate increase by the Federal Reserve will occur next month. The Fed has kept its key short-term rate near zero since the financial crisis year 2008.
However, China’s sharp and sudden devaluation of its currency against the dollar this week could complicate the Fed’s decision on timing of a rate increase. The rising dollar has been hurting U.S. exporters by making their goods costlier abroad. By making Chinese goods comparatively cheaper in the United States, a weaker yuan would push already-low U.S. inflation even lower.
The Fed wants to be “reasonably confident” that inflation is returning to its 2% target before raising rates. Inflation has risen just 1.3% in the past 12 months.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1%of the loan amount.
read more: http://www.usatoday.com/story/money/personalfinance/2015/08/13/mortgage-rates/31637993/
Mortgage giant Freddie Mac said Thursday the average rate on a 30-year fixed-rate mortgage rose to 3.94% from 3.91% a week earlier. The rate on 15-year fixed-rate mortgages increased to 3.17% from 3.13%.
A solid U.S. employment report for July out last Friday — with employers adding 215,000 jobs and the jobless rate steady at 5.3 percent — means there’s a strong chance that the anticipated interest rate increase by the Federal Reserve will occur next month. The Fed has kept its key short-term rate near zero since the financial crisis year 2008.
However, China’s sharp and sudden devaluation of its currency against the dollar this week could complicate the Fed’s decision on timing of a rate increase. The rising dollar has been hurting U.S. exporters by making their goods costlier abroad. By making Chinese goods comparatively cheaper in the United States, a weaker yuan would push already-low U.S. inflation even lower.
The Fed wants to be “reasonably confident” that inflation is returning to its 2% target before raising rates. Inflation has risen just 1.3% in the past 12 months.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1%of the loan amount.
read more: http://www.usatoday.com/story/money/personalfinance/2015/08/13/mortgage-rates/31637993/
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