Home Improvements that Pay You Back

Mortgage Update

Interest Rate Update

Interest rates have eased down a tiny bit over the last few weeks. Some "experts" say rates could dip down again for a short period of time to keep the housing market moving.

Back From The Brink

Provisions of the Dodd-Frank Law

Lots of new regulations and guidelines go into effect today. Lots of talk about how it will make loans harder to get but in reality there should not be much of a change. More paperwork of course but that should be the extent of it. There are some new calculations limiting maximum fees that can be charged but that will only effect those lenders that overcharge anyway. There is some new requirements that deal with a persons Ability to Repay the loan but again most of that has already been worked into the underwriting process.

How Does This Affect You ?

Ask questions and discuss what is going on in the industry. The biggest problem we continue to see is sourcing of monies. Because of the Anti-Money Laundering guidelines lenders contin-ue to hammer on sourcing deposits, meticulous paperwork trail of money transfers, and continu-ally needed the "most current" statements and printouts. When talking with prospective buyers make them aware they have to be on financial lockdown until the process is complete.

30 Year Fixed up to $417,000	4.125% to 4.50%
30 Year Fixed "Agency" up to $625,500	4.375% to 4.625%
30 Year Fixed FHA up to $417,000	3.75% to 4.25%
30 Year Fixed FHA "Jumbo" up to $729,500	3.875% to 4.25%

Market Matters

Adjustable-rate mortgages regain popularity as prices, rates rise Source: LA Times   Adjustable-rate mortgages are again gaining in popularity despite practically vanishing during the housing bust. Since home prices and interest rates rose last year, more people have turned to adjustable mortgages to keep their monthly payments affordable, with such mortgages offering a lower initial rate. However, the rate can rise over time with market changes. Read the full story  Housing Market 2014: What Buyers, Sellers Should Brace for Now Source: AOL   Experts contend that higher mortgage rates and increased inventory in 2014 along with looser mortgage lending standards will be key factors to prepare for in the new year. Some expect higher prices to lead investors out of the market. Read the full story

Mortgage Rate Swings May Mean “Bumpy” 2014 Housing Market Source: Wall Street Journal Experts posit that an important trend could continue in 2014 due to the inversely proportional relationship between the average of mortgage interest rates and new-home sales. Simply put, as interest rates go up, demand from would-be homeowners drops, and if rates change significantly, then the 2014 housing market will feel the effects. Making sense of the story During 2013, increases in mortgage rates corresponded with declines in home buying, and in light of shifts in the Federal Reserve’s monetary stimulus effort, the trend is expected to continue. When the Fed first announced it would consider scaling back its bond-buying program, mortgage interest rates spiked in May. As a result, the seasonally adjusted annual rate of new home sales dropped by 4 percent from the prior month. In contrast, mortgage rates dropped by three-tenths of a percentage point during October just as new home sales surged 18 percent. In mid-December, the Fed announced that it will begin tapering its asset purchase program, but the Fed is only reducing its monthly buys of mortgage securities and Treasuries by just $10 billion. If mortgage interest rates increase a little, some analysts have stressed that further rate increases will see the recovery slow rather than reverse. The interest rate on U.S. Treasury notes is also increasing, which could signal higher interest rates ahead because it is used as a reference point for the cost of borrowed money for U.S. consumers and businesses. Read the full story

Talking Points … According to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.), seasonal factors, combined with shrinking housing affordability, cooled California pending home sales from both the previous month and year in November. C.A.R.’s Pending Home Sales Index (PHSI) indicates that pending home sales dropped 13.6 percent in November to 93.8, down from a revised 108.6 in October, based on signed contracts. Pending sales were down 9.4 percent from the 103.5 index recorded in November 2012. Distressed sales were down by nearly two-thirds from a year ago, when the share was 35.4 percent.  Twenty-one of the 38 reported counties showed a month-to-month decrease in the share of distressed sales, with Santa Clara County having the lowest share at 4 percent.

Newsline

S&P/Case-Shiller Home Price Indices Rise in Third Quarter Data through September 2013, released by S&P Dow Jones Indices for its S&P/Case-Shiller Home Price Indices showed that the U.S. National Home Price Index rose 3.2 percent in the third quarter of 2013 and 11.2 percent over the last four quarters. In September, the 10- and 20-City Composites gained 0.7 percent month-over-month and 13.3 percent year-over-year. While 13 of 20 cities posted higher year-over-year growth rates, 19 cities had lower monthly returns in September than August. More info Building Permits Rise in October Building permits for single-family houses rose 0.8 percent in October to a rate of 620,000, according to the U.S. Census Bureau and the Dept. of Housing and Urban Development jointly announced this week. Authorizations of units in buildings with five units or more were at a rate of 387,000 in October. The Census Bureau and HUD were not able to gather data to report housing starts in October due to the lapse in federal funding during the government shutdown. More info California Pending Home Sales Higher in October California pending home sales reversed a two-month decline to post higher in October, but were down from a year earlier, C.A.R. recently reported. California pending home sales rose in October, with the Pending Home Sales Index climbing 2.5 percent in October to 109.3, up from 106.7 in September, based on signed contracts.  The monthly increase was considerably greater than the average September-to-October change of 0.7 percent over the past five years.  Pending sales were down 9.9 percent from the 121.2 index recorded in October 2012.  Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market. The share of equity sales – or non-distressed property sales – dipped slightly in October, but still made up more than eight in 10 sales, marking the fourth straight month that equity sales have been more than 80 percent of total sales. The share of equity sales in October dipped to 85.5 percent, down from 85.7 percent in September.  Equity sales made up 63.2 percent of sales in October 2012. The combined share of all distressed property sales edged up slightly in October, inching up to 14.5 percent, up from 14.3 percent in September but down sharply from 36.8 percent in October 2012.  However, 16 of the 38 reported counties showed a month-to-month decrease in the share of distressed sales, with San Mateo County having the lowest share at 3 percent. More info U.S. House Prices Rise in Third Quarter Home prices nationwide rose 2 percent in the third quarter compared with the second quarter, according to the Federal Housing Finance Agency (FHFA) House Price Index. This is the ninth consecutive quarterly price increase in the purchase-only, seasonally adjusted index and marks the first time since 2009 that the national house price level is higher than it was five years ago. The HPI is calculated using home sales price information from mortgages sold to or guaranteed by Fannie Mae and Freddie Mac. Compared with last year, house prices rose 8.4 percent from the third quarter of 2012 to the third quarter of 2013. FHFA’s seasonally adjusted monthly index for September was up 0.3 percent from August. Significant Findings: The seasonally adjusted, purchase-only HPI rose in 48 states and in the District of Columbia during the third quarter. Top 5 in annual appreciation: 1) Nevada 2) California 3) Arizona 4) Florida and 5) Washington. Of the nine census divisions, the Pacific division experienced the strongest increase in the latest quarter, posting a 4.2 percent increase and a 19.2 percent increase since last year. House prices were weakest in the East South Central division, where prices increased 0.8 percent from the prior quarter. As measured with purchase-only indexes for the 100 most populated metropolitan areas in the U.S., third quarter price increases were greatest in the Stockton-Lodi, Calif. Metropolitan Statistical Area (MSA), where prices increased 8.3 percent. Prices were weakest in the Virginia-Beach-Norfolk-Newport News, VA-NC MSA, where they fell 2.2 percent. Over the past year, only one MSA —Winston-Salem, NC — had a negative appreciation rate, and 11 of the 20 MSAs with the highest appreciation rates were in California. The monthly seasonally adjusted purchase-only index for the U.S. has increased for the last 20 consecutive months. More info Consumer Confidence Declines Again in November The Conference Board Consumer Confidence Index, which had decreased sharply in October, declined again in November. The Index now stands at 70.4 (1985=100), down from 72.4 in October. The Present Situation Index edged down to 72 from 72.6, and the Expectations Index declined to 69.3 from 72.2 last month. Consumers’ assessment of overall current conditions decreased slightly, with those claiming business conditions are “good” edging up to 19.9 percent from 19.5 percent, and those claiming business conditions are “bad” increasing to 25.2 percent from 23 percent. Consumers’ appraisal of the job market was little changed. Those saying jobs are “plentiful” ticked up to 11.8 percent from 11.6 percent, while those saying jobs are “hard to get” decreased slightly to 34.0 percent from 34.9 percent. More info Fast Facts Calif. median home price: October 2013:  California: $427,290 Calif. highest median home price by region/county October 2013: Marin, $959,740 Calif. lowest median home price by region/county October 2013: Glenn, $125,000 Calif. Pending Home Sales Index: October 2013: Increased 2.5 percent from 106.7 in September to 109.3 in October.   Calif. Traditional Housing Affordability Index: Third Quarter 2013: 32 percent (Source: C.A.R.) Mortgage rates: Week ending 11/27/2013 (Source: Freddie Mac) 30-yr. fixed: 4.29% fees/points: 0.7% 15-yr. fixed: 3.30% fees/points: 0.7% 1-yr. adjustable: 2.60% Fees/points: 0.4%

Turnaround Towns

Market Matters

White House Representative Speaks on Housing Finance Reform
Source: DSNews.com

Gene Sperling, director of the National Economic Council for the White House, recently discussed the president’s four major principles for housing finance reform at an industry symposium. Sperling emphasized maintaining widespread access to the 30-year, fixed-rate mortgage, and enhancing the role of private capital in the market.
Read the full story

New home sales surge in October
Source: The LA Times

The Commerce Department is reporting that sales of newly built single-family houses rose 25.4 percent from September to a seasonally adjusted annual rate of 444,000. Sales are up 21.6 percent in comparison to October 2012.
Read the full story

Mortgage loan quality improved in 2013 

Source: HousingWire

 

Home loan eligibility jumped to 96.44 percent in the first half of the year from 93.66 percent in 2012, according to a new report from compliance technology firm Quality Mortgage Services.
Read the full story

FHFA: Conforming Loan Limits Remain Unchanged
Source: DSNews.com

The Federal Housing Finance Agency has announced that the 2014 maximum loan limit for mortgages acquired by Fannie Mae and Freddie Mac will remain at $417,000 for one-unit properties in most areas of the country. There is a cap of $625,500 in high-cost areas.
Read the full story

Senate opens door for immediate housing finance reform
Source: The Hill
Due to the Senate’s elimination of the filibuster for presidential nominations, many experts believe Rep. Mel Watt (D-N.C.) finally will be as the next director of the Federal Housing Finance Agency, and with that change in leadership, there could be immediate major housing finance reform that provides greater access to the conventional housing finance market for a variety of buyers.
Read the full story

Key U.S. housing markets challenged by lack of multifamily builds
Source: HousingWire

The latest building permit numbers indicate there were 387,000 authorizations for new multifamily units in October, which is an increase from the past two months. However, experts argue the number is too low and that equity financing for apartment projects is not growing.
Read the full story

Southland home buyers shifting to condos as house prices rise
Source: The LA Times

Since home prices jumped in price this year, southern California home buyers purchased fewer single-family homes in October due to affordability concerns. However, since condos are an affordable path to homeownership in many urban areas, demand increased this year.
Read the full story

Market Matters

Bidding Wars Wane in U.S. Housing Markets on Supply Rise Source: Bloomberg  Higher mortgage rates and an increase in values are reducing affordability, while also encouraging more sellers to list their properties. This could mean price growth will slow after the biggest increases since 2006. The government shutdown may have weakened confidence as well. Read the full story

Young American adults aren't moving as much as they once did Source: The LA Times The lingering effects of the recession are evident in statistics from the Census Bureau, as young adults are stuck in place due to an inability to obtain sufficient credit and income to move to a new home or apartment. The share of moves fell back to 11.7 percent this year. Read the full story

Down Payments Continue to Decline in Third Quarter Source: DSNews.com Lenders appear to have more confidence to lend with less cash down from qualified borrowers, as down payment percentages for 30-year, fixed rate purchase mortgages continue to decline. A new report reveals that the average down payment has dropped 2.74 percent since Q2 2013, according to a study released by LendingTree. As home values improve, the risk of borrowers defaulting on loans has decreased, so lenders have adjusted minimum requirements to attract borrowers. Making sense of the story The average down payment on a 30-year, fixed-rate mortgage loan in the third quarter of this year was 15.73 percent. According to LendingTree, the national average loan amount for a mortgage loan originated in the third quarter was about $218,344. New Jersey (18.8 percent), California (18.6 percent), New York (18.0 percent), D.C. (17.9 percent), and Massachusetts (17.5%) top the list with the highest average down payment percentages. The lowest average down payment percentage in the third quarter took place in Nebraska, where down payments averaged 12.5 percent of loan values. South Dakota (12.8 percent), Arkansas (12.9 percent), and Alabama (12.9 percent) followed Nebraska in the next lowest down payments. They all average under 13 percent for the quarter. Missouri filled the No. 5 spot with an average down payment of 13.1 percent. D.C. ranked highest in loan amount with an average of $309,768 in the third quarter. Read the full story