Mortgage Refinancing: Updating the Numbers
Numbers are certainly looking up as more than 170,000 homeowners have received permanent modifications according to a report released by Treasury officials. This was also up a few percentage points from last month’s numbers, which shows continued but slow progress with the government program.
Around 15.5 percent of the homeowners who applied for the program have managed to lock in permanent adjustments up from 11.5 percent a month earlier. Still, more than 835,000 homeowners are still lingering under temporary modifications. The program requires a trial period wherein homeowners are checked if they are able to make the reduced payments. This is also a time where banks gather documented and verified paperwork which establishes grounds for granting permanent modification.
The program allows troubled homeowners to reduce monthly mortgage payments by setting a ceiling on how much payment they make or around 31 percent of their pre-tax income. Industry numbers also show that the average mortgage modification reduces a homeowner’s mortgage payment by $500 or 36 percent.
However, qualifying for the trial program does not necessarily equate to long term modification. More than 90,000 homeowners have been approved for modification and are just waiting for the loan services approval. An equal number of those who applied or nearly 88,000 homeowners however have been denied because of failure to meet one of the criteria. Another 1,500 homeowners who had previously qualified for permanent modification have seen their new loans terminated.
The increase in numbers has only been due to government efforts of pressing banks into speeding up the process. Although the paces at which trial programs are being processed have been improving in the previous months, majority of homeowners still find themselves under temporary modification.
The government mortgage refinancing program was aimed at helping the million of homeowners in danger of losing their homes. However, months into the program, it has only reached a fraction of those it was originally meant for.
Reported by REOProteams
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Mortgage Rates Remain Below 5
For the third straight week, rates for 30 YR Fixed Rate Mortgages remained below the 5 percent level according to reports released by Freddie Mac this Thursday. Rates for 30 Yr FRM stood at 4.96 percent slightly up from the previous week’s 4.95 percent.
Other mortgage rates were also slightly up this week as 15 Yr FRM was at 4.33 percent a bit higher than the 4.32 percent a week earlier. 5 Yr ARMs also ticked higher, reports show rates stood at 4.09 percent up from the previous week’s 4.05 percent.
This, as some of the federal programs which have been responsible for keeping mortgage rates low are scheduled to end. Large amounts of government money have been pumped in to buy mortgage back securities in an effort to keep mortgage rates low and spur home buying.
December of last year saw mortgage rates drop to 4.71 percent the lowest since weekly reports were started. But the Federal Reserve’s program is slated to end at the end of this month raising fears that mortgage rates might spiral upwards after the program’s demise.
Rates have been hovering at the 5 percent levels ever since the fed pumped in trillions of dollars to buy MBS. Scheduled to end March 31 of this year, many analysts fear that rates could rise again. Some economists believe that mortgage rates are being kept artificially low and that gains in the housing sector could be compromised once some of the government programs end.
The government has been responsible for buying huge chunks of mortgage back securities and with the programs slated end, economist fear that the market may not be able to pick things up once the fed has left. But the Fed had signaled its intention to keep a close watch over things and keep its options open once mortgage rates start to begin their upward spiral.
Reported by REOProteams
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Bad Weather, Foreclosures Dampens Home Builder Confidence
It seems that some of the worst weather conditions being experienced in parts of country these past few months have not only put a chill into the homes of homeowners but has also placed a dent in home builder sentiment.
Bad weather have left prospective homebuyers knee deep in snow and too busy keeping themselves warm to go out and shop for a new home. The rising number of foreclosures has also left homebuilders facing fierce competition from previously owned homes. With some of these homes being sold at a fraction of their original values homebuyers have been scrambling to purchase these properties.
“The continual flow of distressed properties priced below the cost of production is having an adverse effect on new-home appraisals and also making it tough for builders’ customers to sell their existing homes,” said NAHB Chairman Bob Jones.
With the tide of foreclosures swamping the market with bargain priced homes, homebuilders are facing a hard time competing for home sales. Sales of previously owned homes still outnumber the numbers of newly built homes.
According to a report released by the National Association of Homebuilders this Monday, the housing market index this month dropped 2 points returning to January levels. The market index stood at 15 points, this report reflects the general sentiment of home builders in the country.
Figures below 50 points show a pessimistic outlook in the housing market. The market index has generally been below the 50 point market since the start of the real estate crisis. Homebuilder confidence last stood above the 50 point level on April of 2006.
Sales of newly built homes have stumbled the previous months. January posted the third consecutive drop in newly built home sales, dipping by 11 percent. Previously owned homesales didn’t do as good either as they dipped by 7 percent.
The cold months have been traditionally slow months for home sales. This gives homebuilders a glimmer of hope as home sales usually pickup during the spring. With the tax credit program extended till spring of this year, this and low mortgage rates might just be answer homebuilders are looking for.
Reported by REOProteams
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Applications for Mortgage Slightly Up this Week
According to a report released by the Mortgage Bankers Association this week, mortgage applications posted a slight gain of 0.5 percent for the week which ended March 5. Pending home sales and loan applications have always been a good indication of how the housing market would be moving in the following weeks or months.
This news comes as a relief as housing numbers during the past months has been mainly disappointing. However, much of the decline could be due to the fact that winter months are traditionally weak months for home sales. Still, declines were posted even after seasonally adjusted numbers.
The four week average for mortgage applications also showed encouraging figures as it also posted a small 0.8 percent increase. Helping some analyst post a rosier outlook for the future after continued reports of dismal number the past few months.
The drop in mortgage applications as some home buyers adopted a wait and see attitude after some programs like the $8,000 tax credit was extended in November. Other welcome developments include the government’s announcement that the home refinancing program would be in play until next year. Although most of the troubled homeowners have already applied for the refinancing program, continuing uncertainty about the state of the housing market could translate to new homeowners applying for the program.
The sale of previously owned homes continues to make up a large chunk of all new home sales. Homeowners have been quick to take advantage of the bargain prices. Other factors spurring home sales include low mortgage breaks and huge government funded programs aimed at homeowners.
The government has been responsible for keeping mortgage rates down. It has released billions of dollars in an effort to buy mortgage backed securities enabling these companies to offer lower mortgage rates.
Reported by REOProteams
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