Posts Tagged ‘mortgage rates’
NEW YORK (CNNMoney) — Renting used to be cheaper than buying. But in many U.S. cities that’s no longer the case, as rents continue to climb and home prices stagnate.
While asking prices for homes declined 0.7% over the past 12 months through March, rents rose 5%, according to a report released Thursday by real estate listing site Trulia.
“Buying a home is more affordable than renting now in almost every part of the United States,” said Jed Kolko, chief economist for Trulia.
Several metro areas recorded double-digit percentage increases in rental rates.
In Sarasota, Fla., the average rent jumped 12.9% year-over-year, the biggest increase of any of the 100 largest metro areas Trulia surveyed.Miami and San Francisco saw the next biggest increases, with rent hikes of 12.1% and 11.1%, respectively.
The metro areas that sustained the highest rent increases were a decidedly mixed bag, but obviously shared one factor: rising demand for a limited supply of rental units.
The national vacancy rate for apartments fell 0.3 percentage points during the first quarter to 4.9%, its lowest point since late 2001, according to a separate report from Reis Inc., a real estate research firm. With such limited availability, it has put pressure on rentals of all types.
In cities like Miami that were hit hard by the housing bust and recorded a high number of foreclosures, all of the displaced residents have to live somewhere.
Other cities have put constraints on the construction of new multi-family housing, thereby limiting supply. For example, in San Francisco, where the median rent is a whopping $2,625, there are few tracts of land available to develop, raising demand for housing and pushing rents there higher.
Several Rust-Belt cities also saw large rent increases in the past year, including Indianapolis, where rents went up 9.7%, and Columbus, Ohio, where they jumped 9.3%.
These cities have seen big gains in the industrial sector, which have led to a growing number of jobs and higher rents, said Kolko. As hiring levels off, he does not expect the big rent increases to continue.
Meanwhile, asking prices for homes nationwide crept lower over the past 12 months, according to Trulia.
That, along with record low mortgage rates, has made buying a home more affordable than it’s ever been and a bargain compared to renting. However, many Americans will not be able to seize this historic opportunity to become homeowners, said Kolko.
Unemployed, too broke to come up with a down payment or with credit scores too battered to qualify for a mortgage, many people simply cannot qualify to buy a home right now, according to Kolko
With fewer consumers able to make the leap into homeownership, rents could continue to climb higher, he said. 
Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.
The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.
Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.
However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability. Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.
Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”
In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.
While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.
Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generation actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.
DENVER — Colorado Attorney General John Suthers announced today that Colorado has joined a $25 billion multistate settlement with the five largest national banks, Bank of America, JPMorgan Chase, Wells Fargo, Citi and Ally, who account for 60 percent of the home loan servicing market, to end problematic business practices and to help distressed homeowners. The settlement — the second largest multistate consumer protection settlement — will deliver $204.6 million worth of relief for Colorado homeowners.
Under the terms of the settlement, Colorado, which served on the executive committee that oversaw the settlement negotiations, will receive:
- $73.3 million that will be available to grant principal reductions on loans to make a modification possible. Approximately 40 percent of these funds will also be available to ease the effects of foreclosure, including waiving deficiency balances, enhanced cash-for-keys payments and blight prevention;
- $52.5 million in cash to the state;
- $46.3 million worth of refinancing benefits to underwater borrowers; and,
- $32.49 million in payments to homeowners who lost their homes to foreclosure between January 1, 2008 and December 31, 2011.
Nationally, the banks have agreed to:
- Commit a minimum of $17 billion directly to borrowers through a series of national homeowner relief options, including principal reduction. Given how the settlement is structured, servicers will actually provide up to an estimated $32 billion in direct homeowner relief.
- Commit $3 billion to a mortgage refinancing program for borrowers who are current, but owe more than their home is currently worth.
- Pay $5 billion to the states and federal government ($4.25 billion to the states and $750 million to the federal government).
- Provide homeowners with comprehensive new protections through new mortgage loan servicing and foreclosure standards.
- Be overseen by an independent monitor will ensure mortgage servicer compliance.
“This agreement delivers real help to homeowners affected by the banks’ dual tracking and other improper mortgage- and foreclosure-related processes,” Suthers said. “As a result of this settlement, the banks will end a series of problematic processes that put homeowners at a severe disadvantage during the foreclosure process. This settlement will not solve every problem with the housing market, but it goes a long way to helping homeowners in distress now and leveling the playing field for consumers.”
The settlement is the second largest multistate consumer protection enforcement settlement after the 1998 tobacco litigation settlement. This agreement is the result of a massive civil law enforcement investigation and initiative that includes state attorneys general and state banking regulators across the country and nearly a dozen federal agencies. It holds banks accountable for past mortgage servicing and foreclosure fraud and abuses and provides relief to homeowners. With the backing of a federal court order and the oversight of an independent monitor, the settlement stops future fraud and abuse.
Customers of the five settling banks who lost their homes to foreclosure between January 1, 2008 and December 31, 2011may be eligible for restitution under the settlement. The independent, third-party administrator of the settlement hopes to contact affected victims by the end of the summer. Customers of the five settling banks who are still in their homes but either behind on their payments or underwater should contact the banks directly through dedicated toll-free contact numbers to determine if they are eligible for assistance:
- Bank of America - 1-877-488-7814
- Chase - 1-866-372-6901
- Citi - 1-866-272-4749
- GMAC/Ally - 1-800-766-4622
- Wells Fargo – 1-800-288-3212
The Office of the Attorney General will work with the Governor’s Office and the General Assembly to ensure that the $52.5 million Colorado directly receives under the settlement will be used for purposes including foreclosure prevention, housing-counseling services, additional legal services for distressed homeowners, promotion of loan-modification opportunities and anti-blight efforts.
The settlement changes the way the banks do business. Under the agreement, the banks will be required to stop the use of robo-signing, end the process of dual tracking of loans, provide a single point of contact for consumers as they move through the loan-modification processes, create an online portal for consumers to get information about where they are in the loan-modification process, and abide by a strict set of deadlines for dealing with loan modifications. The settlement also requires that the banks post payments they receive to homeowners’ accounts within two business days of receiving them.
The foreclosure practices of the banks will be subject to strict oversight by an independent monitor who will provide regular reports to the participating states. The banks will be subject to stiff fines if they violate the terms of the agreement.
The settlement does not grant any immunity from criminal offenses and will not affect criminal prosecutions. The agreement does not prevent homeowners or investors from pursuing individual, institutional or class action civil cases against the five servicers. The pact also enables state attorneys general and federal agencies to investigate and pursue other aspects of the mortgage crisis, including securities cases.
Consumers interested in learning more about the multistate agreement can visit www.NationalMortgageSettlement.com orwww.coloradoattorneygeneral.gov/mortgagesettlement.
If consumers believe they have been affected by the banks’ problematic processes or have experienced any form of foreclosure fraud, they can file a complaint at www.coloradoattorneygeneral.gov/complaint. To learn more about Colorado’s ongoing fight against mortgage and foreclosure fraud, visit the Office of the Attorney General’s Mortgage Fraud Information Center.
Homeowners facing foreclosure also should contact the Colorado Foreclosure Hotline at 1-877-601-4673 or visitwww.coloradoforeclosurehotline.org. The hotline works with homeowners in or facing foreclosure. Homeowners who call the free hotline can speak with a housing counselor about their options.
The average rate on the 30-year fixed mortgage dropped to the lowest since records have been kept, creating a tempting target for people to refinance their homes.
Freddie Mac said Thursday the average rate on the 30-year fixed mortgage hit 3.87 percent, down from 3.98 percent the prior week. That’s below the previous record of 3.88 hit two weeks ago.
The average on the 15-year fixed mortgage fell to 3.14 percent, also a record low. Records for mortgage rates
date back to the 1950s.
Mortgage rates tend to track the yield on the 10-year Treasury note, which fell below 1.9 percent this week.
Mortgage rates have hovered near 4 percent for the past three months, and have perhaps contributed to a slight improvement in the housing market. But many homeowners remain underwater and the pipeline of foreclosures continues to be huge, putting heavy pressure on housing prices.
High unemployment and scant wage gains have made it harder for many people to qualify for loans. Many don’t want to sink money into a home that they fear could lose value over the next few years.
Sales of previously occupied homes were dismal last year. New-home sales in 2011 were the worst on records going back half a century.
Builders are hopeful that the low rates could boost sales next year. But so far, they have had a minimal impact.
Mortgage applications have risen slightly over the past four weeks, according to the Mortgage Bankers Association. But they are coming off extremely low levels.
To calculate the average rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.
The average rates don’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for the 30-year loan rose to 0.8 from 0.7; the average on the 15-year fixed mortgage was unchanged at 0.8.
For the five-year adjustable loan, the average rate fell to 2.80 percent from 2.85 percent. The average on the one-year adjustable loan rose to 2.76 percent from 2.74 percent.
The average fee on the five-year adjustable loan rose was unchanged at 0.7; the average on the one-year adjustable
The Associated Press contributed to this report.
The housing sector will likely take incremental steps forward in 2012, though total originations will fall on fewer refinances, according to economists at Fannie Mae.
The second half of the year should outpace the first six months in terms of growth, though fiscal policy and political uncertainty in Washington will likely drive consumer and business activity, the mortgage giant said.
Chief Economist Doug Duncan said positive consumer activity and challenges in housing and the global economy will equate to moderate growth for the year.
“We’re entering 2012 with decent momentum, especially on the employment side, which is fostering positive household and consumer behavior,” Duncan said in a release. “Unfortunately, we expect this momentum to slow as we move through the first half of the year.”
The report released Friday forecast total home sales to increase 3.5% to about 4.74 million in 2012 from 2011 with another 5% gain in 2013 to nearly 5 million. New home sales could jump 10.4% for 2012.
The Federal Housing Finance Agency home sales price index, excluding refinances, could dip 1.1% for 2012 from a year before, according to the forecast. Economists predicted the 2011 index would finish 4.6% lower than 2010.
Mortgage originations as dollar volume could see a decline as well in 2012, largely on a steep drop in refinances. The Fannie report said total originations will fall to $1.01 trillion in 2012 from a predicted final 2011 tally of $1.36 trillion. Economists expected refinancing to plummet to $540 billion from $894 billion.
Purchase mortgages, however, will rise to $471 billion in 2012 from a estimated 2011 total of $464, according to the report.
Total single-family outstanding mortgage debt will likely drop 1.3% to $10.14 trillion in 2012.
For the U.S. economy as a whole, Fannie researchers predicted real GDP would increase 3.3% in the fourth quarter to finish the year at 1.7% growth. Economists forecast 2.3% GDP growth for 2012 and 2013.
Write to Andrew Scoggin.
Follow him on Twitter @ascoggin.
Freddie Mac recently released the results of its Primary Mortgage Market Survey®, showing mortgage rates easing to new all-time record lows for all products covered in the survey helping to keep homebuyer affordability high. The average for the 30-year fixed mortgage rate has been below 4.00 percent for six consecutive weeks.
The survey concluded that the 30-year fixed-rate mortgage averaged 3.89 percent, with an average 0.7 point for the week ending January 12, 2012, down from last week when it averaged 3.91 percent. Last year at this time, the 30-year FRM averaged 4.71 percent.
The 15-year FRM this week averaged 3.16 percent with an average 0.8 point, down from last week when it averaged 3.23 percent. A year ago at this time, the 15-year FRM averaged 4.08 percent.
Additionally, the 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.82 percent this week, with an average 0.7 point, down from last week when it averaged 2.86 percent. A year ago, the 5-year ARM averaged 3.72 percent.
Results showed that the 1-year Treasury-indexed ARM averaged 2.76 percent this week with an average 0.6 point, down from last week when it averaged 2.80 percent. At this time last year, the 1-year ARM averaged 3.23 percent.
“Mortgage rates eased slightly this week to all-time record lows following mixed indicators in the labor market,” says Frank Nothaft, the vice president and chief economist of Freddie Mac. “Although the economy added 1.6 million jobs in 2011, which was the most since 2006, the unemployment rate remained historically elevated.”
For more information, visit www.freddiemac.com
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