Here is an interesting read that I came across, Fannie Mae home loan mortgage purchases fell 7% in August after an uptick in July. Purchases from lenders fell to the lowest level in two years. Fannie Mae reported Tuesday that it acquired $68.3 billion in mortgages in August, down from $73.4 billion in the prior month.
Loan commitments fell 18% from July to $51 billion in August. This is probably due to a lack of refinance applications. Loan commitments have not been low since July 2011.
Source: National Mortgage News
Geofrey Merino NMLS 317287 lending nationwide!
Thank You Congress
Once again, the United States Congress has warded off a major threat to the economy. For the past several months interest rates have been rising in response to the threat of the Federal Reserve Board starting to end one element of their stimulus program. For the past several years, the Fed has implemented an unprecedented program to bring down long-term interest rates by purchasing Treasury and Mortgage Backed Securities. Typically in response to a recession, the Fed lowers short-term borrowing rates but the recession of 2008 was so deep that they had to resort to extreme measures. For one thing, the secondary markets for home loans collapsed and without this targeted stimulus we would have been trying to overcome the subsequent foreclosure crisis within the real estate markets with financing for real estate at higher rates and more difficult to obtain.
Fast forward five years and we can see that the real estate markets are recovering from the crisis. The Federal Reserve Board has shown that they are now ready to ease off the pedal and the bond markets are reacting accordingly. Up steps Congress. When the Federal Reserve Board met two weeks ago, they were considering announcing the first step. But they hesitated. Why? The Fed felt at this point the economy is just not strong enough to take this first step, however small. And they did cite at least one threat to the economic recovery. What was that? A possible government shutdown because it appears Congress will go down to the wire with regard to the deadline to raise the debt limit. Simply stated, if we can’t borrow money, we can’t fund the government. We understand that Congress is likely to resolve or at least put off the disagreement. But that is not the point. By putting off the decision until the last minute once again they have again created an artificial threat that has caused rates to ease at least temporarily. Thanks, Congress! Meanwhile, this week the employment report will give us an important reading as to whether the Fed should have acted. A strong reading could cause rates to continue their climb while a weak reading could keep us where we are for now — or even trend lower.
What is the problem with mortgage rates rising? From the experts rates are going to slow down the economy surge we are expecting,
“It clearly is a risk to the housing outlook because everybody’s looking for housing, basically, to be the engine of growth going forward, and it’s obviously showing some early signs of pulling back. No surprise in the fact that interest rates are a bit higher,” Bank of America Merrill Lynch Senior U.S. Economist Michael Hanson said.
If anyone has been following on what has been going on with the foreclosure activity across the country, you probably have noticed that foreclosure activity has continued to slow in select markets. Arizona is a market that I am more focused in these days as my office is in Scottsdale, AZ. In Arizona, the foreclosure activity has slowed down and is down nearly 50% from a year ago. The state of Arizona is not in the ranks with California when it comes to foreclosure rate filings. According to Realty Trac’s latest report they are both out of the top ten list for foreclosures for the sixth consecutive month in July.
According to Daren Blomquist, Vice President of Realty Trac, banks have now caught up with the backlog of delayed foreclosures in states that may have a lengthy process with judicial foreclosures. The downside though, foreclosure filings are up 2% (130,888) this is an increase from a 78 month low in June but the good news is that we are down about 32% from a year earlier. People are still loosing their homes, what was the HARP programs good for?
Foreclosures starts have increased in 26 states from the June and were up in 15 states from a year ago. The states with the highest are Maryland, Oregon, New Jersey and Ohio.
“U.S. foreclosure activity in July is 64% below the peak of more than 367,000 properties with foreclosure filings in March 2010, but is still 54% above the historical average of 85,000 properties with foreclosure filings per month before the housing bubble burst in late 2006,” Blomquist explained.
Florida continues to the one of the nation’s highest foreclosure areas in the country. More homes are now from non-distressed homeowners. With the rise in interest rates, homeowners will have an advantage to continue gaining value in their homes so when more homes come available they will come with a price.
So when is the best time to by a home? It might have already passed by with these historical low rates. Can we say bubble . . .
MBS are down -20/32 (FNMA 30-yr 3.5 at 100.02), around 8/32 below morning levels, and near the low for the day. Unfavorable repricing took place. Stronger than expected global economic data and increased expectations for the Fed to begin to taper soon caused MBS to decline today. The economic news from Japan and Europe hinted at stronger future economic growth. In the US, the Retail Sales data came in very close to expectations. To investors, this means that the Fed is likely to remain on track to begin to scale back its bond purchase program in the next month or two. As each major economic report meets the consensus, fewer opportunities remain for unexpected weakness which could persuade the Fed to wait longer to taper. The Dow is up 30 points. Tomorrow, PPI will be released at 8:30 et.
On another topic, it is important to get your buyers a solid pre-approval because this will be the next buying power that they have on their side as the competition heats up.
Did you know that there were many home owners that lost there home to foreclosure during the work financial crisis in history. Well, those individuals are coming back to the market and it has been noticed that one in ten homes this year has been to those who had a foreclosure or a short sale according to John Burns, a national research firm on the housing industry.
|Afternoon Analysis: 08-07-13 04:00pm
|MBS are up +7/32 (FNMA 30-yr 3.5 at 100.28), around 5/32 above morning levels, and near the high for the day. Some favorable repricing was seen. A decline in stocks helped MBS drift higher today. No economic data was released. Demand was weaker than average for the 10-yr Treasury auction. The Dow is down 50 points. Tomorrow, Jobless Claims will be released at 8:30 et. The results from the 30-yr Treasury auction will come out around 1:00 et.
In the last 30 days or so the mortgage interest rate market took a beating as if things were perfect here at home, which after the Federal minutes the market took off for the holidays because mortgage rates surged higher. The efforts were grand that the Federal Reserve intensified its efforts to curb a growth-threatening rise in long term interest rates, Bloomberg reports.
“This is pretty obvious that the Fed was caught off guard by the market’s reaction given the lengths to which they have gone to reshape market expectations, “Drew Matus, deputy U.S. chief economist at UBS Securities, said, The range of borth speakers and outlets suggests that these comments are, if not coordinated then at least part of a collective — likely futile — effort to re-mold the market’s view of the June FOMC press conference.”
MBS are down -1/32 (FNMA 30-yr 3.5 at 101.14), around 13/32 above morning levels, and near the high for the day. Both favorable and unfavorable repricing took place. MBS prices began and ended near yesterday’s closing level, but there was a lot of quarter end volatility during the session. Today’s economic data had little impact. The Dow is down 60 points. For the week, MBS rose about 30/32.
The big story next week will be Friday’s Employment report. As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month, and it will carry even more weight than normal due to how it will influence Fed policy. Earlier in the week, ISM Manufacturing and Construction Spending will be released on Monday. Factory Orders will come out on Tuesday. ISM Services, ADP Employment, and the Trade Balance are scheduled for Wednesday. Mortgage markets will be closed on Thursday in observance of Independence Day.