FHA 30 year fixed mortgage rates
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Pending Sales of U.S. Existing Homes Rise 8.2%
More Americans than forecast signed contracts in May to buy previously owned homes, signaling the residential real estate market may be rebounding from a slump earlier in the year.
The index of pending home resales increased 8.2 percent from April after a revised 11 percent drop the prior month that was smaller than initially reported, the National Association of Realtors said today in Washington. Economists forecast a 3 percent increase, according to the median estimate in a Bloomberg News survey.
Falling home prices that make properties more affordable may be luring potential buyers into the market even as 9.1 percent unemployment and stringent loan terms hold back a fuller recovery for the industry. Final sales in May, which were at a six-month low, will probably be “the low point of the year,” NAR Chief Economist Lawrence Yun said last week.
“At such depressed levels, any increase is welcome,” Anika Khan, an economist at Wells Fargo Securities LLC in Charlotte, North Carolina, said before the report. “But we’re not at a pace that would give us solid activity in the housing market.”
Estimates for pending home sales ranged from a drop of 4.8 percent to an increase of 15 percent, according to 36 forecasts in the Bloomberg survey. Pending sales rose 16 percent from May 2010.
A separate NAR report on June 21 showed sales of previously owned homes, which make up about 96 percent of the market, dropped in May to the lowest level in six months. Purchases decreased 3.8 percent to a 4.81 million annual rate. The median price fell 4.6 percent from a year earlier.
Leading Indicator
Pending home sales are considered a leading indicator because they track contract signings. Purchases of existing homes are tabulated when a sale closes, typically a month or two later.
Following the June 21 report, NAR’s Yun told reporters that home sales should begin to rebound in coming months and that pending sales, based on not-yet-complete data, looked to be up around 15 percent for May.
Today’s report showed an 88.8 index level for pending home sales on a seasonally adjusted basis. A reading of 100 is consistent with the average level of contract activity in 2001, when record-keeping began, and coincides with “historically healthy” home-buying traffic, according to the NAR. The index last rose above 100 in April 2010 before falling two months later to the lowest level since the real estate agents’ group created the index.
The NAR said the May increase was the biggest monthly gain since November.
Western Gain
All four regions showed an increase in contract signings from a month earlier, led by a 13 percent gain in the western U.S.
Lennar Corp. (LEN) Chief Executive Officer Stuart Miller said last week he sees the first signs of “repair” in the market. The third-largest U.S. homebuilder by revenue reported second- quarter profit that beat analysts’ estimates on higher house prices and earnings at its distressed-investing unit.
“While it’s now well-documented that the expected spring selling season of 2011 simply did not materialize, it is beginning to feel like the worst days of the housing market are getting behind us,” Miller said during a June 23 call with analysts.
Housing, nonetheless, is having trouble gaining strength. The S&P/Case-Shiller index of home values in 20 cities fell 4 percent in April from a year earlier, the most in 17 months, the group said yesterday. From March to April, prices dropped 0.1 percent on a seasonally adjusted basis.
Federal Reserve Chairman Ben S. Bernanke said June 22 that “uncertainty” surrounding employment and the broader economy is “affecting people’s willingness to make the commitment to buy a house.”
New-home purchases declined in May for the first time in three months and prices also dropped, a Commerce Department report showed last week. Sales decreased 2.1 percent to a 319,000 annual pace. The median price fell 3.4 percent from the same month in 2010, the biggest 12-month drop since October.
To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net
Home Prices in 20 U.S. Cities Likely Fell in April
A backlog of foreclosures and falling sales indicate prices may decline further, discouraging builders from taking on new projects. Photographer: Joe Raedle/Getty Images
June 27 (Bloomberg) — John Taylor, an economics professor at Stanford University, talks about Federal Reserve monetary policy, the Taylor Rule and prospects for U.S. economic recovery. Taylor speaks with Tom Keene on Bloomberg Television’s “Surveillance Midday.” (Source: Bloomberg)
Home prices probably decreased in April, showing the housing market remains an obstacle for the U.S. recovery, economists said before a report today.
The S&P/Case-Shiller index of property values in 20 cities fell 4 percent from April 2010, the biggest year-over-year drop since November 2009, according to the median forecast of 30 economists surveyed by Bloomberg News. Other data may show consumer confidence held near a six-month low.
A backlog of foreclosures and falling sales indicate prices may decline further, discouraging builders from taking on new projects. The drop in property values and a jobless rate hovering around 9 percent are holding back consumer sentiment and spending, which accounts for 70 percent of the economy.
“Home prices remain incredibly bogged down by foreclosures and weak demand,” said Sean Incremona, a senior economist at 4Cast Inc. in New York. “The picture is unlikely to change much this year. Declining home prices and high unemployment are bad for confidence.”
The S&P/Case-Shiller index, based on a three-month average, is due at 9 a.m. New York time. Survey estimates ranged from declines of 4.9 percent to 3.5 percent. Values fell 3.6 percent in the 12 months to March.
The New York-based Conference Board’s consumer confidence gauge, due at 10 a.m., rose to 61 from 60.8 in May, according to the Bloomberg survey median. Estimates ranged from 55 to 66.7.
Fuel Costs
Some of the improvement probably reflects a drop in fuel costs. The average price of a gallon of regular gasoline fell to $3.57 on June 26, down from a May 4 price of $3.99 that was the highest in almost three years, according to AAA, the nation’s largest auto club.
The projected rise in confidence contrasts with other surveys in which Americans’ moods dimmed. The Bloomberg Consumer Comfort index dropped in the week ended June 19, the first decline in five weeks, and the Thomson Reuters/University of Michigan sentiment gauge fell more than forecast this month.
The Case-Shiller report may show home prices fell 0.2 percent in April from the prior month after adjusting for seasonal variations, the 10th straight decrease, according to the Bloomberg survey.
The year-over-year gauges provide better indications of trends in prices, the group has said. The panel includes Karl Case and Robert Shiller, the economists who created the index.
Shiller told a conference in New York this month that a further decline in property values of 10 percent to 25 percent in the next five years “wouldn’t surprise me at all.”
Fewer Sales
Reports earlier this month showed the housing market is yet to gain momentum. Sales of previously owned homes, which comprise about 94 percent of the market, were down 3.8 percent last month from April, the National Association of Realtors said.
Purchases of new houses dropped 2.1 percent in May, the first decline in three months, according to Commerce Department data. Competition from foreclosed homes is hurting demand for newly built dwellings.
The 1.8 million-unit inventory of distressed homes nationwide that may reach the market would take about three years to sell at the current pace, Daren Blomquist, communications manager at RealtyTrac Inc., said this month.
As house prices decline, owners feel less wealthy and home equity shrinks, making borrowing more difficult.
The Standard & Poor’s Supercomposite Homebuilding index lost 4.4 percent as of June 27 from the end of April, less than a 6.1 percent drop in the broader S&P 500 gauge, which was weighed down largely by concern about the European debt crisis.
Builder Outlook
Some developers expect demand to stabilize following a poor selling season. Lennar Corp. (LEN), the third-largest U.S. homebuilder by revenue, last week said second-quarter sales fell from a year earlier and home orders were little changed, while the average price climbed. The 2010 orders were boosted by a federal tax credit for homebuyers that required contracts be signed by April 30.
“While it’s now well documented that the expected spring selling season of 2011 simply did not materialize, it is beginning to feel like the worst days of the housing market are getting behind us,” Chief Executive Officer Stuart Miller said during a conference call with analysts on June 23.
Bloomberg Survey
================================================================
Case Shiller Cons. Conf
MOM% YOY% Index
================================================================
Date of Release 06/28 06/28 06/28
Observation Period April April June
----------------------------------------------------------------
Median -0.2% -4.0% 61.0
Average -0.2% -4.0% 61.0
High Forecast 0.4% -3.5% 66.7
Low Forecast -0.5% -4.9% 55.0
Number of Participants 17 30 70
Previous -0.2% -3.6% 60.8
----------------------------------------------------------------
4CAST Ltd. --- -4.1% 61.5
ABN Amro Inc. -0.1% --- 61.0
Action Economics --- --- 63.0
Aletti Gestielle SGR --- --- 60.0
Ameriprise Financial Inc --- --- 61.5
Banesto --- -4.1% 61.7
Bank of Tokyo- Mitsubishi --- --- 59.0
Bantleon Bank AG --- --- 60.0
Bayerische Landesbank --- -4.0% 62.0
BBVA --- -3.9% 60.8
BMO Capital Markets --- -4.4% 62.0
BNP Paribas --- --- 58.0
BofA Merrill Lynch Resear --- -3.9% 61.0
Briefing.com --- -3.8% 59.0
Capital Economics -0.4% -4.1% 65.0
CIBC World Markets --- -4.2% 62.5
Citi --- --- 61.0
Commerzbank AG --- -4.0% 60.0
Credit Agricole CIB --- --- 62.0
Credit Suisse --- -3.8% 55.0
Daiwa Securities America --- --- 62.0
DekaBank --- --- 61.5
Desjardins Group --- -3.9% 61.0
Deutsche Bank Securities --- --- 62.0
Exane --- --- 61.5
Fact & Opinion Economics --- -3.5% 59.0
First Trust Advisors --- --- 59.9
FTN Financial --- --- 60.0
Helaba --- --- 60.0
HSBC Markets -0.2% -3.9% 60.0
Hugh Johnson Advisors --- --- 60.5
IDEAglobal --- -4.0% 60.0
IHS Global Insight --- -3.9% 61.0
Informa Global Markets --- --- 61.0
ING Financial Markets -0.2% -3.9% 63.0
Insight Economics --- -3.9% 59.0
Intesa-SanPaulo --- --- 63.0
J.P. Morgan Chase -0.1% -3.8% 60.5
Janney Montgomery Scott L -0.3% -4.8% 62.0
Jefferies & Co. --- --- 62.0
Landesbank Berlin --- --- 58.0
Manulife Asset Management --- --- 61.0
Maria Fiorini Ramirez Inc --- --- 62.5
MF Global -0.5% -4.2% 60.5
Moody’s Analytics --- --- 59.0
Morgan Stanley & Co. --- --- 64.0
Natixis --- -4.0% 61.0
Nomura Securities Intl. --- -3.9% 59.8
Nord/LB --- --- 60.0
Parthenon Group -0.4% --- 59.7
Pierpont Securities LLC --- --- 64.0
PineBridge Investments 0.4% --- 61.5
Raiffeisenbank Internatio --- --- 62.0
RBC Capital Markets --- --- 62.0
RBS Securities Inc. --- --- 59.5
Scotia Capital --- --- 59.0
SMBC Nikko Securities -0.1% -3.8% 63.0
Societe Generale -0.2% --- 66.7
Standard Chartered -0.3% -4.8% 61.0
State Street Global Marke 0.1% -3.6% 60.1
Stone & McCarthy Research --- --- 62.5
TD Securities -0.5% --- 60.0
UBS -0.2% -3.9% 62.0
UniCredit Research --- -4.0% 61.0
Union Investment --- --- 61.8
University of Maryland -0.4% -4.1% 60.0
Wells Fargo & Co. --- --- 59.3
WestLB AG --- -4.9% 60.5
Westpac Banking Co. --- --- 60.5
Wrightson ICAP 0.0% --- 63.0
================================================================
To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net
Republicans propose increasing FHA down payment to 5%
The Republican led House Financial Services Committee has drafted legislation that would, among other things, raise the FHA down-payment requirement to 5 percent and prohibit borrowers from financing their closing costs.
The draft legislation, ‘‘FHA-Rural Regulatory Improvement Act of 2011’’, was discussed today in a House Subcommitte hearing entitled “Legislative Proposals to Determine the Future Role of FHA, RHS and GNMA in the Single-and Multi-Family Mortgage Markets”.
In a formal release, the House Financial Services Committee’s Republican Chairman Spencer Bachus touted the bill as a coming at an important time in history, “This hearing and legislative proposal come at a pivotal moment, as the Committee debates the future of the mortgage finance system, and in particular, government guarantee programs that could expose taxpayers to significant losses.”
Industry advocates were quick to respond to the proposal as a move in the wrong direction. Michael Berman, Chairman of the Mortgage Bankers Asssociation, explained that down-payments are not the best indicator of payment default. Berman said, “Recently, policymakers have focused on required minimum down-payments as a measure of what factors are necessary to create sound lending practices. While down-payment certainly impacts default risk, other compensating factors, particularly full documentation of conservative loan products, are more influential mitigating factors.”
Berman went on to share the MBA’s opinion on the matter, saying, “The current minimum down-payment of 3.5 percent for borrowers with credit scores of 580 or above and 10 percent for borrowers with credit scores of 579 and below permits borrowers to have appropriate “skin in the game” while providing credit-worthy homebuyers with an option for entering the purchase market. Maintaining the existing minimum down-payment requirements, while requiring strong underwriting standards, such as full documentation and income verification, allows borrowers to responsibly become, and stay, homeowners.”
The MBA isn’t the only industry group to oppose the down-payment hike. Ron Phillips, President of the National Association of Realtors, shared similar sentiments in his prepared remarks. “NAR strongly opposes increasing the down-payment for FHA. The correlation between down-payment and loan performance is significantly less important than the linkage to strong underwriting, which FHA continues to have. FHA’s foreclosure rate remains less than conventional mortgages, so we don’t believe changes to the down-payment would do anything but disenfranchise many creditworthy homebuyers”.
Not all feelings were mutual though. The Cato Institute, a D.C. think tank devoted to limiting government participation in free markets, believes a combination of poor credit history and low down-payment requirements have resulted in “tremendous losses” for private mortgage investors and the FHA. In its prepared testimony Cato said, “Given the relatively “safe” features of an FHA loan, we do not have to guess about loan characteristics driving the borrower into default. We know it is equity and credit history that drives losses.”
Cato outlined a variety of FHA program reforms it believes must be implemented immediately to ensure taxpayers are exposed to minimal risk. These reforms include:
- Immediately require a 5 percent cash down-payment on the part of the borrower.
- Require FHA to allow only reasonable debt-to-income ratios.
- Restrict borrower eligibility to a credit history that is equivalent to no worse than a 600 FICO score.
- Require pre-purchase counseling for borrowers with a credit history that is equivalent to a FICO score between 600 and 680.
- Require a 10 percent down-payment, immediately, for borrowers with a credit history equivalent to below a 680 FICO score.
Borrower eligibility should also be limited to borrowers whose incomes do not exceed 115 percent of median area income, so as to mirror the requirements of section 502(h)(2), as amended, of the Housing Act of 1949.
Besides raising the down-payment requirement, the proposed legislation would also cement the reduction of current “high-cost” loan limits. The maximum loan limits for Fannie Mae, Freddie Mac, and FHA are currently $417,000 with a temporary limit of up to $729,750 for one-unit properties in high-cost areas. The temporary high-cost area limit was first set in the Economic Stimulus Act of 2008, and was extended in subsequent legislation. It expires on September 30, 2011. Without the extension, the high-cost loan limit ceiling would revert back to the limits established under the Housing and Economic Reform Act (HERA), a maximum of $625,500 in high-cost areas.
The Obama administration already stated in its white paper that it will not support another extension of the higher loan limits, but the MBA believes the higher limits should be maintained until the housing market stabilizes and the private market shows more signs that demand has returned. MBA urged such legislation to be enacted well before October 1, 2011, in order to avoid certain market disruptions that will, because of rate locks, occur within 90 days of the current limits expiring. The National Association of Home Builders echoed that perspective.
NAHB First Vice Chairman Barry Rutenberg, a home builder from Gainesville, Fla., told the House Financial Services Subcommittee, “Counties across the country would see their loan limit reduced by tens of thousands of dollars, placing further downward pressure on home prices and impairing the ability of borrowers to use FHA-insured mortgages to purchase new homes,”
To keep FHA, Fannie Mae and Freddie Mac loan limits at their current levels, NAHB called on Congress to support H.R. 1754, the Preserving Equal Access to Mortgage Finance Programs Act, a bipartisan measure sponsored by Reps. Gary Miller (R-Calif.) and Brad Sherman (D-Calif.).
The draft legislative proposal will require a full Committee vote before it is formally introduced to be voted on by the entire house. Such measures would not be expected to pass the Senate.
Housing Price Stats: What will mean for fha mortgage rates
Home Prices Decreased last quarter and are expected to decrease even further according to Case Shiller.
FHA mortgage rates: 30 year fixed
30 year fixed FHA mortgage rates
www.fha-rates-today.com/30year-fixed.html
FHA rates 30 year fixed:
FHA 30 year fixed rate 4.75%
FHA 30 year fixed rate 4.75% – 0 points
FHA Jumbo Rates:
FHA Jumbo rates, 30 year fixed rate 5.00%
FHA Jumbo rates, 30 year fixed rate 5.00% – 0 points, 0 lenders fees
FHA Streamline Refinance Rates:
FHA streamline refinance rates 30 year fixed rate 4.75%
FHA streamline refinance rates 30 year fixed rate 4.75% – 0 points
*FHA rates quoted for $150,000+, FHA jumbo rates quoted at $500,000+
Get a FREE Quick Quote with no social security number at http://www.fha-rates-today.com
FHA mortgage rates
FHA Mortgage Rates remain low at 4.5% with most wholesale lenders and banks.
Mortgage Rates for both FHA and Conforming have been low due in large part to the unrest in the Middle East and the Japan disaster. The Federal Reserve Board announce yesterday they would be selling mortgage backed securities they bought as part of the initial stimulus program to keep mortgage rates low. They are going to sell up to $10 billion/month of mortgage backed securities held in reserve. This had little effect on market mbs pricing and mortgage rates held steady. The 30 year fixed FHA mortgage rates are ranging from 4.25% – 4.75%.
FHA Mortgage Rates
FHA Mortgage Rates see improvement with flight to safety. Bond traders are buying Ginnie Mae Mortgage backed securities, and treasury n0tes driving up prices and driving down yields. FHA Mortgage Rates are benefiting from the unfortunate tragedies of the Japan Sumami and Nuclear disaster right after the unrest in the Middle East which caused concern over oil production. Mortgage rates should be headed higher in the absense of the these events, but since Japan is the 3rd largest economy a full blown nuclear meltdown could create an economic downturn globally. This of course would push rates back down, possibly into the mid to low 4′s on the 30 year fixed FHA mortgage rates. www.fha-rates-today.com
Home prices fall 4.1%, near 2009 lows
Home prices fall 4.1%, near 2009 lows
Case Schiller predicts home prices may fall another 15% – 25% as goverment winds down Fannie Mae and Freddie Mac. Expects mortage rates to increase, and mortgage costs to increase, with private capital filling the mortgage rate gap which will drive home prices down even further. See below article from CNNMoney.com
Home prices took a big hit at the end of 2010, even as the rest of the economy gained steam.
National home prices fell 4.1% during the last three months of 2010, compared with 12 months earlier, according to the latest report from the S&P/Case-Shiller home price index, a closely watched indicator of market trends. They were down 1.9% compared with three months earlier.
“Despite improvements in the overall economy, housing continues to drift lower and weaker,” said David Blitzer, spokesman for S&P.
And things may get a lot worse, said Robert Shiller, a Yale economist and half of the Case-Shiller team, in a web conference after the report’s release.
“There’s a substantial risk of home prices falling another 15%, 20% or 25% more,” he said.
Shiller cited a few reasons for his bearish stance. The government is expected to reduce the presence of Fannie Mae and Freddie Mac in the housing market. These agencies currently provide loan guarantees for about two-thirds of mortgages. If they fade away, private mortgage money will have to fill the gap and the cost of mortgage borrowing will surely rise. That will hurt home prices.
There’s also talk of possibly ending the mortgage interest tax deduction for many homeowners. Meanwhile, the weak economic recovery may be threatened by higher oil prices as a result of turmoil in the Mideast.
At the web conference, Shiller’s index partner Karl Case wasn’t much more optimistic.
“I see [the market] bouncing along the bottom with a slight negative trend,” said Case, an economics professor emeritus at Wellesley College.
A widespread drop
On a seasonally adjusted basis, the national index surpassed the low it hit in the first quarter of 2009.
The decline was widespread, with 18 of the 20 large cities covered by a separate S&P/Case-Shiller index recording losses for the year. The only gains were posted by Washington, which was up 4.1%, and San Diego, which saw prices climb 1.7%.
The biggest loser for the year was Detroit, where prices dropped 9.1%.
“We’re really close to being at the bottom again,” said S&P’s Maureen Maitland. “Last year’s gains came courtesy of the tax incentives and the market is not holding up on its own.”
The impact of homebuyer tax credits ended back last spring, and the two quarters of data since then reflect that. Prices fell steeply during the third quarter, down 3.3%. When the credit was in effect, prices rose consistently, up four out of five quarters starting in the second quarter of 2009.
S&P reported that both the company’s 10- and 20-city indexes also fell month over month. In three cities, Detroit, Cleveland and Las Vegas, home prices have dropped below their January 2000 levels — yes, you’d have to go back to the past millennium to find lower prices there.
Eleven markets, including New York and Chicago, have reached their lowest levels since home prices peaked in 2006 and 2007.
The losses were not unexpected, according to Brad Hunter, chief economist for Metrostudy, a housing market research firm.
“It’s clear now that, going back to last fall, the apparent strength was a false strength,” he said. “Now that the tax credits are gone, we’re back to where the training wheels are off, to normal consumer demand.”
He expects home prices to decline gradually throughout 2011, with markets picking up only when hiring increases substantially.
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