Archive for Financial News
Mortgage Bankers Association Sees Home Refinancing Trend
Posted by: | CommentsIn a recent article, the MBA forecasted mortgage trends for 2010 interest rates, mortgage refinancing activities and more. According to Mortgage Banker Association’s Weekly Application Survey, thirty-year mortgage loans with fixed rates dropped through November, falling 18 basis points relative to the month prior and ending November at 4.79 %. Fifteen-year home mortgage rates reached a new record low for the survey of 4.27%. The percentage of borrowers selecting the 15-year has risen in 2009 as a result of the widened spread between 15- and 30-year home loans. MBA forecasts that 30-year mortgage rates will rise through 2010 to end the year at 5.7%. In addition to conventional loans, MBA believes that both VA and FHA mortgage rates will rise a percentage point between now and 2011.
On a seasonally adjusted basis, home purchase loans applications declined almost 20 % from October to November. Mortgage refinance applications rose by about 1% over that time. MBA projects that mortgage loan originations will decrease from almost $2.0 trillion in 2009 to about $1.5 trillion in 2010. MBA forecasts that purchase originations will increase from $718 billion in 2009 to $804 billion in 2010, while refinance loan originations are projected to fall from $1.246 trillion to $693 billion. The Federal Reserve and U.S. Treasury home loan programs continue to dominate the secondary market. In November, Federal Reserve purchases of agency MBS accounted for about 80% of new MBS issuance from Fannie Mae and Freddie Mac.
FHA Mortgage Rates Dip
Posted by: | CommentsAfter four days of rising home mortgage rates ended today as consumers can now lock 30-year mortgage rates starting at 4.375% today. Conforming and FHA mortgage rates increased 0.25% to .375% last Friday and many borrowers put their refinance loan on hold hoping for rates to come back down. News came from HUD Friday that the Federal Housing Administration has decided to tighten credit standards for FHA home loans. In 2010 FHA lenders will be required to carry large bonds with significantly higher net-worth requirements for companies that plan to originate FHA loans in the future.
FHA loan defaults and foreclosures have caused HUD to reconsider FHA requirements and loan guidelines. Mortgage refinancing activity continues to be robust even through the Christmas season, because so many borrowers stand to benefit from a refinance loan that reduces their mortgage payments by hundreds of dollars.
Home Affordable Refinance Program and 125 Mortgage
Posted by: | CommentsEarlier this year, the government announced several new obama mortgage programs including the Home Affordable Refinance Program that extends refinancing to borrowers with 125 mortgage alternatives. The Home Affordable Refinance loan enables borrowers to qualify for a 125 refinance that enables homeowners to borrow up to 125% of the properties appraised value. This is not to be confused with the 125% home equity loan that borrowers would use for cash out and debt consolidation for credit card debt. The Affordable Home Refinance Program is a rate and term refinance that does not allow cash out or consolidation. Qualifying borrowers must currently have a Fannie Mae or Freddie Mae home loan that does not exceed $417,000. Borrowers need a 620 credit score and only one 30-day late mortgage payment is allowed with compensating factors. This latest obama mortgage may create an opportunity for millions of homeowners to refinance into a low fixed rate mortgage even if the borrower is upside down on their home loan.
Mortgage Refinancing Expanded Under Home Affordable Refinance Program
Posted by: | CommentsAccording to recent mortgage lending reports, the Obama administration eased eligibility rules Wednesday for its Home Affordable Refinance program, lifting the maximum loan-to-value ratio to 125% from 105. The shift, which regulators had hinted was coming, is aimed at making refinancing available to more people whose homes are worth less than their mortgage loans. Clearly under the President’s new mortgage relief program, more homeowners will be eligible to refinance their bad credit mortgages or high rate ARM’s that they can no longer afford. 125% mortgage refinancing could pave the road for a quicker recovery.
HARP is open to homeowners whose loans are owned or guaranteed by Fannie Mae or Freddie Mac, the mortgage financing giants now under government control. It covers 1st mortgages only. Second mortgage loans are not eligible for the Home Affordable Refinance Program. The mortgage refinance program, launched this year, has gotten off to a slow start, in part because the maximum 105% loan-to-value ratio was too low to include many homes that have fallen sharply in value. The new 125% maximum means an eligible homeowner with a $375,000 home loan can refinance if his or her house is worth at least $300,000. But the borrower still must be able to afford the new loan. Income requirements are an increasing problem as unemployment soars and many workers are dealt pay cuts.
Treasury Secretary Timothy F. Geithner said the move to raise the loan-to-value limit was “a crucial step in our broader efforts to get America’s housing market and economy on the path to recovery.” But refinance activity in general remains vexed by the jump in mortgage rates from their generational lows in April. Refinance applications to lenders have tumbled since mid-May as rates have surged, according to Mortgage Bankers Assn. data released Wednesday. Despite a down-tick in rates in the last two weeks, refinancing activity hasn’t rebounded.
Home refinancing applications fell 30% last week from the previous week, to the lowest level since November. Home loan applications fell 4.5%, according to the report. The average contract interest rate for thirty-year fixed-rate home loans decreased to 5.34% from 5.44% a week earlier. For fifteen-year fixed loans, the rate averaged 4.81%, down from 4.93%. The average upfront fees known as points, including the origination fee, edged up to just over 1%.
The 30-year fixed rate bottomed out at 4.61% in late March, the lowest level since the mortgage group started keeping track in 1990. The recent mortgage rate trends may delay the arrival of a solid housing recovery, Federal Reserve Bank of San Francisco President Janet Yellen said in a speech Tuesday. “I am concerned that FHA mortgage rates, which have risen of late, could place a drag on a still very sick housing market, potentially driving home prices still lower and pushing more borrowers into foreclosure,” she said.
Mortgage Refinancing Modifications and Obama Home Loans
Posted by: | CommentsFormer Ditech executive, Jeff Morris, says “When the average borrower with a jumbo mortgage can qualify to refinance at a competitive interest rate, I’ll know we have turned the corner.” Morris continued, it’s a mess out there…Many homeowner think that Obama is going to give them 2% fixed rate even if they are 120 days late on their mortgage.” FHA mortgage rates have been low, but not that many borrowers qualify because the credit crunch is still preventing mortgage refinancing and new home loans for many 1st time home buyers. Mortgage loan modification requests are piling up higher than refinance applications.
According to Lawrence Yun, chief economist of the Realtors’ group, the number of home foreclosures may rise to 2.5 million this year and that would be the highest since keeping records of home loan defaults. “The foreclosure wave we’ve been through is not over,” said Susan Wachter, a real estate professor at the University of Pennsylvania’s Wharton School in Philadelphia. “That’s why we don’t see a bottom in housing yet.”
According to Seattle-based real estate data service Zillow.com. About 20.4 million of the 93 million houses, condos and co- ops in the U.S. were worth less than their loans as of March 31st. After the Federal Reserve pledged to acquire as much as $1.25 trillion in mortgage-backed securities to free up money for mortgage loans, mortgage interest rates fell to a record low of 4.78 percent twice in April. Rates began climbing last month on investor concern federal spending will fuel inflation.�
More Mortgage Loans May Qualify for Refinancing
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The Government released a statement that more homeowners with high LTV mortgage loans could soon be eligible for refinancing under the Obama administration’s plan to stem foreclosures. According to a Bloomberg, the government is thinking about how to expand the existing foreclosure prevention initiatives to help homeowners who are more deeply underwater on their mortgages than the current program allows. Millions of homeowners have lost their home equity with the housing crisis hindering loan to value levels significantly. With mortgage guidelines for refinancing undergoing drastic changes, it is safe to say that homeowners and lending professionals are concerned.
Right now, homeowners with mortgage loans guaranteed by FHA, Freddie Mac or Fannie Mae – and who meet various other criteria – can qualify for the government’s Making Home Affordable plan as long as their loan is equal to 105 % or less of their property’s value. The program has already helped tens of thousands of borrowers are seeking home loan refinancing that yields reduced monthly mortgage payments. And now, even more people could qualify. “We’re actively considering how to structure a refinance program that makes sense over 105%,” James Lockhart, directory of the Federal Housing Finance Agency, told Bloomberg.
Is Loan to Value Part of the Equation for Today’s Refinancing?
Recently, rising mortgage rates have become a potential roadblock to the program’s success, he added. The most recent figures from the Mortgage Bankers Association show that refinancing activity fell by nearly one-quarter (23 %) in the week ended June 12. The proportion of mortgage applications to refinance home loans declined to 54.1 % from 59.4 % one week earlier. Despite the fact that average rate for a 30-year, fixed rate mortgage decreased slightly to 5.5 %, it could not match the record-low rates seen in April. “Higher mortgage rates will keep re-fi activity under pressure,” economist Tom Porcelli of RBC Capital Markets told Bloomberg.
Mortgage Refinancing Applications Drop as Interest Rates Rise
Posted by: | CommentsMortgage refinance loans continue to make up the majority of the market with both VA home mortgages and FHA home loans dominated. A according to industry data released today, mortgage loan applications dropped last week as mortgage rates crept up. The mortgage market composite index, a measure of mortgage loan application volume, fell 16.2% on a seasonally adjusted basis compared with a week earlier, according to the Mortgage Bankers Association. The drop was reflected mostly with the home refinancing activity. The home refinancing index fell 24.1% last week, while the home purchase index increased 4.3%.
According to the MBA the rate hike comes as the average thirty-year fixed-rate mortgage interest rate increased to 5.25% last week from 4.81%, That was the most significant mortgage rate increase since October 2008.
Mortgage interest rates have been slowing rising up as demand for long-term government bonds has eased in recent weeks, analysts have said. Bonds are a traditional safe haven during market turbulence, but stocks have been buoyed by optimism that the recession was easing. Also, investors have also begun to shy away from government debt on fears the government and FHA was taking on too much to fund federal recovery efforts. “If you were looking for mortgage refinancing for under 5%, this puts the brakes on that,” said Guy Cecala, publisher for Inside Mortgage Finance. Refinance mortgages have been in high demand as adjustable rate loans have been resetting in 2009 at an alarming rate.
Mortgage refinance rates are still low by historical standards and could fall again as the government continues to buy up mortgage-backed securities and government bonds, Cecala said. The housing market has remained weak this year, though a plummet in home sales prices has attracted buyers in some of the hardest-hit parts of the country. Although some mortgage insiders and esteemed economists believe sales could begin to show improvement later this year, prices are expected to continue to fall.
