RealNews

The Mortgage Bankers Association and Freddie Mac both reported good news for those needing to refinance mortgages and those with resetting ARMs with the MBAA reporting an average 15-year Fixed Rate Mortgage (FRM) rate below 5% and Freddie Mac reporting a 1-year ARM rate below 5% and 15-year FRM rates below 5%. Even 30-year FRM rates are flirting with 5% according to both reports. The Mortgage Bankers Association reported an increase in refinance activity and a small drop in purchase applications last week.

In other housing news, the National Association of Homebuilders reported that builder sentiment held steady at a record low in November and the Commerce Department reported another drop in housing starts. With new home inventories still in the 10 month range, the drop in housing starts to a level a little over half the November 2007 level is good news for homeowners, but bad news for construction workers, building suppliers and for home buyers who wait too long to buy. NAHB Chairman Sandy Dunn blames sales conditions for the negative sentiment:

While builders are doing everything we can in the way of price and non-price incentives to move new homes off the books, buyers are afraid to move forward, and in any case there is almost no way to compete with the cut-rate product that is continually flooding the market from mounting foreclosures.

Buyers need to, carefully of course, take advantage of the real bargains that are starting to pile up whether it’s from foreclosures or builder incentives, as with building slowing this much and mortgage freezes in place inventories are going to drop and when they do the bargains will dry up.

Mortgage Bankers Association Average Mortgage Rates

30-year FRM: 5.18%, 1.13 points*
15-year FRM: 4.93%, 1.34 points
1-year ARM: 6.63%, 0.3 points

Freddie Mac Conforming Mortgage Average Rates

• 30-year FRM: 5.19%, 0.7 point
• 15-year FRM: 4.92%, 0.7 point
• 5-year hybrid ARM: 5.6%, 0.6 point
• 1-year ARM: 4.94%, 0.5 point

* Points reported by Mortgage Bankers Association in this survey include origination fees as well as traditional discount points. Average rates are based on an 80% LTV loan. This means a loan amount no more than 80% of the property value as determined by the lower of the purchase price or appraised value. Typically this means a 20% down payment, though an 80% loan can also be achieved with a second mortgage carried by the seller or a third party lender for the difference between the actual down payment and 20%.

Builder Confidence Remains At Record Low In December

December 15, 2008 - Builder confidence in the market for newly built single-family homes held at a record low in December as deepening economic turmoil, a deteriorating job market, and an ongoing flow of foreclosed homes onto the market continued to negatively impact sales conditions. The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) did not budge this month from November’s all-time low reading of 9, with two out of three component indexes losing further ground.
 
“The crisis continues,” said NAHB Chairman Sandy Dunn, a home builder from Point Pleasant, W. Va. “While builders are doing everything we can in the way of price and non-price incentives to move new homes off the books, buyers are afraid to move forward, and in any case there is almost no way to compete with the cut-rate product that is continually flooding the market from mounting foreclosures. Congress and the Administration must step in with substantial incentives to bring qualified buyers back to the table as well as effective foreclosure relief programs if we are to end this negative spiral that is weighing so heavily on our national economy.”
 
“We have seen no improvement over the past month in terms of sales conditions for new homes,” said NAHB Chief Economist David Crowe. “In fact, certain factors have gotten progressively worse, not the least of which is the job market, where massive layoffs are having a devastating effect on consumer confidence. At this point it will take definitive government action to stop the slide in home values and turn the tide of consumer sentiment. Expanding the first-time buyer tax credit and providing government action to reduce mortgage rates would go a long way toward arresting this downward spiral, just as a combination of similar moves worked in the 1970s to boost the housing market and economy.”
 
Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.
 
Two out of three of the HMI’s component indexes registered some further deterioration in December. The index gauging current sales conditions and the index gauging sales expectations for the next six months each declined to new record lows, falling one point to 8 and two points to 16, respectively. The index gauging traffic of prospective buyers held at a record low of 7 for the month.
 
Two out of four regions posted declining builder confidence readings in December, with the Midwest and South edging down one point and two points, to 6 and 10, respectively. The Northeast held even with the previous month’s 11 reading, while the West posted a one-point gain to 7. 

Mortgage Applications Increase, Driven by Refinances in Latest MBA Weekly Survey

WASHINGTON, D.C. (December 17, 2008) — The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending December 12, 2008.  The Market Composite Index, a measure of mortgage loan application volume, was 841.4, an increase of 2.9 percent on a seasonally adjusted basis from 817.7 one week earlier, which was revised from 796.8.*  On an unadjusted basis, the Index increased 2.9 percent compared with the previous week and was up 37.3 percent compared with the same week one year earlier.
The Refinance Index increased 6.5 percent to 4156.0 from the previous week and the seasonally adjusted Purchase Index decreased 4.5 percent to 286.1 from one week earlier.  The Conventional Purchase Index decreased 6.7 percent while the Government Purchase Index (largely FHA) was virtually unchanged.
 
The four week moving average for the seasonally adjusted Market Index is up 17.9 percent.  The four week moving average is up 3.2 percent for the seasonally adjusted Purchase Index, while this average is up 28.1 percent for the Refinance Index.
The refinance share of mortgage activity increased to 76.9 percent of total applications from 74.3 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 1.1 percent of total applications from the previous week.

30-YEAR FIXED RATE FALLS TO AT LEAST A 37-YEAR LOW
McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®): “Interest rates for 30-year fixed-rate mortgage rates fell for the seventh consecutive week, moving these rates to the lowest since the survey began in April 1971,” said Frank Nothaft, Freddie Mac vice president and chief economist. “The decline was supported by the Federal Reserve announcement on December 16th, when it cut the federal funds target to a record low and stated it stood ready to expand its purchases of mortgage-related assets as conditions warrant.”