C.A.R. Mortgage Update
Low Rates Keeping Homes Affordable
Falling interest rates are fueling a rise in home mortgage applications and
refinancing in the Inland region, though experts aren’t yet ready to declare
the beleaguered local housing market on the road to full recovery. To read the
full story, please click
here
First-Time Buyer Tax Credit
Extension Possible
Bills to extend the maximum $8,000 tax credit for first-time home buyers, which
expires Nov. 30, are pending in both the U.S. House and the Senate. Sen.
Christopher J. Dodd, a Connecticut Democrat and chairman of the Senate Banking,
Housing, and Urban Affairs Committee, is co-sponsor of a bill with Georgia
Republican Sen. Johnny Isakson that would raise the credit amount to a maximum
of $15,000. Senate Majority Leader Harry M. Reid of Nevada favors an extension
of the current credit. He was quoted by the Las Vegas Sun saying, "It's
something we can get done."
Odds are that the credit will be extended and broadened to cover all buyers next
year, but the chances of the amount increasing aren’t as good, observers say.
Source: Washington Post Writers Group, Kenneth R.
Harney (08/22/2009)
Behind FHA Strains, a Push to
Lift Housing
As it tried to help shore up the ailing housing market during the past year,
the Federal Housing Administration increased its exposure, particularly to
mortgages in high-cost states that have also seen some of the sharpest price
declines.
To read the full story, please click
here
A Down Payment Anomaly
Despite home buyers being advised to issue down payments of at least 20
percent, many home buyers are finding that smaller down payments result in
better interest rates—but also higher payments.
Rules put in place in late 2008 by Fannie Mae and similar rules adopted by
Freddie Mac are less favorable to borrowers who put down 20 percent to 25
percent--partially because the GSEs consider these borrowers to be more of a
credit risk since they are not required to purchase private mortgage insurance.
According to Fannie Mae, borrowers benefit from this industry practice
because they are able to leave themselves a financial cushion by not issuing
larger down payments, and can instead save the extra money for emergencies. It
is important to note though that smaller down payments mean higher monthly
payments because the loan itself will be larger.
To read the full story, please click
here
Many Experts Support Extending
Tax Credit
Real estate professionals and home builders are pushing for an extension and an
increase in tax incentives to encourage homebuying. Otherwise, they argue, that
it is very likely that the current housing uptick will end on Dec. 1, when the
tax credit does. “The giddiness we see out there [about a recovery] is without
merit," says Richard A. Smith, CEO of Realogy, which is the parent company
of Century 21, ERA, Coldwell Banker, and Sotheby's International Realty.
Not everybody sees things Smith’s way. Michelle Meyer, an economist with
Barclays Capital in New York, says that while the tax credit did contribute to
an increase in sales, some of the improvement reflects an improving economy.
“Even if you say some of the gain is artificial, it's still true that we're
seeing an increase in housing demand, and that shows fundamental strength,"
she says.
Mark M. Zandi, chief economist at Moody's Economy.com, ignores this
chicken-or-egg argument and points to an analysis he did that suggests
increasing the tax credit to $15,000 for all home owners through the end of next
year would result in 675,000 additional home sales.
Source: BusinessWeek, Prashant Gopal (09/11/2009)
Mortgage Applications Rise as
Rates Fall
Mortgage rates declined last week, triggering a dramatic jump in mortgage
applications. The Mortgage Bankers Association reported that its weekly index of
mortgage application volume rose 17 percent on a seasonally adjusted basis
compared to the previous week. On an unadjusted basis, the index increased 15.8
percent and was up a whopping 64.5 percent compared to the same week a year ago.
Much of the increase was in refinances, with the refinance index increasing 22.5
percent, the biggest jump since March. The purchase index rose 9.5 percent,
which was the largest gain since early April. Mortgage rates were down across
the board:
