Market News Update - House Prices on the Rise

Finally we can breathe a little easier about the employment sector, at least for the moment.  Although the national unemployment level increased slightly from 8.2% to 8.3%, the underlying numbers show significant improvement in the labor market.  In July there were 163,000 private sector jobs added to the workforce where in June we only had 73,000.  The jump is far more than analysts were expecting.  The stock market loved the report as of the opening bell with a jump out of the gate of more than 150 points on Friday morning.

For the investors that have been betting on Federal Reserve Chairman Bernake to launch another round of stimulus, this latest jobs report certainly will slow down the implementation of any new economic stimulus program.  The irony of it all is that for weeks investors have been believing the Fed was going to do something; however, I have repeatedly written in my weekly reports that there has been absolutely no indication from the Fed that they were ready to do something now. 

Housing continues to show signs of life.  The S&P Case-Shiller Home Value Index for May showed a higher than expected gain of .9%.  This is the third strong gain in a row following 0.7 and 0.8 percent readings in April and March.  Prices are still .7% lower than the same time last year, however the gap between last year and this year in prices is closing, which is yet another positive sign for the housing market.

The Mortgage Bankers Association reported that the prior week’s applications for mortgage financing were virtually unchanged.  Applications for purchases declined  2% while refinance applications increased only .8%.  Mortgage rates are coming off their record lows and that undoubtedly is going to impact mortgage applications.

It is my prediction that we will see refinance applications slow down further as interest rates start to creep up.  I am, however, very excited in that it is my feeling that the slight increases in mortgage rates will stimulate buyers to jump into the market, especially on the heels of the better than expected employment report.

In many areas of the country real estate professionals are reporting that housing inventories are at the lowest level they have seen in many years.  We are even seeing some bidding wars for houses by purchasers who are determined to land their dream house.  Despite the prices on these homes being driven up through competition, appraisals are still not supporting the value increases, which means buyers, bidding up prices, have to come up with extra cash to pay the difference between the appraisal value and the contract price.

Consumer confidence improved slightly, which is yet another sign that the economy is not quite as bad the media will lead us to believe.  Everything we see on TV and hear on the radio we must filter, realizing that the media will make any headline sensational as that is how they get ratings.

Next week’s economic reports are:

• Wednesday August 8^th -  MBA Applications
• Thursday August 9^th - First Time Jobless Claims       

I appreciate your business and look forward to talking to you soon! Have a great day!!!
 

Sincerely,

Cindy Tomlinson
Loan Officer

USLending Company

DRE Lic # 01520422
NMLS # 214851   

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HARP Accounts for 1 in 5 Refinances in May!

With the help of record-low mortgage rates, HARP refinances surged in May, accounting for 20 percent of all loans refinanced by the GSEs, FHFA announced Monday.

For the month of May, 67,456 loans were refinanced through HARP, and the total number of loans refinanced by Fannie Mae and Freddie Mac for the month was 341,209. The one in five ratio of loans refinanced through HARP is the largest increase since the program’s 2009 inception.

“These numbers show HARP 2.0 is accomplishing the goals set forth—to provide relief to borrowers who might otherwise be unable to refinance due to house price declines,” said FHFA Acting Director Edward J. DeMarco. “Borrowers with Fannie Mae- or Freddie Mac-backed loans who are current on their underwater mortgages are taking advantage of the opportunity offered by HARP 2.0.”

The number of underwater borrowers who found relief through HARP also saw a significant increase. Year-to-date through May, 78,273 refinances were completed for underwater borrowers compared to 59,991 refinances for underwater borrowers for the entire year of 2011.

Since the program began, Fannie Mae and Freddie Mac have refinanced 1.3 million loans through HARP.

In March 2012, the GSEs launched HARP 2.0, which allowed mortgages with a loan-to-value (LTV) ratio of 125 percent or higher to be eligible for refinancing.

Following this change, the percentage of those with high LTVs who received refinancing doubled. In May, borrowers with LTVs greater than 105 percent accounted for 32 percent of HARP refinances, up from the 15 percent average in 2011.

The percentage of those who opted for shorter term 15- and 20-year mortgages increased to 19 percent in May compared to the 10 percent average in 2011. Choosing shorter term mortgages over a 30-year mortgage helps build equity more quickly.

In Nevada, Arizona, Michigan and Florida, HARP refinances accounted for 40 percent of all refinances in those states compared to the 20 percent nationwide average.

In Nevada and Arizona, underwater borrowers represented more than half of those refinanced through HARP, and in Florida, Idaho, and California, underwater borrowers represented 40 to 50 percent of HARP refinances.

By: Esther Cho