The near-record low mortgage rates seen during the past few weeks may not be around much longer.
Signs of improving economic conditions could lead Federal Reserve Chair Ben Bernanke to raise key interest rates, driving up mortgage rates.
Fewer banks have reported tightening their lending standards in the past quarter. If lending standards start to stabilize, the Fed may remove emergency lending procedures, including the zero rate.
This means that consumers will start to see interest rates climbing back up in the months ahead.
10.8 percent annual growth in San Diego home prices
San Diego County home values rose 10.8 percent in March compared to 12 months earlier, as a smaller number of buyers chased deals on the most expensive homes, according to the latest update of Standard & Poor's Case-Shiller Home Price Index.
For months, the momentum behind San Diego home prices has been a frenzied market of investors and first-time homebuyers looking to score a deal on a house.
But March saw that trend flipped on its head: Homes priced under $311,200 fell 0.5 percent, the first monthly drop since May, though still up 11.3 percent since the previous March. Meanwhile, homes prices above $465,686 rose 2.9 percent in March from February, and were up 7.7 percent from the previous year.
The index, a widely respected measure of the resale value of houses, shows that San Diego is still 36 percent off its November 2005 high.
For months, the momentum behind San Diego home prices has been a frenzied market of investors and first-time homebuyers looking to score a deal on a house.
But March saw that trend flipped on its head: Homes priced under $311,200 fell 0.5 percent, the first monthly drop since May, though still up 11.3 percent since the previous March. Meanwhile, homes prices above $465,686 rose 2.9 percent in March from February, and were up 7.7 percent from the previous year.
The index, a widely respected measure of the resale value of houses, shows that San Diego is still 36 percent off its November 2005 high.
Existing-Home Sales Continue to Improve in April
Existing-home sales rose again in April with buyers motivated by the tax credit, improving consumer confidence and favorable affordability conditions, according to the National Association of Realtors®.
Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, increased 7.6 percent to a seasonally adjusted annual rate of 5.77 million units in April from an upwardly revised 5.36 million in March, and are 22.8 percent higher than the 4.70 million-unit pace in April 2009. Monthly sales rose 7.0 percent in March.
Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, increased 7.6 percent to a seasonally adjusted annual rate of 5.77 million units in April from an upwardly revised 5.36 million in March, and are 22.8 percent higher than the 4.70 million-unit pace in April 2009. Monthly sales rose 7.0 percent in March.
Loan demand to buy homes sinks to 13-year low
Demand for loans to buy U.S. homes shriveled to a 13-year low last week, following the expiration of federal tax credits, while near-record low mortgage rates stoked refinancing, the Mortgage Bankers Association said on Wednesday.
Mortgage purchase applications sank 27.1 percent to the lowest level since May 1997 in the absence of the popular government support, the group said. U.S. housing groped for footing after more than a year of homebuyer tax credits worth up to $8,000 expired on April 30.
Requests for home purchase loans have fallen almost 20 percent over the past month despite low borrowing costs.
Overall loan requests were down 1.5 percent, on a seasonally adjusted basis, in the week ended May 14, cushioned by a 14.5 percent jump in mortgage refinancing applications as home loan rates neared historic lows.
Average 30-year mortgage rates fell 0.13 percentage point last week to 4.83 percent, the lowest since last November, the MBA said. The record low was 4.61 percent in March 2009, based on the group's survey, which has been conducted since 1990.
Mortgage purchase applications sank 27.1 percent to the lowest level since May 1997 in the absence of the popular government support, the group said. U.S. housing groped for footing after more than a year of homebuyer tax credits worth up to $8,000 expired on April 30.
Requests for home purchase loans have fallen almost 20 percent over the past month despite low borrowing costs.
Overall loan requests were down 1.5 percent, on a seasonally adjusted basis, in the week ended May 14, cushioned by a 14.5 percent jump in mortgage refinancing applications as home loan rates neared historic lows.
Average 30-year mortgage rates fell 0.13 percentage point last week to 4.83 percent, the lowest since last November, the MBA said. The record low was 4.61 percent in March 2009, based on the group's survey, which has been conducted since 1990.
Mortgage rates drop to lowest level this year
Mortgage rates fell this week to the lowest level of the year, as rates fell on U.S. government securities. Fixed mortgage rates closely track interest rates paid on long-term Treasury bonds.
The average rate on a 30-year fixed rate mortgage dipped to 4.93 percent this week from 5 percent a week earlier, Freddie Mac said Thursday. It was the lowest level since mid-December, when rates averaged 4.81 percent.
The drop came as investors shifted money from risky European debt to safer U.S. securities. Bond yields fell as a result, and that lowered mortgage rates.
The average rate on a 30-year fixed rate mortgage dipped to 4.93 percent this week from 5 percent a week earlier, Freddie Mac said Thursday. It was the lowest level since mid-December, when rates averaged 4.81 percent.
The drop came as investors shifted money from risky European debt to safer U.S. securities. Bond yields fell as a result, and that lowered mortgage rates.
Calif. bill seeks to close property tax loopholes
Democratic lawmakers are determined to close tax loopholes they say cost state and local governments hundreds of millions of dollars each year, as they search for ways to trim California's enormous deficit.
A report by the union-funded California Tax Reform Association found that the share of property tax paid on residential property has increased since two-thirds of voters approved California's landmark Proposition 13 tax law in 1978, while the share paid on commercial property has decreased.
Under the current system, when property changes owners, its land value is reassessed and the new owner pays taxes based on the new value, which is often higher.
But it only applies when a person or legal entity obtains more than 50 percent of the property, allowing corporations to structure sales to avoid a reassessment. AB 2492, would redifine an ownership change to 100 percent of a property being sold, regardless of the number of new owners.
Republicans whose votes are needed to reach the two-thirds legislative approval to pass any tax increase are opposed, along with the California Taxpayers Association. The group said a switch would increase taxes on business owners.
A report by the union-funded California Tax Reform Association found that the share of property tax paid on residential property has increased since two-thirds of voters approved California's landmark Proposition 13 tax law in 1978, while the share paid on commercial property has decreased.
Under the current system, when property changes owners, its land value is reassessed and the new owner pays taxes based on the new value, which is often higher.
But it only applies when a person or legal entity obtains more than 50 percent of the property, allowing corporations to structure sales to avoid a reassessment. AB 2492, would redifine an ownership change to 100 percent of a property being sold, regardless of the number of new owners.
Republicans whose votes are needed to reach the two-thirds legislative approval to pass any tax increase are opposed, along with the California Taxpayers Association. The group said a switch would increase taxes on business owners.
Poway is "best value" in San Diego
Looking for the most house for your money? Think about buying in North County, particularly in Poway. Not only does Poway have a top-ranked school district, it recently was recognized nationally as the top value in San Diego County.
The area around Poway Road and Highway 67, commonly referred to as the Garden Road-Sycamore Creek area, was nominated as San Diego's "best-value" neighborhood, or the one that offers the best quality of living for the money.
The neighborhood is one of 20 nationwide that made the list compiled by Location Inc.
The area around Poway Road and Highway 67, commonly referred to as the Garden Road-Sycamore Creek area, was nominated as San Diego's "best-value" neighborhood, or the one that offers the best quality of living for the money.
The neighborhood is one of 20 nationwide that made the list compiled by Location Inc.
Fannie Tightens Interest-Only Requirements
Fannie Mae announced today that it plans to require borrowers using interest-only mortgages to put down 30 percent of the sale price.
Fannie Mae also said it will only buy adjustable-rate mortgages underwritten to require that borrowers could afford the loans even if interest rates reset to the higher of either:
1. The loan’s initial interest rate plus two percentage points.
2. The cap, the maximum the interest rate can rise.
"Our goal is to make sure consumers can sustain their mortgages and remain in their homes over the long-term, while helping our lender partners offer a range of mortgage products for qualified borrowers," says Marianne Sullivan, senior vice president of Single Family Credit Policy and Risk Management at Fannie Mae, in a prepared release.
Fannie Mae also said it will only buy adjustable-rate mortgages underwritten to require that borrowers could afford the loans even if interest rates reset to the higher of either:
1. The loan’s initial interest rate plus two percentage points.
2. The cap, the maximum the interest rate can rise.
"Our goal is to make sure consumers can sustain their mortgages and remain in their homes over the long-term, while helping our lender partners offer a range of mortgage products for qualified borrowers," says Marianne Sullivan, senior vice president of Single Family Credit Policy and Risk Management at Fannie Mae, in a prepared release.
California home tax credit going, going...
If you're interested in obtaining the tax break to help reduce the cost of buying a home, you better act fast.
Funding for the credit could be used up within three weeks, thanks to an expected flood of delayed closings by homeowners who hope to qualify for both the state and federal credits.
The federal homebuying credits, which provide up to $8,000 for first-time buyers and up to $6,500 for qualified repeat buyers, have a June 30 deadline for closing escrow in cases in which buyers signed a binding purchase contract by April 30.
The state credit, worth up to $10,000 over a three-year period, became effective May 1 and can be used by two groups of taxpayers: First-time and repeat buyers of new homes and first-time buyers of existing homes.
To claim the credit, first-time buyers of existing homes have until Dec. 31 to close escrow, or until program funding runs out.
Funding for the credit could be used up within three weeks, thanks to an expected flood of delayed closings by homeowners who hope to qualify for both the state and federal credits.
The federal homebuying credits, which provide up to $8,000 for first-time buyers and up to $6,500 for qualified repeat buyers, have a June 30 deadline for closing escrow in cases in which buyers signed a binding purchase contract by April 30.
The state credit, worth up to $10,000 over a three-year period, became effective May 1 and can be used by two groups of taxpayers: First-time and repeat buyers of new homes and first-time buyers of existing homes.
To claim the credit, first-time buyers of existing homes have until Dec. 31 to close escrow, or until program funding runs out.
Jumbo and Second Mortgage Lending
Any lending that did not have government backing was virtually non-existent last year. Therefore, it is no surprise that mortgages for jumbo and second home purchases were effectively shut down.
But some modest signs of revival for jumbo and second home mortgages have appeared this year. As banks make a profit, it is inevitable that more lending to non-government loans will happen. However, a monkey wrench was thrown into the mix by Greece.
If Greece defaults—because its tax revenue is not able to cover the pension benefits as many Greeks are retiring at the relatively young age of 55— then banks in Germany and other European countries will come under pressure. These banks will not then be able to lend to other countries such as Spain, Portugal and Italy, who also need to borrow heavily to finance their deficits.
The contagion will surely then spread to the U.S. banking system as well, which means less money available for lending – particularly on jumbo and second home mortgages. At the moment, the problem spreading all the way to the U.S. is a small probability event, though it will be a highly impactful if it was to occur.
But some modest signs of revival for jumbo and second home mortgages have appeared this year. As banks make a profit, it is inevitable that more lending to non-government loans will happen. However, a monkey wrench was thrown into the mix by Greece.
If Greece defaults—because its tax revenue is not able to cover the pension benefits as many Greeks are retiring at the relatively young age of 55— then banks in Germany and other European countries will come under pressure. These banks will not then be able to lend to other countries such as Spain, Portugal and Italy, who also need to borrow heavily to finance their deficits.
The contagion will surely then spread to the U.S. banking system as well, which means less money available for lending – particularly on jumbo and second home mortgages. At the moment, the problem spreading all the way to the U.S. is a small probability event, though it will be a highly impactful if it was to occur.
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