Mortgage Rates

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How Higher Mortgage Rates Will Dent Housing's Recovery

By , Associate Editor, Money Morning -

How much do higher mortgage rates reduce home sales?

That, of course, depends on how much rates rise and whom you ask. But there's no doubt higher mortgage rates hurt sales, experts say.

Interest rates have been climbing since May. Rates on 30-year, fixed-rate mortgages averaged 4.37% for the week ending July 18, Freddie Mac's weekly survey of conforming mortgage rates said. That's up more than a percentage point from early May.

And existing home sales fell 1.2% in June, to a seasonally adjusted annual rate of 5.08 million, from 5.14 million in May (but still 15.2% higher than in June 2012), the National Association of Realtors said Monday.

Lawrence Yun, the NAR's chief economist, told Money Morning he expects interest rates to hit 5% to 5.5% within a year. And while he foresees existing home sales rising as much as 10% for 2013, he predicts only a single-digit percentage increase next year primarily because of higher mortgage rates.

"There's no risk of any reversal of this housing recovery; it's just slowing the pace of this housing recovery," Yun said.

He said robust demand and affordable prices would lessen the impact of the higher mortgage rates in much of the country, but pricier markets in New York, parts of California and Hawaii would be hit harder by the higher mortgage rates.

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The 10 Best U.S. Housing Markets 2013

By , Money Morning -

The percentage of Americans optimistic about the U.S. housing market has reached levels not seen since rumblings of the financial crisis began.

A new Rasmussen Reports national survey found 37% of homeowners believe the value of their home will increase in the next year - thehighest since September 2008.

And 58% of Americans believe their homes are worth more now than when they bought them. That's the highest percentage believing this since fall 2011.

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Here's Another Troubling Sign America is Circling the Drain

By , Chief Investment Strategist, Money Morning • @ShahGilani_TW -

Don't blame yourself if you missed this tidbit last week...

On Thursday, the Consumer Financial Protection Bureau hit the nation's four largest mortgage insurers with a total of $15.4 million in fines for "allegedly" paying kickbacks to lenders to steer business their way.

Of course, they didn't have to admit they did it, and therefore, they didn't do what they were fined for.

Back in the summer of 2009, the Inspector General of the Department of Housing and Urban Development handed the Justice Department evidence that laid bare a scheme by lenders (the usual suspects: Citigroup, Wells Fargo, Countrywide, and so on) to get kickbacks from mortgage insurers for making borrowers - who had to buy mortgage insurance - purchase coverage from those companies kicking back profits to lenders. In the industry, it's called "forced placement"

Who did what here?

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The Secret Behind the Housing Market "Recovery"

By , Money Morning -

U.S. home prices climbed 10.2% in February, the biggest year-over-year gain since March 2006.



The data seemed to support that a housing market recovery is alive and well - or, is it?

Even though buying is up, banks aren't handing out mortgages at a high enough rate to support this climb.

We asked Money Morning Capital Wave Strategist Shah Gilani to explain what was behind this major housing market change. You might be surprised to learn who's driving the home buying - and what it means for the housing market recovery.

Watch his interview below for the answer.

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Money Morning Mailbag: Mortgage Rates Slip But U.S. Housing Market Still Unfriendly for Some Seeking Refinancing

By , Associate Editor, Money Morning -

U.S. mortgage rates dropped to a record low this week as the U.S. Federal Reserve started its second round of quantitative easing (QE2).

The 30-year fixed loan rate fell to 4.17% from 4.24%, Freddie Mac (OTC: FMCC) said yesterday (Thursday). The average 15-year rate fell to 3.57% from 3.63%.

Lower rates pushed up refinancing applications by 6%, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey for the week ending Nov. 5. The refinancing gauge has more than doubled since the beginning of 2010.

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The "Mortgagegate" Scandal: Congratulations America, You're Now in the Title-Insurance Business

By , Chief Investment Strategist, Money Morning • @ShahGilani_TW -

U.S. taxpayers already own pieces of such problem-plagued companies as General Motors Corp., Chrysler LLC, American International Group Inc. (NYSE: AIG), Fannie Mae (OTC: FNMA) and Freddie Mac (OTC: FMCC). Now the increasingly problematic "Mortgagegate" saga could land American taxpayers in the trouble-ridden title-insurance business.

On Oct. 8, Bank of America Corp. (NYSE: BAC) indemnified Fidelity National Financial Inc. (NYSE: FNF) against any losses that Fidelity might sustain in litigation over title insurance it writes on foreclosed homes - the same homes, coincidentally, that Bank of America wants to sell to new buyers.

This arrangement amounts to U.S. taxpayers, who are the ultimate backers of the Federal Deposit Insurance Corp. (FDIC), backstopping a giant, publicly held title-insurance company, which is backstopping a huge commercial bank, so that the bank can sell properties that it might not have proper title to.

It sounds like a Wall Street version of the "Six Degrees of Kevin Bacon," but it's no game - it's a daisy-chain scheme that once again sets American households up as the biggest losers.

To understand the latest "Mortgagegate" developments - and see the steps to take - please read on...

Question of the Week: Mortgagegate Makes Investors Wary of U.S. Banking Industry

By , Associate Editor, Money Morning -

A potentially crippling crisis is flashing through the banking industry and threatening to derail the already struggling housing market and U.S. economic recovery.

But Gilani said the headlines aren't telling the full story.

Dubbed "Mortgagegate" - a nod to the earlier scandal-ridden crisis touched off by Watergate - this latest crisis involves such big lenders as Bank of America Corp. (NYSE: BAC), Citigroup Inc. (NYSE: C) and GMAC LLC (NYSE: GMA), which are alleged to have conducted negligent foreclosure practices. 

Money Morning Contributing Editor Shah Gilani warned about the allegedly fraudulent business practices employed by lenders and their hired "robo-signers" that led to thousands of questionably reviewed foreclosure documents.

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We Want to Hear From You: Will "Mortgagegate" Affect You?

By , Associate Editor, Money Morning -

A potentially crippling crisis is flashing through the banking industry and threatening to derail the already struggling housing market and U.S. economic recovery.

Question of the Week Dubbed "Mortgagegate" - a nod to the earlier scandal-ridden crisis touched off by Watergate - this latest crisis involves such big lenders as Bank of America Corp. (NYSE: BAC), Citigroup Inc. (NYSE: C) and GMAC LLC (NYSE: GMA), which are alleged to have conducted negligent foreclosure practices.

Money Morning Contributing Editor Shah Gilani reported last week about the allegedly fraudulent business practices employed by lenders and their hired "robo-signers" that led to thousands of questionably reviewed foreclosure documents.

But Gilani warned that the headlines aren't telling the full story.

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What You Don't Know about "Mortgagegate" Could Crush the U.S. Banking System

By , Chief Investment Strategist, Money Morning • @ShahGilani_TW -

What most Americans don't know about " Mortgagegate" is that "robo-signing" of foreclosure documents is the tip of the iceberg.

The breadth and depth of this newest mortgage crisis is so dangerous that the U.S. Federal Reserve last month pre-announced another potential round of quantitative easing (pundits are calling it "QE2") to address "potential negative shocks."

In fact, the fallout potential is so numbing and the actions that birthed it so scandalous that commentators have given the crisis the Watergate-esque title of " Mortgagegate" (or, as some prefer, "Mortgage Gate").

Here's what the news-story headlines aren't telling you.

For an investment strategy that will protect your portfolio from "Mortgagegate," please read on...

Foreclosures Continue to Stymie Housing Recovery

By , Contributing Writer, Money Morning -

Banks seized more homes in August than in any month since the housing bubble burst in 2007, even as the number of homes entering the foreclosure process dropped for the seventh month in a row, according to data compiled by RealtyTrac Inc.

In all, banks repossessed 95,364 properties last month, up 3% from July and an increase of 25% from August 2009, RealtyTrac said. August was the ninth month in a row that the rate of homes seized by banks increased on an annual basis. The previous high was in May.

Additionally, almost one-quarter of all U.S. home closing transactions involved properties that were in some stage of mortgage distress and sold at a 26% discount on average in the second quarter.

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Moribund Housing Market Threatens to Kill Economic Recovery

By , Contributing Writer, Money Morning -

The weak housing market, which has traditionally led the U.S. economy out of recent recessions, this time may put an end to the economic recovery.

Existing home sales plummeted by a record 27% to their lowest level in 15 years in July and inventories soared, the National Association of Realtors (NAR) reported yesterday (Tuesday). Home re-sales, which account for 90% of the total market, dropped to an annual rate of 3.83 million in July. And inventories rose to 12.5 months from 8.9 months in June, putting them at their highest level in more than a decade.

"Historically, July is the peak inventory month in any given year," NAR Chief Economist Lawrence Yun told The Wall Street Journal. "The question is whether this pause is a temporary pause."

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The Housing Market Still Wobbly Despite May's Home Price Improvement

By , Contributing Writer, Money Morning -

The S&P/Case-Shiller index of home prices increased more than forecast in May, but the combination of a now-expired government tax credit, skyrocketing foreclosures and deteriorating consumer confidence is expected to keep a lid on the housing market in the second half of 2010.

Home prices in 20 major U.S. cities climbed 4.6% from May 2009, the biggest year-over-year gain since August 2006. However, analysts say the increase was artificially buttressed by seasonal factors and the residual impact of the homebuyers' tax credit.

"While May's report on its own looks somewhat positive, a broader look at home price levels over the past year" doesn't show that the housing market "is in any form of sustained recovery," David M. Blitzer, chairman of S&P's index committee told The Wall Street Journal. "Since reaching its recent trough in April 2009, the housing market has really only stabilized at this lower level."

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Taxpayers' $3.7 Trillion Bailout Hasn't Saved the U.S. Housing Market

By , Associate Editor, Money Morning -

The amount of taxpayer dollars directed at the Troubled Asset Relief Program (TARP) continues to grow but with little economic progress being made, particularly in the housing market.

Total taxpayer support for the mortgage market rose by $700 billion in the past year to $3.7 trillion, Neil Barofsky, the Special Inspector General for TARP, said his quarterly report to Congress.

"Indeed, the current outstanding balance of overall Federal support for the nation's financial system...has actually increased more than 23% over the past year...the equivalent of a fully deployed TARP program - largely without congressional action, even as the banking crisis has, by most measures, abated from its most acute phases," said Barofsky.

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Housing Market Wobbling without Tax Credit Crutch

By , Contributing Writer, Money Morning -

The housing market has struggled to rebuild since its 2007 collapse, and its recovery is on even shakier ground now that a tax credit for first-time homebuyers has expired.

Nearly one-third of all U.S. home sales in the first quarter involved properties that were in some stage of mortgage distress, according to RealtyTrac Inc.. And homes on the market that were in the process of foreclosure sold at an average discount of 27% in the first quarter, which does not bode well for new inventory coming onto the market.

"We're clearly creating more properties that will be sold at distressed prices than the market is absorbing," Rick Sharga, RealtyTrac's senior vice president for marketing, told Bloomberg News in an interview. "The discount will probably stay between 25% and 30% as lenders carefully manage the number of new foreclosure actions in order to avoid flooding the market."

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Question of the Week: Readers Respond to Money Morning's U.S. Housing Market Query

By , Associate Editor, Money Morning -

On one hand, housing market reports released last month showed that prices and sales are up from a year ago. The Standard & Poor's Case-Shiller Home Price Index showed a 2.3% year-over-year increase in March prices. And the National Association of Realtors said sales of previously owned homes rose 7.6% from March to April - a five-month high - and were up 22.8% from April 2009.

"A majority of the markets have seen price gains recently," said Lawrence Yun, chief economist at the National Association of Realtors. "A return to old-fashioned responsible lending and buying will help the housing market avoid disruptive and painful bubble-bust cycles."

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