December 22, 2008

Will Credit and Mortgage Markets Rebound in 2009?

Author: admin - Categories: California Real Estate News, Housing Spotlight, Real Estate News - Tags: , , , , ,

Real estate news continues to dominate main stream media because of the housing sales slumps, foreclosure crisis and historic mortgage rate cuts. The Existing Home Sales release will be released soon from the National Association of Realtors and the Department of Housing and Urban Development. The Commerce Department will also release a report with new home sales data.  These three reports should help the experts measure the strength of the housing sector and home loan credit demand, however, neither consider to be of high importance. Both of the reports are expected to show a decline in sales.

In a recent article, Kelly Media Group President, Jason Cardiff said, “2009 may see the housing sectors and mortgage refinance markets rebound after all.” Cardiff continued, “The Federal Reserve showed their commitment with record low rate cuts to fight deflation and many believe the President Elect, Barrack Obama will be aggressive in an effort to stem the foreclosure mess.” HUD continues to release new FHA loan products that offer solutions for mortgage refinancing with Hope for Homeowners and FHA Secure. FHA continues promoting rehabilitation and home remodeling to foreclosed home-buyers with the 203k rehab loans. FHA actually insures rehabilitation mortgages for owner-occupants and non-profit housing providers who finance the rehabilitation of an existing property or the purchase and rehabilitation of a property.

December 17, 2008

Low Mortgage Rates May Stimulate Real Estate Markets in 2009

Author: admin - Categories: Published Real Estate Articles, Real Estate News - Tags: , , , , , , , , , ,

The Federal Reserve continued with their rate cutting campaign that promotes home financing and lending directly to damaged financial markets and companies. Its statement Tuesday came with a promise to extend those efforts. “The focus of the Committee’s policy going forward will be to support the functioning of financial markets and stimulate the economy through open market operations and other measures that sustain the size of the Federal Reserve’s balance sheet at a high level,” the Fed said.

Two large Federal lending programs are still being ramped up. In one, the central bank will buy up to $600 billion of debt issued or guaranteed by Fannie Mae, Freddie Mac and other government-backed mortgage businesses. So far, the Fed has only committed $8 billion to purchasing bad credit home loans. Officials have been relieved that mortgage rates have come down since announcing the program. 

According to HSH Associate, mortgage rates for conforming thirty year home loans dropped from 6.64% to 5.28% since the Fed’s last meeting, a financial publishing firm. It has been one of the few areas in financial markets where credit costs have shown substantial improvement in the past few weeks. “Over the next few quarters the Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand its purchases of agency debt and mortgage-backed securities as conditions warrant,” the Fed said.

Fed officials have high expectations for a separate program through which they will lend up to $200 billion against high-rated securities backed by car loans, student loans, credit-card debt and small-business loans. U.S. officials have said the program, which is called the Term Asset-Backed Securities Loan Facility and is expected to be operational in February, can be expanded to other asset classes — such as commercial real estate loans or mortgages not backed by Fannie Mae and Freddie Mac. FHA loans also got a boost from the Fed’s rate reduction, as FHA mortgage executive, Jeff Moran said, “FHA mortgage applications have surged since last week.” Moran continued, “Our lending office alone saw a 35% increase new loan application volumes, compared to the previous week.”

The latest housing data underscored the grim economic setting. The housing downturn is now more than three years old. “November’s report for new home production and permit issuance indicates not only that conditions aren’t improving in the housing market, but that the situation is getting worse,” said David Crowe, chief economist with the National Association of Home Builders. Real estate news in 2008 has been mostly negative amid the foreclosure crisis and stock market slide. Kelly Media Group President, Jason Cardiff spoke to reporters in Toronto today as the rate cut news hit the wires. Cardiff said, “The Federal Reserve has made their move to lower mortgage rates to these historic levels. Now struggling American homeowner who have been waiting on the sidelines to refinance can now jump into the game.” Cardiff continued, “Let’s take a moment for have a round of applause…Fixed rates at 5% is good news for American homeowners.”

The Federal Open Market Committee had downgraded its unemployment and economic growth projections at its last meeting on October 29th and things have only gotten worse since then. The unemployment rate, at 6.7% in November, was already above the Fed’s October forecast for the fourth quarter and looks sure to go higher still.

Economists at Macroeconomic Advisers LLC, a forecasting firm, say the nation’s gross domestic product is on track to contract by 6.5% in the current quarter. If they’re right, it will be the worst quarter since 1980. “Since the Committee’s last meeting, labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment and industrial production have declined. Financial markets remain quite strained and credit conditions tight,” the Fed said.

The recent decline in mortgage rates could help revive housing markets. Federal Reserve officials also are focused on reducing other interest rates relative to Treasury benchmarks, a difference that is known on Wall Street as a ’spread.’ Across a wide-range of consumer lending, spreads have remained painfully high since September, a sign of tight credit conditions.

December 10, 2008

Foreclosures Increase Home Sales

Author: admin - Categories: California Real Estate News, Real Estate News - Tags: , , , ,

According to a report from Michael Corkery, the early indications of more housing market gloom October – a month in which one home builder executive declared that “home buyers had essentially gone on strike” — pending home sales were not as low as many real estate experts had anticipated. The National Association of Realtors’ measure pending sales were down 0.7%. in October from the previous month, compared with Wall Street’s estimate of a 3% decline.

The reason for the real estate evaluators to be so far off their predictions was likely to due to foreclosure news. Credit Suisse analyst Dan Oppenheim said his survey of real estate agents showed signs of dismal sales in October, but those real estate agents might have missed the foreclosures being sold by mortgage lenders and banks in bulk or through auctions in the distressed markets of Southern California, Las Vegas Nevada and most of Florida. California short sales continued to dominate the pending real estate sales.

The better than expected pending sales are a mixed blessing. The home foreclosure sales continue to drive down prices and are taking away business from home builders and homeowners trying to sell their homes. But it does suggest that the foreclosure overhang is being whittled away, especially in the South – primarily Florida – where pending home sales were up 7.8% in October.

Will Lower Home Mortgage Rates Salvage the Real Estate Markets?

Author: admin - Categories: Published Real Estate Articles, Real Estate News - Tags: , ,’s real estate experts weigh the Treasury’s attempt to regenerate the real estate bubble by reducing home mortgage rates. In a recent article, Stephane Fitch considers the controversial proposal being discussed in which the U.S. government will actually buy down the interest rates from banks to ensure lower mortgage rates to help ignite the housing market that has been hindered by foreclosures and declining real estate in the news nationwide. Forbes magazine brought together their panel of real estate experts who are uniquely qualified to analyze, assess and anticipate movements to escape the housing crisis.

Forbes: The biggest headline of the moment: The government seems to be planning serious action to lower mortgage rates. But there’s a lot of other news happening. (Anybody notice that an obscure developer named Donald Trump is in a legal fight with his mortgage lenders? Both Radar Logic and have released new data and insights about the housing crisis. Mark Zandi’s colleague at, Celia Chen, has asked me to share with you all an interesting study of own vs. rent ratios across the nation that is quite alarming.

Let’s go around the horn about the mortgage rates. Treasury reportedly wants to push mortgage rates down to 4.5% from their current level. It’s unclear how they’ll do this or whether it’s wise public policy. But let’s take the 4.5% mortgage rate on its face.

Spencer, is reporting that the going rate for a 30-year fixed rate amortizing mortgage is around 5.3%. That figure doesn’t include the payment of “points.” I believe a no-points thirty-year home loan is solidly above 6% today. So driving down rates by 150 basis points is just huge. What does this mean to a wealthier person, a Forbes reader, say, who is thinking of buying or selling or holding onto a house?

Spencer Rascoff: What a wild last two weeks. The national average interest rate for a thirty-year fixed mortgage in Zillow Mortgage Marketplace is now down 80 basis points from two weeks ago. This dramatically improves the affordability of real estate to the typical home-buyer and has sparked a refinance boom in the last few weeks.