Fixed-rate mortgages remained stable this week while adjustable-rate mortgages rose slightly due to uncertainty about this week’s Federal Reserve’s Open Market Committee meeting, Freddie Mac Chief Economist Frank Nothaft said.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.99 percent, with an average 0.7 point, up from 5.89 percent a week ago but down from 6.30 percent a year ago. One-year Treasury-indexed ARMs averaged 5.27 percent, up from 5.19 percent a week ago but down from 5.65 percent a year ago.

(more…)

Resales increased 2 percent to a 4.99 million annual rate, higher than forecast, from a 4.89 million pace in April, the National Association of Realtors said yesterday. Separately, the Commerce Department said the economy grew at a 1 percent annual pace in the first quarter, capping the weakest six-month expansion in five years.

The supply of homes for sale remains about twice the level representing a stable market, according to the NAR, and figures have yet to show any sign of sustained sales gains. Federal Reserve officials said Wednesday the housing contraction will likely damp growth into 2009.

(more…)

Bankers and lenders are rapidly changing their requirements as home sales and prices plummet and delinquencies and defaults rise. Problems in the mortgage market are spilling into other lending markets as customers struggle to keep up with payments on other loans, such as auto and credit card payments.

“The market is reinventing itself daily,” said Les Berman, owner of Beverly Hills, Calif.-based EB Financial and the president of the California Association of Mortgage Brokers. “I did my first loan in 1971 and have never seen anything like this.”

To adjust their standards - which many critics say grew too lax in the middle of the decade - lenders now are raising minimum credit scores, offering smaller loans, and requiring detailed proof of income and assets.

For those who do meet the tightened criteria, a new plan disclosed yesterday by the Federal Reserve to provide $200 billion to the financial services sector should mean there is plenty of money available for borrowers and lower interest rates, said David Wyss, the chief economist at Standard & Poor’s.

(more…)

The reality is that most all buyers need to obtain a mortgage loan to purchase a home. Since mortgage approval is such an integral aspect of a home purchase, wouldn’t it make sense that REALTORS® have a better understanding of the mortgage pre-approval process, since so few buyers are able to buy a home and pay cash.

These terms appear to be similar, but can be quite different. Not only do they cause confusion for home buyers, there seems to be many interpretations from those in the real estate and mortgage industry as well.

Speaking as a REALTOR®, the difference is in documentation and verification. In other words, is the buyer providing copies of income paystubs and bank account statements to the Mortgage Lender or is the Mortgage Lender simply relying on verbal information provided by the buyer? More often than not, the difference between the two terms is that one is issued without any verification of information and the other starts with the buyer providing written documentation of all information provided. While neither is a considered to be a mortgage commitment, nor a written mortgage guarantee, obtaining a Mortgage Pre-Approval letter is more preferred than obtaining a Mortgage Pre-Qualification letter.

(more…)

WASHINGTON - Rates on 30-year mortgages dropped for a fourth straight week to the lowest level in nearly four years, raising hopes that low rates will help spur a rebound in the hard-hit housing industry.

Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 5.48 percent this week, down from 5.69 percent last week.

(more…)

NEW YORK - This week’s surprise rate cut by the Federal Reserve not only held Wall Street and investors in thrall, it’s also kicked into high gear a rush by homeowners across the country to refinance their mortgages at today’s lower rates.

Thirty-year fixed-rate mortgages now carry an average interest rate of 5.57 percent, down from 5.75 percent last week and from 6.32 percent a year ago, according to a Bankrate.com national survey. That’s bringing them within shouting distance of the historic low of 5.21 percent set in June 2003, when the housing sector was expanding quickly and there was a stampede of mortgage refinancings.

The Fed’s unexpected reduction of the overnight bank lending rate by three-quarters of a point to 3.5 percent this week doesn’t necessarily mean mortgage rates will drop by a similar amount. Mortgage lenders tend to peg their rates instead to the yield on the 1-year Treasury note or 3-month London Interbank Offered rates.

(more…)

NEW YORK (CNNMoney.com) — The worst housing financial crisis in decades is only going to get worse, a Merrill Lynch report said Wednesday.

The investment bank forecasted a 15 percent drop in housing prices in 2008 and a further 10 percent drop in 2009, with even more depreciation likely in 2010.

By contrast, the National Association of Realtors (NAR) expects housing prices to remain flat in 2008. NAR did cut its home price estimate for the current quarter, however, to a 5.3 percent year-over-year decline, which represents the steepest drop in that price measure on record. But NAR sees an uptick in home prices in the last two quarters of 2008.

“Merrill Lynch’s figures are way too pessimistic, and they are unprecedented,” Lawrence Yun, the National Association of Realtors chief economist told CNNMoney.com. “There is so much variation in local housing markets, and we see stable price conditions for 2008.”

(more…)

Sales volume posted the steepest drop since 1982, though the NAR emphasized that volume was still the fifth-highest in history — a result of the nation’s growth.

We are expecting to have year-end sales data for Massachusetts early next week.

The confirmation that prices dropped last year won’t come as a surprise to many, as it simply confirms the end of a story that was written throughout the year. The median price was $218,900, down from $221,900 in 2006.

(more…)

Mortgage rates already sit near historic lows. But larger forces are aligned against a revival: Falling home prices, tighter lending standards, and rising unemployment all are limiting how many people can buy homes, and how much they can spend.

“No matter what happens to mortgage rates, housing is not going to turn around,” said Patrick Newport, an economist with the Waltham forecasting firm Global Insight. “Lower borrowing costs help a little, but the problem right now is that you’re buying something that’s losing value.”

The Fed acted yesterday to reduce the cost of short-term loans to businesses and consumers, including credit card and car loans, hoping to contain the economic damage caused by the housing downturn. The action doesn’t directly affect mortgage rates, which are determined by investors’ decisions on where to put money, between, for example, stocks and bonds.

(more…)

The MBA says 63 percent of foreclosure actions in the third quarter were taken against borrowers who were beyond help, for one of the following three reasons:

1. The home was owned as an investment (18 percent).

2. The borrower received help, then fell behind again (29 percent).

3. The borrower could not be reached (23 percent).

(The numbers don’t add up because some homeowners fall into multiple categories.)

If you follow that logic, then only about 149,000 (the remaining 37 percent) of the 384,000 foreclosure proceedings in the third quarter targeted homeowners who could have been helped.

(more…)