Sudbury MA Real Estate

Homeowners rushing to refinance mortgages

Federal Reserve’s surprise rate cut sparked a refinancing boom

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.

Read the rest of this entry »

Housing prices to free fall in 2008 - Merrill

According to a Merrill Lynch report, home prices will drop 15 percent this year, and declines will continue in 2009.

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.”

Read the rest of this entry »

It’s official: Prices fell in 2007

The median price of an existing U.S. home fell 1.4 percent last year, the National Association of Realtors reported today. It is the first drop in annual median prices since the NAR started reporting data in 1968, and possibly the first since the Great Depression.

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.

Read the rest of this entry »

Lower mortgage rates alone won’t revive the ailing real estate sector

Don’t look for the Federal Reserve’s rate cut to revive the housing market.

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.

Read the rest of this entry »

Mortgage Industry: We ARE helping

A new study from the Mortgage Bankers Association says companies provided some kind of assistance to 246,000 troubled borrowers during the third quarter. That’s smaller than the number of new foreclosure actions during that July through September period, but — here’s the crucial claim — higher than the number of preventable foreclosure actions.

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.

Read the rest of this entry »