Mortgages and Lending

Mortgage Market Update for November 28, 2011 - provided by Julie Whalen of Guild Mortgage

Last week, October Existing Home Sales inched up to an annual rate just under 5 million units. And although things appear to be improving only slowly, existing home sales are actually UP 13.5% from a year ago.

Even better, the months' supply of existing homes fell to 8.0 and inventory is now down 13.8% versus a year ago. The naysayers jumped on the fact that the median price was also down. But a large portion of October sales came from distressed properties whose prices are heavily discounted. Although some see this as a negative, it's what's needed for inventories to be worked down and for the housing market to recover.

This Week’s Mortgage Forecast

NEW HOME SALES, PENDING HOME SALES, JOBS... Of great interest this week will be more housing market reports and the jobs numbers that are key to the real estate recovery. October New Home Sales are expected to hold steady, above the 300,000 level. September Pending Home Sales, indicating Existing Home Sales a few months out, look to be up a tad.

Friday, we get the November Employment Report. Although payrolls should rise, the number of new jobs is still not enough to bring down the unemployment rate.

30-Year Fixed-Rate Mortgage Averages 3.99 Percent

Freddie Mac’s Primary Mortgage Market Survey showed average mortgage rates changing little from the previous week amid a mix of economic data reports as the 30-year fixed-rate mortgage averaged 3.995, dropping below 4.00% for the second time this year.  The 30-year fixed averaged 3.94% in the October 6, 2011 survey. 

30-year fixed-rate mortgage (FRM) averaged 3.99% with an average 0.7 point for the week ending November 10, 2011, down from last week when it averaged 4.00%. Last year at this time, the 30-year FRM averaged 4.17%.

On September 30, 2011 the US Congress allowed FHA and conforming loan limits to drop from 125% of an area's median home price to 115%. While critics of the higher loan limits claimed that the government shouldn't be supporting mortgages 'for the rich,' recent data shows that the reductions have had a larger impact to the overall real estate market.

According to a survey conducted by the National Association of REALTORs NAR Research arm, 16% of home buyers were forced to leave the market because of the reductions. Especially hard hit were areas with high median home prices and areas where there are a wide range of home prices.

Further survey results showed that 52% of buyers had to come up with additional down payment money and 32% were forced to look for a lower priced home. 

In Denver, FHA loan limts dropped on October 1 from $406,250 to $368,000.