Mortgage rates have remaind stable due to the Federal Reserve not raising interest rates. The pre-owned single family home sales market is soft this seaon. Subprime lending and adjustable rate market find many battling foreclosure because of greed for home ownership and premium interest rates. Consumers with poor credit and financial flaws put themselves and their banks in risk.
Prices are going raising as the cost of living goes up. Property values shrinking, wages and the job market is still decent. The burden of local, state and the federal government are spending money like drunken sailors and it's only the American fighting attitude that keeps the working guy/gal able to continue. We all know that consumer inflation is far higher than the 2.1 percent official CPI inflation rate. Politicians are “cooking” the books. Eventually the markets will self-correct, but will we ever get spend-thrift politicians?
Mortgage applications are beginning to rise, however existing home sales are lackluster. The number of homes available for sale is decreasing which is a positive indication that the market is stabilizing. The 16% drop in mortgage activity for the first half of 2006 was heavily influenced by non-traditional loans. Strong demand for interest only options was an influence.
The Federal Reserve FOMC (federal open market comittee) meeting left interest rates unchanged at their meeting Tuesday, October 26, 2006. Not withstanding Lehman Brothers prediction that the Fed will have to tighten by at least another quarter point to stem inflation pressures, Federal funds futures give no indication of any coming rate hike or cut for the next several meeting. The cooling of the housing market was indicated a prime factor in the no change vote.
On the defensive side, one of the largest mortgage lenders is cutting 2,500 jobs to weather out the housing slump. Hoping to save $500 million, Countrywide is cutting down its labor force.
However, the second home market has seen activity with the baby boomers. A recent survey shows future growth in second homes due to the sheer size of the baby boom generation.
Further housing weakness will be triggered by a credit crunch was predicted by UCLA Anderson Forecast in a recent Investment Business Daily article.
UCLA Anderson Forecast predicted growth to rise and a fed funds rate to 4.5% from 5.25% and they see at least two, if not three, Fed rate cuts keeping economic growth this year in positive territory. Lower mortgage rates are on the horizon.
With a 8 1/2 month backlog of housing inventory, a drop in mortgage interest rates would rev up a few engines. The National Association of Realtors said that pending home sales rose 0.7%, a gain that came despite bad weather and the impact from subprime mortgage problems.
Mortgage applications rose 3.2% in the week ending February 23 and were up 8.8% vs. the same week last year according to Mortgage Bankers Association. The average rate for 30-year fixed rate loans fell to a 7-week low of 6.16%.
Mortgage applications rose 8.1% and refinancing applications surged. The 30-year fixed rate mortgage fell 15 basis points to 5.98% last week which was the lowest since October 2005.
Home builder stocks rose on the data which was further fueled by a Toll Bros., the luxury home builder. Report that they anticipate a market bottom. Additionally, Citigrop upgraded the home builder stock sector.
Good news for those applying for mortgages. Mortgage rates sunk to 6.18% with the benchmark 3-year fixed rate mortgage indicator, ending November 22. The rate had been 6.24% one week earlier and a year ago it stood at 6.8%.
Applications for new home buyers slid 2.8% and applications for all mortgages fell 3.7% for the week of November 17th.
