Mortgage Rates Edge Up

Mortgage rates rise 0.7 points

Last week, mortgage rates rose an average 0.7 points, according to Freddie Mac. Realtor Magazine reports a “series of recent positive reports showing the housing market on the mend” may have affected mortgage rates, halting the downward trend.

Increase in home sales highest in over a year and a half

Existing home sales for December of last year increased 5 percent from the month prior — the biggest month-to-month increase since May, 2010. It is also a 3.6 percent increase year over year from December 2010, when 4.45 million units were sold.

Recovery on the way?

NAR’s chief economist, Lawrence Yun, thinks these may be early signs of a sustained recovery — “Record low mortgage interest rates, job growth and bargain home prices are giving more consumers the confidence they need to enter the market.” (via RealtorMag)

NAR President Moe Veissi believes that with steady improvement in the job market, the housing market will also improve, as more home buyers try to make the most of market conditions — low prices and low rates — in 2012.

Do Some Houses Sell Faster Than Others?

An interesting infographic says “yes”

The site One Block Off the Grid (1bog.org), a free group discount site focused on solar energy solutions for home owners, recently published the following infographic showing some statistics about why some houses sell faster than others.

Good News for Unemployed Homeowners

Freddie Mac and Fannie Mae announce mortgage forbearance extension

In another move geared to moving the housing market recovery along, the two major mortgage players, Freddie Mac and Fannie Mae, last week announced expanded relief programs for homeowners struggling with their loans due to joblessness. The thought that relieving some of the stress from the combination of joblessness and mortgage obligations will make it easier for distressed and out-of-work homeowners to focus on finding a new job and getting back on track with their home loan.

Freddie Mac and Fannie Mae Forbearance for Jobless now 12 Months

Freddie Mac and Fannie Mae now allow mortgage companies to grant unemployed borrowers payment suspension or reduction for up to 12 months. Previously, the maximum length for mortgage forbearance on Freddie Mac guaranteed loans was six months, with written approval from Freddie Mac.

FHA Forbearance was extended to 12 months last July

The Federal Housing Authority (FHA) made a similar move six months ago, in July 2011, when it mandated that mortgage companies offer 12 months of forbearance to qualified unemployed borrowers — up from a prior maximum of four months.

Nearly 60% of Outstanding Mortgages Backed by Fannie, Freddie and the FHA

The announcement from Freddie and Fannie impacts far more homeowners than did the FHA’s announcement last July — Freddie and Fannie together guarantee nearly half of all U.S. home loans, while the FHA backs less than 10 percent.

For more, read these articles:

• Unemployed Mortgage Holders Get Extension on Payments (The New York Times)
• Mortgage Aid for Unemployed Expanded (Wall Street Journal Developments)
• Fannie Mae unveils new forbearance program for unemployed and Freddie extends mortgage forbearance for unemployed (Housing Wire)

News Flash: Housing is Important to Economic Recovery

Federal Reserve speaks up on the housing market

Consumer Confidence + Tight Credit + Too Much Empty Property = Slow Recovery

Last week the Fed sent a housing “white paper” to Congress discussing the importance of housing to the economic recovery. On Friday, Federal Reserve Governer Elizabeth Duke observed that “housing demand and homebuilding continue to be restrained by weak income and sentiment, tight lending standards, and a large overhang of vacant properties.”

Unemployment Improvement in Fits and Starts

Duke said she sees unemployment trending down and for inflation to settle to levels that are consistent with the Fed’s mandate. Unemployment does seem to be dropping: December’s jobless rate of 8.5 percent was the lowest it’s been in almost two years.

Housing Recovery is Critical to Economic Recovery

Duke also noted that, typically, the housing sector plays an important role in propelling economic recoveries — and that so far, the housing sector has not only contributed to the recovery, but the combination of substantially decreased home values and the hit on consumer confidence has not only slowed consumer spending, it has pushed a substantial number of homeowners underwater on their mortgages.

More Aggressive Government Support May Be the Answer

Both the white paper sent to Congress and Duke’s comments on Friday included suggestions that more aggressive policies and action from the government may be required to boost the housing market and spur economic recovery. According to Duke,

“policymakers should at least consider policies that take into account the role the GSEs [government-sponsored enterprises] could play in hastening the healing of the housing market rather than focusing entirely on minimizing losses to the GSEs. In the end, breaking the current logjam created by large numbers of loans severely past due or in foreclosure and high levels of distressed sales should help reduce losses to the GSEs by breaking the downward cycle in prices. And, I think it is plausible that a faster recovery in the housing markets could speed, rather than slow, the end of GSE conservatorship,”

For more of Duke’s comments at the Virginia Bankers Association/Virginia Chamber of Commerce 2012 Financial Forecast, and perspective on the Fed’s position on the housing market and recovery:

• Economic Developments, Risks to the Outlook, and Housing Market Policies (Elizabeth Duke’s speech)
• Fed governor suggests tight underwriting is stalling recovery (Housing Wire)
• Fed’s Duke Sees ‘Choppy” U.S. Job Market Amid Gradual Recovery (Bloomberg Businessweek)
• Fed Up With the State of Housing (Wall Street Journal|Heard On The Street)