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RealtyTrac recently reported that national foreclosure filings are down while foreclosure filings are seeing marked increases in some states.
There are two systems for foreclosing residential real estate in the United States; judicial and non-judicial foreclosure. The states individually decide which foreclosure process will be followed in their state.
Judicial foreclosure requires action by the courts because the mortgage is not written including a “power of sale clause”. Judicial foreclosure proceedings generally take longer than non-judicial processes due to this court involvement.
A log-jam of delayed judicial foreclosures are beginning to move through backlogged courts with the result of higher numbers of foreclosures started, foreclosure auctions scheduled, and properties either sold to third parties at foreclosure auctions or repossessed by mortgage lenders.
In states allowing non-judicial foreclosure, the matter may be handled outside of the judicial system as the mortgage is written with the power of sale clause which allows the lender to take control of the mortgaged property to satisfy the outstanding lien.
Here are highlights of April’s foreclosure report:
Nationally, 144,790 foreclosure filings were made in April, a decrease of 5 percent compared to March and representing an annual decrease of 23 percent year-over-year.
Overall, April’s residential foreclosure activity was at its lowest since February 2007. About one of every 905 U.S. housing units had a foreclosure filing during April.
Due to the aforementioned backlog of judicial foreclosures, scheduled foreclosure auctions hit a 30-month high in April rising by 22 percent between March and April.
Some states had markedly higher rates of foreclosure sales scheduled in April 2013 as compared to April 2012. Examples include Maryland (+199 percent), New Jersey (+91 percent), Ohio (+73 percent), Oklahoma (+57 percent), and Florida (+55 percent)
Foreclosure auctions scheduled in non-judicial states were 7 percent lower in April as compared to March, and were an encouraging 43 percent lower in April 2013 as compared to April 2012; this was the lowest reading for non-judicial foreclosure sales scheduled since December of 2005.
Non-judicial foreclosure sales were impacted in some states as the result of legislation affecting foreclosure procedures. Affected states included Arkansas, California, Nevada, Oregon and Washington.
70,133 U.S. homes went into foreclosure in April 2013, which is 40 percent lower than for March 2013 and 28 percent lower than during April 2012.
With home values increasing and large numbers of delayed foreclosures clearing the books, this data offers further evidence that the U.S. real estate market is steadily improving. As more foreclosures are removed from the housing inventory, home prices should continue to stabilize and increase in the Utah area.
Mortgage rates fell again last week and are again near record lows.
According to Freddie Mac, the average rate for a 15-year fixed rate mortgage did achieve a record low of 2.61 percent as compared to 3.1 percent one year ago.
The average rate for a 30-year fixed rate mortgage fell to 3.40 percent and near the record low of 3.31 percent.
The average rate for a 30-year fixed rate mortgage fell to 3.40 percent and near the record low of 3.31 percent.
Low mortgage rates are helping homeowners with refinancing and are boosting housing markets as more buyers can qualify for mortgage loans.
Home Values Continue To Rise
Last week’s economic news was mixed; The Federal Housing Finance Agency, which oversees Freddie Mac and Fannie Mae, released its Home Price Index for February.
According to this index, home prices increased by 0.7 percent between January and February, and increased by 7.1 percent year-over-year on a seasonally adjusted annual basis.
According to the National Association of REALTORS®, existing home sales for March fell short of the expected 5.03 million and came in at 4.92 million existing homes sold on a seasonally adjusted annual basis.
This reading was also 0.7 percent shy of February’s reading of 4.95 million existing homes sold.
Some homeowners may be taking a wait-and-see stance as they wait for home values to continue rising.
Employment Numbers Gaining Steam
Weekly jobless claims fell to 339,000 and were short of the consensus of 351,000 and the prior week’s 355,000 jobless claims filed.
As more workers gain employment, those able to buy homes increases.
The economy in general also benefits as households gain income they can use for purchasing goods and services.
Consumer Sentiment rose by 2.1 points to 76.4 over the March reading of 72.3 percent.
April’s reading also surpassed expectations of 74.0 percent.
As consumers gain confidence in the economy, they are generally more likely to buy homes and make other major purchases that contribute to the U.S. economy.
Coming Up this Week
This week’s economic news calendar includes several reports that impact the housing sector as well as the general economy:
While we can’t predict what will happen with mortgage rates, some industry analysts indicated that they expect rates to remain low in the near-term.
These lower rates should continue to support growth in the Salt Lake City real estate market for homebuyers and sellers as well as those looking to refinance their home.
Mortgage rates worsened last week amid evidence of an improving economy. Conforming mortgage rates climbed in Utah and nationwide, rising to a 4-month high.
Freddie Mac has the average 30-year fixed rate mortgage rate at 3.53% for borrowers willing to pay 0.7 discount points plus a full set of closing costs.
There was plenty of news on which for rates to move last week.
First, the Federal Open Market Committee (FOMC) met and voted to hold the Fed Funds Rate in its current target range near 0.00 percent. The Fed also recommitted to purchasing mortgage-backed securities (MBS) and Treasury securities on the open market until such time as the national Unemployment Rate reaches 6.5%, or until inflation rates rise.
Then, Friday, it was shown in the Non-Farm Payrolls report that the national jobless rate had climbed to 7.9 percent, a statistic Wall Street pinned to Hurricane Sandy. In addition, it was shown that 157,000 net new jobs were added to the U.S. economy in January.
This was a slight improvement from the month prior’s revised figures, and marked the 27th consecutive month of U.S. job growth.
Also last week, the National Association of REALTORS® reported the December Pending Home Sales Index to be lower than expected; largely the result of shortages of available homes in many areas.
In addition, Durable Orders for December were more than twice what investors expected; a further indication of a strengthening U.S. economy.
Lastly, the ISM Index for January surpassed Wall Street’s expectations. This manufacturing index is considered an indicator of future inflationary trends. An upward trend in this index suggests rising mortgage rates. While current mortgage rates remain relatively low, they can be expected to continue rising as the economy improves.
This upcoming week will be quieter with fewer economic series scheduled for release. Factory Orders for December will be announced, as will the ISM Services Index and Jobless Claims. Mortgage rates may continue to rise.
Another month, another good showing for the U.S. economy.
Mortgage rates are performing surprisingly well after Friday’s release of the October 2012 Non-Farm Payrolls report. The Bureau of Labor Statistics’ monthly report beat Wall Street expectations, while also showing a giant revision to the previously-released job tallies of August and September.
171,000 net new jobs were created last month against calls for 125,000 and revisions for the two months prior totaled 84,000.
October also marked the 25th consecutive month of U.S. job growth — a period during which 3.8 million jobs have been reclaimed. This sum represents more than half of the 7.3 million jobs lost between 2008-2009.
Nationally, the Unemployment Rate rose by one-tenth of one percent last month to 7.9%. It may seem counter-intuitive to see unemployment rates rise even as job growth soars. However, it’s a sign of economic strength.
October’s rising Unemployment Rate is the result of more workers entering the U.S. workforce and actively looking for jobs, a manifestation of rising consumer confidence levels and optimism for the future.
Typically, mortgage rates in Utah would worsen on a strong jobs report like this. This month, however, rates are improving. This is mostly the result of Hurricane Sandy, which is expected to create a drag on the U.S. economy with its $50 billion damage tag.
The storm has Wall Street looking past the strong jobs report, positioning itself for the next few months. Investors are moving into less risky assets until the uncertainty surrounding the storm’s effects subside. Mortgage-backed bonds are considered “safe” and are benefiting from this safe haven buying pattern.
For home owners and buyers in Salt Lake City and nationwide, the shift is yielding an opportunity to lock mortgage rates at artifically-low levels. 30-year fixed rate mortgages remain well below 3.50% for borrowers willing to pay discount points, and home affordability is approaching an all-time high.
Home values are expected to rise through 2013 so consider this week’s low rates a gift. If you’re in a position to go to contract and/or lock a mortgage rate, you may want to take that step today
Mortgage markets improved slightly last week. With a dearth of new U.S. economic data due for release, investors turned their collective attention to the Europe, China, and the Middle East.
U.S. mortgage rates fell slightly in the holiday-shortened week.
The combination of civil protests, economic slowdowns, and growing political tensions caused investors to dump risky assets in favor of the relative safety provided by the U.S. mortgage bond market.
According to Freddie Mac, the average conforming 30-year fixed rate mortgage is now 3.39% nationwide for borrowers willing to pay 0.7 discount points plus a full set of closing costs. 0.7 discount points is a one-time closing cost equal to 0.7 percent of the borrowed loan size.
As an illustration, a bank’s charge of 0.7 discount points on a $100,000 mortgage would cost $700 to the borrower.
Freddie Mac also reported the average conforming 15-year fixed-rate mortgage rate at 2.70% nationwide with an accompanying 0.6 discount points plus closing costs. Loans with zero discount points carry a higher mortgage rate average.
This week, data returns to Wall Street as a series of housing reports are slated for release, in addition to inflationary reports such Tuesday’s Consumer Price Index (CPI).
The week begins with Retail Sales, released at 8:30 AM ET Monday. On a strong figure, mortgage rates in Salt Lake City are expected to climb. This is because Retail Sales data is closely tied to consumer spending and consumer spending accounts for more than two-thirds of the U.S. economy.
A growing economy tends to pull mortgage rates higher.
Tuesday’s CPI may do the same.
Inflation erodes the value of a mortgage bond so when inflation pressures grow, demand for mortgage bonds fall which, in turn, causes mortgage rates to rise. If CPI is higher-than-expected, mortgage rates will likely rise.
Then, there’s a flurry of housing data. The Housing Market Index (Tuesday), Housing Starts (Wednesday) and Existing Home Sales (Friday) all hit this week. Strength in housing may lead mortgage rates higher, harming home affordability for today’s home buyers.
At today’s mortgage rates, every 1/8% increase raises monthly mortgage payments roughly $7 per $100,000 borrowed.
