Market Conditions

U.S. Home Lending Set to Bounce Back in 2015 After Slump

16.01.2015
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The U.S. mortgage market hit bottom in 2014.

Chief economists at Fannie Mae and Moody’s Analytics Inc. as well as the Mortgage Bankers Association all predicted a turnaround this year after a record decline in 2014.

“The worst is over,” said Mark Zandi at West Chester, Pennsylvania-based Moody’s Analytics. “Mortgage bankers will feel a lot better by the end of the year than they do right now. It will be a long, slow climb out, but better days are ahead.”

Home lending plunged 36 percent last year, according to the MBA, to the lowest since 1997, when the Dow Jones Industrial Average first broke 7,000. The drop was led by Wells Fargo & Co., where originations fell 50 percent from a year earlier, and JPMorgan Chase & Co.’s 53 percent decline, the banks said yesterday in earnings reports.

The market is poised for revival […]

Mortgage Rates Fall for Second Week as 30-Year at 3.66%

15.01.2015
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U.S. mortgage rates fell for a second week, holding at the lowest level in more than a year and a half, as declining financing costs boost loan demand.

The average rate for a 30-year fixed mortgage fell to 3.66 percent from 3.73 percent last week, Freddie Mac said in a statement today. The average 15-year rate declined to 2.98 percent from 3.05 percent, the McLean, Virginia-based mortgage-finance company said. Both are the lowest since May 2013.

Consumers, returning from the holidays, have taken advantage of dropping rates to purchase and refinance homes. The Mortgage Bankers Association’s loan applications index jumped 49 percent in the period ended Jan. 9 after an 11 percent increase the prior week, the Washington-based group said yesterday.

“It’s difficult to make a case that it’s not beneficial,” Paul Diggle, U.S. property economist […]

Failure to Refi Proves Costly

30.12.2014
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Homeowners choose not to refinance their mortgages for any number of reasons. But when they don’t, they lose out on tens of thousands of dollars in savings.

Exactly how much they lose depends on each borrower’s individual circumstances, but a first-of-its-kind study attempts to quantify what people forfeit by not turning in their old loan rates for lower ones.

Researchers found that the median household, having failed to refinance, gave away $45,000 in savings over the life of its mortgage. The study — by Benjamin Keys and Devin Pope from the University of Chicago, and Jaren Pope of Brigham Young University — also found that the mistake of not refinancing is widespread.

Based on a sample of 1.5 million single-family mortgages that were active in December 2010, they estimate that 1 in 5 borrowers — that is, roughly 300,000 families — had not refinanced when […]

Ben Bernanke Couldn’t Refinance His Mortgage

3.10.2014
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Just how inflexible are lending standards these days? Ben Bernanke said at a conference Thursday that he’d been unable recently to refinance his mortgage.

“It’s entirely possible” that lenders “may have gone a little bit too far on mortgage credit conditions,” he said at a conference in Chicago, according to Bloomberg News.

But wait. Surely a man with high income, lots of equity in his home, good credit and a solid net worth must be able to get a mortgage. Mr. Bernanke stepped down as the chairman of the Federal Reserve in January and joined the Brookings Institution as a “distinguished fellow in residence.” He’s also writing a memoir and giving speeches (reportedly for hefty speaking fees).

The broader point Mr. Bernanke was making isn’t that credit standards on their own are unnecessarily restrictive. Borrowers who can make a 3.5% down payment with a 650 […]

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