U.S. Mortgage Demand Rose From Two-Year Low on Falling Rates

By Bob Willis - Feb 23, 2011 4:00 AM PT

The number of applications for U.S. mortgages rose last week, led by more refinancing as mortgage rates fell to the lowest level since the end of January.

The Mortgage Bankers Association’s index of loan applications increased 13 percent in the week ended Feb. 18 after dropping the prior week to the lowest point since November 2008. The group’s refinancing measure jumped 18 percent and the purchase gauge rose 5.1 percent.

“Refinancing is more sensitive to fluctuations in rates” than are purchases, Paul Dales, a senior economist at Capital Economics Ltd. in Toronto, said before the report. Still, he said he expected refinancing to “remain soft” with sales at “historically depressed levels for perhaps two or three years.”

The average rate on 30-year fixed mortgages dropped to 5 percent as turmoil in the Middle East and North Africa led investors to seek the safety of U.S. Treasury securities, which are benchmarks for some consumer loans, pulling down their yield. Still, mounting foreclosures, falling prices and 9 percent unemployment mean it will take time for demand to pick up.

The 30-year rate fell from 5.12 percent the prior week. It reached 4.21 percent in October, the lowest since the group’s records began in 1990.

At the current 30-year rate, monthly payments for each $100,000 of a loan would be $536.82, in line with the same week the prior year, when the rate was 5.04 percent.

Rates Fall

The average rate on a 15-year fixed mortgage fell to 4.28 percent from 4.34 percent.

The share of applicants seeking to refinance a loan rose to 65.7 percent from 64 percent the prior week.

The housing market is struggling to gain traction after a homebuyers’ tax credit expired last year and as more properties fall into the foreclosure pipeline. Combined sales of existing and new homes in December were at a 5.61 million annual unit pace, down from a July 2005 record of 8.53 million.

A report from the National Association of Realtors today may show existing home sales fell 1.1 percent to a 5.22 million annualized rate in January, according to economists’ estimates. Sales of previously owned homes last year totaled 4.91 million, the lowest level since 1997.

Builder Losses

Homebuilders are still posting losses. D.R. Horton Inc., the second-largest U.S. homebuilder by stock-market value, on Jan. 27 reported a fiscal first-quarter loss that was wider than analysts projected.

“I think 2011 will be a marginal, weak year in the homebuilding industry,” D.R. Horton Chief Executive Officer Donald Tomnitz said during a conference call the same day. “Given the weak macroeconomic conditions, high levels of existing homes for sale and tight mortgage availability, we remain cautious and realistic in our expectations.”

The Washington-based Mortgage Bankers Association’s loan survey, compiled every week, covers about half of all U.S. retail residential mortgage originations.

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

Original article published at http://www.bloomberg.com/news/2011-02-23/u-s-mortgage-demand-rose-from-two-year-low-on-falling-rates.html


Gov. signs new homebuyer tax credit

posted by Jeff Collins

Gov. Arnold Schwarzenegger has signed a new bill providing up to $10,000 in tax credits for both new-home buyers and for first-time buyers of existing homes.

An earlier round of state tax credits offered last year were for new-home purchases only. That program was so popular that homebuyers depleted the full $100 million eight months before the deadline. Continue reading “Gov. signs new homebuyer tax credit”

Tax Credit Ignites Early Spring Selling Season

Daily Real Estate News  | January 21, 2010

Tax Credit Ignites Early Spring Selling Season
The homebuying season is starting early this year, thanks to the expanded first-time and move-up homebuyer tax credit.

Typically, the busiest time for home shopping starts in March and continues through May, but this year buyers who want to take advantage of the tax credits have to hold a signed contract by April 30 and close the deal by June 30. Continue reading “Tax Credit Ignites Early Spring Selling Season”

July pending home sales rise to 2-year high

By ALAN ZIBEL, The Associated Press

8:45 a.m. September 1, 2009

WASHINGTON — A gauge of future U.S. home sales rose more than expected in July to the highest level in over two years as first-time buyers rushed to take advantage of a tax credit that expires this fall.

The report showed the housing market is rebounding faster than expected from its historic bust. Low prices and the looming expiration on Nov. 30 of a first-time homebuyers’ tax credit of up to $8,000 have spurred sales. Prices in much of the country have begun to rise from the depths of the slump. Continue reading “July pending home sales rise to 2-year high”

Tax Credits Used as of 6/24/09

Tax credit amounts

California allocated $100,000,000 for this tax credit. Buyers must apply for credit allocation from us. We will review applications and allocate credit on a first-come, first-served basis. Once $100,000,000 has been allocated, the tax credit will no longer be available. We began issuing certificates of credit allocation on May 1, 2009. Please check this page for updates on the allocated and remaining credits available. Continue reading “Tax Credits Used as of 6/24/09”