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Friday, September 23, 2016

Friday Rate Update

Freddie Mac: Mortgage Rates Decreased in Anticipation of Fed's Decision

Freddie Mac reported on Sept. 22 that mortgage rates fell again in anticipation of the results of the Federal Open Market Committee's meeting. "The 10-year Treasury yield declined after last week's post-Brexit high in anticipation of the [Federal Reserve's] September policy meeting," said Freddie Mac chief economist Sean Becketti. "The 30-year fixed-rate mortgage followed Treasury yields, falling two basis points and settling at 3.48 percent." This is down from 3.5 percent last week and 3.86 percent a year ago. Meanwhile, the 15-year fixed-rate mortgage dropped to 2.76 percent, down from 2.77 percent a week ago and 3.08 percent a year ago, and the five-year Treasury-indexed hybrid adjustable-rate mortgage slipped to 2.8 percent, down from 2.82 percent last week and 2.91 percent last year.

From "Freddie Mac: Mortgage Rates Decreased in Anticipation of Fed's Decision"
HousingWire (09/22/16) Ramírez, Kelsey

Thursday, September 22, 2016

TransUnion: Rate Hike Could Cause Payment Shock for 9M Borrowers

A new report from TransUnion indicates that an interest-rate hike of 25 basis points by the Federal Reserve would result in 92 million credit-active consumers experiencing a monthly payment increase, but the average increase would be just $6.45 per month. However, 9.3 million consumers would not be able to absorb the increase. "While it's important to address the 9.3 million consumers who cannot absorb the payment shock, 90 percent of exposed consumers can afford their increased monthly payments," said Nidhi Verma, senior director of research and consulting at TransUnion. "However, if interest rates continue to rise progressively, more consumers might not be able to absorb the payment shock." Borrowers with one or more variable-rate credit products, including credit cards, home equity lines of credit, or certain mortgages and personal loans, are among those at risk. According to Verma, "In theory, 137 million consumers could be exposed to a payment shock, but in fact not all of these consumers will be impacted." Varma noted that some consumers pay their balances in full each month, or their annual percentage rates cannot be further increased.

From "TransUnion: Rate Hike Could Cause Payment Shock for 9M Borrowers"
HousingWire (09/21/16) Ramírez, Kelsey

Mortgage Applications Tank 7.3 Percent Amid Rising Rates

The Mortgage Bankers Association (MBA) reported on Sept. 21 that total mortgage application volume fell 7.3 percent on a seasonally adjusted basis last week from the previous week. Refinance applications fell 8 percent to the lowest level since June, though refinance volume remains 26 percent higher than the same week last year. "Mortgage rates increased to their highest level since June last week as comments by some Fed officials made it appear that the Federal Reserve is closer to raising rates," said MBA chief economist Michael Fratantoni. "The average refi loan size fell to its lowest level in three months as more jumbo borrowers left the market." Meanwhile, purchase application volume dropped 7 percent from the previous week but was up 3 percent from the same week a year ago. "Higher rates appeared to have a bigger impact on entry-level buyers, as the average purchase loan size increased to its highest level since June," said Fratantoni.

From "Mortgage Applications Tank 7.3 Percent Amid Rising Rates"
CNBC (09/21/16) Olick, Diana

Wednesday, September 21, 2016

ICBA to Congress: Community Banks Are Not Wells Fargo

ICBA urged Congress to keep in mind the differences between community banks and megabanks as lawmakers consider any legislative response to Wells Fargo’s massive consumer fraud. In a letter to members of Congress, ICBA called for targeted regulatory relief for community banks to promote consumer choice in financial services.

“Community bankers are gravely concerned that the legislative and regulatory reaction to Wells Fargo will again fail to distinguish between too-big-to-manage banks and community banks,” ICBA President and CEO Cam Fine wrote. “Costly, unnecessary new requirements would only hamper community banks’ ability to serve their customers and further drive consolidation and concentration of the nation’s financial resources.”

On the same day that Wells Fargo CEO John Stumpf testified at a fiery Senate Banking Committee hearing, ICBA wrote that community bankers are outraged by the scandal and operate a relationship-based business model at odds with the megabank’s transaction-based approach. ICBA noted that Congress should avoid the kinds of overreaching laws and regulations enacted after the recent financial crisis while continuing to advance tailored regulatory relief for community banks.

“Such legislation is before Congress today, and its momentum should not be stalled by the fraud at Wells Fargo,” Fine wrote. “Fix what’s wrong with American financial services by strengthening what’s right with it—community banks.” 

---ICBA News

Tuesday, September 20, 2016

U.S. Bank Survey: Americans Positive about Life, Anxious about Money 

Most Americans feel positive about their lives but show anxiety about their finances, according to the first U.S. Bank Possibility Index released by Minneapolis-based U.S. Bank yesterday. Three in five Americans feel satisfied with their lives overall, and 65 percent are optimistic about changes over the next year.

However, a majority (52 percent) reported being concerned about their finances. Just under half said they were concerned about paying off their debt and about paying bills, and 55 percent are worried about saving for unexpected life events. Only four in 10 Americans make and follow a budget, the survey found.

At work, this financial stress drives dissatisfaction with salary, with one in three saying they are dissatisfied with their ability to support themselves and their families. However, the survey found that it doesn’t take much more income to be more satisfied with life. The average income difference between those with 25 percent life satisfaction to 89 percent satisfaction was only $12,000 in annual salary.

Financial stress also hinders some home lives, with 42 percent saying their financial situation makes them less satisfied at home and 57 percent saying their finances hinder the personal life they want to enjoy. Only 34 percent of non-homeowners said they will be able to buy a home in the next five years, and four in 10 respondents who valued vacation time and travel said they could not afford it.

--ABA Daily Newsbytes

Thursday, September 15, 2016

Regions Bank Pays $52.4 Million Settlement Over FHA Loans

Regions Bank has agreed to pay a $52.4 million settlement to the government, making it the latest bank to settle alleged abuses from originating mortgage loans insured by the Federal Housing Administration (FHA), the Department of Justice announced Tuesday. Regions, a unit of Birmingham, Ala.-based Regions Financial, admitted that between January 1, 2006, and December 31, 2011, it certified for FHA insurance mortgage loans that did not meet the U.S. Department of Housing and Urban Development's (HUD) standards for borrower creditworthiness.

From "Regions Bank Pays $52.4 Million Settlement Over FHA Loans"
USA Today (09/13/16) Krantz, Matt

Friday, September 9, 2016

Friday Rate Update

Freddie Mac: Mortgage Rates Slip Down

Freddie Mac reported on Sept. 8 that mortgage rates fell slightly this week after rising last week and that low rates continue to fuel refinances. The average 30-year fixed rate mortgage slipped to 3.44 percent from 3.46 percent a week ago and 3.9 percent a year ago. Meanwhile, the average 15-year fixed-rate mortgage fell to 2.76 percent from 2.77 percent a week ago and 3.1 percent a year ago, and the five-year Treasury-indexed hybrid adjustable-rate mortgage dropped to 2.81 percent from 2.83 percent a week ago and 2.91 percent a year ago. "Since the Brexit vote, the refinance share of mortgage activity has remained above 60 percent," said Freddie Mac chief economist Sean Becketti. "As mortgage rates continue to range between 3.41 percent and 3.48 percent, many are taking advantage of the historically low rates by refinancing."

From "Freddie Mac: Mortgage Rates Slip Down"
HousingWire (09/08/16) Ramírez, Kelsey

Meanwhile, at banks *other than* St Casimirs....

Single Women Pay Mortgages More Faithfully Than Men, Yet They Are Charged More

Researchers at the Housing Finance Policy Center of the Urban Institute found that single women default on mortgages less often than men, but they tend to be charged more for their loans and are denied credit more often. Furthermore, the study shows that despite having lower incomes on average than single men, single women tend to make bigger down payments. Researchers found that single women generally present "weaker credit characteristics" at the application stage, so they are more likely to end up with subprime loans. There are concerns about inequity in the system given that single women had statistically lower default rates throughout the study, which encompassed the prime boom years of 2004-2007, the housing bust and global financial crisis from 2008-2010, and the post-recession recovery years of 2011-2014. The researchers wrote, "Given that more than one-third of single women borrowers are minorities and almost half of them live in low-income communities, we need to develop more robust and accurate measures of risk to ensure that we aren't denying mortgages to women who are fully able to make good on their payments."

From "Single Women Pay Mortgages More Faithfully Than Men, Yet They Are Charged More"
Washington Post (09/07/16) Harney, Kenneth R.

Tuesday, September 6, 2016

Mortgage Rates Wander Higher But Remain Near Yearly Lows

Federal Reserve Chairman Janet Yellen's Aug. 26 speech signaling that the central bank is moving closer to raising its benchmark rate initially caused an increase in mortgage rates, but they have since dropped again to near yearly lows. Freddie Mac reported on Sept. 1 that the average 30-year fixed-rate mortgage was 3.46 percent, up from 3.43 percent a week ago but down from 3.89 percent a year ago. The 30-year fixed rate has been less than 3.5 percent for more than two months. Meanwhile, the average 15-year fixed-rate mortgage was 2.77 percent, up from 2.74 percent a week ago but down from 3.09 percent a year ago, and the average five-year adjustable-rate mortgage was 2.83 percent, up from 2.75 percent a week ago but down from 2.9 percent a year ago. "The 10-year Treasury yield inched up in response to [Yellen's] speech last Friday then settled near last week's average," said Freddie Mac chief economist Sean Becketti. "Mortgage rates have hovered between 3.41 and 3.48 percent for the past 10 weeks."

From "Mortgage Rates Wander Higher But Remain Near Yearly Lows"
Washington Post (09/01/16) Orton, Kathy