Friday Rate Update

Mortgage Rates Slip Slightly

The average rate for a 30-year fixed-rate mortgage slipped slightly to 4.51 percent from last week’s rate of 4.58 percent, Freddie Mac said yesterday. At this time in 2012, the 30-year FRM rate averaged 3.59 percent.

New U.S. Rules to Cut Mortgage Risk, Improve Underwriting Process

The Federal Deposit Insurance Corp. (FDIC) today will vote on whether to release for public comment rules requiring lenders and bond issuers to maintain a stake in loans that they bundle and sell as securities, with the exception of low-risk mortgages. The Federal Reserve, the Department of Housing and Urban Development, and three other agencies were required under the Dodd-Frank law to revise the rules and are expected to proffer similar proposals shortly.

From "New U.S. Rules to Cut Mortgage Risk, Improve Underwriting Process"
Reuters (08/28/13) Chadbourn, Margaret

New Home Sales Plummet in July

Sales of new homes fell 13.4 percent in July to a seasonally adjusted annual rate of 394,000, according to the Department of Commerce Friday. Sales were 6.8 percent higher than a year ago. The median new home price rose to $257,200.

--ABA Daily Newsbytes

Small Banks Adjust to CFPB's New Mortgage Rules

The Consumer Financial Protection Bureau (CFPB) on Aug. 15 issued revised examination procedures for mortgages, including rules that govern ability-to-repay standards and qualified mortgages. Small banks, including the $2.1 billion-asset Federal Bank of Tennessee, say the rules are keeping them busy. The CFPB's mortgage rules are complicated and likely will require smaller lenders to make big changes, says an executive with the American Bankers Association.

From "Small Banks Adjust to CFPB's New Mortgage Rules"
American Banker (08/20/13) Peters, Andy



Maryland Goes After Payday Lenders' Banks to Stop Illegal Loans

Maryland's financial regulator is trying to stop illegal online payday loans by going after the banks that help make the loans possible. "Without the payday lender's bank, the payday lender can't operate in my state," said Mark Kaufman, commissioner with the state's division of financial regulation. The institutions are all outside Maryland and the reach of the state regulator, but Kaufman said his office has turned over the names of eight banks to federal regulators in recent months.

From "Maryland Goes After Payday Lenders' Banks to Stop Illegal Loans"
Baltimore Sun (08/19/13) Ambrose, Eileen

More Car Loans Than Mortgages in U.S.

There are now more auto loans than mortgages in the U.S., according to new data from the Federal Reserve Bank of New York. Americans were holding 84 million auto loans in the second quarter of 2013, compared with 80.6 million mortgages, the New York Fed’s Household Debt and Credit Report showed. Borrowing for vehicles reached $814 billion in the second quarter, an increase of $20 billion from the previous quarter. The increase was bigger than any other loan category in the quarter. Most auto loans go to older borrowers, with the greatest share going to people aged 30 to 49. The only group originating more loans than before the recession are people over 60.

From "More Car Loans Than Mortgages in U.S."
Wall Street Journal (08/14/13) Izzo, Phil

Cheat Sheet: The Future of Housing Finance Reform

According to American Banker, President Barack Obama's housing finance reform strategy involves unwinding Fannie Mae and Freddie Mac over several years, and putting private capital at the center of the housing finance market. The plan will also allow the federal government to maintain a limited role in the new system. Obama has outlined four specific principles for reform: keeping a government role in the market; eliminating the possibility of bailouts; preserving products such as the 30-year fixed-rate mortgage; and promoting affordable housing.

From "Cheat Sheet: The Future of Housing Finance Reform"
American Banker (08/09/13) Borak, Donna

Fannie: Consumer Attitudes on Housing Market Improving

Consumer attitudes toward the housing market are increasingly positive despite the recent rise in mortgage interest rates, Fannie Mae reported. Fannie’s July National Housing Survey found that the share of respondents who believe interest rates will go up over the next year increased 5 percentage points to 62 percent, the highest level in the survey’s three-year history.

Consumers also expect home prices to climb an average of 3.9 percent over the next 12 months, holding steady from the May and June surveys. Meanwhile, the share of respondents who said it is a good time to buy a house increased to 74 percent, while the share who said it’s a good time to sell a house increased to 40 percent, matching the survey high.

--ICBA

Survey Finds Some Credit Easing, Stronger Loan Demand

On balance, banks eased credit standards during the last three months as demand for loans rose, according to the Federal Reserve’s July survey of senior loan officers released yesterday. Demand for business and mortgage loans increased, with close to half of respondents reporting moderately stronger demand for commercial real estate lending and a majority of respondents reporting moderate growth in mortgage loan demand.

“Of the domestic respondents that reported having eased either standards or terms on [commercial and industrial] loans over the past three months, all but two cited more-aggressive competition from other banks or nonbank lenders as an important reason for having done so,” the Fed reported. Other reasons cited by large numbers of respondents included a more favorable or less uncertain economic outlook and increased risk tolerance.

In consumer lending, net percentages of respondents reported easing standards on prime mortgages (7.4 percent), car loans (14 percent) and consumer lending such as credit cards (3.7 percent). “Demand for all three types of consumer loans asked about in the survey had reportedly strengthened, on balance, over the second quarter,” the Fed said.

--ABA Daily Newsbytes

Friday Rate Update

Mortgage Rates Edge Up

The average rate for a 30-year fixed-rate mortgage edged up slightly to 4.39 percent from last week’s rate of 4.31 percent, Freddie Mac said yesterday. At this time in 2012, the 30-year FRM rate averaged 3.55 percent.