New Home Sales Edge Up in May


Sales of new homes rose 2.1 percent in May to a seasonally adjusted annual rate of 476,000, according to the Department of Commerce. Sales were 29 percent higher than a year ago. The median new home price was $263,900. Read more.


House Price Index Edges Up in April
U.S. house prices increased 0.7 percent from March to April, according to the Federal Housing Finance Agency’s House Price Index released yesterday. Prices are up 7.4 percent from a year previous, the agency said, but still 11.7 percent below their April 2007 peak. The FHFA's monthly index is calculated using the prices of houses bought with mortgages backed by Fannie Mae and Freddie Mac

Bankers Welcome Rise in Mortgage Rates, If It's Slow and Steady


Mortgage interest backpedaled this week from a 14-month high of 3.98 percent last week, as the average rate on 30-year fixed loans dipped back down to 3.93 percent. The direction is expected to reverse again next week, however, based on the strong likelihood that the Federal Reserve will scale down its bond purchases later in the year. The shift could mean some pain for borrowers and for banks that have been raking in fee income from refinancing loans and selling them on the secondary market. But bankers in general -- and community bankers, in particular -- concur that a slow, steady rise in long-term rates would help normalize conditions. However, "if the 30-year [rate] really spikes a lot, that will have an effect on the real estate market, and it's a fragile market," warns Alex Grinewicz of Columbia Bank in Fair Lawn, N.J.

From "Bankers Welcome Rise in Mortgage Rates, If It's Slow and Steady"
Colorado Springs Gazette (06/20/13)

Mortgage Rates Rise But Still a Bargain

Mortgage rates have topped 4 percent for the first time in about a year, hitting 4.15 percent in the first week of June, reports the Mortgage Bankers Association. The rise represents a 15 percent increase in the cost of borrowing, or about $50 in the average monthly payment on a $192,800 loan -- last month's median price for existing homes. There is concern that rising rates could slow the pace of price and sales gains, but rates would have to move substantially higher to derail the housing recovery. "Rates aren't moving far enough where somebody says, 'I can't get the house I thought I was going to be able to get,'" says Peter Lansing, CEO of Denver-based Universal Lending. Buyers are more concerned about the low supply of homes for sale, which is pushing prices out of their range.

From "Mortgage Rates Rise But Still a Bargain"
Wall Street Journal (06/19/13) P. A4 Timiraos, Nick; Dougherty, Conor

Homebuilders’ sentiment about the market for new single-family homes surged eight points to a 52 reading in June -- the biggest jump since 2002 -- according to the National Association of Home Builders/Wells Fargo Housing Market Index released yesterday. The gain reflected improvement in all three index components -- current sales conditions, sales expectations and traffic of prospective buyers.

“This is the first time the HMI has been above 50 since April 2006, and surpassing this important benchmark reflects the fact that builders are seeing better market conditions as demand for new homes increases,” said NAHB chairman Rick Judson. “With the low inventory of existing homes, an increasing number of buyers are gravitating toward new homes.”

--ABA Daily Newsbytes

Friday Rate Update

Mortgage Rates Rise for Sixth Straight Week

The average rate for a 30-year fixed-rate mortgage climbed to 3.98 percent, Freddie Mac said yesterday, rising from 3.91 percent last week and climbing for the sixth straight week. At this time in 2012, the 30-year FRM rate averaged 3.71 percent.

End of Refi Boom Could Trigger Consolidation: U.S. Bank's Aneshansel

Incoming U.S. Bank Home Mortgage President Rick Aneshansel contends that the decline in refinancing will not be compensated by purchase volume, and is likely to spark a wave of consolidation. "If industry volumes are down, the industry has to resize itself," he says. The Mortgage Bankers Association reports that rising interest rates have caused refinance volume to fall from 72 percent of the mortgage market to 68 percent since January. In addition to the expected slowdown in refinancing, banks are still trying to absorb new mortgage regulations from the Consumer Financial Protection Bureau requiring proof of a borrower's ability to repay a loan. "We see continuing [home price] appreciation and as people get right-side up there's an opportunity to grow home equity lending in a responsible way," Aneshansel says. "We believe that will be a growth product in the next few years."

From "End of Refi Boom Could Trigger Consolidation: U.S. Bank's Aneshansel"
American Banker (06/12/13) Berry, Kate

ICBA’s Fine: The Fair Lending Inquisition Is a New Regulatory Low


Conflicting rules on fair lending and “qualified mortgages” might represent a new low in the history of regulatory doublespeak, ICBA President and CEO Cam Fine wrote. In his latest blog post, Fine wrote that new rules from the Department of Housing and Urban Development and Consumer Financial Protection Bureau put lenders in a no-win situation.

HUD’s fair lending rules could expose community banks to disparate impact legal actions if they choose to only make CFPB-approved “qualified mortgage” loans, Fine wrote in Finer Points. This could mean community banks not violate one regulation while trying to comply with another, he wrote.

Instead of burdening community banks with overwhelming and contradictory regulations, Fine wrote, policymakers should encourage their symbiotic relationships with customers and communities.

“How can we promote lending decisions that are not excessively risky but also support loans to homebuyers who aren’t perfect on paper?” Fine wrote. “Well, just off the top of my head, maybe we should support the relationship lenders out there who meet face-to-face with borrowers to determine their qualifications and potential risks.”

Flood Insurance Update

The House last night adopted, by a 281-146 vote, an ABA-supported amendment that would delay for one year some rate increases in the National Flood Insurance Program. Rep. Bill Cassidy (R-La.) offered the amendment during the chamber’s consideration of the Department of Homeland Security appropriations bill.

ABA and its American Bankers Insurance Association subsidiary expressed support for the provision in a letter to Cassidy and all House members earlier this week.

"While both ABA and ABIA remain committed to moving to actuarial rates for flood insurance coverage under the NFIP, we recognize that a greater transition period may be necessary in order to ensure continued affordability for thousands of middle and low income homeowners and small businesses," the groups wrote.

Consumer Watchdog Releases Final Amendment on Ability-to-Pay Rule

The Consumer Financial Protection Bureau has issued amendments to its ability-to-repay rules that would essentially make it easier for small- and medium-sized financial institutions to issue loans while also honoring qualified mortgage requirements. The rules, required by Dodd-Frank, require banks and credit unions to verify borrowers' finances and prohibit so-called no-doc and other risky loans that harmed borrowers in the recent mortgage crisis. The amendments relax some of these requirements for smaller lenders under the QM rule and also readjust how loan origination compensation is tabulated.

From "Consumer Watchdog Releases Final Amendment on Ability-to-Pay Rule"
The Hill (05/29/13) Needham, Vicki