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Friday, July 29, 2016

Friday Rate Update

Freddie Mac: Mortgage Rates Continue Upward Trend

Freddie Mac reported on July 28 that the 30-year fixed-rate mortgage rose to 3.48 percent from 3.45 percent a week ago but fell from 3.98 percent a year ago. The 15-year fixed-rate mortgage climbed to 2.78 percent from 2.75 percent a week ago but was down from 3.17 percent a year ago. Meanwhile, the five-year hybrid adjustable-rate mortgage held steady at 2.78 percent for the week but was down from 2.95 percent a year ago. "Home sales continue to benefit from the persistently low mortgage rates with June's new home sales coming in at an annualized rate of 592,000 homes, its fastest pace since 2008," said Freddie Mac chief economist Sean Becketti. "The 10-year Treasury yield remained flat this week in anticipation of the [Federal Reserve's] July policy meeting. Mortgage rates, on the other hand, rose another three basis points to 3.48 percent."

From "Freddie Mac: Mortgage Rates Continue Upward Trend"
HousingWire (07/28/16) Ramírez, Kelsey

Wednesday, July 27, 2016

Economic Notes from the ABA

Home Price Growth Eases 

Home price growth in 20 major metro areas continued to rise in May, with year-over-year growth at 5.2 percent, according to the Standard & Poor’s/Case-Shiller Home Price Index released yesterday. Home price growth was down from the previous month’s 5.4 percent rate. Prices have grown at a rate of 5 percent or higher since early 2015. Eight cities reported year-over-year growth, and 12 cities reported increases in May. Year-on-year growth was highest in Portland, Seattle and Denver. 


New Home Sales Rise 

Sales of new homes were up 3.5 percent in June to a seasonally adjusted annual rate of 592,000 units, the Commerce Department said yesterday. The rise followed a decrease in May, and June’s figure was 25.4 percent above last year’s number. The median new home price for the month was $306,700. 

Friday, July 22, 2016

Friday Rate Update

Mortgage Rates Edge Up 

The rate for a 30-year fixed-rate mortgage averaged 3.45 percent this week, up from the previous week’s 3.42 percent, Freddie Mac said yesterday. At this time last year, the 30-year FRM rate averaged 4.04 percent. 

This week’s 15-year FRM averaged 2.75 percent, up from 2.72 percent last week. A year ago, the 15-year FRM averaged 3.21 percent.

---ABA Daily Newsbytes

Wednesday, July 20, 2016

Gallup Survey: Majority of Americans Think Cashless Society Will Be Reality

A new Gallup poll reveals that 62 percent of Americans surveyed expect the United States to become a cashless society at some point in their lifetime, with all purchases made electronically or with credit or debit cards. Americans already make payments from an expanding menu of electronic options, fewer make cash transactions, and younger populations are becoming more comfortable without cash in their pockets, said Gallup. Fifty-eight percent of those 65 and older and 63 percent of those between the ages of 18 and 29 foresee a cashless society in the future. Overall, only 25 percent responded that a cashless society was unlikely, and just 11 percent said it was very unlikely.

From "Gallup Survey: Majority of Americans Think Cashless Society Will Be Reality" (07/18/16) Dean, Charles J.

Friday, July 15, 2016

Friday Rate Update

Mortgage Rates Barely Budge as Risk Appetite Remains Low

Freddie Mac reported on July 14 that the average 30-year fixed-rate mortgage rose to 3.42 percent, up one basis point from the previous week and 11 basis points from the all-time low set in 2012. Meanwhile, the average 15-year fixed-rate mortgage was 2.72 percent, down from 2.74 percent the previous week, and the average five-year hybrid adjustable-rate mortgage was 2.76 percent, up from 2.68 percent. Freddie Mac indicated that mortgage rates did not fall as much as Treasury yields after the Brexit vote and have not bounced back as much since then, and "this pattern suggests that mortgage rates are likely to remain low throughout the summer."

From "Mortgage Rates Barely Budge as Risk Appetite Remains Low"
MarketWatch (07/14/16) Riquier, Andrea

Wednesday, July 13, 2016

Study: Financial Literacy Dips Even as Americans’ Finances Recover 

Consistent with overall economic improvement, measures of Americans’ financial stress and fragility continue to improve -- even as financial literacy trends slightly downward -- according to the 2016 Financial Capability in the United States study released yesterday by the FINRA Investor Education Foundation and the Global Financial Literacy Excellence Center. The share of Americans satisfied with their personal financial condition has doubled since 2009 to 31 percent.

The survey showed improvements in several indicators, such as ability to pay bills, saving more than one spends, paying credit card balances in full and calculating retirement needs. Forty-six percent have three months’ worth of expenses set aside in an emergency fund, up 11 points from 2009. The share of recent homebuyers who put down at least 20 percent rose 9 points to 33 percent.

However, even as overall finances improved, Americans’ financial literacy continued a downward trend. In 2009, 42 percent answered four out of five basic financial questions correctly; in 2015, only 37 percent did. The questions cover everyday situations relating to interest rates, inflation, bond prices, mortgages and risk. Middle-income respondents showed the biggest drops in knowledge relative to both poorer and wealthier respondents. Despite these results, 76 percent rated their own financial knowledge as “high” -- up 9 points from 2009.

Student loans remain an area of stress for the quarter of respondents with outstanding student debt. More than half of those with student debt said they did not calculate their monthly payments before taking on the debt and that they would have changed their approach to financing their education if they had to do it again. Large shares of student loan borrowers are having a hard time managing their debt. Nearly half said they are concerned they will be unable to pay off their debt, and 37 percent have been late with a payment at least once in the previous year.

--ABA Daily Newsbytes

Monday, July 11, 2016

Millions of Spenders Are Ready to Come Back From the Mortgage Crisis

The number of people who lost their homes to foreclosure peaked seven years ago, and many are once again applying for loans as their credit scores begin to improve. These credit score improvements, combined with gains in both employment and income, could bolster consumer spending over the next couple of years. According to data from the Federal Reserve Bank of New York, the number of consumers with a new foreclosure added to their credit report totaled 6.8 million from 2007 to 2010. Negative events like short sales and foreclosures typically roll off a borrower's credit report after seven years, and for many, that anniversary is fast approaching. This could boost demand for homes, increase spending on durable goods like appliances and furnishings, and even prompt consumers to apply for new credit cards or auto loans. "Banks are awash in reserves, so it's a backdrop that's ripe for further extension and further growth in consumer credit," said Jacob Oubina, a senior U.S. economist at RBC Capital Markets LLC in New York. However, many people who experienced foreclosure also had trouble paying other bills, resulting in a bigger hit to their credit scores, which could stay lower for longer.

From "Millions of Spenders Are Ready to Come Back From the Mortgage Crisis"
Bloomberg (07/07/16) Stilwell, Victoria

Friday, July 8, 2016

Friday Rate Update

Mortgage Rates Fall 

The rate for a 30-year fixed-rate mortgage averaged 3.41 percent this week, down from the previous week’s 3.48 percent, Freddie Mac said yesterday. At this time last year, the 30-year FRM rate averaged 4.04 percent.

This week’s 15-year FRM averaged 2.74 percent, down from 2.78 percent last week. A year ago, the 15-year FRM averaged 3.2 percent.

--ABA Daily Newsbytes

Wednesday, July 6, 2016

FHFA Report Highlights Results of GSEs' Nonperforming Loan Sales

The Federal Housing Finance Agency's first report on the sales of nonperforming loans (NPL) owned by Fannie Mae and Freddie Mac shows that only 24 percent of the 8,849 loans sold before June 30, 2015, were resolved, about half through foreclosures. However, the report also reveals that a significant percentage of loans sold to investors had better outcomes than nonperforming loans in the portfolios of Fannie and Freddie. Eight months after the loans were sold, 21 percent of the borrowers avoided foreclosure while 16 percent went into foreclosure, compared with 14 percent of borrowers of loans held in government-sponsored enterprise (GSE) portfolios who avoided foreclosure and 20 percent who went into foreclosure, according to the report. "What that says is the NPL sales are better at avoiding foreclosure and resolving loans more quickly than leaving the severely delinquent loans in GSE portfolios," says Laurie Goodman, co-director of the Housing Finance Policy Center at the Urban Institute. Goodman notes that investors buying nonperforming loans have incentives to offer principal reductions and more flexibility in modifying loans than GSE servicers.

From "FHFA Report Highlights Results of GSEs' Nonperforming Loan Sales"
American Banker (07/05/16) Collins, Brian

Jumbo Mortgages Play Larger Role at U.S. Banks

Some lenders continue to increase jumbo mortgage lending in response to regulatory pressure and other challenges since the mortgage crisis. High-dollar home loans rose to 24 percent of mortgage approvals at six of the largest U.S. banks — JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, PNC Financial Services Group, and SunTrust Banks — in 2015 from 21 percent the year before, according to an analysis of federal home loan data. In 2012, jumbo loans accounted for just 12 percent of all mortgage approvals at the six banks. Jumbos are attractive to lenders because they typically go to borrowers who have high credit scores, big down payments, and low default rates. Moreover, jumbos are not linked to government programs that help back home loans — programs that cost banks tens of billions of dollars in fines after the financial crisis. The focus on jumbos has contributed to a decline in lending to black and Hispanic borrowers because people in those groups rarely receive jumbos.

From "Jumbo Mortgages Play Larger Role at U.S. Banks"
Wall Street Journal (07/05/16) P. C1 Ensign, Rachel Louise

Monday, July 4, 2016