eCreditDaily.com

Mortgage Rates Set New Lows for 10th Time: 30-Year at 4.32%

2010-09-03T00:01:50Z

Despite prices of Treasury bonds pulling back somewhat in recent days, mortgage rates continued their historic slide this week, setting record lows for the 10^th time in 11 weeks.

The 30-year fixed-rate mortgage averaged 4.32 percent for the week ended today, down from the previous week’s 4.36 percent average — and 5.08 percent from a year earlier, according to Freddie Mac, which has kept records on the benchmark long-term rate since 1971.

Rates have been dropping since investors have been shifting heavily into the safety of Treasury bonds, pushing yields down. Yields on Treasuries move inversely to prices. Mortgage rates tend to track Treasury yields. Debt prices fell today, though, as investors took profits ahead of tomorrow’s unemployment report.

Treasuries tend to trade lower as more positive economic news emerges, though there has been little but fears of a double-dip recession in recent weeks.

Freddie Mac also reported new lows on the other types of loans it tracks.

Rates on 15-year fixed-rate mortgages averaged 3.83 percent, also a new low and down from 3.86 percent the prior week and 4.54 percent a year ago.

Five-year Treasury-indexed hybrid adjustable-rate mortgages were at 3.54 percent, compared with 3.56 percent a week earlier and 4.59 percent last year at this time. That loan type is also a new low, but Freddie started tracking it in 2005.

One-year Treasury-indexed ARMs were at 3.50 percent, down from 3.52 percent the previous week and 4.62 percent a year ago.

Federal Reserve chairman Ben Bernanke said in an August 27th speech that with inflation expectations reasonably stable and the economy growing – however sluggishly – inflation should remain near current readings for some time before rising slowly.

“As a result, mortgage rates eased further this week to new historic lows,” said Amy Crews Cutts, deputy chief economist, Freddie Mac.

House prices, however, appear to be firming, Cutts added.

She noted that home prices rose 2.3 percent between the first and second quarter of this year, reaching the highest level since the fourth quarter of 2008, according to the S&P/Case Shiller National Home Price Index.

Pending Home Sales Register Surprise Jump in July: NAR

2010-09-02T15:36:44Z

Pending home sales of existing homes unexpectedly jumped 5.2 percent in July based on the forward-looking index by the National Association of Realtors, surprising analysts and possibly signaling a bottom to the post-tax credit freefall in the housing market.

The NAR’s pending home sales index rose to 79.4 percent, from a downwardly revised 75.5 in June.

But the index is 19.1 percent below that of July 2009, when it was at 98.1.

The data is based on contracts and not closings. There is normally a lag time of one or two month before they count as existing home sales.

The national index had fallen 29.9 percent in May and another 2.8 percent in June.

Expiration of the expanded homebuyer tax credit program on April 30 sent home sales activity into a sharp downward trend, fueling fears of a double-dip recession and slowing overall economic recovery.

Obama Administration officials have suggested that renewing the tax credit is under consideration.

“Home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery,” said Lawrence Yun, NAR chief economist. “But the recovery looks to be a long process. Home buyers over the past year got a great deal, and buyers for the balance of this year have an edge over sellers.”

Buyers also have historically low mortgage rates on their side. “Affordability could reach a generational high in the second half of the year,” Yun said. But he cautioned that most lenders still have tough lending standards in place.

“The loan underwriting standards are tighter, but home buyers can improve their chances of getting a loan by staying well within their budget,” Yun said.

Record Low Rates Lift Mortgage Refinancing to 15-Month High

2010-09-01T13:52:58Z

Mortgage refinancing activity has bounced back to a 15-month high as borrowers are taking advantage of record-setting low fixed rates, according to the Mortgage Bankers Association’s weekly survey released today.

The MBA’s overall market composite index, covering purchase and refinance applications, increased 2.7 percent last week, compared to a week earlier.

The increase was mostly driven by the refinance component, which moved up 2.8 percent to its highest level since May 1, 2009.

“Refinancing activity picked up again last week, reaching new 15-month highs, as borrowers took advantage of even lower mortgage rates. The drop in mortgage rates was in line with Treasury rates as the latest data continue to show weak economic growth and an exceptionally weak housing market,” said Michael Fratantoni, MBA’s Vice President of Research and Economics.

Fratantoni said the sharp decline in the MBA’s purchase application index in May “had provided a clear leading indicator of the drops in new and existing home sales that were reported for June and July.”

Despite the slight increase in purchase activity in the past week, the MBA does not expect an increase in new home sales reported for August or existing home sales reported for September.

The MBA reports that average contract interest rate for 30-year fixed-rate mortgages decreased to 4.43 percent last week, from 4.55 percent — with points increasing to 1.34 from 0.89 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The contract rate is a new low for the MBA’s survey.

Also see: Mortgage Fixed Rates Still Setting New Lows: 30-Year at 4.36%

FDIC: ‘Problem’ List Grows – But Earnings Up, Charge-offs Down

2010-08-31T15:21:55Z

Insured banking institutions reported earnings of $21.6 billion in the second quarter of 2010, up significantly from the year-ago loss of $4.4 billion and marks the highest quarterly earnings since third quarter 2007, the Federal Deposit Insurance Corp. reported today.

In its second-quarter update, though, the FDIC also reported that its “Problem List” of troubled institutions increased from 775 to 829 during the quarter. But the total assets of these “problem” banks fell from $431 billion to $403 billion. Banks on this list could be more likely to fail, but the vast majority are not expected to be seized. So far this year, 118 banks have failed and the current rate is expected to pass last year’s total of 140 failures.

Despite the addition of 54 institutions to the problem list, the FDIC reported some overall improvements, particularly in reduced loan-loss provisions and slightly lower charge-offs for federally-insured banks.

“Insured institutions added $40.3 billion in provisions to their loan-loss allowances in the second quarter,” the FDIC reported. “While still high by historic standards, this is the smallest total since the industry set aside $37.2 billion in first quarter 2008 and is $27.1 billion (40.2 percent) less than the industry’s provisions in second quarter 2009.”

Net charge-offs totaled $49 billion in the second quarter, a $214 million, or 0.4 percent, decline from a year earlier and the first year-over-year decline since fourth quarter 2006. Charge-offs were lower than a year ago in most major loan categories, except for credit cards and real estate loans secured by nonfarm nonresidential properties.

The amount of loans and leases that were non-current, or 90 days or more past due or in non-accrual status, decreased by $19.6 billion (4.8 percent) during the second quarter. This is the first quarterly decline in non-current loans since first quarter 2006.

See the FDIC’s full second-quarter 2010 report.

Discover: Small Business Confidence Plummets in August

2010-08-30T17:03:51Z

Small business confidence dropped sharply on Discover’s national index in August, with 62 percent of owners seeing the economy as worsening and 55 expecting unfavorable conditions for their own business.

Discover’s overall “Small Business Watch” index fell from 83 in July to 73 this month.

Confidence was at a record low among small business owners who sell directly to consumers. Those businesses slid 17.4 points since last month to a record-low 65.5 points on the index, compared to business-to-business operators who marked 79 on the index in August, down only 2.2 points from July.

“There’s growing concern that the economy is stuck in neutral, or even sliding, and small business owners definitely reflected that sentiment this month,” said Ryan Scully, director of Discover’s business card. “With the economy seemingly unable to show sustained growth, and small businesses not expanding to create jobs, it’s no wonder that confidence is down.”

August marks the third straight monthly decline for Discover’s four-year-old index, which is the lowest it has been in 18 months. In July, the Watch reported that 75 percent of small business owners expected a second recession to occur before the country sees a full recovery.

The outlook is also grim on the labor front, with 78 percent of small businesses saying they have no plans to do any hiring. When asked about hiring over the next few months, 72 percent of business owners had no plans to add or subtract jobs; 20 percent said they were laying off workers; and 6 percent planned to do some hiring.

The percentage of small business owners planning layoffs is the lowest in the history of the Watch.

The Discover index is based on a national random survey of 750 small business owners. It is commissioned by Discover Business card.

Group Urges More Principal Reductions as Foreclosures Outpace Fixes

2010-08-28T20:54:05Z

The increased use of loan modifications resulting in lower payments has created more “sustainable” mortgages, but foreclosures continue to outpace the number of reconfigured loans, according to a report this week by the State Foreclosure Prevention Working Group.

The report echoed the conclusion of a watchdog over the government’s Home Affordable Mortgage Program, HAMP, which recommended that lenders be required to reduce mortgage principals to effectively combat foreclosures and rising negative equity, or the epidemic of “underwater mortgages.” Such reductions are now voluntary.

“Currently…only one in five loan modifications reduce the loan amount, and the vast majority of loan modifications actually increase the loan amount by adding servicing charges and late payments to the loan balance,” said the group’s report.

The SFPW group, made up of 12 state attorneys general and three banking regulators, has collected data from 13 mortgage servicers for two years. This is its fifth public report, and the second one this year following its January report.

The group finds that more than 60 percent of homeowners with serious delinquent loans are still not involved in any loss-mitigation activity. Without improvements in foreclosure prevention efforts, the group “anticipates hundreds of thousands of foreclosures will occur later this year.”

“The report certainly indicates there are positive developments with regard to loan modifications,” said Neil Milner, President and CEO of the Conference of State Bank Supervisors. “However, there is still a tremendous amount of work to be done to prevent unnecessary foreclosures. Servicers must continue to perform meaningful outreach to those homeowners who are seriously delinquent and to perform modifications with significant principal reduction.”

View all the reports by the State Foreclosure Prevention Working Group.

Also read:

Watchdog Urges Mandatory Mortgage Principal Reductions

Mortgage Fixed Rates Still Setting New Lows: 30-Year at 4.36%

2010-09-03T00:01:21Z

Long-term mortgage rates continued their historic slide this week, with the 30-year fixed rate slipping to 4.36 percent from last week’s 4.42 percent, according to Freddie Mac.

The 15-year fixed set a new low as well: 3.86 percent, down from 3.90 percent last week.

This marks the ninth straight week of new lows for either or both long-term rates as new and existing home sales set records of their own in reports released this week. Existing home sales plunged 27 percent in July; new home sales fell 12 percent to a record low.

The housing market reports “led to some market concerns that the housing market may slow the economic recovery,” said Amy Crews Cutts, deputy chief economist, Freddie Mac. “As a result, long-term bond yields fell to the lowest levels since January 2009, allowing fixed mortgage rates to ease to new record lows this week.”

Much of the slowdown in sales, Cutts said, was anticipated after the recently expired homebuyer tax programs, which siphoned future home purchases into the first half of the year.

“For instance, average existing home sales over the first seven months of 2010 were nearly 8 percent higher than over the same period a year ago,” Cutts said. .

The economist also said that house prices appear to be stabilizing. Nationally, house prices rose 0.9 percent on a seasonally-adjusted basis during the second quarter of this year this year after 11 consecutive quarterly declines, according to the Federal Housing Finance Agency’s purchase-only index.

Last year at this time, the 30-year fixed-rate mortgage averaged 5.14 percent.

Freddie Mac’s 30-year fixed-rate survey began in 1971, while the 15-year began in 1991.

Average Credit Card Debt Down to 8-Year Low: Below $5,000

2010-08-25T13:33:19Z

Credit card delinquencies – payments overdue at least 90 days – fell again in the second quarter of 2010 – and the average individual card debt fell below $5,000 for the first time since 2002.

Consumers are continuing to pare down debt in the face of a prolonged and shaky economic recovery, according to data released today by the credit bureau TransUnion.

TransUnion’s quarterly analysis found the national credit card delinquency rate decreased to 0.92 percent in the second quarter of 2010, down 17.1 percent over the previous quarter. Year over year, credit card delinquencies fell by 21.3 percent.

Credit card delinquency rates were highest in Nevada (1.50 percent), followed by Florida (1.24 percent) and Arizona (1.11 percent). The lowest credit card delinquency rates were found in North Dakota (0.54 percent), South Dakota (0.55 percent) and the District of Columbia (0.61 percent).

Average credit card borrower debt drifted downward for the fifth consecutive quarter. Average debt in the second quarter slipped by 4.1 percent to $4,951 from the previous quarter’s $5,165, and down 13.4 percent compared to the second quarter of 2009 ($5,719). This represented the first period credit card debt was below $5,000 since the first quarter of 2002, TransUnion said.

“The last five quarters of consecutive decreases in credit card balances show that consumers continue to pay down their credit cards in response to economic uncertainty and high unemployment,” said Ezra Becker, director of consulting and strategy in TransUnion’s financial services business unit. “Many consumers view available credit as a liquidity reserve that can be drawn upon in the event of a personal hardship.”

Becker said both the 90-day and 120-day non-payment rates showed the largest decreases on a quarter-over-quarter and year-over-year basis since the recession began at the end of 2007.

Sales of Existing Single-Family Homes Plunge to 1995 Level

2010-08-24T15:09:56Z

Sales of existing homes plummeted 27 percent in July to a seasonally adjusted rate of 3.83 million units, compared to a downwardly revised 5.26 million units in June, according to the National Association of Realtors.

Sales – representing existing single-family homes, townhomes, condominiums and co-ops — were down 25.5 percent compared to July 2009.

Sales of existing single family homes – which account for most transactions — are at the lowest level since May of 1995.

The July figures were expected, meeting most Wall Street predictions.

Sales of both existing and new homes have been sliding since the April 30 expiration of homebuyer tax credits and a slower economic recovery hampered by persistently highly unemployment and anemic growth in private job growth.

“Consumers rationally jumped into the market before the deadline for the home buyer tax credit expired. Since May, after the deadline, contract signings have been notably lower and a pause period for home sales is likely to last through September,” said Lawrence Yun, NAR chief economist.

On the positive side, mortgage rates have been setting new lows for two months. Any pick up in the economic recover would boost the housing market, Yun said.

“Even with sales pausing for a few months, annual sales are expected to reach 5 million in 2010 because of healthy activity in the first half of the year. To place in perspective, annual sales averaged 4.9 million in the past 20 years, and 4.4 million over the past 30 years,” Yun said.

The median existing-home price for all housing types was $182,600 in July, up 0.7 percent from a year ago, NAR said. Distressed home sales are unchanged from June, accounting for 32 percent of transactions in July – 31 percent in July 2009.

See Related Articles:

More Credit Card Reform: Penalty Fee Limits Take Effect

2010-08-22T15:55:04Z

A new round of credit card rules take effect today, including a $25 penalty fee cap, a ban on “inactivity fees” and a “one-fee limit” that prevents card issuers from piling on fees for a single event or transaction that violates a card agreement.

The new rules comprise the final stage of the Credit Card Accountability Responsibility and Disclosure Act of 2009, most of which took effect Feb. 22 of this year.

At that time, a ban on retroactive interest rate hikes became law, along with disclosure requirements that now show up on credit card statements showing how long it would take to pay of a balance on minimum payments alone.

This time around, penalty fees are the focus.

Here is a rundown on the Aug. 22 credit card rules, according to the Federal Reserve:

Reasonable Penalty Fees:
Penalty fees have been as high as $39, but the Fed has implemented a $25 limit. In addition, you cannot be charged a late payment fee that is greater than your minimum payment. For example, if your minimum payment is $20, your late payment fee can’t be more than $20. If you exceed your credit limit by $5, you can’t be charged an over-the-limit fee of more than $5.

Exceptions to the Penalty Fee Limit:
A credit card issuer can raise the penalty fee above $25 if:

One of your last six payments was late, in which case your fee may be up to $35; or
“Your credit card company can show that the costs it incurs as a result of late payments justify a higher fee.”

Inactivity Fees:
Your credit card issuer cannot charge you inactivity fees, or a penalty of not using your credit card.

One-Fee Limit:
You cannot be charged more than one fee for “a single event or transaction that violates your cardholder agreement.” For example, you cannot be charged more than one fee for a single late payment.

Re-Evaluation of Rate Increases:
If your card issuer increases your APR (annual percentage rate), it must re-evaluate that rate increase every six months. “If appropriate, it must reduce your rate within 45 days after completing the evaluation.”