by Calculated Risk on 9/19/2012 07:03:00 AM

From the MBA: Mortgage Rates Drop to New Survey Lows

The Refinance Index increased 1 percent from the previous week. The HARP 2.0 share of refinance applications was 22 percent this past week. The seasonally adjusted Purchase Index decreased 4 percent from one week earlier.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 3.72 percent, the lowest rate in the history of the survey, from 3.75 percent, with points increasing to 0.45 from 0.44 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

Click on graph for larger image.

This graph shows the MBA mortgage purchase index.

The purchase index has been mostly moving sideways over the last two years.

It looks like refinance activity is picking up again as mortgage rates decline.

by Calculated Risk on 9/18/2012 08:30:00 PM

Tomorrow will be about housing, and recently that has meant a little better news ...

• At 7:00 AM ET, the Mortgage Bankers Association (MBA) will release the mortgage purchase applications index. Purchase applications have mostly been moving sideways this year at a low level.

• At 8:30 AM, Housing Starts for August will be released. The consensus is for total housing starts to increase to 768,000 (SAAR) in August, up from 746,000 in July.

• At 10:00 AM, the National Association of Realtors (NAR) will release the existing Home Sales report for August. The consensus is for sales of 4.55 million on seasonally adjusted annual rate (SAAR) basis. Housing economist Tom Lawler expects sales to be about 4.87 million SAAR.

A key will be inventory and months-of-supply. It is possible that months-of-supply will be close to 6.0 months; the lowest level for August since 2005.

• During the day: The AIA's Architecture Billings Index for August (a leading indicator for commercial real estate).

Two more questions for the September economic prediction contest (Note: You can now use Facebook, Twitter, or OpenID to log in).

by Calculated Risk on 9/18/2012 06:18:00 PM

From the Financial Times: Saudis offer extra oil to control prices

Saudi Arabia has offered ... extra oil supplies through the end of the year, a sign the world’s largest exporter is worried about the impact of rising prices on the global economy.
...
“The current price is too high,” a senior Gulf-based oil official told the Financial Times. “We would like to see oil prices back to $100 a barrel.”
excerpt with permission

This might just be talk ... oil prices are down sharply over the last two days, however Brent futures are still at $112.52 per barrel according to Bloomberg.

Meanwhile, gasoline prices are still very high. From the Oregonian: Oregon, Washington gas prices moving in reverse, but still at historic highs

In the past week, the average price of a gallon of regular unleaded in Oregon dropped three centers to $4.01, the nation’s 10th most expensive.

Washington has the nation’s sixth most-expensive gasoline for the second week in a row at $4.05, down a penny from last week.

The national average -- at $3.86 -- actually added a cent-and-a-half. For the first time since early April, Dodds said, 10 states, including California, Washington and Oregon, have averages at or above $4 a gallon, up from nine a week ago.

The following graph shows the recent increase in gasoline prices. Gasoline prices peaked in early April, then fell sharply in May and June - and have increased sharply since early July.

Note: If you click on "show crude oil prices", the graph displays oil prices for WTI, not Brent; gasoline prices in most of the U.S. are impacted more by Brent prices.

Orange County Historical Gas Price Charts Provided by GasBuddy.com

by Calculated Risk on 9/18/2012 03:19:00 PM

I expect this to get extended, but it is probably motivating some people to try to close their short sale before the end of the year.

From Carolyn Said at the San Francisco Chronicle: Clock ticking on forgiven-debt tax break

Before the housing downturn hit, "forgiven debt" on home mortgages could be taxed as income. For instance, if your lender lopped $50,000 off what you owed (a type of loan modification called principal reduction), if you short-sold the property for $50,000 less than your mortgage or if your lender foreclosed on a property worth $50,000 less than you owed, the $50,000 would be treated as income, adding up to a potential big bill for state and federal taxes.

But with millions of struggling homeowners in such situations, both the Congress and the California Legislature passed bills to exempt forgiven home debt from taxes.

But now the Mortgage Forgiveness Debt Relief Act of 2007 is due to expire on Dec. 31. The election-year Congress, already famously fractious, is not expected to act on it in 2012, although industry experts hope it could get extended next year. ...
Even if the act eventually gets renewed, it doesn't cover all homeowners.

"It applies only to the mortgage you originally got to acquire the home or to a refi used to improve the home," said Stephen Moskowitz, a tax attorney in San Francisco.

Homeowners who did cash-out refinances and used the money for any other purpose than fixing up their house could still be on the hook for forgiven debt.

by Calculated Risk on 9/18/2012 12:55:00 PM

From the Federal Financial Institutions Examination Council (FFIEC): Federal Financial Institutions Examination Council Announces Availability of 2011 Data on Mortgage Lending

The 2011 data include information on 11.7 million home loan applications (of which nearly 7.1 million resulted in loan originations) and 2.9 million loan purchases, for a total of nearly 14.7 million actions. The data also include information on 186,000 requests for preapprovals related to a home purchase that did not result in a loan. The total number of originated loans of all types and purposes reported fell by about 780,000, or 10 percent, from 2010, in part because of a 13 percent decline in refinancings. Home purchase lending also fell, but by a more modest 5 percent.

The 2011 HMDA data reflect a continued heavy reliance on loans backed by the Federal Housing Administration (FHA) insurance that began several years ago with the onset of problems in the mortgage market. For home purchase lending, the FHA’s share of first-lien loans showed a continued increase from 7 percent in 2007 to 26 percent in 2008, and then to 37 and 36 percent, respectively, in 2009 and 2010. In 2011, the FHA share fell to 31 percent. First-lien lending for home purchases backed by Veterans Administration (VA) guarantees also has increased in recent years, although VA-backed lending represents a smaller share of the market than FHA-backed lending. The VA market share of first-lien home purchase loans increased from nearly 3 percent in 2007 to about 7 percent in 2009 and 2010. The VA market share of home purchase lending increased to 8 percent in 2011.

The overall volume of reported conventional, FHA-, and VA-related refinancing activity diminished slightly from 2010 to 2011. Although both the number of conventional and FHA-related refinancings fell from 2010 to 2011 (decreases of about 12 percent and 37 percent, respectively), the volume of VA-guaranteed refinancing activity rose significantly, increasing about 41 percent.

Refinance activity has picked up in 2012, although purchase activity has been at about the same level in 2011 according to the MBA.

This is still a very high percentage of FHA loans, although the percentage is down from the peak in 2009 and 2010 (probably because of higher fees).