Mortgage origination projections for 2014

Mortgage interest rates have remained basically stable in recent weeks, but they are about to move upward in a slow but steady action. That’s the opinion of most real estate analysts.


“As goes investors’ perception of the economic climate, so go interest rates,” according to HSH Market Trends. “Although mortgage rates have been relatively stable, upward pressure has been building, and it’s a good bet that this upward pressure will be expressed in higher mortgage rates.”

Whatever the reason, mortgage rates are, or shortly will be, on the rise.

“We found that the overall average rate for 30-year fixed-rate mortgages rose by a single basis point (0.01 percent) to 4.59 percent; the last few weeks all have featured little move in rates at all, but that seems likely to change. The 15-year companion also eased by single basis point (0.01 percent), landing at 3.65 percent for the week.

“Popular FHA-backed 30-year FRMs rose by three basis points, lifting back to 4.25 percent, while the overall 5/1 Hybrid ARM failed to move at all again, holding for a third week at 3.32 percent.”

It looks like those prospective buyers who have been waiting for rates to bottom-out have missed their best opportunity. But the good news is that mortgage rates are still historically very low, and will remain so in the near future.

Q: Are home prices still rising?

A: DataQuick’s July monthly property intelligence report reveals a monthly and annual rise in home prices for all 42 counties evaluated.

“In fact, home prices have hiked an average of over 13 percent versus this time last year. This rise in prices has been directly linked to fewer foreclosures, limited property availability, and an overall decline in total amount of July property transactions.”

Q: Are home sales continuing to increase?

A: Home sales probably increased in July to the highest level in more than three years as growing demand for residential real estate bolsters the expansion, economists said this week, it was reported by Real Trends.

“Combined purchases of existing and new homes climbed to a 5.64 million annualized pace last month, the fastest clip since November 2009, according to the median forecasts of economists in a Bloomberg survey.

Another report may show the world’s largest economy is poised to strengthen.

“Improving sales, even as borrowing costs rise, and a limited supply of homes, lots and materials are helping boost home values and builder confidence. The waning effects of across-the-board federal spending cuts, combined with gains in the housing and auto markets, will probably help lift economic growth in the second half of the year.”

Q: Is it possible for a person who was bankrupt to obtain a new FHA loan?

A: The Federal Housing Administration (FHA) is allowing borrowers who went through a bankruptcy, foreclosure, deed-in-lieu, or short sale to reenter the market in as little as 12 months, according to a mortgage letter released recently.

In order to be eligible for the more lenient approval process, provided documents must show “certain credit impairments” were from loss of employment or loss of income that was beyond their control. Additionally, borrowers must demonstrate they have fully recovered from the event that caused the hardship and complete housing counseling.

Q: Have Fannie and Freddie updated their seller guidelines?

A: Fannie Mae and Freddie Mac have both updated their seller guides to incorporate the Consumer Financial Protection Bureau’s Ability to Repay rule under the Truth in Lending Act.

The Federal Housing Finance Agency worked with the GSEs to update their respective seller guides in alignment with one another. The basic goal of the “Ability to Repay” rule is to ensure lenders act in good faith that a borrower can repay his or her loan before offering the loan.

Q: Is the affordability of homes declining?

A: An era of exceptionally affordable housing is fading in some parts of the U.S. as stagnant incomes collide with rising prices and interest rates.

The share of median household income devoted to home mortgage payments recently surpassed historic averages in six of 30 major housing markets, according to John Burns Real Estate Consulting.


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