Mortgage Rates @ 60 Year Lows: The Silver Lining for Housing
Wednesday, October 5, 2011
by Jeremy M. Salemson
Chief Executive Officer, Corporate Investors Mortgage Group, Inc.
Global Concerns, Domestic Uncertainty, Housing Headwinds and Increasing Jobless Claims. These and other economic subjects seem to be dominating the headlines. The silver lining for housing is that Mortgage Rates are at 60 Year Lows - but can low rates really be a silver bullet? With rates so low, you would think that housing numbers and confidence levels would be much stronger than they have been. Well we recently got a more robust explanation from
Mortgage BankersCEO David Stevens as to perhaps why we're experiencing the less than stellar housing data. In testimony given recently before the Senate Banking subcommittee on Housing, Transportation and Community Development, Stevens touched upon a few of the identified housing obstacles which are currently impacting the domestic housing market. These topics range from the obvious - Unemployment issues and Excess Housing Inventories - to the more in-depth issues such as Regulatory Uncertainty, Repurchase and Litigation Risk and Inconsistent Foreclosure Regimes. In plain English, there are many complex problems to be dealt with before housing will return to any sense of "normal" levels.
Continuing this line of thinking, according to the National Association of Homebuilders, its Homebuilder Sentiment dropped in September to a reading of 14, which was just shy of the industry expectation of 15. According to NAHB Chairman Bob Nielson, "Builders continue to confront the same challenges in accessing construction credit, obtaining accurate appraisal values for new homes, and competing against foreclosed properties that they have seen for some time."
A friendly reminder that the "high cost" maximum loan limits for both
Fannie Mae and Freddie Mac will be decreasing effective October 1, 2011 to $625,500 from $729,750. The conforming loan limit of $417,000 is not impacted by this change. Here in the Triangle, we're not influenced at all by this reduction due to the fact that we don't have any geographical areas which are considered "high cost" as dictated by theFederal Housing Finance Agency(FHFA).
While the FHFA is considering easing some of the guidelines on the somewhat controversial Home Affordable Refinance Program (HARP), it is also considering raising certain fees for 2012. The acting head of FHFA, Edward Demarco, while speaking in Raleigh recently at the American Mortgage Conference stated "Loan level price adjustments, representations and warranties, valuation requirements, and portability of mortgage insurance coverage are among the matters being considered."
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