Market News
HOUSING RECOVERY LIKELY THIS YEAR, BUT TIMING ISN'T CLEAR
Unusual weather patterns and problems in the subprime lending marketplace are creating challenges in assessing housing market conditions, but a recovery is likely this year, according to the latest NAR forecast. David Lereah, NAR's chief economist, said there is some ambiguity about the current housing market. "Our goal each month is to fine-tune the forecast based on the latest housing data and a variety of economic indicators, but extraordinary weather variations are skewing home sales and clouding the picture," he said. "Underlying trends point to a housing recovery in 2007, but it will take a couple months for us to get a better handle on it. Existing-home sales are expected to slowly improve from what appears to be the cyclical low last fall, but we think there will be some additional in the new home market, which hopefully will start to rise later in the year."
FREDDIE, FANNIE CEOs SEEK RULE CHANGES
The chief executives of Freddie Mac and Fannie Mae told lawmakers Thursday that tweaks are needed in proposed legislation that would rein in the huge mortgage buyers, with Freddie's chief executive warning that legislative missteps could spell more trouble for the housing market as well as increased mortgage rates. "In this time of relative weakness in the US housing market." Freddie CEO Richard Syron told the House Financial Services Committee, "over-engineering the GSE-model of housing finance, market weakness, higher mortgage rates for borrowers and a diimished supply of long-term fixed-rate financing." Both Freddie Mac and Fannie Mac are government-sponsored housing enterprises, or GSEs, that buy mortgages from banks and repackage them as securities, injecting liquidity into the housing market. Having weathered huge accounting problems dating from several years ago, they're slowly returning to regular financial reporting.
MORTGAGE RATES FALL FOR FOURTH STRAIGHT WEEK
During a week in which the news about mortgages seemed never-ending, rates didn't move much. The lowlight of the past week--the event that tipped the stock market over the edge Wednesday afternoon--was the release of the report on mortgage delinquencies in the final three months of 2006. According to the Mortgage Bankers Association, 54 in every 10,000 homewoners had foreclosure proceedings started against them in the fourth quarter. That's a record pace, narrowly exceeding the previous high of 50 in every 10,000 homeowners, set in the second quarter of 2002. The benchmark 30-year fixed-rate mortgage fell 3 basis points, to 6.16%. According to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.29 discount and origination points. One year ago, the mortgage index was 6.43%; four weeks ago, it was 6.32%.
