It’s Tuesday News Day and these are this weeks hot topics concerning the real estate market, the financial market, general market conditions, and interest rates.
Wall Street Journal – Mortgage Lenders Ease Rules for Home Buyers in Hunt for Business
As a sign of mortgage lenders’ rising confidence in the housing market, restrictive lending standards are beginning to ease, and the credit freeze is starting to thaw. Lenders have started to accept lower credit scores and to reduce down-payment requirements.
Lenders recognize that refinancing old mortgages will no longer be a huge profit center for banks, so competing for borrowers will be needed for business and future profits. As a result, lenders will have to open up to borrowers who may not have perfect credit or large down payments.
For example, the lender TD Bank began accepting down payments as low as 3 percent through an initiative called “Right Step” for first-time buyers. A year ago, the program required at least a 5 percent down payment.
Mortgage originations are expected to reach $1.1 trillion this year, which is down from $1.8 trillion last year and $2 trillion in 2012 due to less refinancing.
While private lenders have shied away from low-down-payment mortgages in the past few years, in the past year, more than one in six loans made outside of the FHA included down payments of less than 10 percent.
Credit scores for borrowers seeking conventional mortgages also are easing, as scores on purchase mortgages stood at 755 in March, down from 761 a year earlier.
Smaller lenders are trying to appeal to first-time buyers while many larger lenders are gradually reducing down payments for jumbo loans in order to attract wealthy customers.
In other news…
LA Times – Moving in with parents becomes more common for the middle-aged
Due to the effects of the sluggish economy, older people are quietly moving in with their parents at twice the rate of their younger counterparts. The number of Californians aged 50 to 64 who live in their parents’ homes swelled 67.6 percent to about 194,000, according to the UCLA Center for Health Policy Research and the Insight Center for Community Economic Development.
Wall Street Journal – 5 Questions on the State of Mortgage Lending
There are growing signs that lenders are becoming less picky amid a rebound in home prices and a drop-off in mortgage refinancing, but questions remain about the impact of down-payment standards, the stringency of credit requirements, and the fate of the U.S. economy after the mortgage-credit pendulum has swung from one extreme to the other.
LA Times – More homeowners are becoming first-time landlords
In Western housing markets like Los Angeles, there has been a noticeable uptick in the number of home buyers who want to rent out their old place rather than selling. Rents continue to climb, and if the trend continues, it could mean even fewer homes for sale in an already tight market.
HousingWire – HUD’s Donovan: This is the worst rental crisis in this nation, ever
Shaun Donovan, Secretary of the United States Department of Housing and Urban Development, recently praised the GSE reform measure put forward by Chairman Tim Johnson and Sen. Mike Crapo of the Senate Committee on Banking, Housing, and Urban Affairs. He also said it is important to provide affordability across all segments immediately because “This is the worst rental affordability crisis this country has ever known.”
New York Times – A Settlement on Soured Mortgages May Raise Questions on What Is Enough
Debate about whether the big banks have paid enough to cover the mortgage abuses they committed before the market collapsed has been a lingering question in the aftermath of the financial crisis. Many critics have argued that recent settlements underestimated how many mortgages fell short of the bonds’ written standards, and that investors, not the banks, end up bearing some of the settlements’ costs.
LA Times – Student debt holds back many would-be home buyers
The recent explosion of college debt looms largest of all as a factor holding back young home buyers, on top of rising prices, tougher lending standards, and a still-shaky job market. Student loan debt has tripled in a decade, to nearly $1.1 trillion, according to the Federal Reserve Bank of New York, which has contributed to soft demand for home buying this spring.
CNBC – Higher prices ‘choke’ housing
Weakened affordability has left buyers unable to keep pace with the impact of all-cash investors, as inventories are low and prices now so high. Researchers posit prices in more than 1,000 U.S. cities could be more expensive than ever within the next year.
Talking Points…
California pending home sales increased more than usual and rose to the highest level in eight months, according to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). Overall, pending home sales climbed 17.8 percent in March, with the Pending Home Sales Index (PHSI) rising from 97.1 in February to 114.4 in March, based on signed contracts.
In addition, the share of short sales has fallen to levels last observed in 2008.
The share of equity sales – or non-distressed property sales – has been increasing steadily over the past year. The share of equity sales increased to 87.6 percent in March, up from 85 percent in February.
If you have any questions about the current real estate market give me a call at (408) 840-3852 or shoot me an email at Thomas.Feng@gmail.com to discuss your situation and how to get the most out of the current real estate housing market.
Because of the many legal and tax situations that can arise through the sale and purchase of real estate ALWAYS consult with your ATTORNEY or ACCOUNTANT before making ANY decisions in ANY transaction
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* THIS ARTICLE WAS POSTED AT Thomas Feng’s Bay Area Connect *