The number of refinance applications continued its steady decline, dropping by 6.7 percent last week on a seasonally adjusted basis, according to the Mortgage Bankers Association’s weekly survey.

Overall loan applications decreased by 3.3 percent on a seasonally adjusted basis. The MBA seasonally adjusted purchase index decreased by 1 percent to 449.8 from 454.2 the previous week. The seasonally adjusted refinance index decreased to 1,694.9 from 1,816.9 one week earlier.

The refinance share of mortgage activity decreased to 36.2 percent of total applications from 37.4 percent the previous week. The adjustable-rate-mortgage share of activity decreased to 34.6 percent of total applications from 35.2 percent one week earlier.

The average contract interest rate for 30-year fixed-rate mortgages increased to 6.26 percent from 6.21 percent one week earlier. Points including the origination fee decreased to 1.35 from 1.39 the previous week for 80 percent loan-to-value ratio loans.

The average contract interest rate for 15-year fixed-rate mortgages increased to 5.63 percent from 5.58 percent the previous week. Points including the origination fee decreased to 1.36 from 1.4 one week earlier for 80 percent loan-to-value ratio loans.

The average contract interest rate for one-year adjustable-rate mortgages increased to 3.86 percent from 3.75 percent one week earlier. Points including the origination fee decreased to 0.99 from 1.02 the previous week for 80 percent loan-to-value ratio loans.

Washington, D.C.-based Mortgage Bankers Association is a national association representing the real estate finance industry.

Mortgage fees are bloated, difficult to compare and full of undisclosed mark-ups on third-party products, according to a new analysis from Consumer Reports, the respected consumer advocacy magazine.

Consumers can shop for the best mortgage by comparing such factors as interest rates, points and annual percentage rates (APRs). But they can’t comparison shop on the basis of closing costs, the magazine stated in the “Bloated mortgage costs” section of its report.

“Because they include myriad charges for loan origination, processing, and so on, they are almost impossible to compare from lender to lender and often catch borrowers by surprise just days before they must finalize one of life’s major purchases,” the authors wrote

Reports such as this one encourage borrowers to shop around for loans and to ask more questions when they obtain a mortgage. They also arm borrowers with information they otherwise wouldn’t be offered and wouldn’t know to ask about.

Are mortgage costs bloated? Tell us what you think.

Most fees, which usually add up to 2 percent of the amount borrowed, pay for legitimate lender services, the magazine reported. But, the report pointed out, the U.S. Department of Housing and Urban Development estimated that borrowers could save about $8 billion of the $50 billion they now pay each year in closing costs if pricing were simplified and fuller disclosure were required.

Consumer Reports magazine went to press before HUD withdrew its controversial proposed changes to the Real Estate Settlement Procedures Act (RESPA). That proposal drew 45,000 comments during the public comment portion of the rule-making process. Many of those comments came from within the real estate industry and were in opposition to HUD’s proposed changes.

HUD’s proposal would have changed the disclosure requirements for yield spread premiums and other mortgage broker fees, simplified the good faith estimate form and facilitated the sale of guaranteed-price bundled packages of mortgages and mortgage-related services.

The article explained the factors that can drive up closing costs, including yield spread premiums, hidden markups and unhelpful cost estimates. The piece explained each cost in a way that’s accessible to readers.

The authors pointed out that yield spread premiums boost the cost of a mortgage and raise an otherwise low interest rate. Yield spread premiums aren’t disclosed to borrowers, the article said.

Lenders often add their own markup to the costs of various services provided by third parties, the article added. The total price would be disclosed to the borrower, but the lender’s cost would not be.

“Banks may also pile on nuisance fees that should already be covered in overhead, such as charges for fax machine use and document storage,” the article stated.

Good-faith estimates don’t really help borrowers because the actual costs can grow by thousands of dollars by closing, according to the magazine.

In true Consumer Reports fashion, the article gave consumers tips on how to reduce mortgage costs. The article encouraged them to shop for mortgages at several local banks and online lenders serving their areas.

It also suggested borrowers should ask for the loan’s contract interest rate, the annual percentage rate and a good-faith estimate of closing costs and should consider paying closing costs up front.

The complete report, “Financial services: Don’t get taken by hidden fees,” also addressed other financial sectors, including credit cards, 401(k) retirement accounts and auto loans
By Samantha Peterson

Mortgage originations will average nearly $3 trillion per year over the next decade and residential mortgage debt will grow at close to an 8.25 percent annualized rate.

Those were two of the projections presented today in a 10-year forecast from the National Association of Realtors, Independent Community Bankers of America, National Association of Home Builders, Fannie Mae and Freddie Mac. Economists from those groups, which are part of the Homeownership Alliance, summed up their in a report, “America’s Home Forecast: The Next Decade for Housing and Mortgage Finance.”
Freddie Mac Chief Economist Frank Nothaft said America’s families will need 125 million mortgage loans for home purchases or refinancings, totaling $27 million in mortgage originations. First-time home buyers will remain a major component of the purchase market, buying about 24 million homes over the next decade.

Those trends would push the nation’s outstanding mortgage debt to $17 trillion in 2013, Nothaft said. Faster home price growth would translate into higher levels of originations and stronger debt growth.

The report didn’t take interest rates into consideration. Rates will fluctuate over the next decade, but housing demand will be driven by factors such as population growth, not interest rates, Fannie Mae Chief Economist Dave Berson suggested.

Other findings also point to a rosy picture of the housing sector 10 years from now.

“You are going to get a bullish forecast from us,” NAR Chief Economist David Lereah said. “And you’re getting it because we’re looking at the data and we’re looking at the data very intelligently.”

David Seiders, chief economist for the National Association of Home Builders, said about two million new housing units will be needed each year to meet demand. Conventionally built single-family homes will account for about 72 percent of total new housing units, an even larger share than during the past decade, he predicted.

Factors that will contribute to that demand will be household growth, along with replacement requirements, second home demand and changes in vacancy. Those will result in a necessary annual production between 1.85 and 2.17 million new housing units. Even the lower end of the range, the study points out, is higher than production levels of recent decades.

The home ownership rate will likely rise above today’s record level and exceed 70 percent by 2013, Lereah predicted. He said home price appreciation should average about 5 percent a year for the next 10 years, but could be more than 6 percent if more constraints are placed on housing supply.

Population growth will create more demand for housing as will people living longer, Lereah said. More retirees will look for second homes and more immigrants will seek to buy homes once they’ve lived longer in this country, he said.

In fact, immigrants will make up a sizeable chunk of the demand for homes, said Paul Merski, chief economist with the Independent Community Bankers of America.

“That’s a real challenge and opportunity for our industry,” he said.

Other challenges that the housing industry faces include the home ownership gap between minority and white households, increasingly stringent local land-use controls that push up house prices and proposed changes in the regulation of the housing government-sponsored entities, including Fannie Mae and Freddie Mac, according to the report.

The Washington, D.C.-based Homeownership Alliance is made up of housing industry organizations, including the five that authored the report.

By Samantha Peterson

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Buyers still outnumber sellers in most markets
Wednesday, May 12, 2004

Home prices rise 33% in Riverside-San Bernardino, Calif.
Median existing-home prices in most metropolitan areas continued to experience above-average appreciation in the first quarter, according to the latest survey by National Association of Realtors.

The association’s first-quarter metro-area home price report, covering changes in 126 metropolitan statistical areas, shows 35 areas with double-digit annual increases in median existing-home prices and 16 areas posting generally small declines. Most markets—80—rose faster than the norm for price appreciation.

David Lereah, NAR’s chief economist, said a strong home-price growth pattern is well established. “It’s a simple matter of supply and demand,” he said. “We continue to have more home buyers than sellers in most of the country, which results in tight housing inventories and higher rates of home-price appreciation.”

The national median existing-home price was $170,800 during the first quarter, up 6.5 percent from the first quarter of 2003 when the median price was $160,400. The median is a typical market price where half of the homes sold for more and half sold for less.

NAR President Walt McDonald, broker-owner of Walt McDonald Real Estate in Riverside, Calif., said housing continues to be an excellent investment. “Normally, overall home prices appreciate one-to-two percentage points above the rate of inflation, but we’ve been well above that for the last three years,” he said. “Although the rate of price growth is expected to slow, it should continue to rise faster than historic norms both this year and next.”

David Lereah, NAR
Lereah noted that none of the metros experiencing price declines had recently experienced rapid appreciation. “In some of these areas we may be seeing a surge of first-time buyers at the lower end of the market, but many of them have gone through a period of local economic weakness, primarily in the labor markets, and they also have an adequate supply of homes from new home construction,” he said.

“Generally, these areas are now recovering jobs and should gradually turnaround. In other words, they are not harbingers of local price bubbles because those area home prices were never inflated to begin with.”

The strongest price increase was in the Riverside-San Bernardino area of California, where the first quarter median price of $258,900 was 33 percent above a year earlier. Next came Las Vegas, at $224,900, which was 31.3 percent above the first quarter of 2003, followed by Anaheim-Santa Ana (Orange Co., Calif.), with a first quarter median price of $572,500, up 28.1 percent in the last year.

Median first-quarter metro resale prices ranged from $82,300 in South Bend-Mishawaka, Ind., to more than seven times that amount in the San Francisco Bay area, which was $597,300. The second most expensive area was Anaheim-Santa Ana followed by San Diego at $483,000.

Other low-cost markets include Peoria, Ill., the second least-costly area at $83,900, and Springfield, Ill., with a first-quarter typical resale home price of $84,000.

Regionally, the strongest increase was in the Northeast where the median resale price during the first quarter was $212,000, rising 18.7 percent from a year earlier. The strongest percentage increase in the region was in Portland, Maine, where the typical resale price was $218,100, up 17.9 percent from a year ago, followed by the Monmouth-Ocean, N.J., with a median price of $298,000, which was 16.6 percent higher than the first quarter of 2003. Next came the Hartford, Conn., area with a first quarter median price of $212,300, up 16.4 percent in the last year. Six other Northeastern metros also show double-digit median price increases, including Nassau-Suffolk, N.Y.; Providence, R.I.; Atlantic City, N.J.; the New York City area, Syracuse, N.Y.; and Newark, N.J.

In the West, the first-quarter median existing-home price was $241,300, up 10.7 percent from a year ago. After the Riverside-San Bernardino, Las Vegas and Anaheim-Santa Ana areas, the strongest increase in the region was in Los Angeles-Long Beach, where the median price of $387,700 rose 25.8 percent from a year earlier. The San Diego area, at $483,000, rose 24.1 percent, and, Reno, Nev., with a typical resale price of $227,500, was up 24 percent. Four other Western metros experienced double-digit median price gains, including Sacramento, Honolulu, San Francisco and Seattle.

In the South, the median existing-home price of $155,500 rose 3.8 percent from the first quarter of 2003. The strongest increase in the region was in Sarasota, Fla., where the first-quarter median price of $239,900 was up 24.5 percent in the last year. In the Miami-Hialeah area, the median price of $245,900 rose 21.6 percent, while Ft. Meyers-Cape Coral, Fla., at $171,800 rose 21.5 percent from a year earlier. Twelve other metro areas in the South experienced double-digit price increases, including Bradenton, Fla., Washington, D.C., West Palm Beach-Boca Raton-Delray Beach, and Daytona Beach, Fla.

In the Midwest, the median resale home price of $137,100 during the first quarter was 1.9 percent higher than the same period in 2003.

The strongest increase in the region was in the Waterloo-Cedar Falls, Iowa, area where the median price of $88,800 was 10 percent higher than the first quarter of last year. Next was Green Bay, Wis., at $138,500, up 9 percent from the first quarter of 2003. This was followed by Omaha, at $130,800, up 8.7 percent, and Minneapolis-St. Paul, where the median price of $205,000 was 8.4 percent higher than a year ago.

30-year fixed up at 6.04%;
10-year Treasury up at 4.76%
Monday, May 10, 2004
Inman News

Long-term mortgage interest rates rose further Friday, and the benchmark 10-year Treasury bond yield moved up to 4.76 percent.

The 30-year fixed-rate average jumped to 6.04 percent, and the 15-year fixed-rate increased to 5.37 percent. The 1-year adjustable was up at 3.35 percent.

The 30-year Treasury bond yield increased to 5.46 percent.

Rates are current as of 7:15 p.m. Eastern Standard Time.

Mortgage rate figures are according to Bankrate.com, which publishes nightly averages based on its survey of 4,000 banks in 50 states. Points on these mortgages range from zero to 3.5.

In other economic news, the Dow Jones Industrial Average was down 123.92 points, or 1.21 percent, finishing at 10,117.34. The Nasdaq was down 19.78 points, or 1.02 percent, closing at 1,917.96.

In the rush to make an offer on a house, you may not think you have time to spend sorting through the many loan programs available. But it can pay off in the end. If you only consider interest rates and your monthly payment, for example,
—you could pay thousands of dollars more than you should over the life of your loan.

For example, consider long-term interest costs.
On a 30-year, fixed-rate loan of $100,000 at 7 percent, you would pay $239,500 in total interest charges by the end of the loan term.
You would pay $276,500 on the same loan at 8.5 percent. I
f you only qualify for an 8.5 percent loan, then it may make sense to buy down your interest rate by paying discount points up front, especially if you plan to hold your loan for a long time (which means you’ll incur the greatest amount of interest charges).

Tools for Loan Comparison

Lenders compare interest rates and loan payments by using amortization tables, charts that show the amounts of principal and interest due at regular intervals. You can use amortization tables to help you compare loans (most lenders will give you one if you ask). To compare monthly payments between a 15-year term and a 30-year term on a $100,000 loan at 5 percent, just look down one side of the table for the loan amount, then read across to find the monthly payment amount at 5 percent for both loan terms. (The result would be $790.79 for the 15-year loan; $536.82 for the 30-year loan). You can also use amortization tables to compare differences in monthly payments with different interest rates. For example, payments on a $100,000, 30-year loan would range from $536.82 at 5 percent to $552.20 at 5.25 percent to $567.79 at 5.5 percent. There are tables for all kinds of loans, and many also include the unpaid balance of the loan after each payment is made. Looking at a loan this way can show you how fast you will accumulate equity….

Compare loan programs and rates offered by several different lenders before you choose a loan. If you find a lender that offers a 7.25 percent rate when all the others charge one-quarter point more, you’ll save $6120 in interest over the life of a 30-year, $100,000 fixed-rate mortgage. Understanding the tradeoffs can help you choose a loan wisely.
To be sure you compare loans thoroughly:

Compare three to five different lenders or mortgage brokers.
One of them is bound to offer the loan that’s best for you or not.. If you are buying a house pick two lenders who can guarantee their offer.
Don’t focus solely on the interest rate look out for up-front points!
Getting a low rate is important, but you may not benefit from it if you have to pay too many up-front points and other fees.

Understand the relationship between points and rates. The relationship is real simple, your going to pay about $750 in lenders fees, and about 1 point, but what are they really going to give you for an interest rate. Higher the rate the more you will pay in the short and long run regardings of the up front fees….

A point is prepaid interest, and each point you pay equals one percent of your loan amount. If you get a $100,000 loan and pay two points, that’s $2,000 in points.
The more points you pay, the lower the rate you’ll get?
Well how about the more points the Seller pays the lower the rate….

Think about how long you’ll keep the loan.

If you’re going to move in a few years, consider an adjustable-rate mortgage since you may be able to sell the house before the rate gets too high. If you plan to stay longer, a fixed-rate mortgage may be an attractive option because your rate stays fixed for the term of the loan.

I have a program that you will not have lender fees and have a interest rate with the fee structure no one can match….I only ask for two things….1. use encompass realty as your Realtor, 2. Referrals, refer us someone …