by Calculated Risk on 7/07/2010 09:50:00 AM

The Mortgage Bankers Association reported this morning that refinance activity increased again:

The Refinance Index increased 9.2 percent from the previous week and is the highest Refinance Index observed in the survey since the week ending May 15, 2009.
...
The refinance share of mortgage activity increased to 78.7 percent of total applications from 76.8 percent the previous week, which is the highest refinance share observed in the survey since April 2009.

Click on graph for larger image in new window.

This graph shows the monthly MBA refinance index (Blue) and mortgage rates from the Freddie Mac Primary Mortgage Market Survey - and the Fed Funds target rate since Jan 1990.

Even with the recent decline in mortgage rates, refinance activity is still well below the peak in 2009. The reason is the 30 year mortgage rate is only slightly below the rates of April and May 2010 (4.6% now compared to just over 4.8% in 2009), so for those who refinanced last year there isn't much incentive to refinance now (considering the cost to refinance).

Of course many homeowners can't refinance because they owe more than their homes are worth, or their incomes have declined and they can't qualify.

by Calculated Risk on 7/07/2010 07:21:00 AM

The MBA reports: Mortgage Refinance Applications Increase in Latest MBA Weekly Survey

The Refinance Index increased 9.2 percent from the previous week and is the highest Refinance Index observed in the survey since the week ending May 15, 2009. The seasonally adjusted Purchase Index decreased 2.0 percent from one week earlier. The Purchase Index has decreased eight of the last nine weeks.
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“Mortgage rates remained near record lows last week, as incoming data on the job and housing markets were weaker than anticipated. As more homeowners locked in to these low rates, the level of refinance applications increased to a new 13-month high,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. “For the month of June, purchase applications declined almost 15 percent relative to the prior month, and were down more than 30 percent compared to April, the last month in which buyers were eligible for the tax credit.”
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The average contract interest rate for 30-year fixed-rate mortgages increased to 4.68 percent from 4.67 percent, with points decreasing to 0.86 from 0.96 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

Click on graph for larger image in new window.

This graph shows the MBA Purchase Index and four week moving average since 1990.

There has been a mini-refi boom because of the low mortgage rates, but the purchase index has fallen sharply to the levels of 1996.

by Calculated Risk on 7/06/2010 11:59:00 PM

Click on graph for larger image in new window.

From Reuters: US shopping center vacancy rates rose in 2nd qtr

For U.S. strip centers, the vacancy rate in the second quarter rose ... to 10.9 percent, slightly below the 11 percent in 1991 during the prior real estate bust ...

"Until we see stabilization and recovery take root in both consumer spending and business spending and employment, we do not foresee a recovery in the retail sector until late 2012 at the earliest," said Victor Calanog, Reis director of research.

At regional malls, the vacancy rate rose to 9.0% - the highest since Reis starts tracking regional malls in 2000. The record vacancy rate for strip malls was in 1990 at 11.1%.

by Calculated Risk on 7/06/2010 06:53:00 PM

Early this year, the FHA announced a proposal to reduce allowable seller concessions from 6% to 3%.

David H. Stevens, Assistant Secretary of Housing and FHA Commissioner, discussed the reasons for this proposal in May:

We are also proposing a third policy measure to reduce the maximum permissible seller concession from its current 6 percent level to 3 percent, which is in line with industry norms. The current level exposes the FHA to excess risk by creating incentives to inflate appraised value. ... FHA's experience shows that loans with high levels of seller concessions are significantly more likely to go to claim. Experience to-date on loans insured from FY 2003 to FY 2008 suggests that claim rates on high-concession loans are 50 percent higher or more than those on low-concession loans.

I was told by the FHA today that a notice for public comment would be announced "VERY shortly". (I'm guessing that means in the next few weeks - if not this week).

The notice will be posted in the Federal Register, and will go into effect after a 30-day comment period.

by Calculated Risk on 7/06/2010 03:19:00 PM

From Lender Processing Services: LPS' May Mortgage Monitor Report: Increase in Rate of New Delinquencies; Decline in Number of Delinquent Loans Becoming Current

The May Mortgage Monitor report released today by Lender Processing Services, Inc. ... shows a 2.3 percent month-over-month increase in the nation's home loan delinquency rate to 9.2 percent in May 2010, and that early-stage delinquencies are increasing as normal seasonal improvements taper off. This report includes data as of May 31, 2010.

According to the Mortgage Monitor report, the percentage of mortgage loans in default beyond 90 days increased slightly, while both delinquency and foreclosure rates continue to remain relatively stable at historically high levels. There are currently more than 7.3 million loans currently in some stage of delinquency or REO.

The report also shows that the average number of days for a loan to move from 30-days delinquent to foreclosure sale continues to increase, and is now at an all-time high of 449 days, resulting in an increase in "shadow" foreclosure inventory.

LPS shows 9.2% delinquent and another 3.18% in foreclosure for a total of 12.38%. I'm not sure about the days to foreclosure numbers (other sources show fewer), but they have steadily increased. For delinquency rates I usually use the quarterly report from the MBA.

Here is the LPS monthly report. The increase in early stage delinquencies might be seasonal, but it is definitely bad news. And what happens when house prices start falling again later this year as I expect?

For more, from Diana Golobay at HousingWire: National Mortgage Delinquency Rate Swells to 9.2% in May: LPS

And from Diana Olick at CNBC: New Loan Delinquencies on the Rise Again