Bankrate: Mortgage Rates Surge to 3-Month High

Mortgage rates bounded higher this week, with the average 30-year fixed mortgage rate soaring from 6.32 percent to 6.77 percent. According to Bankrate.com's weekly national survey, the average 30-year fixed mortgage has an average of 0.39 discount and origination points.

The average 15-year fixed rate mortgage jumped to 6.46 percent, while the average jumbo 30-year fixed rate climbed to 7.95 percent. Adjustable mortgage rates were mixed, with the average 1-year ARM dipping to 6.09 percent and the average 5/1 ARM increasing to 6.67 percent.

Mortgage rates have been jerking violently up and down in recent weeks, with fixed mortgage rates hitting the highest point since the week of July 23rd. This week's big increase came without corresponding volatility in benchmark Treasury yields. The catalyst for higher mortgage rates were the expansion of mortgage credit spreads - the difference in yields on mortgage- backed securities versus those of risk-free Treasury yields - to the highest level since 1986. The spreads, now hovering near 300 basis points, are up from the customary 180 basis point that were commonplace prior to the onset of the credit crunch in Aug. 2007. Higher funding costs for Fannie Mae and Freddie Mac, despite being under government conservatorship, have contributed to the expansion of mortgage credit spreads and the increase in mortgage rates.

The recent volatility in mortgage rates hits fence-sitting mortgage shoppers in the wallet. At last week's rate of 6.32 percent, a $200,000 loan carried a monthly payment of $1,240.55. This week, with the average rate at 6.77 percent, the monthly payment on a $200,000 loan is $1,299.86.

U.S. home prices down 16.6% in past year: Case-Shiller

Home prices fell in August for the 25th consecutive month and prices in 10 major markets plunged a record 17.7% over 12 months earlier, according to a key index of real estate values released Tuesday.

The S&P Case-Shiller Home Price 10-city index dropped 1.1% for the month. The 20-city index recorded a record year-over-year decline of 16.6% with a 1% fall in August

The hardest hit of all 20 cities was Phoenix, where prices plummeted 30.7% during the past 12 months. Las Vegas prices plunged 30.6% and Miami sank 28.1%.

The cities that held up the best were Dallas (-2.7%), Charlotte NC (-2.8%) and Boston (-4.7%). No city showed a price gain during the last 12 months.

Chicago home sales dive 16%; median price tumbles 13%

Home sales in Chicago plunged 16% in September, while sales in the nine-county area fell at a much slower rate, according to a report released Friday by the Illinois Assn. of Realtors.
In the city, a total of just 1,770 single-family homes and condominiums were sold in September, compared with 2,108 during the same month a year ago.

In the entire Chicago area, sales last month dropped 6.2%, to 6,371 homes, compared with September 2007.

Meanwhile, the median sale price for Chicago-area homes in September was $224,000, down 13% from $257,500 during the same month a year ago.

"If there was any good economic news in the last month, it would have to be the universal realization that the downturn in the economy has reached proportions that have many analysts suggesting that it is by far the worst since the Second World War," Geoffrey J. D. Hewings, director of the Regional Economics Applications Laboratory at the University of Illinois at Urbana-Champaign, said in a news release announcing the sales figures.

Interest rates were little changed from a year ago. The area’s average rate for a 30-year, fixed-rate mortgage was 6.05%, compared with 6.41% during the year-ago month.

Statewide, home sales dropped 8.7% to 9,686 homes. But sales actually rose in 33 of the state’s 101 counties, including Kane (4.7%) and Kendall (5.1%).

Sales and price information is generated from a survey of Multiple Listing Service sales reported by 35 participating Illinois Realtor local boards and associations, according to the statement. The association defines the Chicago area Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry and Will counties.

Foreclosure filings jump 71% in the third quarter

The number of homeowners ensnared in the foreclosure crisis grew by more than 70% in the third quarter of this year compared with the same period in 2007, according to data released Thursday.

more at http://www.usatoday.com/money/economy/housing/2008-10-23-foreclosure-rates_N.htm

U.S. home prices down 5.9% in past year, FHFA says

U.S. home prices fell 0.6% in August and 5.9% in the past year, according to the Federal Housing Finance Administration, successor to the Office of Federal Housing Enterprise Oversight. The August decline in the FHFA index was less than the 0.8% drop in July. Home prices have now fallen 6.5% from the peak. Prices fell in eight of nine regions in August, with only the New England region showing a 0.4% increase. Prices fell 1.8% in the Pacific region in August. Prices are down in all nine regions over the past year.

Home Prices Seem Far From Bottom

The American housing market, where the global economic crisis began, is far from hitting bottom.

Home prices across much of the country are likely to fall through late 2009, economists say, and in some markets the trend could last even longer depending on the severity of the anticipated recession.

more at http://www.nytimes.com/2008/10/16/business/economy/16housing.html

Mortgage Rates Are Rising Despite Government Efforts

The average 30-year rate jumped to 6.47% in the week of October 10, according to the Mortgage Bankers Association. That was up from 5.98% a week earlier and just shy of the August high (6.58%), itself the highest in more than a year.

How can rates be going up when the economy is tanking and the government is throwing everything it can at the banking sector and credit markets?

Because bond investors are dumping the heck out of bonds — and when bond PRICES fall, bond YIELDS (interest rates) rise.

Why are investors selling bonds? Well, we just learned that the budget deficit soared to $454.8 billion in fiscal 2008, which ended September 30. That was more than double the $161.5 billion deficit in 2007 and the highest in the history of the country.

Thanks to all the fresh bailout programs, the deficit will likely surge by a few hundred billion MORE dollars in fiscal 2009 — and it could easily top $1 TRILLION.

Long bond futures plunged from an intraday high of 124 23/32 in mid-September to around 114 now — a decline of more than ten points in price.

Since bond yields move in the opposite direction of prices, they're going up. The benchmark 10-year Treasury Note now yields about 4%, up from the 3.4% area in September.

August pending home sales jump 7.4 percent

(Reuters) - Pending sales of existing U.S. homes unexpectedly jumped in August to the highest level in over a year, data from a real estate trade group showed on Wednesday.

The National Association of Realtors Pending Home Sales Index, based on contracts signed in June, rose 7.4 percent in August to 93.4 from an upwardly revised index of 87.0 in July.

The August reading was 8.8 percent higher than a year earlier, and the highest level since 101.4 in June 2007.

Economists polled by Reuters ahead of the report were expecting pending home sales to drop by 1.8 percent.

The association's senior economist Lawrence Yun said home buyers responded to improved affordability, with home prices low and mortgage rates down after the government takeover of Fannie Mae and Freddie Mac.