Declining First Time Home Buyers Slows Recovery

Bloomberg Personal Finance is reporting that Americans are being shut out of the housing recovery

because of rising prices and tougher credit standards. First-time buyers accounted for 26 percent of purchases in January, the lowest level recorded by the National Association of Realtors (NAR) since it began tracking the data in October 2008. The decline of these buyers threatens to slow the pace of the economic recovery.

Inventory Smaller

More moderately priced homes are usually the main inventory for first time home buyers, and that inventory has shrunk do to cash investors snapping them up for rentals. In December, 47 percent of U.S. purchases were paid for with cash, up from 27 percent a year earlier. In addition adding to the already shortened supply, thirty-nine percent of owners looking for better homes plan to keep their current house as a rental. Higher mortgage costs are also a burden for first timers. Rates for 30-year fixed loans climbed to 4.37 percent last week from a near-record low of 3.35 percent in early May.

Lender Issues

The FHA, the biggest source of financing for first-time buyers, has raised the cost of borrowing and tightened underwriting to cope with losses on mortgages it insured as the property bubble burst. The number of FHA borrowers purchasing their first homes declined by 38 percent last year. For buyers whom go with other lenders they are requiring higher FICO scores. More than 40 percent of borrowers in 2013 had FICO scores above 760, compared with about 25 percent in 2001. Because of these difficulties, new home owners aren't even applying for home loans.

Young People Home Ownership Down

The home ownership rate for people in their 20's and 30's fell to 42.2 percent in 2013, the lowest in 19 years of Census data. While purchases rose 8.2 percent for residences costing more than $250,000, they fell 10.7 percent for homes worth less. Leslie Appleton-Young, chief economist for the California Association of Realtors sees the decline as ‘a huge problem’. Another economic factor to add to the decline of first time home buyers is, housing prices are rising faster than incomes at this point. What’s a first time home owner to do? Focused strategy oriented planning is the best path for those interested in purchasing their first home. 

Solid Housing Recovery Taking Hold

Properties starting the foreclosure process in November dips down to its lowest level since December 2005, according to RealtyTrac's U.S. Foreclosure Market Report for November. Foreclosures are down 10% from the previous month and down 32% from a year ago. Bank repossessions in November were down 19% from the previous month and down 48 percent from a year ago, the lowest level since July 2007.

 "While some of the decrease in November can be attributed to seasonality, the depth and breadth of the decrease provides strong evidence that we are entering the ninth inning of this foreclosure crisis with the outcome all but guaranteed," said Daren Blomquist, vice president at RealtyTrac.  "While foreclosures will likely continue to stage a weak rally in certain markets next year as the last of the distress left over from the Great Recession is dealt with, it is highly unlikely that there will be a foreclosure comeback that poses any major threat to the solid housing recovery that has now taken hold."

Savannah Housing Market

How is Savannah fairing in the foreclosure market?  Keller Williams Real Estate Broker Don Callahan said; "As the amount of distressed home sales decline and the overall inventory decreases we are beginning to see an increase in home values. It is refreshing to see the stabilization of our local market." Good news for the Savannah housing market.

Source: Realty Trac US Foreclosure Market Report 
http://www.realtytrac.com/Content/foreclosure-market-report/november-2013-us-foreclosure-market-report-7946

Is It Possible Home Sales Are About To Climb?

Things are looking up for our economy according to today’s news. With mortgage rates hovering in the 4.25% range, unemployment down, and less foreclosures and bankruptcies, consumers are more likely to borrow. Below are some of the news sources that I tapped into.

The Fed’s uncertainty with bond buying and reducing asset purchases makes for a tough interest rate environment. The rates were flat most of last week until Friday when the rate rose slightly from 4.13 to 4.25 for a 30yr fixed loan. Read more at the Mortgage News Daily site: http://www.mortgagenewsdaily.com/consumer_rates/330213.aspx

Bloomberg reports today that Americans will cure their debt troubles by taking out loans because of a 5yr low in the unemployment rate. In addition the banks will be more inclined to loan due to a cleaning of their own balance sheets. Read more at Bloomberg news: http://www.bloomberg.com/news/2013-11-04/americans-debt-hangover-seen-ending-in-boost-to-growth-economy.html

Mortgages Rates Rising & QM Standards in 2014 are Loans Hard to Get?

An analysis of home loans showed that 1 in 5 current mortgages would not meet the qualified

mortgage safe harbor standard that goes into effect in January.

What the New Rule Means for Borrowers:

AOL Real Estate:  "Under a provision in the Dodd-Frank Act, lenders must verify a mortgage applicant's ability to repay the loan. A borrower's debt-to-income ratio must be 43 percent or lower, plus the mortgage rate needs to be close to the national average prime mortgage rate (within 1.5 percentage points for first-lien loans and within 3.5 percentage points for subordinate-lien loans).

The new QM thresholds take effect Jan. 10, 2014, which will not only impact lenders' liability, but also consumers' ability to qualify for home loans."
Read more: http://realestate.aol.com/blog/2013/10/23/dodd-frank-qualified-mortgage-standard/

Marketwatch: “The average credit score among borrowers who received a mortgage in September was 732, down from a peak of 750 a year prior…. To be sure, the bar to getting a mortgage remains high. Applicants who were denied a mortgage in September had an average FICO score of 696 …”
Read more: http://www.marketwatch.com/story/mortgage-lenders-ease-credit-score-standards-2013-10-16

The Toledo Blade: ”…the regulations also could have the unintended effect of making it more difficult for many working-class families to qualify for mortgage loans offered by major banks.”
Read more at http://www.toledoblade.com/Real-Estate/2013/10/13/Middle-class-buyers-may-feel-squeeze-of-new-mortgage-rules.html

How Are The Banks Doing? 

“SunTrust Banks said Tuesday it will eliminate 800 jobs nationwide, including in Charlotte, the result of a slowdown in its home-loan refinancing business.” “ … with mortgage rates rising this year, lenders have seen weakening demand for refinancing loans. That has led banks, including Charlotte-based Bank of America and San Francisco-based Wells Fargo, to trim the work force that processes those applications.”

Read more here: http://www.charlotteobserver.com/2013/10/15/4390442/suntrust-to-eliminate-charlotte.html#.UmfsWvkWKQA

Maybe now is the time to by before rates get higher and loan standards get tougher. Search the MLS for free here: http://www.realestateinsavannah.net/

Record Lows

 

by Michael Caputo, Starkey Mortgage
mcaputo@starkeymtg.com | 912-658-2366

The short version: interest rates set record lows this week. The ability to offer 30 yr fixed rates at 3.50% is not something we have seen before, ever.

The long version:

The turmoil in Europe has been positive for US mortgage rates for two main reasons. First, economic growth in the region has slowed, which reduces future inflationary pressures. In addition, investors have responded to the uncertainty by shifting to relatively safer assets, including US mortgage-backed securities (MBS). The economy of Greece is very small, but the increasing possibility that Greece will exit the EU calls into question the stability and the benefits of the monetary union, causing a wide range of problems outside of Greece. Bond yields in other troubled European countries have risen, creating a further drag on economic growth. People are beginning to withdraw their money from banks in these countries, increasing the risk of bank failures. Europe's issues will not be resolved quickly and will continue to influence US markets for quite a while.

Focus on the rate that is now available as opposed to rushing the buyer to act before it goes up. Few thought we would see these levels and there is no way to be sure how long it will last. Build your buyer’s confidence about the ability to secure the lowest rate ever offered while sales prices remain low. Low rate + low price = affordability.

The NFIP authority to issue new and renewal policies, as well as increasing coverage on existing policies is currently set to expire at midnight on May 31, 2012. This nonsense happened a few times in 2010 and we can only hope that everyone in DC figures out that this needs to be extended again. If you have a closing with flood insurance after June 1, be advised that this issue is on the horizon.

Real Estate News Update

Jobs Exceed Expectations

Most of the news this week was not good for mortgage rates. The economic data was generally a little stronger than expected, and investor concerns about Europe decreased. As a result, after reaching new lows early in the week, mortgage rates ended the week higher.

Against a consensus forecast of 60K, the economy added 103K jobs in September, and the data for July and August was revised higher by 99K. The Unemployment Rate remained at 9.1%, as expected. Average Hourly Earnings, a proxy for wage growth, increased 0.2% from August. The good news for the economy is that the Employment report surpassed expectations and makes a recession look less likely.

Maximum Number of Mortgages

One individual can mortgage up to eight homes now. Our limit was 4 if the subject property was an investment or second home. There is no limit on the number of mortgages an individual can have if the subject property is going to be the primary home for the borrower. Keep this in mind for any of your investor clients who have been holding at 4 properties because of the previous rule.

The All Important Credit Score

Credit scores are critical to getting approved and the interest rate a borrower can get. The concept of risk-based pricing makes it more important than ever for a borrower to make sure their credit score is as high as possible. We now offer the Credit Expert system to all of our clients as a part of the pre-approval process. Using this score illustrator helps us show the borrower how different actions will influence their score. Have you ever been unsure if you should pay off or pay down a credit card? Wonder no more as we can show you the impact to help you improve your score and lower your interest rate. If you would like a demonstration of this, just let me know.

A real estate news update from Michael Caputo at Starkey Mortgage. Contact Michael at mcaputo@starkeymtg.com.

Do You Know Your Credit Score?

Our friend Michael Caputo at Starkey Mortgage sent us some great information the other day about credit scores. Whether you're looking to buy or not, it's always good to keep tabs on your credit score. See his article below.

It is always a good idea to check the accuracy of the data on your credit report. Consumers can receive a free copy of their credit report each year by visiting http://www.annualcreditreport.com/ 

Eligibility for a particular loan program and the interest rate associated with it can be impacted by a borrower’s credit score. After reviewing the report, a consumer can initiate a dispute on line.
If there are any errors on the report that need to be corrected. http://www.equifax.com/ has a tremendous amount of resources designed to help an individual improve their credit history and better manage.
The credit that they have. The higher the credit score, the lower the perceived risk for an mortgage applicant. Please feel free to call anytime to review your credit report and discuss ways to improve your credit score.

Michael Caputo
Starkey Mortgage
912-658-2366

What is HomePath Mortgage?

 HomePath Mortgage allows a borrower to purchase a Fannie Mae-owned property with a low down payment, flexible mortgage terms, no lender-requested appraisal and no mortgage insurance. Expanded seller contributions to closing costs are allowed.


Benefits to the Borrower:

• Low down payment and flexible mortgage terms (fixed–rate, adjustable rate, or interest–only).

• Down payment (at least 3 percent) can be funded by the borrower’s own savings; a gift; a grant; or a loan from a nonprofit organization, state or local government, or employer.

• No lender-requested appraisal.

• No mortgage insurance; ask your lender for cost details on loans without mortgage insurance.

• Expanded seller contributions for closing costs allowed.

• Available for primary residences, second homes and investment properties.

• Many condo project requirements are waived

Contact us today for a FREE guide to HomePath Mortgage.

5 Mortgage and Foreclosure Myths

Here's a great article from Trulia blogger Tara-Nicholle Nelson on 5 mortgage and foreclosure myths. If you're facing a major decision regarding your home, remember to turn to the experts. For real estate advice contact us today to discuss your situation. Looking into a short sale on your home? Visit http://www.shortsalesinsavannah.net/ to explore your options. Just thinking about refinancing? Visit the Concierge page of DonCallahan.com for a list of local lenders.
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In a mortgage market that changes as quickly as this one, today’s fact is tomorrow’s fiction. For buyers, misinformation can be the difference between qualifying for a home loan or not. Sellers and owners, knowledge is foreclosure-preventing, smart decision-making power! Without further ado, let’s correct some common mortgage misconceptions.

1. Myth: Buyers with bad credit can’t qualify for home loans. Obviously, mortgage guidelines have tightened up, big time, since the housing bubble burst, and they seem likely to tighten even further over the long-term. But just this moment, they have relaxed a bit. In the last couple of weeks, two of the nation’s largest lenders of FHA loans announced that they’ve dropped the minimum FICO score guideline from 620 (which allows for some credit imperfections) to 580, which is actually a fairly low score.

At a FICO score of 620, buyers can qualify for FHA loans at many lenders with only 3.5 percent down. With a score of 580, the lenders are looking for more like 5 to 10 percent down – they want to see you put more of your own skin in the game, and the higher down payment lowers the risk that you’ll default. However, if your credit has taken a recessionary hit, like that of so many Americans, this might create a glimmer of hope that you’ll be able to take advantage of low prices and interest rates without needing years of credit repair.

2. Myth: The Mortgage Interest Deduction isn’t long for this world. Homeowners saved over $85 billion in 2008 by deducting their mortgage interest on their income tax returns. A few months ago, the National Commission on Fiscal Responsibility and Reform caused a massive wave of fear to ripple throughout the world of real estate consumers and professionals when they recommended Mortgage Interest Deduction (MID) reform, which would dramatically reduce the size of the deduction.

Fact is, the Commission made a sweeping set of deficit-busting recommendations to Congress, a few of which are likely to be adopted. Fortunately for buyers and sellers, MID reform is not one of them. Very powerful industry groups and economists have been working with Congress to plead the case that MID reform any time in the near future would only handicap the housing recovery. Congress-folk aren’t interested in stopping the stabilization of the real estate market. As such, the MID is nearly universally thought of as safe – even by those who disagree that it should be.

3. Myth: It’s just a matter of time before loan guidelines loosen up. The US Treasury Department recently recommended the elimination of mortgage industry giants Fannie Mae and Freddie Mac. I won’t get into the eye-glazing details of it here, but the long and the short is that (a) this is highly likely to happen, and (b) it will make mortgage loans much harder and costlier to get, for both buyers and homeowners. It’s possible that loans are as easy to get as they’re going to get. So don’t expect that if you hold out, zero-down mortgages will come back into vogue anytime soon. Fortunately, Fannie and Freddie aren't likely to disappear for another 5-7 years, so you have a little time to pull your down payment and credit together. If you want to get into the market, the time to get yourself ready is now!

4. Myth: If you don’t have equity, you can’t refi. Much ado is being made about how stuck so many people are in their bad loans, because they don’t have the equity to refinance their way out of them. If you’re severely upside down (meaning you own much, much more than your home is worth), stuck may be the situation. But there are actually a couple of ways homeowners can refi their underwater home loans. If your loan is held by Fannie or Freddie (which you can find out, here), they will actually refinance it up to 125% of its current value, assuming you otherwise qualify for the loan. That means, if your home is worth $100,000, you could refinance a loan up to $125,000, despite the fact that your home can’t secure the full amount of the loan.

If your loan is not owned by Fannie or Freddie, you might be a candidate for the FHA “Short Refi” program. While most mortgage workout plans are only available to people who are behind on their loans, the Short Refi program is only available to homeowners who are current on their mortgages and need to refinance up to 115 percent of their homes’ value. So, if you owe $250,000 on your home, you can refinance via an FHA Short Refi even if your home’s value is as low as $217,000. If you think you’re a good candidate for a short refi, contact your mortgage broker, stat – there are some in Congress who think that this program is so underutilized (only 245 applications have been submitted since it rolled out in September – no typo!) that its funding should be diverted to other needy programs.

5. Myth: If you’ve lost your job and can’t make your mortgage payment, you might as well mail your keys in. Until recently, this was essentially true – virtually every loan modification and refinancing opportunity required that your economic hardship be over before you could qualify. And documenting income has always been high on the requirements checklist. But there are some new funds available in the states with the hardest hit housing and job markets, which have been designated specifically for out-of-work homeowners.

The US Treasury Department’s Hardest Hit Fund allocated $7.6 billion to the states listed below – all of which are now using some portion of these funds to offer up to $3,000 per month for up to 36 months in mortgage payment assistance to help unemployed homeowners avoid foreclosure. Contact the state agency listed below if you need this sort of help:

•Georgia: http://www.dca.state.ga.us/housing/homeownership/programs/hardesthitfund.asp


View original article here:http://www.trulia.com/blog/taranelson/2011/03/5_mortgage_and_foreclosure_myths?ecampaign=anews&eurl=www.trulia.com%2Fblog%2Ftaranelson%2F2011%2F03%2F5_mortgage_and_foreclosure_myths

Mortgage Rates Climb

By Chris Vogler chris.vogler@bankofamerica.com
Bank of America Home Loans

Stronger than expected economic data with a hint of higher inflation was negative for mortgage markets last week. Concerns about the level of demand for US securities from China added to the pressure. As a result, mortgage rates ended the week higher.

A number of factors combined during the week to push mortgage rates higher. The recent trend of improving economic data continued this week in the housing sector. The inflation information seemed to show a sharp increase. Later in the week, a Treasury auction for securities which provide protection from inflation showed that investor concerns about future inflation are growing. Investors also worried about a decline in demand for US bonds from China. As the largest foreign holder of US fixed-income securities, any sustained drop in demand from China would have a large impact on US bond markets, including mortgage-backed securities (MBS) markets.

Overall, last week's housing sector data was positive. December Existing Home Sales rose 12% from November. The inventory of unsold existing homes declined 4% to an 8.1-month supply. First-time buyers purchased 33% of existing home sales. December Housing Starts fell from November, but December Building Permits, a leading indicator, rose to the highest level since March. The performance of the housing market varied in different regions, but to see improvement on the national level is encouraging.

Clean house: Tips for paying down your mortgage

Published: Friday, 17 Dec 2010 1:56 PM ET
NEW YORK - Don't let your biggest debt run your life. There are ways to trim your monthly costs that will move you closer to a mortgage-free retirement.

PAYING EARLY: Make one extra payment every year and apply the extra cash toward principal.

"That will cut about 8 years off your 30-year fixed loan," said Pava Leyrer, president of Heritage National Mortgage in Michigan.

There are several ways to do this. You can make a full extra payment all at once. Leyrer suggests using your tax refund.

Still, it may be easier to pay throughout the year. For example, if your monthly payment is $1,200, pay $100 each month. Another option: Some banks will deduct half the mortgage payment from your account every two weeks, which adds up to 13 payments a year.

However, a lump sum payment will shave an additional five to six months off the life of the loan, Leyrer said. That's because the amount of interest you pay will decline faster.

A note of caution: Know if your mortgage has a prepayment penalty, generally found on loans before 2008. In some cases, the penalty is only in place for the first few years and may only apply if you pay off a substantial amount (like 20 percent). This will add an extra cost if you refinance and pay down some of your debt, or sell early and pay off your loan. You also should be able to opt out of this penalty, but may see a bump in the interest rate as a result.

SEEK A LOWER RATE: You're probably aware that mortgage rates have been at their lowest level in decades. What does that mean for you as a homeowner? You could possibly shave hundreds of dollars off your monthly payment. The rule of thumb is that refinancing often makes financial sense if you can secure a rate that's one percentage point or more lower than your current loan. You will pay off the closing costs with the savings within a couple of years, and realize greater savings on interest over the life of the loan.

There are other refinancing tricks. Some of Leyrer's clients are choosing to go from a conventional, 30-year fixed loan, to one backed by the Federal Housing Administration that offers an assumability feature. It often has a lower rate, but more importantly, it allows a buyer to take on the loan if the homeowner sells the house.

For homeowners looking to increase their home's value through improvements or repairs, opt for an FHA 203K loan for expenses up to $35,000. It wraps all the loans for the repairs and renovations into the home loan and typically offers a lower rate than a personal loan.

Homeowners with jumbo loans — generally defined as mortgages over $417,000 — should consider seeking a lower rate if they come into some extra cash. These borrowers can pay off some of the loan to reduce their debt below $417,000 and then refinance. They'll be able to qualify for a conventional mortgage and likely have a lower interest rate that can slash hundreds off a monthly payment.

Others should weigh a mortgage with a shorter duration. John Stearns, a banker at American Fidelity Mortgage Service Inc., just refinanced a homeowner who had 29 years left on his 30-year fixed mortgage. The borrower refinanced into a 25-year fixed loan. He's paying $24 more each month, but will save $35,212 in interest.

INSURANCE INS & OUTS: Lenders require private mortgage insurance, or PMI, if a borrower owes more than 80 percent of the home's value. This adds to the monthly mortgage payment.

But don't get stuck paying for longer than you have to. Lenders are only required to cancel PMI when the borrower owes 78 percent of the home's value or less, Stearns noted. But borrowers can get an appraisal to prove they owe less than 80 percent and require the lender to cancel the PMI.

BE TAX SAVVY: Part of the perks of being a homeowner is that mortgage interest payments are tax deductible. To increase your deduction, make your January payment before December 31 of the previous year. That will also add up to 13 payments for the year and the bigger tax refund can be used to get ahead.

View original article: http://www.cnbc.com/id/40720989

7 Reasons to BUY NOW

Check out Keller Williams Realty's newest e-book "7 Reasons Why Now is a Great Time to Buy a Home!" This guide provides excellent examples as to why now is the best time to buy a house. (Also available on the Buyers page of www.DonCallahan.com) Mortgage rates have never been lower, home prices are excellent, and the inventory is full. If you are ready to buy now, contact us today at don@doncallahan.com.

Guest post by James Kelley
www.VAbenefitblog.com

Owning a home in the same place where historic battles took place and parks as old as the United States itself exist can be a true treasure to pass down to one’s children.

Buying a home, however, can be a stressful process, especially if you go the conventional route. And if we’re talking about U.S. Veterans, men and women who have done so much for the country, the last thing they need is hassle.

But even other government-backed programs are saving everyday people from the burden of conventional loan processes. Programs like the VA, USDA, and FHA mortgage plans give people the chance to buy a home without the stress and heavy expense. How? All three programs have great perks and offer lower rates. Let’s take a look at them.

FHA LoanThe Federal Housing Administration insures the FHA loan. Unlike the VA and USDA loan, the FHA has no income limits or career type requirements. It’s open to anyone and everyone.

An FHA loan has lower closing costs. The down payment is about 3.5 to 5%, which is about three times lower than conventional loans. All of the government-backed programs allow families to use gifted or borrowed money to make payments or put towards a down payment, if applicable. Conventional loans do not allow money from sources in which a proper paper trail cannot be kept.

The FHA program is a favorite among many buyers especially low to middle income families because the credit and debt requirements are not super strict. With the FHA, it is feasible for anyone with past financial errors to work his or her way back up to a decent score and obtain the loan.

USDA LoanThe U.S. Department of Agriculture secures USDA loans. Only homes within rural localities can be bought with this mortgage program. Check with a USDA lender to see which areas around Savannah, GA are eligible for the program.

The USDA, like the VA program, does not require a down payment. Other perks include 100% financing, no monthly mortgage insurance fees, and the actual mortgage payment is sometimes lower than the FHA loan. One slight downfall is the USDA does set income limits to determine eligibility.

VA LoanMany veterans do not know about the growing popularity of the VA loan. Secured by the U.S. Department of Veteran Affairs, it offers amazing deals and an easy application process.
The rates are low, and there is no money down or monthly mortgage insurance.

VA loans can be guaranteed up to $729,000, in some areas. The average loan is about $207,000. There are no upfront fees, except for a possible appraisal fee, though having a service-related disability allows the lender to waive funding fees. The buyer and the lender, however, will still have to bring in a certified home appraiser as per the VA requirements.

To qualify, the service member must be able to prove that they served in the military for 90 days during wartime and 181 days during a time of peace. He or she must have been honorably discharged. Veterans, active duty personnel, reservists and National Guard members can qualify. Also, some surviving spouses might be eligible for the VA loan.

The Next StepTalk with a lending counselor today. They can help you decide which option will save you the most money.

Mortgage Update

by Chris Vogler
Bank of America Home Loans

After dropping to the lowest level in decades last week, mortgage rates fell even further this week! Affordability hasn’t been this good for home purchases in decades.

Interest rates are at lows not seen in 50-60 years, and home prices and selection continue to be the best seen in many years. These two things add up to the fact that buying is affordable and in many cases cheaper than renting. However, the supply of homes in the tri-county area seems to be decreasing slightly and the demand is increasing.

This supply and demand function means that the selection and prices of homes won’t last long. Interest rates for a typical mortgage are in the mid to upper 4% range INCREDIBLE; rates can’t and won’t stay this long for too much longer!

Home Buyer Tax Credit Closing Date Extension & Flood Insurance Extension

From: NAR Government Affairs

After a close brush with the deadline, Congress has passed an extension of the Homebuyer Tax Credit closing deadline, the Homebuyer Assistance and Improvement Act (H.R. 5623). The extension applies only to transactions that have ratified contracts in place as of April 30, 2010 that have not yet closed. The legislation is designed to create a seamless extension the new closing deadline for eligible transactions is now September 30, 2010. There is will be no gap between June 30 and the date the President signs the bill into law.

NAR worked closely with Congressional leaders on both sides of the aisle to enact this important legislation. Extending the Tax Credit Closing deadline will help provide additional stability to real estate markets across the nation.

For additional information on the extension visit www.realtor.org/government_affairs

Additionally, the United States Senate has passed the National Flood Insurance Program Extension Act of 2010 (H.R. 5569) an extension of the National Flood Insurance Program until September 30, 2010. This will allow transactions to move forward. The bill is retroactive and covers the lapse period from June 1, 2010 to the date of enactment of the extension.

For more information on the flood insurance program visit www.realtor.org/government_affairs

Mortgage Applications Jump

Industry group says mortgage activity surged 16.4% last week as consumers took advantage of low interest rates.

By Ben Rooney, CNNMoney.com staff reporter
Last Updated: October 7, 2009: 10:34 AM ET

NEW YORK (CNNMoney.com) -- Mortgage applications surged last week as interest rates on home loans remained low, an industry group said Wednesday.

The Mortgage Bankers Association said its index of mortgage application volume rose 16.4% last week versus the previous week.

The surge in activity came as rates on 30-year fixed rate mortgages, the most widely used loan, remained below 5% for the third week in a row.


The average interest rate for 30-year fixed-rate mortgages fell to 4.89% last week from 4.94% the week before, according to the MBA. It was the lowest level since May 2009 when 30-year rates were 4.81%.

The MBA said refinancing applications jumped 18.2%, climbing to the highest level since mid-May. Purchase applications rose 13.2% to reach the highest level since January.

The report bodes well for the U.S. housing market, which has been stabilizing following a major slump. In addition to low interest rates, home sales have been supported by affordable prices and government tax credits.

But analysts say the market remains hampered by rising unemployment and warn that the budding recovery could falter if a popular $8,000 tax credit is allowed to expire at the end of the year.

Meanwhile, the average rate for 15-year fixed-rate mortgages eased to 4.32%, the lowest rate ever recorded in the survey.

Rates for one-year adjustable rate mortgages, or ARMs, rose to 6.56%.

First Published: October 7, 2009: 9:58 AM ET