MORTGAGE RATES RISE FOR 2nd STRAIGHT WEEK: The Bond market finished slightly down on the week – ending 6 bps lower. This pushed rates slightly higher on the week. You can still get a 4.375% on a 30 year fixed rate, but it will cost over a point. 4.49% is the par rate paying less than one point.
Overall, there is some pressure on mortgage rates right now. The Feds Quantitative Easing measures are about to end, which could push rates a bit higher. Overall, I don’t see rates going much higher or much lower from where they are right now for the foreseeable future.
THE FORECLOSURE NUMBERS: According to the US Foreclosure Market Report, foreclosure activity has decreased for the 8th straight month.
There are 3 foreclosure activities they consider in their report. Notice of Default is when the mortgage company notifies the customer that they are in violation of their contract and they plan on foreclosing unless payments are brought back up to speed. This can be given out after 3 months of late payments. Foreclosures scheduled is when a home is scheduled to be taken back by the bank. REO is when the bank takes back the home and it becomes part of the banks inventory.
From April to May:
Notice of Default rates went down by 7%
Foreclosures Scheduled went up by 3%
REOs went down by 4%
Although the foreclosure activity has decreased, the results can be misleading. Many lenders are delaying foreclosure proceedings for various reasons associated with their own process and procedures as well as market considerations in the area where the homes are being foreclosed in. If they keep pumping more REOs into the market when their current inventory is high, it will push down the values of their existing inventory.
Also, even though the inventory of homes in the foreclosure process has decreased steadily over the past 6 months, the inventory of REOs is increasing. This is because the amount of REOs being added to the market is outpacing the amount of REOs sold. This points to a still struggling housing market where the demand is not on par with the supply.
The states with the highest foreclosure rates in order are Nevada, Arizona, California, Michigan and Georgia.
