Mortgage rates remain low again this week helped out by reemerging doubts about the stock rally and economy as a whole. The benchmark thirty-year, fixed-rate stands just above 5% with no points and the fifteen year is just below 4.50%. While paying a point was buying a full ½% discount to the rate in the first quarter of the year, that premium has narrowed significantly and a point today is only buying a 1/4% rate improvement.
There has been renewed volatility in rates over the past couple of weeks but the day to day ups and downs have always offset leaving rates virtually unchanged. I am still somewhat surprised that twelve month highs in the equity markets would have not dampened demand for bonds but so far we are not seeing it. As long as there is robust demand for bonds, rates will remain in their current range.
Some disappointing news on the housing-front this week as the Commerce Department reported on Tuesday that housing starts for October missed economists’ expectations. Though still up .5% from the previous month, the seasonally adjusted annual rate of 590,000 starts was significantly less than the 610,000 most economists had expected. Housing starts are down 28.2% from September 2009. In another, perhaps more worrying, report, Fiserv, the financial and information analysis firm, said that home prices would continue to fall through 2010. They expect the median home price to drop an additional 11.3% by June, 2010 but expect an increase of 3.6% in the following year. There was a silver lining in the report, however, that showed while prices in some markets such as Miami, Orlando and Phoenix could see additional declines in excess of 20%, home prices in some markets are predicted to actually rise in 2010.
I had a lot of response to last week’s article regarding the new HVCC appraisal guidelines and Truth in Lending requirements. I thought, in fairness, I should point out that Freddie Mac released figures today in support of the HVCC. Freddie Mac said that overall appraisal quality had gone up since the implementation of HVCC May 1st and said it had cut lender repurchase risk substantially. Freddie reported an additional 15% of the appraisals it has reviewed since HVCC took effect are in line with the values produced by their automated valuation models. I felt I should give the other side of the story but I still don’t have to agree with it.