Memphis Real Estate News

Mortgage Problems Worsen, which directly affects the real estate market.

There are conflicting real estate and mortgage stories, some good and some bad. Hopefully this is a sign that the “bottom” has occurred and we are on are way up again.

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Lenders are responding to turmoil in the subprime mortgage market by imposing stricter underwriting standards, and experts say they are doing so at such a rapid pace that it is difficult to keep track of available mortgage products and their interest rates.

Experts note that tighter underwriting criteria could further depress the housing market, as borrowers without down payments, steady incomes, and good credit find themselves unable to obtain financing.

Borrowers looking to refinance out of adjustable-rate mortgages will be unable to do so; and the hard-luck cycle will continue as the inventory of homes on the market swells as these homeowners lose their properties to foreclosure, putting a damper on residential values, eliminating equity that could have been used to keep borrowers afloat, and further adding to supply as even more consumers unable to refinance end up in foreclosure.

Goldman Sachs chief U.S. economist Jan Hatzius says up-wards of 15 percent of borrowers eligible for mortgages last year no longer qualify.

Rates Drop Again, SlightlyFreddie Mac reported a modest decline in mortgage rates during the week ended Aug. 2, with the 30-year fixed rate falling to a one-month low of 6.68 percent from 6.69 percent. Interest on 15-year fixed loans, meanwhile, dropped to 6.32 percent from 6.37 percent.

Rates Rise After Three Weeks of Decline

At the end of the TREC meeting on Wednesday, Adren Greene, said good-by to his follow commissioners as his second term came to an end. Having served two back to back 5 year terms on the TREC,  Adren cannot be reappointed.

He commented on the pleasure of serving, and also noted that during his 10 years of service, meeting twice a month and commuting from Morristown to Nashville, he had spent the equivalent of a year in time serving the TREC.  I suspect that in reality, Adren gave us much more than that and I for one am very appreciative.

Adren will still be busy as an established force in East Tennessee real estate he remains a real estate entrepreneur. Adren formed Coldwell Banker Realty House in Morristown many years ago. Today the company has over 30 real estate professionals The company has hundreds of transactions a year that total several millions in sales.

We wish Commissioner Green well, and thank you for your service.

Nationwide, 30-year fixed-rate mortgages averaged 6.16%, for the week ending May 3rd, unchanged from last week’s 6.16%.  Last year at this time, the 30-year FRM averaged 6.59%.  The average for the 15-year FRM this week is 5.87%, unchanged from last week’s 5.87%.  One-year “T”ARMs were down at 5.42% and five-year “T”ARMs averaged 5.87% down from last week’s 5.88%. 

“The recently advanced report of first quarter Gross Domestic Product (GDP) was weaker than expected, growing only 1.3 percent.  The housing market alone shaved a full percentage point off real GDP growth,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Additionally, both consumer spending and price increases in consumer expenditures were quite tame in March.  These contributing factors allowed mortgage rates to hold steady this week.  Interestingly, the refinance share of mortgage applications has been on a downward trend from a recent peak of nearly 53 percent in December, 2006 to around 42 percent last week.  But a majority of refinancing involved homeowners extracting equity from their homes.  Given that rates on home equity loans are currently around 8.25 percent, homeowners have a big incentive to use cash-out refinancing as an alternative source of financing.”

Nationwide, 30-year fixed-rate mortgages averaged 6.17%, for the week ending April 5, up from last week’s 6.16%.  Last year at this time, the 30-year FRM averaged 6.43%.  The average for the 15-year FRM this week is 5.87%, up from last week’s 5.86%.  One-year “T”ARMs were up at 5.44% and five-year “T”ARMs averaged 5.92% up from last week’s 5.88%.  Some rates increased Friday based on market anticipation of lower than expected job gains to be reported by the Fed after Good Friday’s early market closing.

“Mortgage rates have remained within a narrow band of 0.1 percentage points over every week in March,” said Frank Nothaft, Freddie Mac vice president and chief economist. “This relative stability is due to mixed economic data releases as to how strong the economy is and whether future inflation will recede.  One bright spot this week came from an unexpected increase in pending home sales for February, which suggests the housing market is still healthy.  Looking forward, the upcoming March employment report and producer price index should offer further insight into the current state of the economy and give us an idea where interest rates are headed in the future.”