Mortgage Rates Continue Moving Up
For the sixth straight week, mortgage rates inched upward with the rate on 30-year loans jumping to 3.98 percent and almost touching 4 percent.
The increases are a sign that the economy is improving, but could cause grief to many first-time buyers who are hoping for rates to keep falling.
Last week, the average rate on the long-term loan was 3.91 percent, according to mortgage giant Freddie Mac, who?s been tracking rates since the 1970s. That?s the highest since April last year.
Rates on the shorter-term 15-year-loans also increased to 3.10 percent from 3.03 percent. Despite the increases, rates are still hovering at historic low levels. The recent hikes are in anticipation of the Federal Reserve scaling back its bond purchases. But, if they continue, the momentum in the housing market?s recovery could slow down.
Banks Repossess More Homes as Prices Rise
USA Today reported that banks repossessed 11 percent more homes in May when compared to the previous month. Repossession is the very last step in the foreclosure process, which allows lenders to claim homes from owners who have failed to fulfill their loan obligations.
The increase in this penultimate step of repossession is a sign that lenders are slowly feeling confident about releasing inventory into the market and fetching a good price. Earlier, a barrage of foreclosures damaged the market by deflating prices and crowding inventory. But as the market turned a corner, aided by better employment numbers and low interest rates, inventories depleted and home prices began their upward climb.
?Given the shortage of inventory and rising home prices, banks have little motivation to hold back on any foreclosures,? Craig King, chief operating officer of Chase International brokerage, told the USA Today.
According to RealtyTrac, repossessions increased in 33 states. North Carolina led the nations with a 60 percent jump in repossessions in May. Oregon recorded a 57 percent jump, and Wisconsin and Illinois saw a 44 percent bump.
Foreclosure filings, the start of the long-drawn repossession process, were up 2 percent last month from a 75-month low. ?Filings dropped 28 percent when compared to the year-ago period, but 14 states saw an increase in foreclosure starts when compared to last year. New Jersey saw an 82 percent jump in foreclosure starts when compared to last year, and Nevada had a 81 percent increase, according to RealtyTrac.
Sellers are in Business
A recent survey by mortgage giant Fannie Mae found that 40 percent of Americans believe now is a good time to sell a home, compared to 30 percent in April and 16 percent a year ago.
The response indicates a rise in confidence among homeowners, which could lead to more inventory in the market, thereby ensuring smaller price gains in the future.
?Sentiment toward selling a home appears to be catching up with the strengthening housing market,? Doug Duncan, senior vice president and chief economist at Fannie Mae, said in a release.
The news couldn?t have come at a better time. Home prices in America skyrocketed 12.1 percent in April when compared to the year-ago period. Tight inventory levels and lack of supply triggered the price increase. If sellers release more homes for sale into the market, prices will cease to rise so sharply and keep homes more affordable for potential buyers.
Source: http://www.realestate.com/advice/strengthening-housing-market-encourages-banks-and-homeowners-95396/
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