Mortgage Market News: Foreclosures, New Home Sales, Mortgage Rates
It’s been a fairly eventful couple of days in terms of mortgage market news. Not only have existing home sales increased, but there is new data for foreclosures, new home sales and mortgage rates now.
Foreclosures
The latest foreclosure data shows that foreclosure starts rose dramatically in the first quarter of 2009. This is not much of a surprise, since the moratoriums that many local mortgage companies — as well as Fannie and Freddie — put on foreclosure during the holiday season have been lifted. Quarter 1 marked the end of moratoriums, and the ax that had been poised to fall finally did. There is some hope that the loan modification and other programs introduced by the government might help stem the rising tide of foreclosure. Also, there are hopes that an improving economy later in the year might make it possible for more people to stay in their homes.
New home sales
Despite the concerns over foreclosure, and the temptation offered by existing home sales and distressed properties, new home sales are on the rise. April saw a slight increase to new homes sales, which should be good news for builders. Builders have been hard hit recently to compete with the bargains offered by REO properties. However, many builders are now offering incentives and special financing terms, providing some impetus for new home buying.
Mortgage rates
Mortgage rates are on the rise right now, due to concerns about the likelihood of quantitative easing by the Fed leading to inflation. The Wall Street Journal reports on the concerns about the Fed and inflation:
But the winds turned against the Fed in recent days, as investors worry the government’s approach could lead to inflation. The government will sell nearly $2 trillion in U.S. Treasury bonds this year to fund its stimulus programs, and investors worry there won’t be enough demand for it. Slack demand would send bond prices down and push up the government’s cost of raising money.
“The market is looking at the over $1 trillion deficit and how we’ll finance it and concluding it is too big to finance without Fed assistance. But Fed assistance is causing inflation worries,” says James Bianco, president of Bianco Research. “We’re caught in a vicious cycle.”
These worries are causing conditions that are driving mortgage rates higher. However, they are still low enough that most people can get a good deal on their mortgages when they decide to buy a home.
