February Economic Update
Informative news from Terre Steinbeck, Beverly Hills Realtor, Beverlywood, Hancock Park, Grove // The 30- year mortgage rate slightly rose this week to 3.56 % from 3.53% last week, still at the highest since September. Last year this time, the 30-year FRM averaged 3.95%. The 15-year rate stayed the same this week at 2.77%. A year ago at this time, the 15-year FRM averages 3.19%. The 5-year Treasury-indexed ARM averaged 2.64 percent this week with an average 0.5 point, the same as last week. A year ago, the 5-year ARM averaged 2.80 percent. The 1-year Treasury-indexed ARM averaged 2.65 percent this week with an average 0.4 point, up from last week when it averaged 2.61 percent. At this time last year, the 1-year ARM averaged 2.73 percent. These low rates are continuing to help the housing market, while mortgage delinquencies are decreasing and home prices are steadily rising as demand surges.
Thursday’s agreement on the mortgage settlement reported Banks have provided $45.8 billion in aid under the mortgage settlement plan. This relief was a part of the settlement from about a year ago by 49 state attorneys general, several federal agencies and big banks. The settlement resolved investigations into allegations the financial institutions had used faulty paperwork and other unethical practices to foreclose on homes. Most of the aid to consumers have received have been through short sales not loan modifications, especially in CA. According to California reports, about 175,000 consumers have received a total of $20.6 billion in principal reductions, short-sale relief and only a very small percentage received loan modifications.
What does this mean to us? The satisfaction of the settlement will take pressure off the lenders to do short sales and modifications. I really don’t see lenders doing short sales much longer. We have already begun to see them rescind approvals, so they can re-price the property to a higher value. I’d be surprised if any short sales are done in 2014. I expect them to take a “pay or we are foreclosing approach.” The days lenders are waiting a long period before initiating foreclosure with a borrower in default appears to be over. This is all good news and very much needed for a “normal Real Estate Market,” if there is such a thing.
Prices, obviously, are rising faster than anyone would have expected. I don’t see any end in sight.
Have a nice weekend.