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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Jason W who wrote (483)	8/29/2001 11:31:28 AM
From: Tradelite	Respond to of 306849

Refinancings Up Again As Owners Cash Out Low Rates and Fees Help Fuel Trend By Daniela Deane Washington Post Staff Writer Saturday, August 25, 2001; Page H01 Another refinancing boom is shaping up as 30-year mortgage rates continue to hover below 7 percent and homeowners tap the rising value of their houses. Refinancing activity rose nationwide in the week ended Aug. 17, increasing to 49.7 percent of applications, according to a survey by secondary mortgage giant Freddie Mac. That was up almost two percentage points from the 47.9 percent of the week before, the survey showed. "It's another surge in refinancings," said Robert Van Order, chief economist at Freddie Mac, which buys mortgages from lenders and packages them into securities that are sold to investors. "Refinancings peaked last spring, fell down in the summer and now are headed back up." Declining mortgage rates are part of the reason for the surge. Rising property values, which have given a sharp boost to the portfolios of American homeowners in otherwise slower economic times, are the other powerful motivator. Rates for 30-year mortgages averaged 6.91 percentthis week, which was the third straight week they were at or below 7 percent. That's the lowest long-term rates have been since March. In the second quarter of this year, 57 percent of all refinancings were "cash-out," where the homeowners took more than 5 percent of the equity out of their property, Freddie Mac research showed. "People are using the money in their houses to shore up their personal balance sheets," said Doug Duncan, chief economist at the Washington-based Mortgage Bankers Association. "Delinquencies on credit cards have fallen, which indicates they are paying off their credit cards with some of the cash. They're also doing home improvements and paying for college." The association estimates that mortgage rates will stay at or below 7 percent for the rest of this year. Fannie Mae research shows that cash-out refis have contributed to national consumer spending by $40 billion, one of the main factors keeping the economy out of recession. "A $40 billion infusion of cash into a slowing economy, that's not chicken feed," said Orawin Velz, senior economist at Fannie Mae, the other large secondary mortgage bank. "That's been a great stabilizer for this faltering economy." Homeowners are more comfortable than they used to be with the refinancing process, contributing to the higher number of refis, economists and mortgage brokers say. And increased competition among lenders has driven down transaction costs, making refinancing cheaper than it was a few years ago. "It's no big deal to refinance anymore," said Velz. "Before there was this rule of thumb that said you had to wait until your rate dropped a certain number of percentage points to do it. Now people just refinance. And then refinance again." Increased property values have given homeowners a significant boost in the amount of equity they have in their homes, the principal source of wealth for the majority of Americans. A quarterly sales index released by Fannie Mae that tracks at least two repeat sales of the same property showed prices increasing 8.4 percent in the second quarter of 2001 over the second quarter of 2000. Nationwide, economists say, price appreciation has run 6 percent to 8 percent a year over the past two years, significantly ahead of inflation. "Clearly, there are some pockets doing better than that, and some doing worse," said Vassilis Lekkas, principal economist at Freddie Mac. And the bank predicts continued price appreciation, although at a slower pace -- somewhere between 4 percent and 5 percent next year -- more in line with inflation. Most economists agree with Freddie Mac that there will be a slowdown in property appreciation. "We don't think this is a price bubble that will pop and crash," said Duncan of the Mortgage Bankers Association. "The market will just flatten out." Local mortgage brokers say refinancing activity has been stable -- and consistently high -- for most of 2001. John Staples, owner of mortgage broker Sigma Financial in McLean, said many lenders couldn't handle the volume of business they would get if rates drift much lower. "Whenever the crush comes, processing times go up," said Staples. "In March, the last time rates were at this level, a three- to four-day underwriting process stretched to several weeks. Certain lenders -- not all of them -- just cannot cope." © 2001 The Washington Post Company

To: Jason W who wrote (483)	8/29/2001 1:28:32 PM
From: JakeStraw	Respond to of 306849

>>New Jersey foreclosures jump 15% Yeah but who wants to live in New Jersey?! :^)

To: Jason W who wrote (483)	8/29/2001 3:45:07 PM
From: Raymond Duray	Read Replies (2) \| Respond to of 306849

Hi Jason, Lie, Damn Lies and Statistics Dept. ~ That Shrieking Headline of yours represents a real increase of overdue mortgages of 1 in 800*. Quite a snore if you put it in that perspective, don't you think? Well within the range of statistical noise. Regards, Ray :) Calculation based on (a) survey by the Mortgage Bankers Association of America estimates 0.77 percent of all New Jersey mortgages were 90 or more days overdue in the first three months of 2001, up from 0.65 percent in the first quarter of 2000. So, the increase is 0.12%, or roughly, 1/800.