Mortgage News from All Over
MORTGAGE RATES ON THE RISE
But gains are slight as 30-year up to 5.72%, 15-year to 5.03% and the one-year ARM hits 3.61%.
money.cnn.com
NEW YORK (CNN/Money) - Mortgage rates rose slightly this week, holding true to Freddie Mac's statement last week that rates are set to rise after the Federal Reserve changed its stance on monetary policy, the mortgage finance firm said Thursday.
The average rate on 30-year fixed-rate mortgages rose to 5.72 percent in the week ending Feb. 5, from 5.68 percent last week, with 0.6 of a point payable up front. The 30-year averaged 5.88 percent a year earlier. …
HOME OWNERSHIP RATE HITS NEW RECORD
NAH economist says low mortgage rates spurred record home buying surge in 2003.
money.cnn.com
WASHINGTON (Reuters) - Home ownership climbed to a record high late last year as low mortgage rates made buyers out of renters, a government report showed Tuesday.
The Census Bureau said 68.6 percent of homes were occupied by their owners in the fourth quarter of 2003, up slightly from a 68.3 percent home ownership rate in the fourth quarter of the previous year. …
FED: WEAK DOLLAR NOT AN INFLATION RISK
Bernanke says decline in U.S. currency helps cut deficit, sees low inflation and slow job growth.
money.cnn.com
WASHINGTON (Reuters) - Federal Reserve Board Governor Ben Bernanke said on Thursday that the drop in the dollar's value on foreign exchange markets would help cut the U.S. trade deficit, and was not sparking higher prices. …
THE BOSTON GLOBE
HOUSING STUDY FINDS THREE-CLASS SYSTEM
By Joanna Massey, Globe Staff, 2/5/2004
boston.com
More than 10 percent of residents in 18 area communities spend at least half their income on housing, according to a new study by the Donahue Institute at the University of Massachusetts, suggesting that the affordable-housing shortage has spread deeper into the middle class.
…
'The housing situation is worsening for people with a broad range of incomes, including the middle class," said Aaron Gornstein, executive director of the Citizens' Housing and Planning Association in Boston, which cosponsored the study. 'There are a lot of moderate-middle-class people who are stretching themselves to just get by." …
JOURNAL-ADVOCATE
HOUSING AUTHORITY SEEKING RELIEF; BLAMES APARTMENT GLUT
By MICHAEL BECKER
journal-advocate.com
The Sterling Housing Authority is asking the city for some relief. SHA says the glut of apartment complexes and excess number of affordable housing units is creating financial problems for the authority.
The authority took its case to city council's work session Tuesday.
Bill Herrboldt, executive director of the authority, says vacancy rates at Platte Valley Village are now between 20 and 25 percent, and the authority now faces "negative cash flow." …
THE CHICAGO SUN TIMES
DOWNTOWN CONDO GLUT DOWN, BUT MORE COMING
BY DAVID ROEDER Business Reporter
suntimes.com
Chicago's downtown condominium market has cut into its backlog of unsold units, a report has concluded, and that was presented as positive news for developers and real-estate lenders who assembled to hear the findings Thursday.
But the report also included cautionary advice for the same crowd, including word that an increase in new condo projects is ahead for 2004.
In its annual summary of the downtown residential market, Appraisal Research Counselors Ltd. said the continuing supply of new residences will limit price increases and ensure that concessions to buyers remain common. The firm said the units that are selling the slowest are those that are larger or lack extraordinary views.
The rental market, meanwhile, continues to lose tenants as they purchase condos and town houses, Appraisal Research found. It said that while there's a lot of interest from investors in buying apartment buildings, lack of job growth indicates many buildings will continue to struggle with vacancies. …
PORTLAND BUSINESS TRIBUNE
REFINANCING BOOM TURNS TO BUST
Mortgage field signals layoffs, closures and fewer remodeling jobs
By ANDY GIEGERICH
portlandtribune.com
The tidal wave of home refinancings over the last few years --which gave consumers money to keep the economy afloat when business spending was shriveling --has ebbed, beaching many employees of local mortgage lending institutions.
Washington Mutual announced earlier this month, for example, that it will eliminate 200 jobs in its Lake Oswego "refi" operation.
"The loud thud you heard was refinancing ending in the fourth quarter," said Jim Bradshaw, an analyst who follows banks for Lake Oswego-based D.A. Davidson.
"There definitely seems to be less demand" for home refinancing, said Art Ayre, economist for the Oregon Employment Department. … About a third of the Oregon Mortgage Lenders Association's members --mostly those that focused exclusively on refinancing existing mortgages as opposed to lending for new purchases --have gone out of business over the last two years, according to board member Ken Griggs. …
The refinancing boom is fizzling primarily because those who needed to refinance already have done so, said Matthew Royse, a spokesman for the Mortgage Bankers Association. …
THE VANCOUVER SUN
RESIDENTIAL PROPERTY MARKET DIPS SLIGHTLY
Detached homes transactions declined
Wyng Chow
canada.com
Condominium and townhouse sales rose in January over the previous year, but a decline in transactions involving detached houses pushed Greater Vancouver's residential property market slightly below levels of a year ago.
However, average prices continued climbing unabatedly, as the number of available homes remain at annoying low points for would-be purchasers. …
NEWS.COM
HIGH-RISE HARRY KEPT RATES LOW
By Robert Gottliebsen
finance.news.com.au
THE big banks - and Sydney's biggest apartment builder, Harry Triguboff - saved Australia from a February interest rate rise.
Reserve Bank Governor Ian Macfarlane was determined to stop the Australian property market from exploding in another round of speculation-driven price rises. … It was not until the banks saw that Macfarlane had become deadly serious that they changed their lending criteria.
…
It was the banks' easy lending policy, along with the attractive Australian interest rates, that fuelled the boom.
Because buyers had "bought forward", the bank tightening had a dramatic effect. It meant that many of those who 18 months to two years ago committed to buy apartments "off the plan" on the basis of 10 per cent deposit and nods and winks from the banks, suddenly found the banks would not lend the amounts they had previously indicated were available.
Late last December Harry Triguboff made his famous statement in The Australian that 30 per cent of Sydney units coming up for settlement in the next six months would not be sold to the original buyers. The Melbourne crisis would be as bad or worse. … Most in the industry knew he was right … Events since then have confirmed the Triguboff predictions. A number of the larger Sydney unit developers are now offering investors a net 5 per cent guaranteed return for three years. Given that yields are less than half that, it's a desperate attempt to keep units and apartments off the general market. …
These are serious times for the apartment market in all areas except southeast Queensland, where the Brisbane and Gold Coast markets are still roaring ahead. …
At the moment home buyers aren't prepared to, or can't, pay the higher apartment price levels - at least in Sydney. As a result, rents continue to edge up, although real yields remain very low, particularly in relation to interest rates.
During the next few weeks the official figures will confirm that most of the speculators and home owners are out of the apartment market, with well-funded longer term investors the only buyers. … It is always hard to judge exactly what is happening to the residential housing market, but in most areas prices seem to be down at least 10 per cent from the peak. Sometimes the fall can be much greater (Brisbane and the Gold Coast are again excluded). …
THE WEEKEND AUSTRALIAN
BANK RATES HARRY'S OVERVIEW
theaustralian.news.com.au
THE money market operators and forecasters who predicted the Reserve Bank would lift interest rates this week underestimated the power of the December warning from Sydney's largest apartment builder, Harry Triguboff.
And given the precarious state of the apartment market in Sydney, Melbourne and most other centres except Brisbane and the Gold Coast, the Reserve Bank will be playing with fire if it lifts rates in March.
…
In the apartment markets of Melbourne and Sydney, at least, the speculators and owner-occupiers are now out of the market.
…
Triguboff is financially one of the strongest of the developers and is simply offering to fund those who can't obtain sufficient money from their bank. Those developers who don't have the financial ability to offer vendor finance are guaranteeing a net 5 per cent rental return for three years or more than twice the yield they will receive from renters.
Effectively they are discounting their units by about 7.5 to 10 per cent but it doesn't show up in the sale prices. In the general apartment market, settlement defaults have risen tenfold …
At the same time, although far too many units have been built, the underlying demand is rising and in time that will absorb the excess supply.
Rents, after falling sharply last year, are beginning to recover as a sign of hope for the future. But the development industry that emerges out of this crisis will need to be far more responsible than the one that drove us into it.
And the banks have a lot to answer for. It was their cavalier statements of future lending and a willingness to lend a big proportion of bloated valuations that fuelled the boom.
The banks have shown that they can curb real estate speculation without requiring higher interest rates. …
NEWS.COM
YOUR SAY ON PROPERTY PAINS
By NEWS.com.au readers
news.com.au
WITH the news that a generation of Australians aged under 40 is being locked out of the housing market, we asked you for your thoughts on the property market.
Can you afford to build a dream?
Asked whether you thought you were being priced out of the market, most agreed, although there were some of you that had more philosophial views on the subject and solutions to recent inquiries suggesting Generation X was losing the chance to own a home. Thank you as always for you contributions, and apologies for those that didn't make the final cut. The responses were overwhelming. …
THE HERALD SUN
IT'S CHEAPER AT THE TOP
Kamahl Cogdon
heraldsun.news.com.au
GROWING numbers of brand new inner city apartments are sitting empty.
Renter bargaining power is rising as vacancies in the new apartments climb, creating a potential bargain bonanza for renters.
Real Estate Institute of Victoria figures show the vacancy rate for new CBD, Docklands, Southbank and St Kilda Rd apartments hit 10 per cent in the last three months of 2003.
Vacancies rose from 7.2 per cent in the September quarter and 8.3 per cent in December 2002. There was also a slight rise in vacancies in existing inner-city apartments, up 0.4 per cent in the December quarter to 4.5 per cent.
REIV chief executive Enzo Raimondo said the vacancy rate increase was the result of a flood of new apartments. …
Mr Raimondo said rent reductions were possible if vacancy rates stayed high. …
THE AUSTRALIAN
WARNING ON FALL IN HOME OWNERSHIP
By Drew Warne-Smith and Teresa Ooi
theaustralian.news.com.au
THE sharp decline in home ownership among the under-40s would result in a massive long-term financial burden for state and federal governments, the Housing Industry Association has warned.
Speaking on the first day of public hearings at the Productivity Commission's inquiry into first-home ownership, Warwick Temby, head of services for the HIA, said that if a generation of Australians were to enter retirement without their own home, demand for government services and support would soar.
Between 1989 and 1999, home ownership among those aged 25-39 fell 10 per cent to 54 per cent, and a surging property market would ensure those numbers had now fallen further, Mr Temby said.
"People are not deferring home ownership, they just can't get into it," he said. …
THE WEST AUSTRALIAN
PERTH HOUSING MARKET EASES AFTER BOOM
By Kelly Girdlestone
thewest.com.au
PERTH'S housing market revelled in its biggest boom for 15 years in 2003, with official figures revealing yesterday that prices soared an average of more than 20 per cent.
But there are signs the market has peaked, the Real Estate Institute of WA said, with sales slowing and an increase in the number of properties advertised.
REIWA said the Perth median house price jumped 21.6 per cent in the past year to $236,300 as low interest rates, strong investor demand and uncertainty in the stock market prompted West Australians to pour $4.4 billion into real estate in the December quarter alone.
But while the residential housing sector ended the year with a bang, industry analysts said there were growing signs of a so-called soft landing for the housing market. …
REIWA spokesman Lino Iacomella said the market in the December quarter showed typical signs of the latter stage of a very strong growth cycle.
"The market would have appeared to have peaked after the mid-2003 spike but well-located and appropriately priced properties are in strong demand and are selling quickly," he said. …
THE NEW ZEALAND HERALD
HOUSING PRICES READY TO COOL OFF
By BRIAN FALLOW and MATHEW DEARNALEY
nzherald.co.nz
Booming house prices are poised to come off the boil as the influx of migrants continues to ease, although investors are still priming a strong residential property market.
This should bring house-price inflation - now running at almost 20 per cent - back into single-figure territory before the year is out. …
FIGURES SHOW HOUSE BUBBLE A REAL WORRY
Brian Gaynor: 04.02.2004
COMMENT
nzherald.co.nz
The latest bank lending statistics give a clear indication of why the Reserve Bank is concerned about a housing price bubble.
The figures show that the country's commercial banks continue to pour money into residential mortgages while the productive sector, particularly agriculture, forestry and manufacturing, receives a relatively small amount of bank funding.
…
New Zealand isn't the only country experiencing a housing boom based on bank lending. In the past two years residential mortgage lending in Ireland, which has the same population as New Zealand, has risen 60.9 per cent to €54.7 billion ($102 billion). The average Irish house price has surged to €234,000 ($435,000) compared with $229,000 in this country. …
Last week Reserve Bank Governor Dr Alan Bollard made an important speech to the Canterbury Employers Chamber of Commerce. His main point was that if physical asset prices are rising more rapidly than general prices then resources will be diverted to build or create more of these assets. …
NZ CITY
INTEREST RISE GOOD NEWS FOR LANDLORDS?
home.nzcity.co.nz
Landlords should probably be applauding Reserve Bank Governor Alan Bollard's recent interest rate rise.
Not that he expects it. Far from it. Central bankers "have been likened to dismal souls that take away the punch bowl just when the party is getting boisterous", he said in a recent speech.
And at first glance, owners of rental properties are probably angry.
The rise in the official cash rate will push up mortgage interest rates. That, in turn, will put downward pressure on house prices, which become less attractive if they are more expensive to finance.
But both of those trends may actually help landlords.
Let's look first at mortgage interest rates. One reason investment property has grown in popularity is that interest rates are low by historical standards.
They're not, in fact, low compared with inflation - something would-be property investors should take into account. With inflation also low, the burden of mortgages won't diminish as it did in high-inflation days.
(Still, people think current rates are low, and that's what counts.)
As long as mortgage rates stay low, more people will buy rental property. And that's the last thing current landlords want.
Already there are signs of a glut. In many places, the number of landlords looking for tenants is rising. This pushes rents down, and landlords are more likely to face periods of no rental income. …
…
Other countries have bigger worries. Average house prices here are 5.0 times average incomes, compared with 5.2 in the UK (although much higher in London and the southeast), 6.0 in the US and 6.1 in Australia, says Westpac. …
STUFF
HOUSE BUBBLE NOT BIG ENOUGH TO BURST - YET
Reserve Bank governor Alan Bollard says that he would be prepared to raise interest rates to prevent a housing price bubble, but it would only happen in rare circumstances.
stuff.co.nz
Speaking to the Canterbury Employers' Chamber of Commerce on Friday, Bollard said the recent boom in the housing market isn't sufficiently overheated to warrant "such a severe intervention".
Thursday's interest rate hike "was just part of the normal operation of monetary policy to ensure continuing consumer price stability," Bollard said. But housing is currently still the biggest element in the day-to-day controlling of consumer price inflation.
…
Some people may be incorrectly convincing themselves that house prices only rise and that someone else can always be found to pay an even higher price.
"For a time, this behaviour can be price reinforcing, but eventually some unhappy soul will be stuck holding the bag," Bollard says. …
THE BANGKOK POST
`NO BUBBLE YET,' BUT ALL SIDES NEED TO SHOW CAUTION
Central bank says database is crucial
Kanana Katharangsiporn
bangkokpost.com
The Bank of Thailand sees no signs of an asset price bubble in the property market this year, but says the industry needs to exercise caution and be prepared to adjust if overheating occurs.
Both developers and buyers should be careful in borrowing from commercial banks, as the lesson learned in the past was that credit growth by 20% could cause a real estate crash, said Atchana Waiquamdee, director of the central bank's Economic Research Department.
She said the 1997 crisis was caused by business expansion based on inadequate supporting information as commercial banks granted credit using assets as collateral, with the resulting property price collapse causing huge damage.
The central bank has moved recently to prevent overheating, with regulations such as a requirement that lenders extend no more than 70% of the value of houses priced above 10 million baht.
Lenders must also detail credit approvals for developers who borrow more than 100 million baht in any quarter. … |
