This is a huge increase, and means borrowers and buyers see interest rates rising later this year, as some Federal Reserve Governors are objecting to the sustained purchase of QE3 securities until the unemployment rate drops to 6.5 percent from its current 7.8 percent. A major reason for the price increases is increased mortgage activity due to a drop in interest rates to previous lows. The Mortgage Bankers Association reported both the Refinance and Purchase Indexes increased 15 percent from the previous week and were at the highest levels since mid-January.
The 30-year fixed conforming rate has fallen to 3.375 percent for a 1 point origination fee, and the high-balance fixed rate is now 3.625 percent for 0 points origination. Another reason for such rising prices is the decline in mortgage delinquency and foreclosure rates. The delinquency rate for mortgage loans on one-to-four-unit residential properties fell to a seasonally adjusted rate of 7.09 percent of all loans outstanding at the end of the fourth quarter of 2012, the lowest level since 2008, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey. The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the fourth quarter was 3.74 percent, the lowest level since the fourth quarter of 2008, down 33 basis points from the third quarter and 64 basis points lower than one year ago.
-Harlan Green © 2013
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