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Monthly Archives: March 2013

Average HARP 2.0 user enjoys 33 percent savings on monthly payments

Back in October 2011, the federal government restructured its Home Affordable Refinance Program (HARP 2.0) to open up the program to a wider array of underwater homeowners. As a result, more than 1 million borrowers were able to refinance their mortgages in 2012 alone - roughly three times the pace of the program when it was first introduced back in 2009 - making homeownership significantly more affordable for the vast majority of participants.

That pace has continued in the first quarter, as homeowners have been able to capitalize on record-low interest rates to make their monthly mortgage payments lower than ever before. Because the number of borrowers that used HARP 2.0 doubled in 2012 - and interest rates plummeted over the period - the average savings enjoyed by individual homeowners was greater last year than it had been over previous years of the program.

Luxury homes leading the way in annual sales increase

As the number of home sales nationwide continued its upward momentum going into 2013, so did the price of the average home on the market nationwide. Information gathered by the National Association of Realtors shows that homes in the most expensive price bracket are seeing the biggest sales boost from 2012 into 2013.

Closings on properties costing between $750,000 and $1 million have jumped roughly 27.6 percent from year-ago levels, while homes that cost more than $1 million have been selling at a 27.4 percent faster rate than they were in March 2012, according to the NAR.

A Breakdown of the Factors Contributing to the Healthy National Housing Market

We've discussed numerous reports that have indicated the current housing market recovery is more than just a blip. It seems like every day, new figures are released that show home sales and refinance conditions are currently better than analysts had anticipated they would be for 2013.

For example, interest rates on fixed-rate loans recently took a 0.10 percent dip over the past week, despite predictions from Freddie Mac's chief economists that interest would only increase as the year progress.

Improving Markets Index Shows Majority of Metro Areas Undergoing Recovery

There have been many positive reports recently that indicate the housing market is in a full-fledged recovery, from an increase in new home construction to a recent dip in the average interest of fixed-rate mortgages. However, despite these positive developments regarding the national market overall, many regions of the country have had chronic issues when it comes to legitimate recovery.

This trend may have finally been reversed, as the National Association of Homebuilders (NAHB) recently reported in the group's Improving Market Index that roughly 75 percent of all major metropolitan areas in the country are now on an upswing when it comes to real estate.

Interest Rates Tumble Unexpectedly

After the Federal Reserve recently announced that they would be keeping the Fed Fund Rate at its current 0.0 percent low, lenders responded by setting average interest on fixed-rate home loans lower than they had in previous weeks.

According to government-backed mortgage servicer Freddie Mac, interest tumbled markedly to 3.54 percent this week compared to 3.63 percent the week before on the average 30-year fixed-rate loan offering.

New Home Construction Exceeding Pre-Recession Levels

The housing market continues to show a large gain in momentum as 2013 unfolds, with demand for new properties still outpacing supply. This has resulted in bidding wars across the country for new and previously occupied homes, even with foreclosed-upon residences stirring up competition among potential buyers.

There are many reasons why the real estate market has been so hot lately, though extremely low interest rates on fixed-rate mortgages have played perhaps the largest role, as buyers are able to close on home loans with terms that are affordable. As a result, individuals who would otherwise rent are now finding that paying a mortgage may actually be a more cost-effective measure in the long run. However, if fierce competition for available properties continues, affordability may not be the case for much longer. 

HARP 2.0 exceeds analyst’s expectations in 2012

Figures released by Freddie Mac on Wednesday, March 13 showed that President Barack Obama's Home Affordable Refinance Program (HARP 2.0) exceeded many analysts' expectations last year.

The group had anticipated that the initiative, which was designed to help homeowners who had gone underwater on their mortgages as a result of the housing market crash in late 2007, would help close to 1 million borrowers throughout 2012. Instead, the program doubled its total number of participants over the one-year span, although HARP 2.0 has been around since 2009.

Members of Federal Reserve Bank Holding Important Conference to Determine Rates

The Federal Reserve Bank's Federal Open Market Committee (FOMC), which is a 13-person subcommittee headed by Chairman Ben Bernanke, begins a scheduled two-day meeting on Tuesday, March 19. These meetings take place eight times annually to determine the short-term course of actions of the central bank in response to current market conditions. The group's most important role, which has many analysts paying particular attention, is to determine the Fed Funds Rate.

This rate dictates the Prime Rate, a prescribed figure at which banks lend to each other and the public. Since 2008, the FOMC has met 33 times and has chosen at each conference to keep the rate at a low of 0.0 percent to spur economic growth.

Number of new mortgage applications begin surpassing those for refinance in some states

When the housing market crashed in 2007, thousands of homeowners across the nation were forced into foreclosure, and lending among mortgage providers ground to a halt. Luckily, President Barack Obama and Congress were able to pass measures that would go on to help millions of Americans refinance their home loans and in the long run avoid foreclosure.

This resulted in a major shift in the nature of the lending markets, as refinance, which was once a very small portion of the total activity in the market, became the primary business conducted by mortgage lenders between 2008 and 2012. For the majority of the past 24 months, roughly 80 percent of all mortgage activity nationwide involved refinance.

Incidence of Foreclosure Down Again in February

Foreclosure filings reached all-time highs during the darkest days of the Great Recession, forcing residents out of their homes and making it harder for borrowers to take out a loan than ever before. As a result, the federal government and President Barack Obama took a series of measures to help homeowners keep a roof over their heads, including the introduction of the Home Affordable Refinance Program (HARP 2.0) in early 2009.

Since then, HARP 2.0 and other initiatives designed to help homeowners take advantage of beneficial mortgage refinance have helped to make the incidence of foreclosure filing go down markedly.