Mortgage applications to purchase a home are rising for two reasons: Buyer demand is increasing, and those buyers are afraid rates will go up dramatically, so they want to lock in fast.

(Read More: Depression Begone! Home Prices Set Record in April)

Alicia and Ryan Diederichs say they are in a race against time. A job transfer recently sent them and their three young children to Oceanside, Calif. Now crammed into a small rental apartment, they are hoping to buy a house quickly.

“I’m afraid we’re going to miss the boat,” said Alicia Diederichs. “I feel like we might get priced out of the market in a few months, and just depending on the mortgage payment whether we could afford it if the interest rates go up more.”

The Diederichs need a large house to fit their family, but home prices are rising fast on the California coast, and they have not yet locked in a mortgage rate.

“Ideally we would do a 30-year fixed, but it’s all going to be dependent on the end mortgage payment, what we can afford, so we would have to look at an ARM potentially if rates continue to rise,” she said.

(Read More: Mortgage Cop: Four Top Banks Fail Consumers)

The combination of sharply higher home prices and rising rates is squeezing buyers who are already facing tighter underwriting standards. In order to qualify for loans, they must fit into strict debt-to-income calculations, and those calculations change with every increase in mortgage rates.

Article source: http://www.cnbc.com/id/100845777

The one positive in all the uncertainty surrounding the nation’s debt was a plunge in Treasury yields, which in turn sent mortgage rates to record lows.

The 30 year fixed hit a near-low of 4.45 percent last week from 4.57 percent, and the 15 year made a new low of 3.52 percent, according to the Mortgage Bankers Association. Those low rates pushed refinance applications up 7.8 percent and purchase applications up 5.2 percent (both seasonally adjusted).

So are we housing geeks now jumping for joy? All good? Maybe not so much.

“Refinance application volume increased, but even though 30-year mortgage rates are back below 4.5 percent, the refinance index is still almost 30 percent below last year’s level. Factors such as negative equity and a weak job market continue to constrain borrowers,” notes the MBA’s VP of research and economics, Michael Fratantoni. “Purchase activity increased off of a low base, returning to levels of one month ago, but remains weak by historical standards.”

So even ridiculously low rates are not exactly boosting the housing recovery; that’s because rates have been historically low for a while.

Page 1 of 3 | Next Page
Show Entire Article

Euro Zone Policymakers Fail to Extinguish Market Fire

Pressured by White House, Treasury Secretary Is Expected to Stay at Post

Trichet: Euro Zone in Better Shape Than US, Japan

Italian Prosecutors Seize Documents from Moody’s, SP

ECB Buys Bonds in Secondary Markets as It Holds Rate

More Top Stories

Article source: http://www.cnbc.com/id/44004035?__source=RSS*blog*&par=RSS

Despite the lowest interest rate on the 30 year fixed in six months, mortgage applications to purchase a new home fell last week, over 3 percent. In fact, purchase application volume has been falling, on average, for the past four weeks, which is particularly troubling in this, the supposedly busiest season of the year for home buying.

So what’s going on?

I’m not going to boil it down to some generalization that there is no demand for housing out there, and everyone’s afraid of falling prices. There is demand. Homes are selling. But an historically high number of these purchases are to all-cash buyers, because the mortgage market is just so tight. Fannie, Freddie and FHA rule the roost, and their new rules and fees are pricing some buyers out while disqualifying many more.

Don’t get me wrong, I’m all for stricter underwriting, given the brutal effects of the opposite. I do, however, believe that as government tries to shut the door on Fannie and Freddie, it must open the door to private mortgage investors.

That’s why I was particularly interested to see the testimony today from the CEO of the only player in the private label game. Redwood Trust President and CEO Martin Hughes boiled the situation down pretty clearly.

Page 1 of 3 | Next Page
Show Entire Article

New Corporate Issues Enjoy Strong Demand

Despite End of Easing, Fed Won’t Be Going Away Soon

Commodities Trader Glencore Sets Final IPO Price

No Housing Recovery Without Private Label Mortgage Investors

In Consumer Behavior, Signs of Gas Price Pinch

More Top Stories

Article source: http://www.cnbc.com/id/43080476?__source=RSS*blog*&par=RSS