Market Studies

Fixed mortgage rates moved up just a smidgen this week, according to surveys from Freddie Mac and Bankrate.com. According to Freddie Mac's Primary Mortgage Market Survey, the average interest rate for a 30-year fixed-rate mortgage (FRM) was 3.56 percent (0.8 point) for the week ending February 21, up from 3.53 percent last week. Last year at this time, the 30-year FRM averaged 3.95 percent. Meanwhile, Bankrate's findings showed the 30-year fixed rate rising a single basis point to 3.80 percent.

The national delinquency rate moved against the seasonal trend and declined from the third to fourth quarter, while foreclosure starts and the foreclosure inventory rate made history with their decreases, according to the Mortgage Bankers Association's (MBA) National Delinquency Survey. In the fourth quarter of 2012, the national delinquency rate fell to 7.09 percent, a quarterly and yearly drop of 31 and 49 basis points, respectively, the MBA reported Thursday. Foreclosure starts were down to the lowest level since the second quarter of 2007 after representing just 0.70 percent of loans in Q4.

Over the course of last year, nearly 2 million homeowners were released from negative equity, Zillow reported Thursday. Data from Zillow revealed 1.9 million homeowners came out of negative equity due to two main reasons: the continuation of high foreclosure rates and rising home values, which increased by 5.9 percent year-over-year, according to the Zillow Home Value Index.

Existing-home sales rose 0.4 percent in January to 4.92 million after December sales were revised downward, the National Association of Realtors reported. The median price of an existing single-family home fell to $173,600 in January, the lowest level since last March. The inventory of existing homes for sale fell 4.9 percent to 1.74 million, the lowest level since December 1999. At the reported sales pace, that represents a 4.2 month supply of homes for sale, the lowest supply since April 2005.

First-time claims for unemployment insurance jumped 20,000 to 362,000 for the week ending February 16, the Labor Department reported Thursday. Economists expected 359,000 initial unemployment claims.

A new report from FBR Capital Markets asserts low rates and high demand will continue to boost profitability in the mortgage banking sector in 2013. In a research report released Wednesday, FBR notes that average rates on outstanding mortgages hover between 4.50 percent and 5.00 percent--well above today's historically low rates. According to the firm, this means there is a ""large portion of loans with an economic incentive to refinance.""

Housing starts declined 8.5 percent from December to January but remain 24 percent above last year's rates, according to recent data from the Census Bureau and HUD. Capital Economics points out that the recent decline is largely driven by the multifamily sector, while single-family starts actually rose 0.8 percent over the month. The general upward trend in housing starts is tied to recent declines in distressed inventory, according to Capital Economics. ""[H]omebuilders are starting to benefit from the dwindling supplies of deeply discounted distressed homes, which for a while were next to impossible for builders to compete with,"" the analytics firm stated.

Consumer credit default rates improved at the start of 2013, with noteworthy progress for first mortgage defaults, according to the S&P/Experian Consumer Credit Default Indices. The default rate for first mortgages dropped to 1.58 percent, down from 1.68 percent in December 2012 and 2.08 percent in January 2012. The second mortgage default rate was unchanged from December at 0.69 percent, but down sharply from 1.30 percent in January 2012.

Renters across the country are less likely to default compared to a year ago, but the risk of not fulfilling lease obligations has increased on a quarterly basis, according to CoreLogic’s SafeRent Renter Applicant Risk (RAR) index report. With an index value above 100 indicating less risk, CoreLogic's national index stood at 103 in the Q4 2012, up from 101 in Q4 2011, but down from 106 in Q3 2012.

Housing starts plunged 8.5 percent in January--the steepest drop in two years--to a seasonally adjusted annual rate of 890,000, the Census Bureau and HUD reported jointly Wednesday. Applications for residential permits rose 1.8 percent to a rate of 925,000, the highest level since June 2008. Economists had expected start activity to drop to 914,000 in January from the initial report for December of 954,000 starts. Permits, according to the consensus forecast, were expected to increase to 920,000 from the original report of 903,000 in December.