Market Studies

The average down payment on a 30-year, fixed-rate mortgage loan in the third quarter of this year was 15.73 percent, according to LendingTree, an online marketplace connecting potential borrowers with lenders. The third-quarter average is down 2.74 percent from the previous quarter. LendingTree suggests the drop is due to a slight loosening of standards by lenders across the nation.

Collaboration between the private and public sectors has resulted in 8 million non-foreclosure solutions completed for at-risk families since 2007, according to HOPE NOW, a voluntary alliance of mortgage servicers, investors, mortgage insurers, and nonprofit housing counselors. Over the last six years, the mortgage industry has completed more than 6.71 million total permanent loan modifications, while short sales total approximately 1.39 million since December 2009.

Rising home sales and declining foreclosures drove Q3 home prices to the highest three-month increase since the national housing recovery began, FNC Inc. reports. The company says national home prices have risen 11 percent since the beginning of the recovery, a timestamp that FNC considers to be the start of 2012. Continuing to lead the way are the markets that saw the highest levels of distress in 2008 and 2009.

Housing affordability took a hit in the third quarter--the result of climbing interest rates and recovering home prices. According to an industry index assessing consumers' opportunities for homeownership, families earning the national median income of $64,400 in the July-September period could afford 64.5 percent of the new and existing homes sold during that time. That's down from 69.3 percent in the second quarter, marking the biggest index decline since Q2 2004.

Foreclosures edged up over the month of October in California with notices of default increasing 15.3 percent, notices of trustee sale rising 4.1 percent, and foreclosure sales up 3.9 percent, according to PropertyRadar. All three indicators, though, were down more than 45 percent from October 2012, with foreclosure sales hovering near record lows. However, a closer look at foreclosure sales reveals a decline in sales to third parties and an increase in REO sales.

Despite a steady climb in mortgage interest rates since May, borrowers continued to take advantage of low rates to refinance into lower monthly payments, Freddie Mac reported Tuesday. According to the results of the company's latest quarterly refinance analysis, the average interest rate reduction among those who refinanced in Q3 was about 1.8 percentage points, representing a savings of about 30 percent ($3,500 over 12 months on a $200,000 loan).

Foreclosure auctions in judicial states rose annually for the 16th straight month in October. RealtyTrac recorded a total of 30,023 scheduled judicial foreclosure auctions nationwide last month, up 10 percent from the previous month and up 7 percent from October 2012. The company says lenders are moving these properties to public auction more rapidly because there is strong demand from institutional investors looking for buy-to-rent opportunities, and because rising home prices mean more loan losses can be recouped.

As lenders prepare to adopt the Ability-to-Repay and Qualified Mortgage (QM) rules in January, so too are ratings agencies preparing for these new rules. Fitch Ratings released a report revealing its expectations for how the rules will impact future loss severities on residential mortgage-backed securities (RMBS). Overall, Fitch expects the rules to result in greater underwriting uniformity and enhanced due diligence, with 100 percent of reviews completed on all QM and higher-priced QM loans.

Though the slow rate of household formation among millenials--those born after 1980--has been cause for alarm among some economists, analysts at Moody's Investors Service say reports of a lost generation of homebuyers are overblown. The Census Bureau released its homeownership rate report for the third quarter in early November, revealing homeownership in the 35 and younger age group is growing at a sluggish pace, with 31.6 percent still living with their parents.

The University of Michigan's preliminary Index of Consumer Sentiment report shows a drop in confidence for November--and Capital Economics' Amna Asaf is at a loss to explain why. The index fell from 73.2 to a two-year low of 72.0 in the first November report. With the economy in a relatively healthier position compared to last month, Asaf--an economist for the macroeconomics research firm--says the decline is something of a surprise.