Market Studies

Following an earlier survey from Zillow showing that the 30-year fixed-rate mortgage (FRM) had again hit a new low, Freddie Mac released on Thursday the results of its Primary Market Mortgage Survey (PMMS), which showed an increase in fixed mortgage rates after a month of a half of record lows. The PMMS found that the 30-year fixed for the week ending June 14 averaged 3.71 percent (0.7 point), an increase from 3.67 percent the previous week. This increase ended a six-week streak of falling rates. At the same time last year, the 30-year fixed rate averaged 4.50 percent.

As of April 2012, 1.5 million homes are in shadow inventory, which is a 14.8 percent decrease from last year in April when the number of homes hiding in the shadows was 1.8 million, CoreLogic reported Thursday. The current level of shadow inventory represents a supply of four months compared to a supply of 6 months a year ago. CoreLogic counts shadow inventory, also known as pending supply, by calculating the number of distressed properties that are seriously delinquent, in foreclosure, and held as real estate owned (REO) by servicers, but not currently listed on multiple listing services.

First time claims for unemployment insurance rose to 3086,000 for the week ended June 9, from the prior week's 38,000, (revised from the originally reported 377,000) the Labor Department reported Thursday. Economists had expected the report would show 3795,000 initial claims.

After seeing months of consistent decreases, May turned out to be a busy month for foreclosure activity. Foreclosure filings, which include default notices, scheduled auctions, and bank repossessions, were up 9 percent in May from the previous month of April, but still down 4 percent from a year ago, according to RealtyTrac's U.S. Foreclosure Market Report for May 2012. Foreclosure filings were reported on 205,990 properties in May after two consecutive months below 200,000, but activity levels were still down on a yearly basis for 20 consecutive months now. In April, foreclosure filings totaled 188,780.

Mortgage applications jumped by 18 percent from the week earlier, riding a refinance wave to numbers not seen since 2009, according to the Mortgage Bankers Association. The trade group found that the Refinance Index climbed up by over 19 percent from the week before, reaching the highest level for an index since April 2009.

Williston Financial Group (WFG),the parent company of WFG Lender Services and WFG National Title Insurance Company, announced Monday the appointment of Donald O'Neill as EVP of institutional services.

In a speech before the Commercial Real Estate (CRE) Finance Council on Wednesday, Comptroller of the Currency Thomas Curry warned banks and thrifts not to keep their eggs in one basket with CRE loans. Following up on his remarks in May about operational risk in banking institutions, Curry stressed that CRE credit is still a significant core risk area for banks and thrifts. Curry pointed out that national banks and federally chartered thrifts hold over $700 billion in total CRE loans, an amount that comprises 14 percent of their aggregate loan portfolios.

Investors and lenders should expect loans currently originated to have a 20 percent higher chance of default than those originated in the '90s due to current economic conditions, according to the University Financial Associates (UFA). The UFA Default Risk Index rose slightly to 120 in the second quarter of 2012 from 119 compared to the previous quarter. While loans currently originated are more likely to default than those from the '90s, loans originated today are still much less likely to default compared to vintages from 2006 to 2008.

According to the data, Massachusetts, Connecticut, and Rhode Island have all seen strong mortgage activity so far in 2012, with Massachusetts showing the strongest numbers. Activity in the state is up more than 28 percent, rising to 99,097 in the first four months of the year-an increase from 76,930 during the same period in 2011. Purchase mortgages increased almost 13 percent year-over-year to 13,376, while non-purchase (refinance) mortgages slid up 32 percent to 85,721.

With vacancies declining and rental prices rising, the climate in the housing industry is clearly warming up to rental properties. According to Moody's Analytics, ""weak income gains, favorable demographics, and the foreclosure crises"" are all causing people to choose renting over buying, and demand for rent will remain solid over the next two years.