Market Studies

Mortgage interest rates rose dramatically this week, after lingering around half-century lows for months. The upsurge comes just two weeks after the Federal Reserve announced plans to purchase another $600 billion in Treasury securities, a move that is meant to hold interest rates down. Rates are still extremely low by historical standards, but the sharp increases seen in just one week's time - long-term rates jumped by about 20 basis points in two separate industry studies - serve as an abrupt reminder that trends can reverse on a dime.

The nation's mortgage delinquency rate declined in the third quarter as the job market showed signs of marginal improvements, the Mortgage Bankers Association (MBA) said Thursday. But lenders are still dealing with a massive backlog of defaults, and they stepped up initiations of foreclosure proceedings during the quarter. Even with an increase in foreclosure starts, MBA says the ratio of home loans in the foreclosure process declined, signaling servicers are pushing unpaid mortgages through the pipeline at a faster pace.

Mortgage fraud has increased by more than 20 percent since fraud rates reached their lowest point in early 2009, according to CoreLogic. The company says higher risk, high-volume programs, including those offered by the Federal Housing Administration and the Treasury's Home Affordable Refinance Program, as well as REO and short sales accounted for much of the increase. All are areas where activity has risen sharply over short periods of time, or where safeguards are not squarely in place, CoreLogic says.

There are 7,043,000 mortgages in the United States that are at least 30 days past due or in the process of foreclosure, according to Lender Processing Services (LPS). The company provided a sneak peek at its October month-end mortgage performance data this week. The numbers show the delinquency rate was virtually unchanged from the previous month's reading, but foreclosures are on the rise. LPS says nearly four percent of the nation's home loans have been referred to an attorney for foreclosure.

Consumer demand for home loans plummeted last week as mortgage rates shot up against the backdrop of the Federal Reserve's announcement to pump more money into the economy - an initiative that's designed to keep interest rates low. The total volume of new mortgage applications sank 14.4 percent. It's the biggest week-to-week drop of 2010 and the lowest reading in four months. Rates for 30-year fixed mortgages rose 18 basis points during the one-week period, but analysts say it's too soon to conclude the Fed got it wrong.

According to Jones Lang LaSalle, the majority of the commercial real estate (CRE) industry can expect a commercial comeback in 2011. The economic recovery has relied on government stimulus and monetary policy but the results have been tepid at best. JLL says 2011 will be the year the private sector takes the baton and starts to drive growth. The company predicts investment transaction volume will increase by 36 percent, apartments will top the ""hot list"" for investors, and the hotel sector will rebound more quickly than expected.

The overall financial health of consumers showed incremental improvements in the first half of 2010, but that progress was wiped out during a span of three months due to weaker household budgets, renewed strains on housing costs, and high levels of unemployment, according to the nonprofit credit counseling agency CredAbility. The average U.S. consumer has been in financial ""distress"" for nine consecutive quarters, with consumers in some parts of the country headed for financial ""crisis.""

More than half of the estimated 310,000 homeowner and condominium associations in the U.S. are struggling with financial issues stemming from the nation's foreclosure crisis, according to the Community Associations Institute. Because they are unable to collect fees from empty homes to fund services such as utilities and maintenance, vacancy rates can have a significant impact on homeowner associations. To stay afloat, they are borrowing, postponing improvement projects, levying special assessments, and restricting services.

First-time homebuyers purchased half of all homes that were sold from July 2009 to June 2010, according to an annual survey of buyers and sellers conducted by the National Association of Realtors (NAR). It's the highest share of first-time homebuyers in the history of NAR's study, which dates back to 1981. The trade group attributed its findings to the success of the government's tax credits, but also voiced concern that today's credit policy restrictions are locking responsible borrowers out of homeownership.

Despite a bounce in home prices during the first half of 2010, Fiserv Inc. says it expects property values nationally to fall another 7.1 percent over the next 12 months before beginning to stabilize at the end of 2011. The company sees double-dip territory ahead for many major markets, particularly those that saw the strongest appreciation during the spring and summer months of this year. The analysts at Standard & Poor's have released a similar forecast for the path of home prices. They anticipate an additional 7 percent to 10 percent drop through 2011.