Market Studies

Fixed-rate mortgages have become the dominant choice among borrowers looking to refinance their home loans, with more applicants gravitating toward shorter loan terms. A study by Freddie Mac on loan transition trends found that in the third quarter, more than 95 percent of homeowners who refinanced chose fixed-rate loans, regardless of whether their original loan was an adjustable- or fixed-rate mortgage. Borrowers who previously held shorter-term mortgages also showed a stronger preference for staying with a 15-year or 20-year loan.

According to the Texas Quarterly Housing Report released earlier this month, real estate sales in the Lone Star State decreased 20 percent in the third quarter of 2010 compared to a year earlier, but were essentially flat year-to-date. The Texas Association of Realtors attributes the statistics to an early peak in the market due to the federal homebuyer tax credits. The median home price in Texas remained virtually unchanged at $152,000.

Third-quarter delinquency rates for both residential and commercial mortgages will increase, particularly among smaller lenders, according to preliminary estimates released by Foresight Analytics. Final figures for the third quarter 2010 are not due out until late November, but based on earnings reports and call report filings from many smaller banks, Foresight Analytics offers its advance estimates of what we'll see in the final mortgage delinquency numbers for the July to September time period.

Home prices dropped in 76 of the 155 metropolitan areas tracked by the National Association of Realtors (NAR) during the third quarter, following a sharp decline in sales after the federal government's homebuyer tax credit passed. Seventy-seven metro areas held their ground in the post-credit months and recorded higher median prices on existing homes compared to a year ago. NAR points to the numbers as improvement, considering only 30 metros experienced annual price gains this time last year.

Residential mortgage lending volume will fall below the $1 trillion mark in 2011, becoming the fifth year of what is emerging as a ""lost decade"" for the housing and home financing industries, according to new projections from the market research firm iEmergent. The company expects growth in home lending to remain ""slow"" through 2015, and warns that because of the economic collapse, the pool of potential mortgage applicants - homebuyers and homeowners looking to refinance - has been reduced to levels seen in 1995.

Reports from three different agencies paint distinct pictures of the rate at which loans held in commercial mortgage-backed securities (CMBS) are going bad. Two tracked declines in the CMBS delinquency rate for during October - one says it's the first drop in over a year, the other says it's the first in nearly three years - and the third claims delinquencies are still rising on commercial mortgages. Hotels and multifamily complexes claim the highest delinquency rate among property types in all three reports.

Interest rates on home loans sunk to new lows this week, according to figures released by Freddie Mac Thursday. The GSE surveyed 125 lenders across the country and found that rates on 30-year mortgages are now averaging 4.17 percent, while the average rate for 15-year loans dropped to 3.57 percent. The GSE's chief economist expressed concern that although rates are at their lowest level in more than a half century, they've done little to pull would-be buyers from the sidelines as the housing recovery continues to slow.

Foreclosure filings were reported on 332,172 properties during the month of October, according to data released by RealtyTrac Thursday. That tally represents a 4 percent decrease from the previous month. RealtyTrac says the numbers probably would have been higher except for the fallout from the recent robo-signing controversy, which may result in further declines in November. Lenders seized 9 percent fewer homes last month than they did in September, before foreclosures were frozen in certain states.

Inventories of homes listed for sale are dwindling across the country, in some markets, significantly, according to Altos Research. Of the 26 major markets the company tracks, only three showed increases in inventory during the month of October - Las Vegas, Phoenix, and San Diego - and Altos described their increases as ""slight."" Washington, D.C. had the biggest decline in its supply of listed homes. While, typically, decreases in inventory are evidence of a leveling off, Altos says the potential impact of the so-called shadow inventory looms large.

The number of applications submitted by consumers for mortgage loans rose last week, as interest rates held low. The Mortgage Bankers Association (MBA) reported that applications for home purchases were up 5.5 percent from one week earlier, marking their third consecutive weekly increase. MBA's index for refinance applications also rose, jumping 6.0 percent from the previous week.