Market Studies

Even with record-low mortgage rates, many refinancing borrowers are choosing to pay down their loan balances rather than borrow more money. According to a recent report by Freddie Mac, cash-in borrowers - those who reduced their principal balance by paying in additional money at the closing table - represented 22 percent of all borrowers who refinanced during the second quarter, up from 19 percent the previous quarter. This, Freddie said, tied the record for the third highest cash-in share since the GSE began keeping records on refinancing patterns in 1985.

The residential real estate market in Massachusetts seems to be on the mend. According to a recent report by the Warren Group, a provider of real estate data in New England, the Bay State saw year-over-year increases in both sales and prices of single-family homes and condos in June and in the second quarter.

Mortgage rates continued to slide downward for the week ending July 29, 2010, marking yet another round of record lows, Freddie Mac and Bankrate reported Thursday. According to Freddie Mac's Primary Mortgage Market Survey, 30-year fixed-rate mortgages averaged 4.54 percent this week, and 15-year fixed-rate mortgages fell to 4 percent. Bankrate said 30-year fixed-rate mortgages came in at 4.71 percent, and 15-year fixed-rate mortgages inched down to 4.17 percent.

A new report published by RealtyTrac Thursday shows that 75 percent of the nation's largest metro areas posted increases in foreclosure activity during the first half of 2010. RealtyTrac says it's seeing early signs that foreclosures may have peaked in some hard-hit markets, but with three-quarters of the nation's most populated metros showing continued increases in foreclosure filings, the numbers illustrate just how fragile the housing recovery really is.

The Federal Reserve's Beige Book depicts only intermittent spots of economic growth, with residential real estate markets across the country characterized as ""sluggish,"" and commercial real estate garnering a descriptor of ""weak."" Nearly all 12 Fed districts reported a slow-down in housing activity since the homebuyer tax credit expired. Most reported lending standards to be restrictive, with loan delinquencies above historic norms.

The real estate downturn has sent home prices tumbling, inflated housing inventories, and prompted stimulus programs that have pushed mortgage rates to record lows and given homebuyers tax breaks and cash incentives. Undoubtedly, it's a buyers' market. A new study released by J.D. Power and Associates Wednesday confirms that with today's bargain-basement market conditions, homebuyers are giving their real estate experiences a thumbs-up. Sellers, on the other hand, aren't nearly as pleased once the deal is done.

Despite a continued increase in purchase applications, mortgage loan application volume fell 4.4 percent for the week ending July 23, 2010, the Mortgage Bankers Association (MBA) reported Wednesday. According to MBA's Weekly Mortgage Applications Survey, the purchase index inched up 2 percent from one week earlier. But this uptick wasn't enough to keep overall mortgage application volume on the rise. The week-to-week dip came as the refinance index tumbled 5.6 percent.

Fannie Mae and Freddie Mac are beginning to initiate foreclosures at a faster pace. According to a new study from Lender Processing Services (LPS), GSE foreclosure starts have been accelerating and are currently at all-time highs. From May to June, foreclosures initiated by Fannie and Freddie jumped 21 percent. LPS says the recent momentum coincides with Home Affordable Modification Program (HAMP) cancellations, with most of the increase and volume concentrated in the very late stages of delinquency.

The nation's foreclosure crisis and economic pressures, such as rising unemployment, continue to batter the U.S. housing market, as evidenced by the latest figures from the Census Bureau on homeownership rates. Data released by the federal agency Tuesday shows that the U.S. homeownership rate dropped to 66.9 percent during the second quarter of this year, hitting its lowest mark in more than 10 years.

August is expected to be a challenging month for maturing commercial mortgage-backed securities (CMBS) loans. According to Fitch Ratings, eight U.S. CMBS loans with balances greater than $20 million that are scheduled to mature next month are likely to default. Two-thirds of these Fitch-rated loans were originated in 2005 and typically had five year terms, little to no amortization, and below market coupons, which will likely result in an increase in maturity defaults in today's higher mortgage rate environment with stricter underwriting standards, Fitch said.