Market Studies

Although purchase applications declined further, total mortgage loan application volume jumped 11.3 percent for the week ending May 21, 2010, due to a continued increase in refinance applications, the Mortgage Bankers Association (MBA) reported Wednesday. According to MBA's Weekly Mortgage Applications Survey, the purchase index fell 3.3 percent from one week earlier, but during the same period, the refinance index surged 17 percent.

The nation's thrift industry posted profits of $1.82 billion in the first quarter of 2010. The Office of Thrift Supervision says the data indicates thrifts are stabilizing despite rising delinquencies and foreclosures. By definition, the thrift business involves taking deposits and originating home mortgages. The industry's non-current loans and repossessed real estate assets made up 3.27 percent of total holdings in Q1. Sixty-five percent of these troubled assets were residential mortgages, 27 percent were commercial real estate loans.

One of the industry's most-closely watched barometers has quelled recent optimism that residential real estate had found its footing on solid ground. The S&P/Case-Shiller Home Price Index released Tuesday revealed a 3.2 percent drop in property values during the January to March quarter of 2010, when compared to the level of home prices at the end of 2009. On a year-over-year basis, prices were up 2 percent, but market observers are calling the short-range results ""disappointing"" and a tell-tale sign that the housing market is not out of the woods.

As the real estate market continues to fight an uphill battle towards recovery, the dream of homeownership seems to be dying out for some consumers, at least for the time being. According to a new online survey conducted in May, 76 percent of consumers deemed renting to be the more favorable option to owning a home in the current real estate market, a 5 percent jump from the 2008 survey results.

The National Association of Realtors (NAR) reported Monday that sales of previously owned homes rose 7.6 percent in April compared to March, reflecting a surge in activity as buyers sought to close deals ahead of the contract deadline for the federal homebuyer tax credit. Last month's numbers pushed the annual sales rate to 5.77 million units, up from a 5.36 million sales rate in March, and far exceeded analysts' expectations. They were projecting an increase, but somewhere between a 5.60 and 5.65 million-unit sales pace.

The housing recovery is just around the corner - at least that's the consensus among a panel of 92 well-known industry economists and analysts. The analytics firm MacroMarkets LLC, founded by Robert Shiller, real estate sage and father of the closely-watched Case-Shiller Home Price Index, polled the group of housing market experts and strategists from the likes of Alliance Bernstein and Columbia Business School. Based on their responses, the onset of price recovery in U.S. single family real estate is widely expected by 2011.

Liquidation and modification rates on Countrywide-serviced residential loans have edged higher in the past few months, with a larger percentage of mortgage restructurings encompassing principal forgiveness, according to a study just released by Barclays Capital. The research firm examined loans within residential mortgage-backed securities (RMBS) serviced by Countrywide, now Bank of America Home Loans, and found that while historically, the once-subprime leader claimed lower-than-average mod rates and long liquidation timelines, that has begun to turn around in the past few months.

The number of loans pooled in commercial mortgage-backed securities (CMBS) that require a ""special"" touch as they edge dangerously close to default is rapidly increasing. Fitch Ratings reported Friday that the risk of default is spreading so quickly through the secondary commercial market that the volume of specially serviced CMBS loans grew to approximately 5,000, totaling $81.7 billion during the first quarter.

In just one quarter, homeowners have gone from being overly cynical about their own home's value to being overly confident. According to the Q1 Homeowner Confidence Survey conducted by Zillow, 50 percent of homeowners nationwide believe the value of their own home declined in the past year. But in reality, 65 percent of U.S. homes have dropped in value in the last 12 months. Zillow's chief economist says it is clear that there's a lag between market realities and public perceptions of home values.

Mortgage rates continued to inch down for the week ending May 20, 2010, Freddie Mac and Bankrate reported Thursday. According to Freddie Mac's Primary Mortgage Market Survey, 30-year fixed-rate mortgages averaged 4.84 percent this week. The GSE says this is the lowest rates have been since December 2009. Bankrate's analysis put the 30-year mortgage rate at 4.96 percent, and attributed the week-to-week drop to ""global economic angst.""