Here is what was at the top of the headlines for the mortgage industry this past week:
1. CoreLogic Predicts: Sellers’ Market For Now, but Home Price Surge Will Not Last
Home prices increased during the first quarter of 2013 by 10.2 percent, the first double-digit quarterly increase since the “bubble” peaked seven years ago. However CoreLogic, which issued its Case-Schiller Index report this morning,cautioned this price surge is not going to last.
The company said that home prices were up in 296 of the 384 metropolitan areas it tracks compared to the first quarter of 2012 including many of the cities that were at the center of the housing bubble and where prices plummeted when it burst. Phoenix was up 23 percent, Sacramento 21 percent, and Miami 14 percent. Even troubled Detroit showed an 18 percent annual gain. In Detroit, Phoenix and Sacramento, the months’-supply of active listings is approximately three months and Miami is hovering around five and a half months. Both indicate strong sellers’ markets.
Core-Logic, however, said it expects price appreciation to slow to 5.6 percent between the first quarter of 2014 and the first quarter of 2015 as rising interest rates and home prices erode affordability and inventories of new and existing homes increase causing better balance between supply and demand. As rising prices bring more homeowners into a positive equity position many, previously unable to do so, may decide to sell, further easing upward pressure on prices, slowing appreciation even further in the out years. Over the five years beginning with the first quarter of 2013 prices are expected to rise an average of 4.0 percent
2. Refinancing Down 55 Percent from Recent Peak
Refinancing continued its slide during the week ended July 26 and mortgage application volume overall declined the Mortgage Bankers Association (MBA) recently said. MBA reported that its Market Composite Index, a measure of application volume, was down 3.7 percent on a seasonally adjusted basis compared to the week ended July 19 and 4 percent on an unadjusted basis.
The Refinancing Index was down 4 percent but retained the previous week’s 63 percent market share. Applications for the Home Affordable Refinance Program (HARP) increased to 37 percent of refinancing applications from 34 percent. The Purchase Index declined 3 percent on both a seasonally adjusted and an unadjusted basis and the seasonally adjusted Purchase Index was 5 percent higher than during the same week in 2012.
3. Foreclosures Increase in June, Still down 20% Year-over-Year
There were 55,000 completed foreclosures in the U.S. in June CoreLogic reported this morning. This is a 2.5 increase from May when there were a reported 53,000 bank repossessions but the June figure represented a 20 percent drop from 68,000 foreclosures in June 2012.
CoreLogic is the second company to report an uptick in foreclosure activity for June although the area of increased activity differs. Lender Processing Services said its June Mortgage Monitor, due out next week, will show a near 10 percent spike in the national delinquency rate from May to June.
CoreLogic says that as of June there were approximately 1 million homes in the foreclosure inventory, i.e. properties for which the formal process of foreclosure had begun. This is a decrease of 400,000 since June 2012, a year-over-year decrease of 28 percent and a foreclosure inventory that is 2.9 percent smaller than in May. The current foreclosure inventory represents 2.5 percent of all homes in the U.S. with a mortgage compared to 3.4 percent in June 2012.