Mortgage applications skyrocket with falling rates! - Week in Review: January 14-20

Good News: Mortgage application volume skyrocketed for the second consecutive week, rising 28.4 percent during the week ending Jan. 11, according to the Mortgage Bankers Association's weekly application survey. Application volume jumped 39 percent during the same week a year ago. Refinance volume rose 43.4 percent, while purchase volume jumped 11.4 percent. Refinance volume accounted for 62.7 percent of total application volume, compared with 57.7 percent the previous week. (via CNNmoney, 1/16)

Applications rose as interest rates continued to fall to the lowest rates since 2005 – the average interest rate for traditional, 30-year fixed-rate mortgages fell to 5.62 percent from 5.73 percent. The average interest rate for 15-year fixed-rate mortgages -- which are typically used to refinance loans -- fell to 5.07 percent from 5.21 percent. Rates for one-year adjustable-rate mortgages fell to 5.77 percent from 6.04 percent. These numbers are different from what I see from CAR and the Baltimore Sun (CNNmoney, 1/16, Baltimore Sun, 1/18))

Sales of existing homes in the U.S. probably fell in December, capping the biggest yearly slump in almost a generation, economists said before a report this week. (Bloomberg, 1/20)

Business Week in an article predicts a home equity crisis coming up because borrowers who tapped into the equity of their properties will have their properties decrease to less than they owe. (1/18)

I mentioned before in a post 2 weeks ago, I believe, stating that homebuilders are beginning to feel positive. This week, CNNmoney reports, Home builders' confidence showed a very slight improvement in January, helped by a narrow gain in their hopes for the market early this summer, according to the latest survey. MSNBC spins this same report saying that “Home builders’ confidence near record low.” (1/16)

Commerce Department says that this past month showed the biggest drop in new homebuilding in 27 years (AP, MSNBC, 1/17)

I'm through talking about a recession - I'm seeing more interest in home buying and predict that things will pick up the 2nd half of this year. If we are/will be in a recession, it started with the home market - so the economy is slagging about 8-12 months behind the home market. As interest returns in the home market this year, it will take a while for the rest of the economy to follow. So you will continue to hear about a recession, while I'm looking beyond it.

Tax rebates – you may have heard in the news that Washington is thinking about giving us money to restart the economy. Right now, the Democrats and Republicans in Congress are hashing out a compromise, which I’ve heard will be done by the end of the month. But don’t hold your breath, you might not see the check until June, once everything is settled. (KNX-AM, 1/17, CNNmoney, 1/19)

The Fed is expected to decrease interest rates by 1/2 to maybe even 3/4 points. (Washington Post, KNX-AM, 1/14)

WaMu accused of appraisal fraud - Lawsuit claims the lender told an appraiser to offer a rosier housing outlook so risky mortgages could get approved. (Money magazine, 1/17)

The median home price in a six-county region of Southern California plunged more than 13 percent in December versus a year ago - The average median price in Los Angeles, Orange, San Diego, Ventura, Riverside and San Bernardino counties hit $425,000 last month, the lowest level since February 2005, when the figure was $420,000. December's median price for the region represents a 2.4 percent dip from November and a 15.8 percent drop from the overall peak price of $505,000 posted last spring and summer. Home sales in the region dropped 45.3 percent to 13,240 from a year ago to the lowest sales total for any December in the 20 years that the firm has been keeping track. Sales were essentially unchanged from November. (DataQuick via CNNmoney, 1/15)

As if you didn’t know: Food prices have gone up a lot! (Seattle Times, 1/17, Washington Post, 1/17)

NAR still seeking loan limit increase on Fannie Mae and Freddie Mac. Currently it's at $417k, which is below the median price for California, to 625k, as part of the federal stimulus package. The FHA Reform Bill is still in committee. (NAR, 1/18)

As U.S. falters, Mexican housing booms - Lower delinquency and declining interest rates are making the market attractive to investors. (CNNMoney, 1/20)

Leaving on a foreign note: Home prices in Spain rose in the fourth quarter at the slowest pace since 1998 after higher borrowing costs damped demand. (Bloomberg, 1/18)

Fast Facts:
* Calif. median home price - November 07: $488,640(Source: C.A.R.)
* Calif. highest median home price by C.A.R. region November 07: Santa Barbara So. Coast $1,075,000 (Source: C.A.R.)
* Calif. lowest median home price by C.A.R. region November 07: High Desert $262,650 (Source: C.A.R.)
* Calif. First-time Buyer Affordability Index - Third Quarter 07: 24 percent (Source: C.A.R.)

Sources: Bloomberg.com, MSNBC, Associated Press, CNNmoney.com, California Association of REALTORS, National Association of REALTORS, Seattle Times, Washington Post, Money Magazine, KNX-AM, DataQuick, Baltimore Sun, Business Week.