Mortgage refinance transactions hit a 15 month high last month as mortgage rates hit record lows. Mortgage rates tend to run in tandem with the yield on the 10 year treasury bond, which is below 2.7% lately. 30 year fixed rate mortgages in Oregon hit a low of 4% as these yields continued to drop. It is forecast that mortgage rates could remain at record lows at least until the elections in November.There was some slight increase in yields and rates yesterday and today as Wall Street staged a mini rally, but will it last? August is typically a very quiet month on Wall Street – and unemployment news has not been good.
While mortgage rates hit new lows, lender closing costs have been steadily creeping up since the Feds implemented new Respa regulations earlier this year which were intended to protect home buyers and loan refinancers. The problem is that the new GFEs (Good Faith Estimates) are so convoluted that no one seems to know what they are reading, and even with explanations, cannot understand the numbers! This comes as no surprise to lenders who can barely understand the new “improved” GFEs themselves. In the meantime, lenders have taken advantage of all this confusion, it seems, to increase their fees.
Since HVCC (Home Valuation Code of Conduct) was implemented a couple years ago, most people in the real estate and mortgage businesses, as well as builders and many home buyers have been seeing the negative impact this has had on housing appraisals. (Please read linked articles on more info about this fiasco). The cost of appraisals has risen as the AMCs (Appraisal Management Companies – which are largely owned by lenders) took huge chunks of the fees, while paying appraisers less. This has resulted in very inaccurate appraisals in far too many instances. Now, to make things better for the consumer, there is a suggestion that perhaps it would be good to have appraisers bid for the right to do an appraisal – and lenders would accept the lowest bid. Does anyone really believe this will improve the quality of appraisals? And is this really going to lower costs? or are the lenders going to just leave pricing where it is while their profit margins continue to increase?
Salem, Oregon, one of the last cities across the country to feel the housing boom turn to bust, is not forecast to be one of the first cities to experience double dip recession. Housing values have crashed, but other sectors of the economy have, like most of the country, crashed too. Unemployment remains shockingly high across the Pacific Northwest, higher than most of the country.
The Wall Street mini-rally this week follows a week of plunging values in stocks last week as the economic outlook remains grim. Retailers are leading the way with some good earnings reports, indicating that some people are stirring again, and buying. September is around the corner, so back to school buying is up.
Will the rally last this week? We still have unemployment numbers to be released the end of this week – so stay tuned. Consumers clearly are still not feeling very positive. While the refinance market is booming, home sales continue to slide after all the tax incentives disappeared.
There is a bit of good news. In many cities across the country, housing values are stabilizing, and even creeping up slightly. In Oregon, excluding Salem, many cities did see a slight increase in value, according to Zillow – in the last 2 months.