Impact of mortgage rates on housing payments
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The average 30 yr mortgage rate jumped to 4.51% for the seven-day period ending on July 10th.  That is an increase from 4.29% a week earlier and 3.98% for the second week in June.  The higher rates increased monthly principle and interest payments by roughly 6.5%.  OMG the rates for 10 yr loans are the same as what 30 year loans used to be just a short time ago.

 

Rates have climbed over a full point in recent weeks mostly on speculation about when the Federal Reserve will end its purchases Treasuries.  The 10 year treasury bond determines mortgage rates. 

Applications for purchase mortgages fell 3.1% last week from the last week in June, the second consecutive decline.  However, the impact on the refinance side was much stronger.

An increase in mortgage rates will impact affordability and cause some shoppers to think twice about buying. However,  rates are still low by historical standards.  Rates were well above 4.5% until mid-2011. I remember a loan in 2000 that was 8%.   The good part about climbing rates is that the decline in refinance activity will push lenders to search out more potential borrowers and ease credit standards, allowing access to credit for many borrowers who have been shut out in recent years and unable to take advantage of low rates.


Foreclosure slowdown
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Foreclosure Sign
The California Homeowner Bill of Rights (HBR) which just passed is the reason behind the recent slowdown in foreclosure sales and short sales in Ca. The reason for this is because of the litigation risk from this bill.

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New short sale program offers relief
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New short sale law started Nov 1 now allows borrowers who are upside down but current on their loans to qualify for a short sale. They must qualify for a “hardship”- not just “this freakin loan is killing me”. A hardship could be a job loss, divorce, illness, job transfer ,disasters etc.

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