Market Studies

Mortgage interest rates headed higher this week, nearly reaching year-to-date highs as markets waited for the Friday morning release of the August Employment Situation Report. Freddie Mac's weekly survey put the 30-year fixed-rate mortgage at an average 4.57 percent for the week ending September 5, up from 4.51 percent last week. Shorter term fixed rates and adjustable-rate mortgages all climbed higher as well. Freddie Mac's chief economist attributed the rise in rates to ""signs of a stronger economic recovery.""

Home prices have rebounded so rapidly that industry data show 8.3 million borrowers who've been underwater are on track to have enough equity to sell their home within the next 15 months--without resorting to a short sale. Metro markets that boast the highest percentage of homes with resurfacing equity include Omaha; Colorado Springs; Tulsa; Little Rock; and Raleigh, North Carolina.

DebtX, an online marketplace for commercial real estate (CRE) debt, reported that CRE loan prices were little changed in July. According to DebtX, the estimated price of whole loans securing the commercial mortgage-backed securities (CMBS) universe fell to 90.7 percent, down from 90.8 percent in June. Loan values were 88.1 percent on July 31, 2012.

As home prices improve and headlines spell out recovery, those on the ground in housing markets across the country are encountering a new threat: zombies. These so-called zombie foreclosures take place when a bank initiates foreclosure on a property but then abandons the process, leaving the property in a sort-of no-man's land--vacant but not for sale.

Continuing to shrug off sequester cutbacks, but feeling the effects of adverse weather, the nation's economy ""continued to expand at a modest to moderate pace"" from early July through late August, the Federal Reserve reported Wednesday in its Beige Book assessment. Echoing--or perhaps anticipating--governors' concerns at the upcoming policy meeting, the Beige Book said ""hiring held steady or increased modestly"" while ""upward price pressures remained subdued, and prices increased slightly.""

CoreLogic reported a 12.4 percent annual increase in its Home Price Index (HPI) in July. The yearly gain (which includes distressed sales) represents the 17th consecutive monthly year-over-year improvement. Including distressed sales, the five states with the highest home price appreciation were Nevada (27 percent), California (23.2 percent), Arizona (17 percent), Wyoming (16.4 percent), and Oregon (15 percent). Only one state reported a yearly decline: Delaware (-1.3 percent).

Delinquencies and foreclosures are continuing to decline with higher concentrations among Alt-A and subprime loans, according to the latest Mortgage Market Monitor from Lender Processing Services (LPS). Foreclosures are down 31 percent year-over-year in July, while delinquencies are down 9 percent, according to LPS data. Both delinquencies and foreclosures declined over the 12-month period among all types of loans, except Alt-A and subprime loans.

Mortgage Insurance Companies of America (MICA) reported its members issued 50,575 policies to start the year's second half, up from 49,666 in June and 39,192 in July 2012. Dollar volume of primary new insurance written totaled $13 billion, marking the fifth straight month of gains. (Despite a decline in policies issued in June, dollar volume still saw an increase to $12.3 billion). After falling in June, the number of private mortgage insurance applications ticked up in July, climbing to 53,502--indicating another potential increase in activity in the near future.

At the end of the classic ""Miracle on 34th Street,"" Fred Gailey—fresh from proving department store Santa Kris Kringle is the Santa Claus—muses aloud, ""Maybe I didn't do such a wonderful thing after all"" when (spoiler alert) he spots Kringle's cane in a vacant, for-sale house his soon-to-be stepdaughter Susie has dreamed of. Perhaps critics of sequester may not have been doing such a ""wonderful thing"" when they argued that across-the-board cuts would have a crippling effect on the nation's economy because of the importance of government spending's ripple effect. Those critics, of course, had statistics on their side.

Following the release of the revised Qualified Residential Mortgage (QRM) rule from six federal agencies, several analysts offered insight into how the revisions might benefit or impede progress in the mortgage market. Fitch Ratings believes adopting a QRM standard that mirrors the QM definition will trigger more activity for the jumbo origination and securitization market. Capital Economics, though, noted the QM and QRM proposals aren't much help when it comes to the long-term goal of reducing the presence of the GSEs in the mortgage market.