September 2007 - MND NewsWire

The U.S. Census Bureau and the U.S. Department of Housing and Urban Development issued their monthly joint report on August new house sales on Thursday.

The July sales rate was itself revised downward from an original estimate of 870,000 units. The stunning figure, however, was the comparison of August 2007 data with that on sales one year earlier....

Frank Nothaft, Freddie Mac vice president and chief economist commented that, "Mortgage rates were largely unchanged in the previous week, with long-term rates lingering at lower levels not seen since May. The recent retreat in mortgage rates has brought in an increased volume of mortgage applications, according to the Mortgage Bankers Association, and pushed the share of applications for refinancing to the highest rate since April.

Several Executive Branch surrogates indicated late last week that the Administration was sort of willing to compromise about the role of Freddie Mac and Fannie Mae in solving the current credit crunch. But the announcements made and the methods proposed seem to this reporter to be little, late, and misdirected. The two Government Sponsored Enterprises (GSEs) - Freddie and Fannie - seemed a little confused about what was happening as well.

...Then, on Saturday, the Wall Street Journal quoted a top regulator (undoubtedly from OFHEO) who speculated that those portfolio limits could be lifted in....

It seemed to smack a bit of desperation at the time, but in hindsight it appears to look more like marketing genius.

Hovnanian Enterprises, Inc., one of the nation's largest homebuilders, threw open the doors of literally thousands of its newly built homes or those that were under construction last weekend and, in what media has described as a fire sale, offered deep discounts, sometimes in the six figure range, to buyers ready to make a deal.

Well, whatever it was, it apparently worked...

Even before the Federal Reserve's half point rate cut on Tuesday Freddie Mac's Primary Mortgage Market Survey showed another dramatic downturn in both long and short term interest rates for conventional mortgages.

The Federal Reserve slashed benchmark interest rates by a half point in an agressive move to prevent the economy from moving into recession and to ease the pains of the housing bubble. The decision to cut the overnight federal funds rate from 5.25% to 4.75% was unanimous. This is the lowest level since May of 2006 and the first time the Fed has cut interest rates since June 2003. It was the first 1/2 point cut since November of 2002.

Lawrence Yun, senior economist for NAR said that unusual disruptions are dampening the outlook for home sales, notably for August and September. "There's been an unusual hit to home sales, starting in March when subprime problems emerged and more recently when problems spread to jumbo loans, with many potential buyers on the sidelines.

"However, the jumbo loan market is now beginning to settle, and..."

The Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ended September 7 showed a dramatic drop in the 30- year FRM, from 6.42 percent with 1.09 points (including the origination fee) to 6.25 percent with 1 point.

Mortgage application volume increased...