South State Bank annouces $100 million low-income mortgage initiative

HBA member South State Bank announced this week a $100 million initiative to offer mortgages to consumers in low- to moderate-income and minority areas.

The $100 commitment, which is planned over a five-year period, will target the bank's combined markets following its merger with Park Sterling Bank, another HBA member.  The combined bank will serve South Carolina, Georgia, North Carolina, and Virginia, with a strong presence in the Greater Greenville area.

Fannie-Freddie to Raise Conforming Loan Limits in 2017

The Federal Housing Finance Agency today announced that the maximum baseline conforming loan limit for mortgage loans acquired by Fannie Mae and Freddie Mac in 2017 will increase to $424,100 from $417,000. This will be the first increase in the conforming loan limit since it was raised to $417,000 in 2006.

The Housing and Economic Recovery Act of 2008 established $417,000 as the baseline loan limit and mandated that after a period of price declines, the baseline loan limit would not be permitted to rise until home prices had returned to pre-decline levels.

The loan limit will rise 1.7% in 2017 because the Federal Housing Finance Agency has determined that the average U.S. home value in the third quarter of this year increased 1.7% above its level in the third quarter of 2007.

Higher loan limits will be in effect in higher-cost areas as well. In areas where 115% of the local median home value exceeds the baseline loan limit, the maximum area loan limit will be higher. The new ceiling loan limit in high-cost markets will be $636,150 (150% of the $424,100) for single-family properties. The previous ceiling was $625,500.

Special statutory provisions establish different loan limit calculations for Alaska, Hawaii, Guam and the U.S. Virgin Islands. In these areas, the baseline loan limit will be $636,150 for single-family properties, but actual loan limits may be higher in some specific locations. A list of the 2017 maximum conforming loan limits for all counties and county-equivalent areas in the country may be found here.

Conforming Loan Limits Unchanged in SC at $417,000

The Federal Housing Finance Agency (FHFA) has announced that the maximum conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac in 2016 will remain at $417,000 for one-unit properties in South Carolina. That amount is the conforming loan limit for the majority of the county. The loan limits are established under the terms of the Housing and Economic Recovery Act of 2008 (HERA) and are calculated each year.

HERA sets maximum loan limits as a function of median home values. In 39 high-cost counties, loan limits will rise because those counties experienced increases in local home values. These metro areas include several west-coast counties as well as Boston, Denver, and Nashville.

The Housing and Economic Recovery Act of 2008 (HERA) established the baseline loan limit at $417,000 and mandated that after a period of price declines, the baseline loan limit cannot rise again until home prices return to pre-decline levels. The $417,000 loan limit will stay the same for 2016 because FHFA has determined that the average U.S. home value in the third quarter of this year remained below its level in the third quarter of 2007.

HERA provides for higher loan limits in high-cost counties by setting loan limits as a function of area median home value. Although the baseline loan limit will be unchanged in most of the country, 39 specific high-cost counties in which home values increased over the last year will see the maximum conforming loan limit for 2016 adjusted upward.

Although other counties also experienced home value increases in 2015, after other elements of the HERA formula — such as the statutory ceiling and floor on limits — were accounted for, these local-area limits were left unchanged.

A list of the 2016 maximum conforming loan limits for all counties and county-equivalent areas in the country can be found here.

Wells Fargo Discontinues Affiliated Marketing Agreements

Responding to concerns from the Consumer Financial Protection Bureau, Wells Fargo announced on July 29 that it is voluntarily discontinuing affiliated marketing agreements with builders and realtors. In general, these type of agreements benefit both builders and lenders. Lenders receive business from builders who refer their buyers and because the lender is familiar with the builder, it helps to make the home buying lending process proceed more smoothly.

While these marketing agreements are legal, Wells Fargo has acted unilaterally to take this action to avoid any appearance of paying for referrals.

The Wells Fargo announcement is expected to have a limited impact on our industry, as the vast majority of our members do not have such agreements with Wells Fargo. However, if the Wells Fargo action causes other financial institutions to follow suit, this could affect builders who have similar agreements with other lenders.

Note that Wells Fargo is not a member of the Home Builders Association of Greenville.

USDA to Raise Upfront Fee on No-Downpayment Loans from 2% to 2.75%

The U.S. Department of Agriculture’s Rural Housing Service (RHS) is increasing its upfront fee paid by borrowers on a no-downpayment loan from 2% to 2.75% effective Oct. 1. According to an RHS official, the difference in monthly payments is $4.83 for a typical $135,000 loan.

RHS is permitted to raise this fee up to 3.5% under federal statute, but RHS says it does not anticipate any additional increases in its guarantee fee at this time.

RHS is raising its upfront fee to 2.75% in order to keep the program self-funding and to avoid having to request appropriations from Congress.

Be Ready: New Closing Rules Take Effect August 1

The Consumer Financial Protection Bureau will institute new rules August 1 regarding disclosures under the Truth in Lending Act and Real Estate Settlement Procedures Act that will affect all home builders, particularly those with a real estate lending arm.

Under the new procedures as a result of the Dodd Frank Act, four documents will be merged into two. The Good Faith Estimate and Truth in Lending disclosures will be eliminated and combined into a new single Loan Estimate form, or “LE.”

In addition, the final Truth in Lending Disclosure and HUD-1 Settlement Statement are being replaced by the Closing Disclosure, or “CD.”

What does this mean?First, the Loan Estimate must be delivered to the prospective buyer no later than three business days after receiving the application.

Currently, the HUD-1 Settlement Statement can be presented to the buyer on the day of closing and any changes to the statement can take place during the loan closing.

Under the new rule, the biggest change is that the Closing Disclosure must be provided to the consumer a full three days prior to the closing, and if there are changes during that 72-hour period, the closing could be delayed.

Be Ready a Week Before Closing
To prevent any unwanted closing delays, a good rule of thumb is to have all the paperwork in order a week before the scheduled closing date. So if you want to close August 10, make sure everything is ready August 3.

These new rules are intended to streamline the loan application process and make it easier for consumers to understand by clearly spelling out the most relevant details all on one page – the interest rate of the mortgage loan, the amount of the monthly payments and a listing of all the closing costs.

For those applying for adjustable rate mortgages, the documents will explain how their interest rate and future monthly payments could change based on certain factors.

NAHB was actively involved during the rulemaking process, submitting comment letters both individually and with coalition partners urging the CFPB to ensure that any changes that would make it easier for consumers to understand and comply with the settlement process would not place any undue burdens on builders, lenders and other housing professionals.

NAHB will conduct a webinar June 24 to educate and prepare our members for the impending changes and to show how builders can work proactively with lenders and settlement stakeholders to avoid unnecessary delays to closings. The webinar will also outline strategies to minimize potential issues by communicating with customers and business partners.

See more details on the upcoming new lending rules.

Fannie Mae and Freddie Mac to Offer 3% Downpayment Programs

Fannie Mae and Freddie Mac have announced new low-downpayment mortgage programs geared primarily toward the first-time home buyer market.

In an official statement responding positively to the plan, NAHB Chairman Kevin Kelly said:

“NAHB commends Fannie Mae and Freddie Mac for instituting new loan guidelines that will allow creditworthy borrowers to obtain mortgages with a downpayment of 3 percent. One of the biggest obstacles to achieving homeownership is the ability to come up with a downpayment. By reducing upfront cash requirements while establishing tough but fair underwriting guidelines that include a number of safeguards, Fannie and Freddie will open the door to homeownership for more American families, particularly first-time home buyers and younger households.”

Federal Housing Finance Agency Director Mel Watt, whose agency regulates Fannie Mae and Freddie Mac, said: “These underwriting guidelines provide a responsible approach to improving access to credit while ensuring safe and sound lending practices. To mitigate risk, Fannie Mae and Freddie Mac will use their automated underwriting systems, which include compensating factors to evaluate a borrower’s creditworthiness.”

Major media outlets reporting on the developments noted that Fannie Mae and Freddie Mac’s new programs to purchase mortgages with 3 percent downpayments would enable more creditworthy borrowers who lack the funds for a large downpayment to be able to obtain a home mortgage.

Regulators Act to Loosen Tight Credit Spigot, Boost Home Sales

After years of lobbying by your Home Builders Association, the Association of Realtors, and the Mortgage Bankers Association, federal regulators have finally agreed to make changes to financial institution regulations that will boost the availability of mortgage credit for home buyers.

U.S. financial regulators this week announced separate actions that should boost the housing market and home sales by enabling more creditworthy borrowers to access home loans.

Six federal regulators finalized new rules under the Dodd-Frank Act which define the standards of a qualified residential mortgage. The final rule exempts securitizers from retaining five percent of the credit risk on qualifying home loans packaged and sold as securities. "That five percent retention, as it is known, was a key to financial institutions using much tighter underwriting standards on federally-secured loans than the standards required by the regulators themselves," Michael Dey, Executive Vice President of the Home Builders Association of Greenville, said.

By aligning the definitions of a qualified residential mortgage (QRM) and the qualified mortgage (QM), the standard lenders must follow to demonstrate they have determined a borrower’s ability to repay a mortgage loan, financial regulators have acted to alleviate confusion in the marketplace.

Since 2011, your Home Builders Association has worked independently and with a coalition of housing advocates to urge regulators to establish a QRM rule that removes downpayment requirements and other onerous underwriting criteria to keep homeownership affordable for working American families.

In an official statement, Kevin Kelly, chairman of the National Association of Home Builders, applauded regulators for taking these actions.

“The new QRM rule will encourage sound lending behaviors that support a housing recovery, attract private capital in the mortgage market, help ease tight credit conditions for borrowers, and reduce future defaults without punishing responsible borrowers and lenders,” Kelly said.


Click here to read the released from the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac.

Click here for an interesting article in USA Today about how unreasonably tight credit standards resulted in former Federal Reserve Chairman Ben Bernanke being turned down for a mortgage. 

FHFA Director Announces Plans to Boost Credit
In another important development this week, Federal Housing Finance Agency Director Mel Watt said that FHFA will announce new details in coming weeks that will specify when financial institutions must repurchase loans from Fannie Mae and Freddie Mac that were issued based on false or inaccurate information.

“I hope our actions provide sufficient certainty to enable your companies to reassess existing credit overlays and more aggressively make responsible loans available to creditworthy borrowers,” Watt said in an October 20 speech at the annual Mortgage Bankers Association conference in Las Vegas.

To further unlock tight credit, Watt also announced plans for Fannie Mae and Freddie Mac to lower their down payment requirements from five percent to as low as three percent.

FHFA Index Shows Mortgage Interest Rates Continue to Rise in August

National data show interest rates on mortgages continued their upward trend. Contract mortgage interest rates increased 0.25 percent from July to August, according to an index of new mortgage contracts.

According to the Federal Housing Finance Agency (FHFA), the National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders index was 4.26 percent for loans closed in late August. The index is calculated using FHFA’s Monthly Interest Rate Survey. The contract rate on the composite of all mortgage loans was 4.25 percent, up 25 basis points from 4.00 in July.

Interest rates are typically locked in 30-45 days before a loan is closed. Consequently, August data reflect market rates from mid-to-late July. The effective interest rate was 4.40 percent, up 28 basis points from 4.12 percent in July. The effective interest rate accounts for the addition of initial fees and charges over the life of the mortgage.

FHFA’s interest rate survey shows the average interest rate on conventional, 30-year, fixed-rate mortgages of $417,000 or less was 4.49 in August, an increase of 22 basis points. The average loan amount for all loans was $274,500 in August down $3,700 from $278,200 in July.

FHFA will release September index values October 29, 2013.

NAHB: proposed 20 percent down rule eliminated

NAHB and home buyers across the land, six federal regulatory agencies on Aug. 28 released a revised proposed rule to implement the credit risk retention provisions of the Dodd-Frank Act. The proposed rule would eliminate a 20 percent downpayment requirement and other onerous underwriting criteria that NAHB opposed. In an official statement, NAHB Chairman Rick Judson said that “this proposed, updated rule is a positive step toward ensuring that creditworthy home buyers have a better chance at securing affordable mortgage loans.” The agencies will seek public comment for 60 days (NAHB will weigh in) before holding a final vote on the new rule

South Carolina third highest in the nation in mortgage closing costs

According to a report by Bankrate.com, South Carolina has the third highest mortgage closing costs in the country behind Hawaii and California.  The cost to close a $200,000 mortgage in South Carolina, with 20 percent down, is $2,658 and includes $1,935 in origination fees charged by lenders.

To read more at GSABusiness.com, click here.

FHFA: Refinance Volume Remains High In March

The Federal Housing Finance Agency (FHFA) today released its March 2013 Refinance Report, which shows that refinance volumes remained high as mortgage rates rose slightly but stayed near historic low levels. Nearly 462,000 refinances took place in March, with nearly 100,000 completed through the Home Affordable Refinance Program (HARP). This brings the number of total HARP refinances to more than 2.4 million since the program’s inception in April 2009.

In the first quarter of 2013, there were nearly 1.4 million refinances on Fannie Mae and Freddie Mac loans. Close to 300,000 or roughly 22 percent of those refinances were through HARP. The pace of HARP refinances through the first quarter strongly mirrors the fourth quarter of 2012, when HARP refinances constituted 22 percent of total refinances.

Also in the March 2013 report:

• Borrowers with loan-to-value (LTV) ratios greater than 105 percent accounted for 45 percent of the volume of HARP loans through the first quarter.
• The number of completed HARP refinances for deeply underwater borrowers continued to represent a significant portion of total HARP volume. In March, 22 percent of the loans refinanced through HARP had a LTV ratio greater than 125 percent.
• Year to date, HARP refinances represented 63 percent of total refinances in Nevada and 53 percent of total refinances in Florida.
• Through March, underwater borrowers represented 64 percent or more of total HARP volume in Nevada, Arizona and Florida.
• Also in March, 17 percent of HARP refinances for underwater borrowers were for shorter-term 15- and 20-year mortgages, which build equity faster than traditional 30-year mortgages.
• From the inception of HARP through the first quarter, the total number of HARP loans by state include: California (343,303), Florida (212,755), Michigan (164,866), Illinois (164,492), and Arizona (121,989).

Read the complete Refinance Report at FHFA.gov by clicking here.

FHFA Limiting Fannie Mae and Freddie Mac Loan Purchases to "Qualified Mortgages"

The Federal Housing Finance Agency (FHFA) announced today that it is directing Fannie Mae and Freddie Mac to limit their future mortgage acquisitions to loans that meet the requirements for a qualified mortgage, including those that meet the special or temporary qualified mortgage definition, and loans that are exempt from the “ability to repay” requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act (DoddFrank). In January, the Consumer Financial Protection Bureau (CFPB) issued a final rule implementing the “ability to repay” provisions of Dodd-Frank, including certain protections from liability for loans that meet the criteria of a qualified mortgage as outlined in the rule.

Beginning January 10, 2014, Fannie Mae and Freddie Mac will no longer purchase a loan that is subject to the “ability to repay” rule if the loan:

• is not fully amortizing,
• has a term of longer than 30 years, or
• includes points and fees in excess of three percent of the total loan amount, or such other limits for low balance loans as set forth in the rule.

Effectively, this means Fannie Mae and Freddie Mac will not purchase interest-only loans, loans with 40-year terms, or those with points and fees exceeding the thresholds established by the rule.

Fannie Mae and Freddie Mac will continue to purchase loans that meet the underwriting and delivery eligibility requirements stated in their respective selling guides. This includes loans that are processed through their automated underwriting systems and loans with a debt-toincome ratio of greater than 43 percent. Loans with a debt-to-income ratio of more than 43 percent are not eligible for protection as qualified mortgages under the CFPB’s final rule unless they are eligible for purchase by Fannie Mae and Freddie Mac under the special or temporary qualified mortgage definition.

Adoption of these new limitations by Fannie Mae and Freddie Mac is in keeping with FHFA’s goal of gradually contracting their market footprint and protecting borrowers and taxpayers.

Link to Fannie Mae’s Lender Letter
Link to Freddie Mac’s Lender Letter

FHFA: Refinance Volume Remains Strong Through January

Underwater Borrowers Continue to Benefit from HARP

The Federal Housing Finance Agency (FHFA) today released its January 2013 Refinance Report, which shows that refinance volume remained high through the first month of this year. There were nearly 470,000 refinances in January, with roughly 97,600 completed through the Home Affordable Refinance Program (HARP). This brings total HARP refinances to more than 2.2 millionsince the program’s inception in April 2009.

Also in the January 2013 report:

• Borrowers in January with loan-to-value ratios greater than 105 percent accounted for 47 percent of the HARP refinance volume.
• The number of completed HARP refinances for deeply underwater borrowers continued to represent a significant portion of total HARP volume. In January, 25 percent of the loans refinanced through HARP had a loan-to-value ratio greater than 125 percent.
• HARP continued to account for a substantial portion of total refinance volume in certain states. In January, 66 percent of total refinances in Nevada and 56 percent of total refinances in Florida were through HARP.
• Also in January, 18 percent of HARP refinances for underwater borrowers were for shorter-term 15- and 20-year mortgages, which build equity faster than traditional 30-year mortgages.

Click here to read the Refinance Report at FHFA.gov.

Maximum Conforming Loan Limits for Fannie Mae and Freddie Mac to Remain Unchanged in 2013

The Federal Housing Finance Agency (FHFA) today announced that the maximum conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac in 2013 will remain at existing levels. In most of the country, the loan limit will be $417,000 for one-unit properties. The loan limits are established under the terms of the Housing and Economic Recovery Act of 2008 (HERA), and are calculated each year.

In all counties in the Upstate the loan limit for single-family residences is $417,000, and $533,580 for duplexes.

The law sets loan limits as a function of median home values in local areas. While some counties saw increases in home prices in 2012, no loan limit increases were evident after other HERA terms such as the statutory ceiling and floor were taken into account.

A list of the 2013 maximum conforming loan limits for all counties and county-equivalent areas in the country can be found here. The maximum conforming loan limits for one-unit properties, which generally have applied to loans originated since October 1, 2011, are $417,000 in most locations, but are as high as $625,500 in certain high-cost areas in the contiguous United States.

For loans originated prior to October 2011, the maximum loan limit was as high as $729,750 in the contiguous U.S. That higher “ceiling” limit was permitted under legislation that is not
applicable to loans originated in 2013.

Mortgage Banking: What's Driving Tight Credit

Mortgage Banking magazine featured Fed Chairman Ben Bernake's remarks to NAHB at the International Builders Show in a comprehensive article by George Yacik about the tight credit market for mortgage loans. According to the article, lending standards have gotten tighter in recent months, primarily the result of lender's reaction to Fannie Mae's action to require lenders to buy back mortgages even when the mortgages were made to Fannie Mae standards.  Some banks, like Bank of America, have stopped selling mortgages to Fannie Mae.

From the article:

No one is more aware of that than Federal Reserve Chairman Ben Bernanke, who noted in his speech to the Washington, D.C.-based National Association of Home Builders (NAHB) in February that "the state of the housing sector has been a key impediment to a faster recovery. In the typical economic recovery, a resurgent housing sector helps fuel re-employment and rising incomes. But that scenario has not played out this time."  The main reason for that, he said, is tightened mortgage credit. "In prior recoveries, mortgage credit had begun to grow four years after the business cycle peak - but not this time around," he said. "Despite monetary policy actions that have helped drive mortgage rates to historically low levels, many lending institutions have tightened underwriting conditions dramatically, relative to the pre-recession period. Given the lax standards during the credit boom, some tightening was doubtless appropriate to protect consumers and ensure lenders' safety and soundness. However, current lending practices appear to reflect, in part, obstacles that are limiting or preventing lending even to creditworthy households," said Bernanke.

Read more from the article in Mortgage Banking by clicking here.

NAHB to Congress: Housing Finance Reform Must Provide Reliable Credit to Home Buyers

The National Association of Home Builders (NAHB) told Congress today that proposed mortgage lending reforms under the Dodd-Frank Act must be imposed in a manner that causes minimum disruption to the mortgage markets while ensuring consumer protections.

Testifying before the House Financial Services Subcommittee on Financial Institutions and Consumer Credit, NAHB First Vice Chairman Rick Judson, a home builder from Charlotte, N.C., said that “NAHB believes a housing finance system that provides adequate and reliable credit to home buyers at reasonable interest rates through all business conditions is critical to our nation’s economic health.”

At the heart of this issue is the definition of a new “qualified mortgage” (QM) as required under the Dodd-Frank legislation passed in 2010 that could have a profound effect on mortgage originations. The legislation includes an “ability to repay” provision that requires lenders to establish that home buyers have a reasonable chance of paying back the loan at the time the mortgage is written. This will set the foundation for the future of mortgage financing, as all mortgages will be subject to these requirements.

“NAHB urges the Consumer Financial Protection Bureau (CFPB) and policymakers to consider the long-term ramifications of these rules on the market, and not to place unnecessary restrictions on the housing market based solely on today’s economic conditions,” said Judson. “Overly restrictive rules will prevent willing, creditworthy borrowers from entering the housing market.”

NAHB has joined with 32 other housing, banking, civil rights and consumer groups to urge the CFPB to issue broadly defined and clear QM standards that contain strong consumer protections, promote mortgage liquidity in the marketplace and provide lenders proper incentives to make home loans to creditworthy borrowers.

A narrowly defined QM would put many of today’s sound loans and creditworthy borrowers into the non-QM market, which would undermine prospects for a housing recovery. Loans that fail to qualify as QMs would be less available and far costlier because lenders and investors would face a much greater risk of violating the terms of the new ability-to-repay requirement.

In other words, under a narrow QM definition, lenders would further restrict home mortgage credit in what is already a tight lending environment because they would be fearful of the severe penalties that would be imposed if they failed to satisfy the ability-to-repay requirement under the more uncertain standards that would apply in the non-QM market.

Even with a broader QM definition, the flow of credit could be restrained if lenders face a high risk of legal challenges to their loan decisions. To best ensure safer, well documented and underwritten loans without limiting the availability or increasing the costs of credit to borrowers, NAHB supports a QM safe harbor definition that would provide more assurance to lenders that they will not be subject to increased litigation if they use sound underwriting criteria. The safe harbor should incorporate specific ability-to-repay standards, said Judson.

“We recommend that the regulators work with NAHB and other industry stakeholders to develop a workable safe harbor,” said Judson. “The final rule should promote liquidity by providing consumers stronger protections than those proposed by the Federal Reserve Board and giving financial institutions definitive lending criteria that reduces excessive litigation exposure.”

Noting that in a period of historically low interest rates prospective home buyers are finding it more difficult to obtain mortgage credit, Judson called on policymakers to take great care to avoid further changes that could exacerbate the situation.

“Consumers must have access to a responsible and sustainable housing credit market, so as we strengthen lending regulations to avoid past excesses, we must be careful not to create an environment where mortgage loans are subject to unnecessarily heightened litigation risks,” he said. “Excessive litigation exposure and severe penalties for violating the ability-to-repay standards would further restrict mortgage lending for all Americans and could cause low- to moderate-income and minority populations to suffer disproportionately.”

15 million homes have negative equity--12 percent are in the top 10 cities

According to Zillow, 15 million homes in the U.S. have negative equity of $1.19 trillion.  The top 10 cities with the most underwater homes account for nearly 1.8 million of the homes with negative equity, or 12 percent.

The top 10 cities with the most underwater homes are:

1. Las Vegas, NV, 71 percent of mortgages are underwater (236,817)
2. Reno, NV, 61.7 percent underwater (46,115)
3. Bakersfield, CA, 60.5 percent  underwater (70,947)
4. Modesto, CA, 60.3 percent underwater (46,598)
5. Stockton, CA, 60.3 percent underwater (60,349)
6. Vallejo, CA, 60.3 percent underwater (44,526)
7. Visalia, CA, 57.7 percent underwater (44,526)
8. Phoenix, AZ, 55.5 percent underwater (430,527)
9. Atlanta, GA, 55.5 percent underwater (581,831)
10. Orlando, FL, 53.9 percent underwater (205,369)

Read the full report at 247WallSt.com by clicking here.  Read Zillow's report at Zillow.com by clicking here.

FHFA: Mortgage Interest Rates Rise .03 Percent in April to 3.93 Percent

The Federal Housing Finance Agency (FHFA) today reported that the National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders, used as an index in some ARM contracts, was 3.93 percent based on loans closed in April. Beginning in March, FHFA is calculating interest rates using un-weighted survey data. There was an increase of 0.03 percent from the previous month.


The average interest rate on conventional, 30-year, fixed-rate mortgage loans of $417,000 or less increased 9 basis points to 4.21 in April. These rates are calculated from the FHFA’s Monthly Interest Rate Survey of purchase-money mortgages (see technical note). These results reflect loans closed during the April 24-30 period. Typically, the interest rate is determined 30 to 45 days before the loan is closed. Thus, the reported rates depict market conditions prevailing in mid- to late-March.


The contract rate on the composite of all mortgage loans (fixed- and adjustable-rate) was 3.93 percent in April, up 4 basis points from 3.89 percent in March. The effective interest rate, which reflects the amortization of initial fees and charges, was 4.03 percent in April, up 10 basis points from 3.93 percent in March.

This report contains no data on adjustable-rate mortgages due to insufficient sample size.

Initial fees and charges were 0.90 percent of the loan balance in April, down 3 basis points from March. Twenty-one percent of the purchase-money mortgage loans originated in April were "no-point" mortgages, up one percent from the share in March. The average term was 27.3 years in April, matching the term in March. The average loan-to-price ratio in April was 75.3 percent, up 0.5 percent from 74.8 percent in March. The average loan amount was $256,200 in April, up $9,100 from $247,100 in March.

Business Insider: Tight lending standards are #1 reason housing recovering is slow

In a report by David Zervos of Jeffries & Co., the number one reason for the continued sluggishness in the U.S. Housing Market is tight lending standards.  Specifically, in addition to very stringent credit standards, Zervos cites the larger than normal spread between what bank's pay for funds and what they charge for home loans.

Read more at BusinessInsider.com by clicking here.