Dennis' Mortgage Blog

Two pieces of news this morning for the housing and mortgage industries.

Housing dumps

Earlier today the National Association of Realtors released data for sales of existing homes for the month of February 2011 and the news was not good.  Sales dropped 9.6% in February to a seasonally adjusted annual rate of 4.88 million homes, well below expectations of a 3.9% drop to an annual rate of 5.15 million homes sold.

"We have an uneven, choppy recovery," said Lawrence Yun, NAR's chief economist. "Hopefully it is a recovery that is taking place."

"Hopefully?"  The median price of an existing home sold in February dropped to $156,100, the lowest price since April 2002 and down 5.2% from the $164,600 median price of February 2010.

Housing isn't experiencing a national recovery with these kind of numbers for February.  Certain regions and neighborhoods maybe seeing stronger sales, hence the "uneven, choppy recovery," but nationally housing is far behind the rest of the economy in recovery.

Treasury Dumps

Also today the Treasury Department announced its plan to unload the $142 billion of mortgages it owns from its mortgage purchase program from November 2008 to March 2010.  The Treasury feels the mortgage markets have improved enough to absorb it dumping of mortgage assets on the open market and will sell $10 billion per month for the next fourteen months.

The extra supply of Mortgage Backed Securities (MBS) through the Treasury's sales will have the opposite effect on mortgage rates than what occurred when they were buying MBS.  With the extra supply rates will create upward pressure on mortgage rates. 

So we have homes not selling in a low rate environment and the Treasury is selling performing mortgage assets that will create higher rates and put more strain on a "hopefully" recovering housing market.

The good news is that in its sale of MBS the Treasury will make a profit to help pay down some of the $14 trillion federal debt.

Mortgage rates continue to remain low for the time being.  Call  or email Dennis today to determine your purchasing power for a new home loan or monthly savings from a refinance.  Direct dial 562-472-1118