| Rates fall for 4th week
in a row |
| By Holden
Lewis • Bankrate.com |
|
During a week in which the bad news about mortgages
seemed never-ending, rates didn't move much.
The benchmark 30-year fixed-rate mortgage fell 3
basis points, to 6.16 percent, according to the Bankrate.com national
survey of large lenders. A basis point is one-hundredth of 1 percentage
point. The mortgages in this week's survey had an average total
of 0.29 discount and origination points. One year ago, the mortgage
index was 6.43 percent; four weeks ago, it was 6.32 percent.
The benchmark 15-year fixed-rate mortgage fell 2 basis points,
to 5.93 percent. The benchmark 5/1 adjustable-rate mortgage was
unchanged, at 6.04 percent.
The lowlight of the past week -- the event that tipped the stock
market over the edge Wednesday afternoon -- was the release of the
report on mortgage delinquencies in the final three months of 2006.
According to the Mortgage Bankers Association, 54 in every 10,000
homeowners had foreclosure proceedings started against them in the
fourth quarter. That's a record pace, narrowly exceeding the previous
high of 50 in every 10,000 homeowners, set in the second quarter
of 2002.
 |
Weekly national mortgage survey |
|
| This week's rate: | 6.16% | 5.93% | 6.04% |
| Change from last week: | -0.03 | -0.02 | N/C |
| Monthly payment: | $1,006.29 | $1,386.13 | $993.51 |
| Change from last week: | -$3.21 | -$1.78 | N/C |
Another ominous number: One in seven homeowners who
have subprime ARMs were at least 30 days late on their house payments
at the end of the year. About nine in 10 subprime mortgages are
adjustables, according to a Credit Suisse report that was issued
this week.
Overall, when you count all homeowners -- not just subprime --
the delinquency rate was 5 percent. That was up from 4.7 percent
from the same period a year earlier and also from the third quarter
of 2006.
Among the other discouraging news was word that one
of the biggest subprime lenders, New Century, is under criminal
investigation into accounting problems, and that two other Top 15
subprime lenders -- Accredited Home Lenders and H&R Block's
Option One -- were taking financial hits because they had misread
the riskiness of the subprime loans that they recently issued.
It was smoother sailing in the market for prime mortgages,
which is what the Bankrate national survey measures. Industry insiders take that
as an indication that the mortgage business is fundamentally sound, with problems
limited to subprime, which accounted for one-fifth of mortgage dollars borrowed
last year. An overreaction by Congress or regulators would
curtail mortgage options to consumers, says Doug Duncan, chief economist for the
Mortgage Bankers Association. "Even in the subprime arena, the preponderance
of those customers graduate into the prime marketplace and improve themselves
up the credit risk curve." Around the same time Duncan
was uttering those words, Sen. Chris Dodd, D-Conn., chairman of the Senate Banking
Committee, said: "The federal government has a dual obligation both to protect
consumers from abusive lending practices going forward and to work to ensure that
Americans who have been victimized by abusive products and practices are able
to keep their homes and with them, their piece of the American dream. I am considering
a number of options, including legislation, to accomplish both of these objectives."
Bloggers immediately jumped on that statement, pointing out that if the federal
government bails out homeowners who are having trouble paying their mortgages,
it's the same as the government bailing out the lenders who underwrote risky loans.
A bailout could encourage lenders in the future to take unnecessary risks, confident
that they would get a handout from the federal government if things went wrong.
In the 2006 election cycle, Dodd collected $5.7 million in political contributions,
and $2.5 million of that came from the financial services, insurance and real
estate industries. Seventeen of his top 20 contributors are financial services
companies.
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