30-year Fixed-rate Mortgage Averages 3.88 Percent

In Freddie Mac's results of its Primary Mortgage Market Survey® the average mortgage rates changing little amid mixed economic data. Regardless, the 30-year fixed-rate mortgage edged down slightly to 3.88 percent to a new all-time record low marking the seventh consecutive week below 4.00 percent.

30-year fixed-rate mortgage (FRM) averaged 3.88 percent with an average 0.8 point for the week ending January 19, 2012, down from last week when it averaged 3.89 percent. Last year at this time, the 30-year FRM averaged 4.74 percent.

15-year FRM this week averaged 3.17 percent with an average 0.8 point, up from last week when it averaged 3.16 percent. A year ago at this time, the 15-year FRM averaged 4.05 percent.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.82 percent this week, with an average 0.7 point, matching last week when it averaged 2.82 percent. A year ago, the 5-year ARM averaged 3.69 percent.

1-year Treasury-indexed ARM averaged 2.74 percent this week with an average 0.6 point, down from last week when it averaged 2.76 percent. At this time last year, the 1-year ARM averaged 3.25 percent.

According to Frank Nothaft, vice president and chief economist, Freddie Mac:
"Mortgage rates were nearly unchanged this holiday week in lieu of a mixed bag of economic data reports.

On the consumer front, retail sales edged up only 0.1 percent in December, but the Reuters/University of Michigan sentiment index continued to climb in January to the highest reading since February 2011. On the business side, industrial production rose 0.4 percent in December, slightly below the market consensus forecast, and the core producer price index rose faster than market expectations. Finally, on the home construction front, builder confidence rose for the fourth consecutive month in January to the highest level since June 2007."

Home sales pace increases in December, third month in a row

WASHINGTON – Home sales in December reached the highest pace in nearly a year. The gain coincided with other signs that the troubled U.S. housing market improved at the end of2011.

Analysts caution that sales remain historically low and it will take years for the home market to return to full health.

Still, the third straight monthly sales increase was encouraging. And economists noted that conditions are in place for further gains this year:

Prices have declined. Mortgage rates have never been lower. Homebuilders are slightly more hopeful because more people are saying they might be open to buying this year. And home construction picked up in the final quarter last year.

Sales rose across the country in December. They rose on a seasonal basis more than 10% in the Northeast, 8.3% in the Midwest, 2.9% in the South and 2.6% in the West.

It's always home sweet home for luxury real estate

A luxury pad in one of the world's most exclusive neighborhoods might be seen as an indulgence for only the super rich. But international real estate developer Nick Candy told CNBC that for the shrewd investor with access to capital, it can often be a long-term commitment worth making.

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  By Paul Sakuma, AP
  Luxury real estate can actually be a sound investment, an international developer tells CNBC.

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By Paul Sakuma, AP

Luxury real estate can actually be a sound investment, an international developer tells CNBC.

Candy is one half of property duo Candy & Candy, whose most high-profile build was One Hyde Park — an apartment block in London's Knightsbridge area and one of the most expensive addresses in the world.

Sitting just yards from Harrods department store, the luxury boutiques of Sloane Street and a short walk away from Buckingham Palace, prices here range from a relatively modest $5 million to an astonishing $215 million for a three-story penthouse. But with 24-hour room service from the 5-star Mandarin Oriental Hotelnext door, wine cellars, bomb-proof glass and even panic rooms, is such an apartment a lavish folly or a wise investment?

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"People are buying for the long term," said Candy. "The (properties) will get passed down the generations. Something like this won't get built again for a long time."

And while a home worth $3,000-a-square-foot or more sounds like a big gamble, he is sure that long-term investments like these ride out the ups and downs of economic cycles. "I 100% believe that if you invest in the very best — not just in real estate, but in the rarefied world of commodities — then I believe that you will do very, very well."

An international city like London, it seems, is a safe place to invest even during downturns because of the constant cycle of foreign cash being pumped into the capital.

"London is still a very strong market. In the 1970s and '80s we had Middle Easternmoney; in the late 1990s we had Russian, Ukrainian and Kazakh money and today we have Indian and Chinese money.

"There is more international money coming in than ever before."

He warned that high-end properties can suffer from delays getting work done, overspending and plans that never come to fruition, but ultimately big cities have the international demand to make luxury property a winner.

"London can soak up — from the number of international purchases that are coming in — a lot of supply that is coming onto the market," he said. "We have very limited supply because it takes a good five, 10 years to build a good project. Limited supply, huge demand; (that means) prices will continue to increase."

Candy pointed out the seasonal variation in this particular market, meaning the prospective investor has to allow for the quiet summer months, during which high-worth individuals prefer to be out on their boats than in the city at the office.

So while the sub-prime mortgage crisis that ignited fears of a global downturn may have scared some off real estate investment, with 25 nationalities represented at One Hyde Park, Candy is sure that there is an international trend to buy big in property again.

A devalued sterling has made London property buying a particularly popular choice, but Candy explained that major cities all over the world are seeing similar success at the top end of the market.

"New York is still very strong, it's very American-centric though - 80% of people buying expensive apartments in New York will be home-grown Americans," he said.

"I think Dubai will have a bounce back partly because of the Middle East uprisings. The Gulf regions want to go and buy real estate in Dubai. Also when you have that big a correction and that big a fall, I believe that it will go up quite quickly as well."

And the best places for this kind of investment? Not surprisingly, healthy Asian economies provide the most stable conditions. "Hong Kong, Shanghai, Singapore; these are the areas of the world that I truly believe can sustain the high-end product, and will have the demand for it," Candy said.

States review $25B mortgage settlement offer

WASHINGTON – The nation's five largest mortgage lenders have agreed to overhaul their industry after deceptive foreclosure practices unfairly evicted homeowners, government officials said Monday.

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  By Chris O'Meara, AP
  An auction signs sits in front of a foreclosed home in Valrico, Fla., in November 2010.

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By Chris O'Meara, AP

An auction signs sits in front of a foreclosed home in Valrico, Fla., in November 2010.

A draft settlement between the banks and U.S. states has been sent to state officials for review. It would be the biggest settlement of a single industry since the 1998 multistate tobacco deal.

Those who lost their homes to foreclosure are unlikely to get their homes back or benefit much financially from the settlement, even though the banks may have to pay as much as $25 billion in total to settle with the government. About 750,000 Americans — about half of the households who might be eligible for assistance under the deal — would likely receive checks for about $1,800 each.

• STORY: HUD secretary: Mortgage settlement deal 'very close'

The agreement also could reshape longstanding mortgage lending guidelines and make it easier for those at risk of foreclosure to restructure their loans. And roughly 1 million homeowners could see the size of their mortgages reduced.

Five major banks — Bank of America (BAC), JPMorgan Chase (JPM), Wells Fargo (WFX), Citibank (C) and Ally Financial — and U.S. state attorneys general could adopt the agreement within weeks, according to two officials briefed on the discussions. They spoke on condition of anonymity because they are not authorized to discuss the agreement publicly.

The settlement would only apply to privately held mortgages issued between 2008 and 2011, not those held by government-controlled Fannie Mae or Freddie Mac. Fannie and Freddie own about half of all U.S. mortgages, roughly about 31 million U.S. home loans.

As part of the deal, about 1 million homeowners could also get the principal amount of their mortgages written down by an average of $20,000. One in four homeowners with a mortgage — or roughly 11 million people — owe more than their home is worth. These so-called "underwater" borrowers have little chance at refinancing.

Democratic attorneys general met Monday in Chicago to discuss the proposed offer with Housing and Urban Development Secretary Shaun Donovan. Republican attorneys general will be briefed about the deals via conference call later in the day.

Critics, including some members of Congress, say they want a thorough investigation of potentially illegal foreclosure practices before a settlement is hammered out.

"Wall Street again is trying to pass the buck. Instead of criminal prosecutions, we're talking about something that's not more than a slap on the wrist," said Sen. Sherrod Brown (D-Ohio), who has been critical of the proposed settlement.

President Barack Obama is expected to address the housing crisis and detail new administration proposals during his State of the Union address Tuesday.

Under the deal:

— $17 billion would go toward reducing the principal that struggling homeowners owe on their mortgages.

— $5 billion would be placed in a reserve account for various state and federal programs; a portion of that money would cover the $1,800 checks sent to those homeowners affected by the deceptive practices.

— About $3 billion would to help homeowners refinance at 5.25%.

In October 2010, major banks temporarily suspended foreclosures following revelations of widespread deceptive foreclosure practices by banks. Discussions then began over a national settlement.

Some states have disagreed over what terms to offer the banks. In September, California announced it would not agree to a settlement over foreclosure abuses that state and federal officials have been working on for more than a year.

New York, Delaware, Nevada and Massachusetts, which sued five major banks earlier in December over deceptive foreclosure practices, have also argued that banks should not be protected from future civil liability. The deal will not fully release banks from future criminal lawsuits by individual states.

And both sides have also fought over the amounts of money that should be placed in the reserve account for property owners who were improperly foreclosed upon. Many of the larger points of the deal, including a $25 billion cost for the banks, have long been worked out, officials say.

S.C. home sales stabilize in second half of 2011

COLUMBIA -- Home sales in South Carolina started off rocky in the first half of 2011 but gave way to a decidedly more settled second half, according to figures released last week by the S.C. Realtors trade group.

And with the number of homes on the market shrinking, industry experts say last year could have been the turning point for a market that has lost nearly half of its sales since peaking in 2006.

“If you just look at the year-to-year comparisons, I'm actually pretty excited at the fourth-quarter results; they were very strong, and we finished the year just about even with 2010,” said Nick Kremydas, S.C. Realtors chief executive officer.

Statewide, home closings fell 1.7 percent in 2011, compared with the previous year, to 46,762. Home prices also fell slightly.

Median price was down about 1 percent for the year to $148,500.

The median price fell the most along the Grand Strand, 7.3 percent, to $139,090, in 2011. But the low prices spurred more sales and home closings were up 3.2 percent along the Grand Strand in 2011 when compared to the previous year. About 7,550 homes, condos and villas were sold, according to the association.

And homes statewide sat on the market longer waiting for a buyer to come along, an average of almost five months — up 8.1 percent for the year compared to 2010.

Inventory levels, however, sank to just under a year in 2011 from 14.2 months in 2010 and 14 months in 2009.

Inventory in a healthy market is about six months.

Kremydas said 2011 likely will be remembered as the year the state's free-falling real estate market finally stabilized.

Another wave of foreclosures or new policies, such as eliminating the mortgage interest deduction as has been proposed by some legislators, could throw a wrench into a recovery.

But so far, historically low interest rates and falling home prices have eased years of falling or government stimulated spikes in home sales.

“Ultimately, the upcoming spring market should be a major indication of the direction of housing,” the Realtors report stated. “Sellers are seeing multiple-offer situations, buyers are seeing sub-4-percent loans, and supply-demand trends are more balanced.

”When it gets down to it, that's a stable foundation and a far cry from 2009,“ the report concluded.

The year-end report is also representative of what real estate agents say they experienced in 2011.

”We sold more houses last year and the prices were down,“ said Andy Walker, partner in the Bollin Ligon Walker real estate firm and president of the Central Carolina Realtors Association.

Pending sales, homes for which contracts have been written but which haven't closed, were another bright spot in the Columbia area market report, rising 29.4 in December, Walker noted. That's an indication that sales will rise in the coming months.

Mortgage Rates Finish 2011 Near Historic Lows

In Freddie Freddie Mac's results of its Primary Mortgage Market Survey®, the average fixed mortgage rates finishing the year near their all-time historic lows helping to keep homebuyer affordability high. Averaging 3.95 percent, the 30-year fixed has been at or below 4.00 percent for the past nine consecutive weeks and only twice in 2011 did it average above 5.00 percent. 

The 30-year fixed-rate mortgage (FRM) averaged 3.95 percent with an average 0.7 point for the week ending December 29, 2011, up from last week when it averaged 3.91 percent. Last year at this time, the 30-year FRM averaged 4.86 percent.   

The 15-year FRM this week averaged 3.24 percent with an average 0.8 point, up from last week when it averaged 3.21 percent. A year ago at this time, the 15-year FRM averaged 4.20 percent.  

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.88 percent this week, with an average 0.6 point, up from last week when it averaged 2.85 percent. A year ago, the 5-year ARM averaged 3.77 percent. 

1-year Treasury-indexed ARM averaged 2.78 percent this week with an average 0.6 point, up from last week when it averaged 2.77 percent. At this time last year, the 1-year ARM averaged 3.26 percent.Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac. 

"Mortgage rates ended the year hovering near historic lows in an already affordable housing market.  For instance, the seasonally-adjusted S&P/Case-Shiller® 20-City Composite home price index in October was the lowest seen since March 2003. The largest hit areas were Las Vegas with the lowest reading since January 1997 and Atlanta which was since June 1998. It's not surprising then that over 5 percent of households in December plan to purchase a home over the next six months, the highest share since May, according to The Conference Board."

Which Home Improvement Projects Offer the Best Returns?

When it comes to remodeling, exterior replacement projects have routinely rewarded home owners with more bang for their buck. This year is no different: REALTORS® recently rated many exterior improvements as among the most valuable home investment projects as part of the 2011-12 Remodeling Cost vs. Value Report.



"This year's Remodeling Cost vs. Value Report shows the value of putting your home's best façade forward, so to speak," said National Association of REALTORS® President Moe Veissi. "Inexpensive exterior replacement projects are not only crucial to a home's regular upkeep, but are also expected to recoup close to 70 percent of costs. Specific exterior projects such as siding, window and door replacements are part of regular home maintenance, so many homeowners are already undertaking them. These projects also do not require expensive materials and they have the added bonus of instantly adding curb appeal."

HouseLogic.com, NAR's consumer Web site, includes dozens of remodeling projects, from kitchens and baths to siding replacements, which indicate the recouped value of the project based on a national average. According to the Cost vs. Value, seven of the top 10 most cost-effective projects nationally in terms of value recouped are exterior replacement projects. REALTORS® judged an upscale fiber-cement siding replacement as the project expected to return the most money, with an estimated 78 percent of costs recouped upon resale.

Two additional siding replacement projects were in the top 10, including foam-backed vinyl siding, expected to return 69.6 percent of costs, and upscale vinyl siding, expected to recoup 69.5 percent of costs. Three door replacements were also among the top exterior replacement projects. The steel entry door replacement is the least expensive project in the report, costing little more than $1,200 on average and expected to recoup 73 percent of costs.

The upscale garage door replacement jumped seven spots to number six this year, primarily due to the average cost of the project declining more than 15 percent nationally. The upscale and midrange garage door replacement projects are expected to return more than 71 percent of costs. One window replacement project - upscale vinyl - rounded out the last exterior replacement project in the top 10, expected to recoup 69.1 percent of costs.

Charities get more donated homes

Non-profits are getting more donated homes in the wake of the housing market collapse, and the trend is likely to grow given the ongoing foreclosure crisis.

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The homes, typically low-value ones, may be refurbished and resold or demolished to rid neighborhoods of blight.

By donating, mortgage owners free themselves from the cost of maintaining homes they can't sell. The bigger benefit is that cleaned-up neighborhoods help stabilize values of surrounding homes, banks say.

"It's a win, win, win" for the neighborhood, the bank and the investor, says Rebecca Mairone, head of Bank of America's donation program.

BofA donated 150 homes in 2011. It plans to donate more than 1,200 next year, Mairone says. Wells Fargodonated more than 1,120 homes this year, up from 295 last year, it says.

Nationwide, Habitat for Humanity rehabilitated 1,210 homes that it received as donations or bought at distressed prices in the year ended last June. That's nearly twice as many as Habitat rehabbed a year before, says Sue Henderson, vice president of U.S. operations.

Charities can net thousands of dollars — or more — from donated homes, says Charles Konkus, president of the Illinois-based Real Estate Donations. It handled 117 donated homes in more than a dozen states for charities this year, Konkus says. Before the housing collapse, it got about 20 a year.

Some homes are given by homeowners who receive charitable tax deductions in return. "People see this as a way out if they can't sell," Konkus says.

While rising, the number of donated homes is tiny relative to the size of the foreclosure problem. Nationwide, more than 6 million homeowners are late on their mortgages or already in foreclosure, Lender Processing Services says.

The Cleveland-based Cuyahoga Land Bank gets about 120 donated properties a month, up from 80 a year ago, President Gus Frangos says. Cuyahoga County has 22,000 abandoned single-family homes, he says.

Most donated homes are in such bad shape that they're demolished, Frangos says. Often, properties are then turned into community gardens, sold to neighbors for $100 or returned to cities.

Removing a neighborhood eyesore "almost immediately stabilizes property values," Frangos says.

In some higher cost areas, homes aren't donated as much as they are sold at discounted prices.

Habitat for Humanity of Greater Los Angeles bought 80 distressed homes in the past year, marking its first venture into buying vs. building, CEO Erin Rank says. The homes, typically worth about $200,000, were sometimes discounted by 25% to 30%, Rank says.

Habitat resells the homes it fixes to eligible families. They get livable homes and neighborhoods where Habitat has built other homes are strengthened, too, Rank says.

Home donations don't always work for charities. The East Bay Community Foundation in Oakland, Calif., has rejected three offers of donated homes in recent years. The properties couldn't readily be turned into cash, which the foundation uses to make grants, spokesman John Pachtner says.