Record High Share of Borrowers Who Refinanced in Fourth Quarter Paid Down Principal Balance, Reducing Mortgage Debt

McLean, VA – In the fourth quarter of 2009, 33 percent of borrowers who refinanced their loan lowered their principal balance according to Freddie Mac’s quarterly Refinance Report. This is the highest “cash-in” share since Freddie Mac began tracking the characteristics of refinance transactions in 1985. The next highest share of cash-in refinancing occurred in the fourth quarter of 1993 when 23 percent of borrowers lowered their mortgage debt during refinance.

Consistent with the cash-in share, the report showed that the share of borrowers who increased their loan balance by 5 percent or more during the fourth quarter was at a record low of 27 percent. The previous lowest cash-out refinance share was 33 percent and occurred during the second quarter of 2003.

“Rates on 30-year fixed-rate mortgages set a new record low during the first week in December at 4.71 percent and over the quarter averaged just 4.9 percent in Freddie Mac’s Primary Mortgage Market Survey®,” noted Frank Nothaft, Freddie Mac vice president and chief economist. Freddie Mac’s weekly Primary Mortgage Market Survey® began in 1971. “One-half of borrowers who refinanced their conventional loan during the quarter lowered their annual mortgage interest rate by at least 0.9 percentage points below the old rate. In aggregate, the lower interest rate translates into about $2 billion in payment savings for these homeowners over the first 12 months of the new loan. For families that paid down their mortgage balances when they refinanced, the monthly payment savings are even greater.

“This transformation from a cash-out refi market to a cash-in refi market is consistent with other data we’ve seen on households reducing their overall debt burdens, particularly revolving credit like credit cards. From September of 2008 to November of 2009, consumers cut $100 billion dollars in revolving debt from their obligations, according to the Federal Reserve Board.”

“In the fourth quarter, about $11 billion in home equity was cashed out by homeowners when they refinanced their conventional prime-credit home mortgage, the smallest quarterly amount in nine years. Over 2009, the total amount of equity cashed out was just under $70 billion, the lowest annual total since 2000, when $26 billion was extracted,” said Amy Crews Cutts, Freddie Mac deputy chief economist. “The main causes of the decline in cash-out refinance are declining home prices in many areas of the country that have eliminated equity that could have been extracted and tighter underwriting standards for loan-to-value ratios. Among the refinanced loans in our database, the median appreciation of the collateral property was a negative 2 percent over the median life of the prior loan of 3.6 years.”

These estimates come from a sample of properties on which Freddie Mac has funded at least two successive loans. Transactions are further screened to verify that the latest loan is for refinance rather than for home purchase. The Freddie Mac analysis does not track the use of funds made available from these refinances.

30-Year Rates Down For Third Consecutive Week

McLean, VA –Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 4.99 percent with an average 0.7 point for the week ending January 21, 2010, down from last week when it averaged 5.06 percent. Last year at this time, the 30-year FRM averaged 5.12 percent.

The 15-year FRM this week averaged 4.40 percent with an average 0.6 point, down from last week when it averaged 4.45 percent. A year ago at this time, the 15-year FRM averaged 4.80 percent.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.27 percent this week, with an average 0.6 point, down from last week when it averaged 4.32 percent. A year ago, the 5-year ARM averaged 5.24 percent.

The 1-year Treasury-indexed ARM averaged 4.32 percent this week with an average 0.6 point, down from last week when it averaged 4.39 percent. At this time last year, the 1-year ARM averaged 4.92 percent.

(Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.)

“Fixed mortgage rates followed bond yields lower for the third consecutive week, pushing 30-year mortgages below 5 percent once more,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Similarly, ARM rates eased along with shorter-term rates, as the federal funds futures market indicates no increase in the Federal Reserve’s target rate following its upcoming committee meeting on January 26th and 27th.

“Because of reduced sample sizes and work disruptions that occur with severe weather, housing starts tend to be more volatile during winter months. And, indeed, housing starts declined 4.0 percent in December, falling short of the market consensus of no change. Building permits, which are less vulnerable to weather interruptions, unexpectedly jumped 10.9 percent.”

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation’s residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

Celebrate Super Sunday In Ruidoso

Big Game Football Bash

Inn of the Mountain Gods Resort and Casino – Watch the big game on our four big screens, and enjoy the tailgate food, football contests and prizes. Don’t miss the performance by Jimmie Van Zant! Tickets are $25 at the door (space is limited). Tailgate starts at 1 pm, kickoff at 4 pm. More Info:  1-877-277-4577  www.innofthemountaingods.com

Billy’s Super Sunday Party

Billy’s Sports Bar and Grill at Billy the Kid Casino – Great food and drink specials, biggest and best TVs in town.  Billy’s Killer Hot Wing Eating Contet with $100 prize.  Door prizes and party favors.  Info:  575-378-4431

NM Magazine’s First-Ever Salsa Contest!

Bring the heat!

Introducing the first-ever New Mexico Magazine Salsa Contest

To qualify:

– You must manufacture a ready-to-eat salsa that is either made in New Mexico or made with New Mexico ingredients.

– The salsa must be available for purchase online or in retail outlets.

As the GRAND-PRIZE Winner, you’ll receive:

– Prestige as New Mexico’s best salsa for 2010

The New Mexico Magazine Salsa Contest winner’s seal for your product

– Exclusive coverage in New Mexico Magazine

Click Here For The Official Salsa Contest Rules!

Official Salsa Logo
Official Salsa Logo

Green Building: Great Trends From The Earth Advantage Institute

Whether you choose to buy and build in Spring Canyon Ranch, Ponderosa Views or Vera Cruz Mountain Ranch, you might want to take advantage of New Mexico’s endless supply of alternative power sources and make your home as energy efficient and green as you can. This gorgeous state makes it easy to want to step up to healthy living. Just look around: you can’t get much better than the piercing blue sky, clean air and plenty of room to roam. It’s time to stake your claim on your own piece of New Mexico land!

The Earth Advantage Institute is a free standing nonprofit organization acting as the Northwest’s premier green building program. They want to help you help the environment. If you’re building a new house or remodeling your existing one, they can show your builder how to make it a greener place to live. Here’s some great information from their website on some hot green trends for 2010:

TOP TEN GREEN BUILDING TRENDS TO WATCH IN 2010
By Sean Penrith

While we know the building industry had a rough year in 2009, not all of the industry has been in the doldrums. Green building has been a bright spot in an otherwise lackluster year, and the Northwest design and building communities have been at the forefront.

Consider the collaboration on the Oregon Sustainability Center, which may be one of the first “living” office buildings. On the residential side, according to Multiple Listing Service data, the market share for certified sustainable new homes has actually risen this past year in greater Portland and Seattle.  So what can we expect to see in the coming year in green building? Here are our picks for emerging trends of 2010, in no particular order.
1. The smart grid and connected home. While utilities will continue to make upgrades to the grid for more effective generation, storage and distribution of power, the big news is in the home. The development of custom and web-based display panels that show real-time home energy use, and even real-time energy use broken out by individual appliance, will go a long way towards helping change homeowners’ energy behavior and drive energy conservation. In the same way that the Toyota Prius miles-per-gallon indicator has motivated some owners to modify driving habits, these home “dashboards” may create “extreme energy” buffs intent on reaching individual energy goals specified for the home by rating systems such as the Energy Performance Score.

2. Energy labeling for homes and office buildings. The advent of more accurate energy rating systems for homes and office spaces – similar to the miles-per-gallon sticker on your car – has caught the attention of energy agencies and legislators around the country. Not only can it make a building-to-building or home-to-home comparison easier, but a publicly available score on the Multiple Listing Service (MLS) could galvanize owners to make needed energy improvements while adding value to their building. A post-improvement audit can also measure the effectiveness of upgrades, a useful tool for gauging results of stimulus funding for retrofits. In Oregon and Washington, the Energy Performance Score has been written into recent bills to explore mandatory energy labeling at the time of any transaction.

3. Building information modeling (BIM) software. The continued evolution of CAD software for building design has produced new add-on tools with increasingly accurate algorithms for energy modeling as well as embedded energy properties for many materials and features. This will prove instrumental in predicting building performance. BIM developers will soon be offering more affordable packages aimed at smaller firms and individual builders. Contractors are predicted to show the greatest increase in usage of BIM compared with any other group, according to market research firm McGraw Hill Construction.

4. Buy-in to green building by the financial community. Lenders and insurers have come to see green homes and buildings as better for their bottom line and are working to get new reduced- rate loan products, insurance packages, and metrics into place. Lenders and insurers are realizing that green home owners are more responsible, place higher value on maintenance, and are less likely to default due to lower operating costs of homes and office buildings.

5. “Rightsizing” of homes. As we’ve seen during the current downturn, a larger home no longer translates into greater equity. Given that the forecast for home valuation remains conservative, that energy prices are expected to rise over time, and the Federal Reserve is expected to raise interest rates mid-year, homeowners will likely feel more comfortable building smaller homes and smaller add-ons.

6. Eco-districts. Portland is already on the bandwagon with this one, encouraging the creation of greener communities where residents have access to all most services and supplies within walking or biking distance. These areas would also incorporate green spaces and green certified buildings. While we have such neighborhoods in the cities, the creation of walkable, low impact communities in the suburban setting is also gaining steam.

7. Water conservation. Because indoor and outdoor residential water use accounts for more than half of the publicly supplied water in the United States, the EPA finalized the WaterSense specification for new homes in December of 2009, which reduces water use by about 20 percent less water compared to a conventional new home. Verification groups that certify single and multifamily homes will likely also train the same staff to verify WaterSense compliance when requested by builders or homeowners. Mandatory energy labeling in Europe already documents water efficiency in buildings — it may soon be incorporated into U.S. performance scores. Water will be the essential resource in the next decade.

8. Carbon Calculation. With buildings contributing roughly half the carbon emissions in the the environement, the progressive elements in the building industry are looking at ways to document, measure, and reduce greenhouse gas creation in building materials and processes. Lifecycle analysis (LCA) of building products is underway by third party technical teams, while others are working with federal and state building authorities to educate staff, create monetized carbon credits, and develop effective carbon offset policies. This effort will be heightened once a federal cap-and-trade mechanism is launched in this country.

9. Net Zero Buildings. A net zero building is a building that generates more energy than it uses over the course of a year, as a result of relatively small size, extreme efficiencies and onsite renewable energy sources such as wind, solar or geo-exchange systems. While the Architecture 2030 Challenge sets forth net zero as the goal for all buildings in 2030, we are already within striking distance on many fronts. Building extreme efficiency into a structure is highly cost effective, and achieves the bulk of the net zero effort. Oregon already has several net zero homes, and the planned Oregon Sustainability Center is an example of a net zero office building.

10. Sustainable building education. While the slowdown afforded many builders the opportunity to learn about green building and establish credentials, the momentum for green building is being supplied by homebuyers, homeowners and building owners. The continued demand, especially in progressive cities, will supply new learning opportunities, not just for designers and builders but for the entire chain of professionals involved in the building industry, from real estate to finance, and insurance. These peripheral professionals seek to know more about the features and benefits of sustainable construction in order to place an appropriate value on a green building. In this way they can be assured that there will not be a disconnect between the homeowner’s or builder’s perceived value and the appraiser’s perceived value, and all parties can benefit from the greening of the building industry.

They’re Back! Realty Investors Return To Market

According to a recent article by award-winning journalist Broderick Perkins, real estate investors are getting busy. In a recent survey by Move.com, over 12 percent of home-buyers today said they plan to purchase a home as an investment, compared to less than half, only 5.6 percent, just seven months ago. Read the entire article here for a closer look at how the market is slowly beginning to heat up again.

Mortgage Rates Start the New Year Slightly Lower Than They Ended the Old Year

McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 5.09 percent with an average 0.7 point for the week ending January 7, 2010, down from last week when it averaged 5.14 percent. Last year at this time, the 30-year FRM averaged 5.01 percent.

The 15-year FRM this week averaged 4.50 percent with an average 0.7 point, down from last week when it averaged 4.54 percent. A year ago at this time, the 15-year FRM averaged 4.62 percent.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.44 percent this week, with an average 0.6 point, unchanged from last week when it averaged 4.44 percent. A year ago, the 5-year ARM averaged 5.49 percent.

The 1-year Treasury-indexed ARM averaged 4.31 percent this week with an average 0.6 point, down from last week when it averaged 4.33 percent. At this time last year, the 1-year ARM averaged 4.95 percent.

(Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.)

“Mortgage rates eased slightly this week after rising consecutively through December,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Current interest rates for fixed-rate mortgages are just about at their annual average for 2009, while ARM rates are considerably below their averages for last year.

“As the economy strengthens further and the Federal Reserve (Fed) decides to raise its overnight target rate, ARM rates will follow suit because they are typically tied to shorter-term interest rates. However, the federal funds futures market does not anticipate any Fed action until the second half of 2010.”

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation’s residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

Pending Home Sales Down from Surge but Higher than a Year Ago

Contract activity for pending home sales fell after a surge of activity in preceding months to beat the original deadline for the first-time home buyer tax credit but remains comfortably above a year ago, according to the National Association of Realtors®.

The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in November, fell 16.0 percent to 96.0 from an upwardly revised 114.3 in October, but is 15.5 percent higher than November 2008 when it was 83.1.

Lawrence Yun, NAR chief economist, said a drop was expected. “It will be at least early spring before we see notable gains in sales activity as home buyers respond to the recently extended and expanded tax credit,” he said. “The fact that pending home sales are comfortably above year-ago levels shows the market has gained sufficient momentum on its own. We expect another surge in the spring as more home buyers take advantage of affordable housing conditions before the tax credit expires.”

Buyers who have a contract in place to purchase a primary residence by April 30, 2010, have until June 30, 2010, to finalize the transaction to qualify for the tax credit of up to $8,000 for first-time buyers and $6,500 for repeat buyers.

The PHSI in the Northeast dropped 25.7 percent to 74.4 in November but is 14.7 percent above a year ago. In the Midwest the index fell 25.7 percent to 82.0 but is 9.2 percent higher than November 2008. Pending home sales in the South fell 15.0 percent to an index of 97.8, but are 14.7 percent higher than a year ago. In the West the index declined 2.7 percent to 124.6 but is 21.4 percent above November 2008.

Yun projects an additional 900,000 first-time buyers will qualify for the extended tax credit in addition to about 2 million who have already purchased; 1.5 million repeat buyers also are expected to benefit from the credit.

“Many trade-up buyers, who have historically timed their purchase based on school-year considerations, will have to accelerate their buying plans if they need the tax credit to make a trade,” Yun said. Repeat buyers do not have to sell their existing home to qualify for the credit, but they must occupy the home they buy as their primary residence.

Yun added that mortgage interest rates cannot remain at rock-bottom levels for a sustained period and will likely inch higher in 2010. But the tax credit impact in the first half of the year and expected job growth impact in the second half will support home buying activity and absorb enough inventory to bring a rough balance between buyers and sellers. Home prices are expected to stabilize or even modestly rise as a result in 2010.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

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*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity from 2001 through 2004 parallels the level of closed existing-home sales in the following two months. There is a closer relationship between annual index changes (from the same month a year earlier) and year-ago changes in sales performance than with month-to-month comparisons.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales.

Existing-home sales for December will be reported January 25 and the next Pending Home Sales Index will be on February 2; release times are 10 a.m. EST.