Everyone keeps scanning the horizon, hoping to see the good ship Economic Recovery that’s surely out there somewhere. There’s still no indication of just when our ship will come in, but some market watchers think they’re seeing, just maybe, the merest glimpse of that elusive vessel.
Home mortgage rates offer such a glimpse. We’d remind you that despite their ups and downs, it’s important to remember that they’re definitely in the “historic low” range. For example, the 30-year FRM, as measured by HSH’s Fixed-Rate Mortgage Indicator, settled at 5.48%, up a scant five basis points (0.05%). That all-inclusive figure averages the prices of conforming, jumbo and expanded conforming products. The 30-year conforming FRM for the week averaged 5.04%, meaning that mortgage shoppers can find some very attractive rates in their area. (Check out these graphs for a dramatic reminder.)
Take Our Quick Survey: Tried a mortgage rescue plan?
Spending for new construction projects moved 0.3% higher in March, the first such gain since last September. While outlays for residential projects posted a seventh decline since the last positive reading, spending for commercial buildings increased by 2.7% and was joined by a 1.1% gain in public works spending. It was the second gain in a row for both of these indicators. Spending for residential projects remains a laggard as demand for brand-new housing remains punk, but with dwindling stockpiles there, it won’t be too long before some “restocking of inventories” will need to occur.
The National Association of Realtors noted that its index of Pending Home Sales — a kind of preview of what the Existing Home Sales report might look like in the next month of so — rose by 3.2% in March. The PHS report essentially covers the execution of contracts during a month, and although not all will result in sales, suggests whether activity is improving or declining. With a 30-to-60 day window before the home actually changes hands, the increase points to a firmer marketplace for at least April and perhaps May, as well. While actual sales remain considerably below last year’s level, this is another sign that the market is bottoming and even beginning to improve.
More improvement may come as lending standards stop tightening and more borrowers have access to credit. According to the Federal Reserve’s latest survey of senior loan officers, the second quarter of 2009 will feature somewhat looser credit overall. For example, two quarters ago some 84% of respondents noted that they were tightening lending terms and conditions to Commercial and Industrial borrowers, but ‘only’ about half that number were still engaged in that process by this quarter. For residential mortgage loans, that ‘tightening’ figure remained steady at just below 50% for the second quarter, but even with the firm standards in place, nearly 40% of those polled reported increasing demand for mortgages.
In a perverse fashion, such stronger loan demand in the face of still-tightening standards might even encourage some additional tightening, since borrowers seem undeterred by them, not to mention that higher standards can help ensure greater profitability and lower losses http://www.hsh.com/
