As mortgage rates drop the trick is finding a house

Wall Street’s anxiety over the Trump administration’s trade war with China could herald lower mortgage rates for homebuyers, but a chronic shortage of houses for sale will keep prices high.Investors fearful that the trade war could sharply slow global economic growth have been buying bonds, sending the yield on the 10-year Treasury note to its lowest level since October 2016.The average rate on the 30-year fixed-rate mortgage, which tracks the trajectory in 10-year Treasurys, fell this week to 3.60%, its lowest level since November 2016, according to Freddie Mac. It was 3.75% last week. A year ago the rate stood at 4.59%.If the slide in bond yields continues, the average rate on the benchmark 30-year home loan could fall below 3.5%, housing economists say.Lower mortgage rates give homebuyers more purchasing power, which could entice them to go house-hunting.But with the supply of homes for sale down 15% since December, sales are lagging last year’s pace. The supply shortage is likely to limit any surge in sales.“Demand can pick up, but if the supply does not pick up it just means prices will be accelerating higher,” said Lawrence Yun, chief economist of the National Association of Realtors. “Supply has been a major bottleneck.”Also, homebuyers may not be immune to Wall Street’s jitters about a slowing economy, which could make them feel uneasy about buying a home.“Given that a home is a major expenditure, people need to be confident about economic prospects over the long haul,” Yun added.Investors have sought out safety in U.S. government bonds this week as the trade dispute between Washington and Beijing escalated again. President Donald Trump announced a new 10% tariff set to go into effect next month on Chinese imports that haven’t already been hit with prior tariffs. China retaliated by allowing its currency, the yuan, to weaken against the U.S. dollar.On Wednesday, the yield on the 10-year Treasury touched its lowest level in nearly three years, falling as low as 1.60% from 1.74% late Tuesday, before climbing back to 1.72%. It was above 3% in late November.The spread between the 10-year Treasury yield and the average rate on a 30-year fixed-rate mortgage has historically been about 1.7 percentage points, said Odeta Kushi, deputy chief economist at First American Financial.That means, if the bond yield for 10-year Treasurys drops back to 1.60%, the average rate on a 30-year mortgage could drop as low as 3.3%, though 3.54% is more likely, she said.At bond yields’ current levels, Yun expects the average rate on the 30-year fixed rate mortgage to drop to around 3.4% or even 3.3%.Such low rates could spur a pickup in home loan refinancing. The last time average weekly long-term mortgage rates were below 3.5% was three years ago.The scarce supply of homes on the market has kept prices rising this year. The median sales price of a previously occupied U.S. home climbed 4.3% in June from a year earlier to $285,700. By comparison, wage growth has averaged about 3%.The trend has held back home sales, which were down 2.2% over the 12 months that ended in June. Sales of newly built homes jumped 7% in June, but through the first half of the year have only risen 2.2% from a year earlier, despite such positive trends as a robust job market and falling mortgage rates.Lower rates may prove irresistible for would-be homebuyers, especially those struggling to keep up with rising home prices. The price for a previously occupied U.S. home climbed 4.3% in June from a year earlier, according to NAR.“It certainly will help to make housing more affordable, obviously, as mortgage rates come down,” Kushi said. “The issue will be will folks have something to buy?”Alex Veiga, The Associated Press read more

How a citizen protest movement is stopping evictions in Spain

first_imgTHE WALLS OF the apartment are cracked and patched with damp, but the faded family photographs of Maria Luisa Brana, her husband and their four children, are still hanging.Eight months ago the five of them – all jobless, like millions in Spain’s recession – faced being thrown out for failing to pay their mortgage.Unlike many families, they have beaten the odds.With legal help from the PAH, a citizen protest movement fighting against a wave of evictions across Spain, they managed to get their order to leave cancelled.“No one else would listen to me. You feel powerless. At the same time you know that you owe that money and you feel guilty,” said Maria Luisa, a 52-year-old with grey hair and a piercing gaze.The campaign provided legal support and persuaded the bank to let the family stay in their home and pay rent.Maria Luisa bought the apartment in Villaverde, a working class suburb of Madrid, in 2005 during Spain’s building boom.Three years later, when the boom went bust, the family was all unemployed and Maria Luisa had €140,000 of debt. Their home was seized by the bank.She recalls the “shame and anger” she felt as she and her husband, an unemployed cook, and all her grown-up children feared ending up in the street.“I am not a delinquent,” said Maria Luisa, a former food-handler. “I didn’t pay because I was poor.”Like many homeowners facing eviction in Spain, she turned in desperation to the citizen-run Platform for Mortgage Victims (PAH).She now lives on unemployment benefits of €420 a month, “plus what my father-in-law gives,” she told AFP.The family pays a social housing rate of €350 a month secured for them by the PAH, with the right to inhabit the apartment for seven years.“It’s still not much relief. If I get one month behind with the rent, they’ll take the apartment,” she said.Economic worries aside, she had a heart attack a few weeks ago.A member of the Mortgage Victims’ Platform (PAH) waits for police to come to a flat earlier this month (AP Photo/Daniel Ochoa de OlzaUnder current Spanish law, a bank can pursue a borrower for the remaining balance of a loan if the value of the seized property does not cover it.“Spain has one of the most unjust laws, which leaves people totally unprotected with their mortgage,” said Ada Colau, a spokeswoman for the PAH.“People did not get into debt on a whim,” but were encouraged to by public policies that tolerated banks offering easy loans during the construction boom, she said.Judicial authorities say banks in Spain have issued 350,000 eviction orders against private or commercial mortgage-holders since 2008. About half are estimated to have been carried out, according to media reports.A woman waits for the police to come for her eviction in Madrid earlier this month (AP Photo/Daniel Ochoa de Olza)PAH this month succeeded in getting parliament to consider a new law, backed by a petition with 1.4 million signatures, to end evictions and let insolvent homeowners write off their debts by surrendering their homes.Over the past four years the movement has campaigned by turning up in crowds outside the homes of evictees and sitting on their doorsteps to try to stop police and bailiffs throwing them out.It says it has blocked nearly 600 evictions – in various cases, like the Branas’, securing a deal for them to stay and pay rent.Joining the rebellion, unions of locksmiths and firemen have started refusing to help bailiffs open the insolvent homeowners’ doors.“We were leaving families with children in the street. We ended up acting as executioners,” David Ormaechea, president of the Locksmiths Union, told AFP.This month in the northwestern city of La Coruna, firefighters were called to help evict an 85-year-old woman who had defaulted on her rent.A crowd of protestors gathered outside the apartment to block the eviction. When the firefighters arrived they refused to open the door and some of them joined in the protest.Fire brigades in other regions have since followed their example.“The only thing we do is help citizens,” said Pedro Campos, a fireman in Madrid.“We only enter a home when there is danger inside. Getting a woman of 85 out of her home is not a situation of danger.”- © AFP, 2013Read: Europe-wide report says austerity is not working > Read: Shatter says Troika deal will not increase repossessions >last_img read more