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Financial Markets are Holding Their Own04-08-10 | News

Financial Markets are Holding Their Own

Although it is premature to say the foreclosure problem is over, the Mortgage Bankers Association recently provided some positive news, reporting that the number of foreclosures started in the fourth quarter was down from the third quarter, which had been down from the second quarter. Also, fourth-quarter delinquencies on all mortgages fell slightly to 9.5 percent of home loans from 9.6 percent in the third quarter. - Photo Courtesy of Calculated
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Although it is still not easy for builders to obtain financing, home buyers who can qualify for a mortgage face highly favorable interest rates. Unfortunately when builders struggle to start projects it?EUR??,,????'?????<

For the past six months, conventional rates on 30-year fixed-rate mortgages have hovered around 5 percent. Despite the Federal Reserve?EUR??,,????'?????<

Also, the spread of the Freddie Mac 30-year fixed-rate mortgage rate over the 10-year Treasury note rate has declined significantly in recent months. As of last month, that spread was the narrowest it has been since December 1997. February?EUR??,,????'?????<

NAHB forecasts that the spread will widen to 1.6 percent by the second half of this year, a tad below its long-run historical average of 1.7 percent.

The one troubling note in the Mortgage Bankers Association report was that delinquencies past due by 90 days or more continued to rise. However, 30-day delinquencies have fallen for the past three quarters, suggesting that a slow improvement may be occurring and that the worst is over.

The MBA report contains state data as well and shows that mortgage stresses are concentrated in a handful of states. In fact, 10 states accounted for almost 70 percent of all foreclosures started in the fourth quarter of 2009. In descending order, they were Florida, California, Illinois, New York, New Jersey, Arizona, Ohio, Michigan, Texas and Georgia. ?EUR??,,????'?????<