Posturing for Progress

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the latest or ig i nat ion ORIGINATION Summer Sun Melts Housing Demand se r v ic i ng Like ice cream left out in the heat too long, the demand for housing is slipping away. M S e c on da r y M a r k e t a na ly t ic s arkets across the nation can expect to see softer sales data for June and July, based on reports from Redfin agents around the country. Redfin's Real-Time Demand Pulse for June—which actually tracks May data across 20 U.S. markets—shows a dip in both tour requests and signed offers from customers, despite the fact that inventory has finally started to show growth. According to reports from agents, the number of Redfin customers requesting tours fell 3 percent in May, a larger decline than last year's 2.2 percent. On a weekly basis, tour requests closed May with a 0.9 percent drop compared to an increase of 1.9 percent in 2012. At the same time, the number of Redfin customers making offers dropped 2.1 percent from April to May, also more than last year's 1.1 percent decline. The Memorial Day holiday weekend contributed to a 24.1 percent decline in signed offers in the month's final week, slightly better than the 30.4 percent decrease recorded last year. "Months of bidding wars and record-low inventory earlier this year has finally taken a toll on some buyers," said Redfin analyst Tim Ellis. "Rising interest rates are likely discouraging some buyers as well." Mortgage Rates Look Good to Refinancers The continued drop in rates make HARP more attractive to those who qualify. R efinances through the government's Home Affordable Refinance Program (HARP) remained strong as mortgage rates stayed near record-low levels, according to the Federal Housing Finance Agency's (FHFA) most recent refinance report. In February, 97,738 Fannie Mae and Freddie Mac loans were refinanced under the program, bringing the total to 36 | The M Report 2.3 million since HARP's April 2009 inception. The agency also reported HARP refinances accounted for 21 percent of total refinance volume in February. Of the 2.3 million refinances since inception, about 2 million were primary for residences, 233,000 for investment properties, and more than 75,000 for second homes. Underwater borrowers also continued to represent a large share of total HARP refinance volume. Year-to-date through February, borrowers with loan-to-value ratios (LTVs) beyond 105 percent accounted for nearly half (45 percent) of all HARP refinances, according to FHFA data. In Nevada, Arizona, and Florida, the share was even greater, with underwater borrowers representing 65 percent or more of HARP volume over the first two months of the year. In California and Georgia, the share of HARP refis for underwater borrowers was 58 percent and 50 percent, respectively. Out of the 195,327 total HARP refis seen year-to-date, 45,453 were for borrowers who were deeply underwater, or had LTVs greater than 125 percent. Among the underwater borrowers, 18 percent opted for shorter-term 15- and 20-year mortgages, which build equity faster than traditional 30-year mortgages. HARP, which was set to expire at the end of this year, will live on for two more years after receiving an extension into December 31, 2015.

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