Arguably the most broadly pursued pastime in the country that’s becoming pricier is borrowing money, specifically borrowing to buy houses. With the bearish turn in the Treasury market driving the 10-year note yield above 5% last week, near a four-year high, Freddie Mac’s benchmark 30-year fixed-mortgage rate rose to just below 6.5%.
A survey by RealtyTrac, reported Friday, showed a 68% increase in mortgage loans in foreclosure in February over the year-earlier period. Foreclosures are still relatively low by historical standards, but the trend is directionally discomfiting.
The Fed is between a pair of pincers. On one side, the policy setters understand that higher rates act with a lag, and that the ascent in long-term rates will likely assist their own efforts to slow the economy. That argues for a pause in the tightening campaign. But, then again, going too far, kneecapping the housing market, antagonizing the stock market and pressuring consumer spending could invoke those downside economic risks that don’t seem to be bothering Fed officials these days.
In Danielle Reed’s article, I think she really gets whats going on in Rising Foreclosure Rates Point To a Normalizing Home Market [WSJ].
While the foreclosure rate is higher than in the past few years, the number of foreclosures are within historical norms.
Nationally, the number of mortgage loans that entered some stage of foreclosure rose to 117,259 in February, up 68% from the same month a year earlier, according to Irvine, Calif., online foreclosure-data service RealtyTrac.
Whats really interesting about the foreclosure stats is that the Midwest was hardest hit. I find that hard to understand since the coasts saw higher price spikes and greater use of exotic mortgages.