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rosco 357


Veteran
Home prices may rise on mortgage refinancing boom
Wednesday December 24, 2008, 11:05 am EST
(Reuters) - Veteran banking analyst Richard Bove said he expects housing prices in the United States to stabilize and/or rise after a likely boom in mortgage refinance, as mortgage rates fall and loan applications increase.

"It is quite likely that the country is about to enter a new mortgage refinance boom," the Ladenburg Thalmann analyst wrote in a note to clients.

"The Treasury and the Federal Reserve have created an environment which makes this development almost impossible to avoid," Bove said.

The take over of Fannie Mae and Freddie Mac in September, as well as Fed's plan last month to buy up to $600 billion in "agency" securities issued by Fannie, Freddie, Ginnie Mae and the Federal Home Loan Bank system have had "dramatic results," Bove said.

Mortgage rates have begun to tumble, while mortgage applications are picking up, he said. Banks are also rehiring the mortgage loan personnel they recently fired, Bove added.

On Wednesday, data from an industry group showed that U.S. mortgage applications had surged to the highest level in over five years in the latest week, as potential borrowers came out in droves to refinance after government interventions that helped push interest rates down to record lows.

The Mortgage Bankers Association (MBA) said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended December 19 soared 48.0 percent to 1,245.4, the highest reading since the week ended July 18, 2003, when it reached 1,284.3.

The MBA counts all applications in its survey, even those that are ultimately rejected, and it does not account for multiple applications, which has become increasingly common due to significantly tighter lending standards.
http://finance.yahoo.com/news/Home-prices-may-rise-on-rb-13912433.html

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