MBA Warns of Real-Estate Bubble

The Mortgage Bankers Association has released a report on the housing and mortgage markets covering issues such as the concern over a real estate market “bubble” and the growing use of non-traditional mortgage products. The report cited a number of “market-level risk factors” as indicators of a “bubble” in a particular area, including a decline in employment, a significant amount of speculative investment, an instance of condo sales as a large percentage of total sales, a large proportion of products that “expose borrowers to potentially substantial payment shocks,” and other products that help maximize purchase power.

Rates on 30-year mortgages declined for a second straight week as low mortgages continued to fuel the housing boom.
Mortgage giant Freddie Mac reported Thursday that rates on 30-year, fixed-rate mortgages fell to a nationwide average of 5.77 percent this week, down from last week's 5.80 percent. Rates have fallen for two weeks after hitting a four-month high of 5.89 percent the week of Aug. 11.
Analysts said the continued low mortgage rates were helping to keep housing markets red hot. Sales of new homes hit a record level in July while sales of existing homes came in at the third highest level in history.
Even with the two consecutive declines, analysts said that rates should resume rising in coming weeks as the Federal Reserve continues its campaign to nudge rates higher as a way of making sure that inflation does not get out of control.
Rates on 15-year, fixed-rate mortgages averaged 5.35 percent this week, down from 5.40 percent last week.
One-year adjustable rate mortgages edged down slightly to 4.56 percent from 4.58 percent. Last week's level had been the highest in more than three years.
Rates on five-year hybrid adjustable rate mortgages averaged 5.30 percent this week, down from 5.34 percent last week.