MARKET UPDATE

Key Rate Drops, Sets Record; 10-Year Near to 52-Week Low Freddie Mac’s closely watched weekly survey of primary market mortgage rates registered yet another record low for the popular 30-year product on Thursday morning as the long-term rate-indicative 10-year Treasury yield dropped toward its 52-week low. The 30-year average for the week ending May 17, at 3.79%, came in four basis points lower than the previous week. The 10-year as of late morning Thursday was at 1.74%. Its 52-week low has been 1.7%. Other rate averages in Freddie’s survey for the week were as follows: the 15-year dropped a basis point to 3.04%, the five-year Treasury-indexed hybrid rose two basis points to 2.83% and the one-year Treasury adjustable-rate mortgage jumped five basis points to 2.78%. Points averaged 0.7 of a point for the 30-year and 15-year, 0.6 of a point for the five-year Treasury hybrid and 0.5 of a point for the one-year Treasury ARM. Freddie’s chief economist Frank Nothaft said in his weekly rate report that renewed financial uncertainty in Europe and improving economic indicators in the United States drove yields and rates during the week. A year ago, the 30-year averaged 4.61%, the 15-year averaged 3.8%, the five-year Treasury hybrid averaged 3.48% and the one-year Treasury ARM averaged 3.15%. Foreclosure Filings Fall to (Almost) Five-Year Low It appears the nation’s foreclosure crisis has turned the corner—thanks to short sales. According to new figures compiled by RealtyTrac, servicers filed 188,780 notices of default in April, the lowest reading since July 2007. The NODs—which include default notices, scheduled auctions and bank repossessions—fell 5% from March and are down 14% from a year ago. One in every 698 housing units had a foreclosure filing last month, the Irvine, Calif.-based analytic provider said. “More distressed loans are being diverted into short sales rather than becoming completed foreclosures,” said Brandon Moore, CEO of RealtyTrac. “Our preliminary first quarter sales data shows that pre-foreclosure sales—typically short sales—are on pace to outnumber sales of bank-owned properties during the quarter in California, Arizona and 10 other states.” After three consecutive monthly increases, foreclosure starts were down in April compared to March. A total of 97,665 properties began the foreclosure process during April, down 4% from March and 2% lower from the same time period last year. Bank repossessions continued to decline on a monthly basis too, as lenders completed the foreclosure process on 51,415 homes. This is a 26% drop from April 2011 and represents the 18th straight month of year-over-year decreases in REO activity.