Freddie Mac has its 2013 First Quarter Refinance Report out. Here's the link to the report in its entirety:
http://www.freddiemac.com/news/finance/pdf/RefiReport2013Q1.pdf
Don't be scared, it's only four pages total. But there is some pretty interesting information in there worth mentioning.
"We estimate that refinances will make up approximately two-thirds of single-family originations this year and about one-half in 2014, compared to about 70 to 75 percent in 2012."
Not terribly surprising here. We refinanced both of our homes during this boom but with rates certain to go up (they already are), it's a safe bet that most who've needed to refi have already done so.
"More than 95 percent of refinancing borrowers chose a fixed-rate loan in the first quarter. Fixed-rate loans were preferred regardless what the original loan product had been."
Hell yeah, they better be. All these exotic ARMs are what got so many in trouble in the first place. I recall quite well selling some of those very products to customers when I worked at Bank of America.
"An estimated $8.1 billion in net home equity was cashed-out in the first quarter of conventional prime-credit home mortgages, down from an estimated $8.2 billion in the fourth quarter and substantially less than during the peak cash-out refinance volume of $84 billion during the second quarter of 2006."
That is amazing the difference between now and then. When you hear the statement "people were treating their homes like ATMs" here's the indisputable proof that this was in fact the case. From $84 billion down to $8.1...WOW.
"15% Took "Cash-Out" At Refinance vs. 89% in Q3 2006"
Again, in line with the previous passage, the "house-as-ATM" syndrome seems to be more or less contained.
"The program has helped about 2.5 million refinancing borrowers since its inception through March 2013. HARP loans made up just over 20 percent of first quarter refinance loans purchased by Freddie Mac and Fannie Mae...
Homeowners who refinanced through HARP during the first quarter of 2013 will save an average of $4,300 in interest payments during the first 12 months, or about $358 every month."
Hey, every little bit helps. And it's also worth noting that HARP has been extended through 2015.
Two stocks that stand to gain from this report's implications: Home Depot (NYSE: HD) and Starbucks (Nasdaq: SBUX). There's a pretty good chance that after all this refinancing people are going to stay put for a while. Home repairs and renovations should see a nice little boost from this and Home Depot is the easiest way for investors to gain worthwhile exposure to this sector. Starbucks is just a phenomenal business that is doing everything it can to become that home away from home for consumers. Three big acquisitions over the past couple of years should show some real results and as households are starting to see a little more money in their bank accounts, Starbucks is one of those creature-comforts that presents a relatively low hurdle in convincing people that they have the money to treat themselves to something that they may not have otherwise.
Of course these aren't the only stocks that will benefit. But they are two that are ideal for long-term investors looking to become part-owners of businesses that have and will continue to stand the test of time. For a little extra insight into both companies check out Ask a Fool: How High Can Home Depot Go? and In Hindsight, These Acquisitions May Be Genius.
JMo
http://www.freddiemac.com/news/finance/pdf/RefiReport2013Q1.pdf
Don't be scared, it's only four pages total. But there is some pretty interesting information in there worth mentioning.
"We estimate that refinances will make up approximately two-thirds of single-family originations this year and about one-half in 2014, compared to about 70 to 75 percent in 2012."
Not terribly surprising here. We refinanced both of our homes during this boom but with rates certain to go up (they already are), it's a safe bet that most who've needed to refi have already done so.
"More than 95 percent of refinancing borrowers chose a fixed-rate loan in the first quarter. Fixed-rate loans were preferred regardless what the original loan product had been."
Hell yeah, they better be. All these exotic ARMs are what got so many in trouble in the first place. I recall quite well selling some of those very products to customers when I worked at Bank of America.
"An estimated $8.1 billion in net home equity was cashed-out in the first quarter of conventional prime-credit home mortgages, down from an estimated $8.2 billion in the fourth quarter and substantially less than during the peak cash-out refinance volume of $84 billion during the second quarter of 2006."
That is amazing the difference between now and then. When you hear the statement "people were treating their homes like ATMs" here's the indisputable proof that this was in fact the case. From $84 billion down to $8.1...WOW.
"15% Took "Cash-Out" At Refinance vs. 89% in Q3 2006"
Again, in line with the previous passage, the "house-as-ATM" syndrome seems to be more or less contained.
"The program has helped about 2.5 million refinancing borrowers since its inception through March 2013. HARP loans made up just over 20 percent of first quarter refinance loans purchased by Freddie Mac and Fannie Mae...
Homeowners who refinanced through HARP during the first quarter of 2013 will save an average of $4,300 in interest payments during the first 12 months, or about $358 every month."
Hey, every little bit helps. And it's also worth noting that HARP has been extended through 2015.
Two stocks that stand to gain from this report's implications: Home Depot (NYSE: HD) and Starbucks (Nasdaq: SBUX). There's a pretty good chance that after all this refinancing people are going to stay put for a while. Home repairs and renovations should see a nice little boost from this and Home Depot is the easiest way for investors to gain worthwhile exposure to this sector. Starbucks is just a phenomenal business that is doing everything it can to become that home away from home for consumers. Three big acquisitions over the past couple of years should show some real results and as households are starting to see a little more money in their bank accounts, Starbucks is one of those creature-comforts that presents a relatively low hurdle in convincing people that they have the money to treat themselves to something that they may not have otherwise.
Of course these aren't the only stocks that will benefit. But they are two that are ideal for long-term investors looking to become part-owners of businesses that have and will continue to stand the test of time. For a little extra insight into both companies check out Ask a Fool: How High Can Home Depot Go? and In Hindsight, These Acquisitions May Be Genius.
JMo
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