Money Matters - Simplified

slack

U.S. home prices slack in August

New York -- U.S. home prices rose less than expected on an annual basis in August, a closely-watched index released Tuesday said.

The S&P/Case-Shiller 20-city composite index of home prices for August rose 1.7 percent from a year ago, falling short of the 2.2 percent increase economists had predicted.

In a separate report, the Federal Housing Finance Agency said home prices rose 0.4 percent in July to August, using an index that tracks only prices on mortgages backed by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corp., better known as Fannie Mae and Freddie Mac.

Loan originations surprisingly slack

Washington -- Low interest rates have failed to generate large numbers of loans comparing this recession to 2003, a national U.S. mortgage broker said.

The Federal Home Loan Mortgage Corp. said Wednesday that long-term interest rates dropped to 5.21 percent in 2003, a record low at the time. In response, nearly $4 trillion in loans were written, including $2.7 billion in refinanced mortgages.

In the current recession, with interest rates for 30-year and 15-year mortgages falling to new lows, loan originations are projected to be less than half of 2003 levels, Freddie Mac said.

The explanation is in at least three parts, Freddie Mac said.