for "nightly business report," i'm diana olick. >> for more, read her piece on our website, nbr.com. >>> overhauling the nation's policies on immigration, one that offers citizen ship to those here illegally and suring up the borders in mexico. 32 opposed and 68 in favor but heads to the are you pub can controlled house where it faces tough opposition. >>> the trillion dollar issue, is congress any closer to preventing student loan rates from doubling on monday? first, here is how the international bond closed on monday. >>> wall street regulators filed a self lawsuit against john corzine for his role in the failure of mf global, the trading firm he ran before it collapsed in 2011. the trading commission says corzine failed to super vice dill gently the activities of mf global's officers, employees and agents. the lawyer said he did nothing wrong and looks forward to vin kating him in court. >>> the ceo held hostage by his own workers in china is now free. the nearly week-long stand off in his factory in beijing ended with chip walking out the door but settling with workers. >>> more

>> all right, diana, diana olick reporting fours.kayla tausche with a look at why banks are not passing on these higher -- let me just say they are not passing them on because they want to make for money for themselves, right? >> you would hope so and the benchmark these savings accounts are tied to. they don't have to or need to. mortgages are the only place where higher yields will affect you meidt immediately because these savings accounts and other personal financial products are based on the fed fund rate at or above zero and even though other products with spiking this won't affect you until the federal raises. right now the average savings account .86%. online only accounts will pay you just below 1%. while you may be missing interest on savings you're knot also not paying it on some of your other borrowings in the last section weeks. the average interest a five-year car loan, 2.12% and the average rate on a credit card budged barely a bit. once the rates start to rise, it's both a blessing and curse. >> rates on home equity l

diana olick has more. >> reporter: alisha has been frantically touring homes with her realtor to get her family out of the cramped temporary rental since her job transfer, she's running out of time before home prices and mortgage rates rise. >> i feel like we'll be priced out of buying. >> reporter: she's considering a risky adjustable rate mortgage. >> ideally we would do a 30 year fixed but it's depending on the end mortgage payment of what we can afford. we would have to look at an rm potentially if rates rise. >> reporter: record low fixed rates over the past several years pushed arms out of forever n. 2006 they accounted for 36% of origination. today just around 4.5% according to lender processing services. but in just the past week, the rate on the 30 year fixed surged to 4.5% and lenders like quicken loans say they are suddenly getting more requests for arm. >> over the last week or two we seen the arm production double because folks are actually looking at it and saying to themselves, i have a 30 year fixed rate that's gone up to 4.5% range and i can look at a seven year or t

diana olick is in washington. >> diana. well, tyler, not only did they put a floor on home prices, they put a rocket underneath them, bidding them up and in some cases pricing themselves out of the marked the. we got an inkling about this about a month ago when one investor told us this. >> general consensus right now is that the bargains are drying up when it comes to buying foreclosed properties, and we actually believe that one of the reasons home prices seem to be aprooep preeshating as quickly as they are is because of the lack of discount available for properties. >> since then carrington announced it's no longer buying distressed properties. in fact in, a survey nationally, investors said they planned on cutting back on purchases of homes in the coming year. last suggest, just 30% said they planned to cut back. only 20% of investors said they planned to increase purchases, compared to 39% who said they would last august. >>> meanwhile american residential properties, a single family rental went public last month, and

. >> diana olick in washington for us tonight. >>> another engine of the economy, small business, a little later. we'll look at the challenges facing small business with the head of the sba and twitter co-founder jack dorsey. >>> in congress the house unexpectly defelted a five-year farm bill that would cut $2 billion a year from the federal food stamp program and let states institute work requirements for precrecipients. some said they didn't go deep enough while liberals said they removed too many needy americans from the program. >>> a different story in the senate. lawmakers are close to agreeing on a compromised measure overboarder security with a final draft of a comprehensive immigration bill closer at hand. the new plan would double the size of the federal boarder patrol and add another 700 miles of fencing and pay for high tech protections along the border. it would tack on another $30 billion for the overall cost of the immigration bill. >>> and more trouble in the motor city after tens of millions of dollars in city pension funds are gone. the state appointed manager for detroit

. >> reporter: cnbc's diana olick covers real estate. >> mortgage rates are rising with home prices and buyers are able to get a lot less house than they could even just a month ago. >> reporter: today in virginia, newlyweds john and aubrey holman were looking for a home just as interest rates start to rise. >> if the interest rates did go up, we'd be in a much more difficult situation. we probably wouldn't be able to afford the things we want. >> reporter: nervousness on main street and wall street as the economy regains its footing. there is fear higher interest rates could undermine the recovery in the housing market. one more factor at play today on wall street, brian, fear that the chinese economy is slowing. china is now the second largest economy in the world. back to you. >> all right, tom costello in our d.c. bureau tonight. tom, thanks. >>> now what could be a big breakthrough in a long and drawn out but urgent fight over immigration reform going on in congress. a compromise on border security. this one has the potential to garner overwhelming support in the senate. kelly o'do

for "nightly business report" i'm diana olick in washington. >>> until the housing front a y bipartisan group wanting to shut down fannie mae and freddy mark and replace them with another federal resin you arer to back more private money in the event of another housing crisis. republican senator bob porker is one of the sponsors and says there is an ap title to get this done. >> fanny and freddy, the way they were set up with public gains and private losses was not a fair deal for taxpayers. this is a change that keeps liquidity in the market. hopefully, we'll be successful. i do think there is energy here in congress to take this on, and hopefully, we'll do something that certainly moves us away from the status quo. >> bailing out fanny and freddy cost american taxpayers more than $187 billion. >>> also in washington, the senate is a step closer to a final vote on that comprehensive overhaul of the nation's immigration laws after passing a key hurdle monday evening. a bipartisan majority approved a compromise measure that beeves up border security paving the way for final passage that

diana olick joins us now from washington. diana? >> reporter: tyler, call it a rush to a.r.m.sas rates buy and homeowners hurry to lock in the lowest possible. a.r.m.s do offer lower rates but they are much higher to qualify for. record lower rates over the last years pushed them out of favor. pack in the housing boom back in 2006 they accounted for 36% of original nations. today, just around 4.5%, that according to lender processing services. in just the past week as the rate on 309-year fixed surged to around 4.5%, lenders tell me they started seeing more request for options on loan products. home prices are rising along with rates, and that has potential buyers watching every basis point. >> and i think you're seeing much more intense shopping where people are comparing rates between lenders and looking at different, list conventional products so they are getting teaser rates and buying it down and doing different things to try to get back to the rate they saw last week. >> some buyers are actually being forced into these a.r.m.

diana olick live in washington. diana? >> reporter: the headline number was positive, as you said, but not as much as the street expected and largely driven by multi-family apartment construction. this as supplies of single-family existing homes are still incredibly low. you have to break down the numbers to see it. multi-family starts rose 25% month to month in way and are up 69% from a year ago. single family, basically flat, up just.3% and up 16% from a year ago. permits were healthier. single family rising to the highest level since 2008, while multi-family did take a little breather. the good news is that we need more housing, so construction jobs should be plentiful in the near future at least. the builders are blaming lackluster single family starts on, quote, unusually wet weather in may, but really, it's a lack of land, labor and materials and a conscious effort object part of some of the big builders to slow production in order to take advantage of rising prices. back to you. >> all right, diana. stay with us, an

diana olick with more on the housing numbers from washington. diana? >> reporter: well, tyler, lennar's numbers were an early prem niflgts new home sales numbers we got for may a few hours later. take a look contracts to buy newly built homes rose over 2% month-to-month to a seasonally adjusted rate to 476,000 annually. that's up 29% from a year ago. the bigger number for the builders was home prices, up 10% from a year ago. this is a big positive given that mortgage rates did start to pick up in may when buyers who have been putting the contracts together on these sales. the latest reading on home prices for the nation's top markets set new records in april which was before mortgage rates started to rise. the top ten and top 20 u.s. housing markets saw gains of 11.6 and 12.1% from a year ago on the s&p case-shiller index. we saw record monthly gains seasonally adjusted with all 20 markets in the positive. now, going forward, you will see more sellers listing their homes as prices rise and more buyers are looking to get in fast as rates rise. construct

diana olick joins us from washington with that story. diana? >> see, you gave it away right there. steam, along with home prices and lenders are finding a market for these loans. private-labelled jumbo backed mortgages are back. chase mortgage began issuing the securities this year. its ceo telling me this morning that as fannie and freddie charge banks ever-higher fees, private investor deals are becoming more attractive. >> we think over time it's important that private capital gets back into the mortgage business. and as guaranteed fees have continued to increase over the last couple of years, the economics are right to start to bring that private capital back into the mortgage market. >> now, the number of loans -- jumbo loans originated in the first quarter of this year was up 15% over a year ago, but the number of loans securitized by lenders up 400%. it's still a small share of the $54 billion in jumbo loans made just $4 billion sold by lenders. but that is expected to grow. now, banks are still holding the majority of jumbo loans on their books. largely because demand is st

diana olick is here with the story. >> home prices have been soaring lately, largely due to that lackfor sale amid riding demand. but now new numbers are pointing to a shift. number of listings on zillow down 12% from a year ago but less than a 17.5% drop in january. now listings in all major markets are still down. but the drops improved in 70 metro markets between january and june with the biggest gains in phoenix, san diego, minneapolis. some of them uf over 30 percentage points. on the flip side, supplies tightened in las vegas, chicago, here in d.c. down 10 percentage points. the biggest drops in inventory are higher priced homes. bottom tier properties are close to seeing gains. this may be due to a rise in bank repossessions. foreclosure activity is down from a year ago. bank repossessions jumped 11% from may -- in may from april, according to a new report from realty track. 33 states saw the rise with some quite dramatic, as you can see. >> i think this is the leading edge of a trend. we're not going to see bank repossessions as high as we saw in at the peak of this in septemb

diana olick from washington. >> a sudden rise in bank repossessions the final stage of foreclosure whenbank takes back your home, has analysts pointing to rising home prices. this may be the leading edge of a trend that puts those rising prices in reverse. >> you have an environment now with rising home prices in most markets that gives the banks more incentive to go ahead and foreclose on these homes because they know they can turn around, sell them quickly, and for a price that's higher than what they would have been able to sell for a year ago. >> overall foreclosure activity is down from a year ago, bank repossessions jumped 11% in april. 33 states saw the rise with some quite dramatic as you can see here, also foreclosure starts, that is the beginning of the process, also rose in may, month to month. and up from a year ago in 14 states, particularly states that either use a judge in the process or have new laws surrounding foreclosures like maryland, new jersey, and nevada. it also points to pipeline of distressed properties moving faster. there are close to 3 million homes either

diana olick is here to break it all down for us. diana? >> reporter: numbers are all defying expectations, but i'm hearing that word again a lot that i used to hear in 2006. unsustainable starting with the builders, who are doing better but frankly should be building more given the red hot demand. contracts to buy newly built homes rose over 2% month over month to a seasonally adjusted annual rate of 476k. that's up 29% from a year ago. still, with housing demand at around 1.3 million, the builders could do more. builders were able to raise prices up 10% from a year ago, despite rising rates, but, remember, rates didn't really spike until the end of may. now, to home prices. the latest reading on home prices in the nation's top 20 markets set new records in april which was before mortgage rates started to rise again. the top 10 and 20 markets so gains of 11.6 and 12.1% from a year ago, that from the case-shiller index. report mondayly gains softballbly adjusted and now comes the caveat. these numbers look backward before rates spiked, and

diana olick is in the house and steve liesman joins the party as well. ay here and what do housing sources tell you about that sector's ability to withstand these higher interest rates? >> well, look, it will hit on the bottom line first for first time home buyers. they will be hardest hit because they are relying on a market. one-third of this market is all cash buyers, and when you factor that in and you factor in the fact that they are competing against investors, those first time buyers. the rest of the market, i'm not so sure that interest rates are worse than rising home prices. we have seen a spike in home prices because of low inventories and that's a far bigger deal than rising mortgage rates. >> going up a lot. >> the medium price. anywhere from the stress or not. >> people are use the word bubble and i'm hearing that word, unsustainable. >> they were using that word in 2006 but nobody seems to believe it back then. everybody thought they would keep going back up. >> what's your take on housing? >> there's housing affordability index that looks

diana olick, you know what, a lot of people are talking about this, and the old adage of maybe historyeats itself and we never learn from our mistakes. >> reporter: well, that's right, mandy. don't even have to go further than our observe shops. "street signs" producer tells us she has gotten seven calls from quicken loans offering her adjustable rate mortgages. a.r.m.s do have lower rates and can be interest only. the rate on 309-year fixed surged to around 4.5%. lenders said they started seeing more request for more option loan products. home prices are rising along with rates, and this has potential buyers watching every basis point >> for us over the last probably week or two we've seen our a.r.m. production double because folks are actually looking at it and saying to themselves i have a 30-year fixed rate that's gone up maybe to a 4.5% range and i can look at a seven-year or a ten-year adjustable that would have a half to three-quarters of a percent lower interest rate. >> now, california home buyer alicia deadericks has been working to buy a home quickly. a job move forced her a

even the prospect of rising interest rates already having an impact on housing, and as diana olick reports for us, the effects in some cases are exactly what you would think, but in others, a very different result. >> reporter: bill, fears about what the fed chairman will say next week about interest rates has mortgage rates continuing to rise. the 30-year fixed conforming loan hit 4.15% last week, up 3.59% at the beginning of may. that's a 14-month high. while that has pushed refinance applications down 36% in a month, purchase applications fell just under 2%. that could be because buyers on the fence are scared rates will go even higher. >> it's the equivalent of a price increase. it creates urgency. we're actually seeing more sales now because rates are beginning to creep up very slowly. and if that continues, and if we stay in a manageable range, we'll be fine. >> what's so interesting, though, is that as conforming fannie, fraeddy, and fha loans get more expensive, jumbo loans are getting cheaper. the gap between the two is the narrowest now since before the credit crash. the conformi

diana olick covers that sector and joins us live now from washington. >> hey, that's right. home builders rallying on news that home builder sentiment hit a seven-year high in june, jumped eight points on the national association index. the first time it's been in positive territory, that is, above 50 on the index, since april of 2006. the eight-point jump is also the biggest one-month gain since 2002. we just showed you the stocks of the big builders like lennar, d.r. horton and pulti to the upside. no mention in this report of rising mortgage rates. we'll watch for that going forward. all three components of the index saw gains. current sales conditions up eight points and sales expectations up nine points and buyer traffic up seven point. only the last one, buyer traffic, is still in negative territory or under 50 on the index. now, confidence rose in much of the country, particularly strongly in the south. it did, however, slip in the west. supplies of existing homes are rising in some western markets, and prices are particularly strong in california. now, confidence is

. >> that's the question and let's pick that up with diana olick who joins us live. ce april of 2012 and it's the biggest one-week jump since july 2011 and that all according to the mortgage bankers association and look at just how far we've come in the past month. the 30-year fixed jumped 30 bases points from last week to average 4.07% and rates are now up 48 basis points in the past four weeks thanks to concerns that the fed will stop buying mortgage-backed securities sooner than expected and it's currently buying $85 billion a month in mbs. the higher rates, of course, refis down 15% last week to their lowest level since november of 2011. they now make up just 68% of all mortgage applications and that had been up in the high 80s when rates were lowest. applications to purchase a home down just under 2%, but with buyers coming back to the market, suddenly rising rates are not exactly what we needed in this market. the chief economist for quicken loans saying this morning that homebuyers were potentially shocked by this rise in rates and that's why we saw the big dro

diana olick is on the story. what's the latest data?> a gain but largely for multi-family apartment buildings. single-family housing starts flat in may despite very tight supply of homes for sale. builders are faced with a shortage of land and enticed by the ability to raise prices dramatically. >> the recovery has been very concentrated in the best area. builders are deliberately metering out their sales pace and land because land is so precious. not the recovery in the outskirts and periphery where you'll see more volume growth as we move forward. >> the real gains in may were, again in, multi-families. starts rose 25% month to month and were up 69% as rental demand continues to be strong. single families start up .3% and up 16% from a year ago. permits though were healthier. single families rise together highest level since 2008 while multi-family took a little breather. the good news is we do need more housing. construction jobs should be more plentiful in the future and what's not plentiful is the land and the financing for it. >>

i'm diana olick. [ female announcer ] there's one thing dave's always wanted to do when he retires -- keep working, but for himself. so as his financial advisor, i took a look at everything he has. the 401(k). insurance policies. even money he's invested elsewhere. we're building a retirement plan to help him launch a second career. dave's flight school. go dave. when people talk, great things can happen. so start a conversation with an advisor who's fully invested in you. wells fargo advisors. together we'll go far. >>> we're kag it the dumbest smartphone ever collecting 11,000 smartphones during couture week in paris. they are made with 18 karat gold and blue ostrich and black alligator and, of course, diamonds but one of the most expensive on the list is calling the black insane mold set with 75 baguette cut diamonds and costs almost $100,000 for the person who has everything, and in the meantime, talking of luxury goods, check out gold, posting its worst quarter since at least the 1970s. i bet gold bugs are glad we're closing out this quarter. >> definitely are and looking at gold

our real estate expert diana olick has the answer on that one. >>> also today on "power lunch," thisthe state of the economy and his thoughts on what will happen if the fed pulls back. michelle is down there and talking to him. >>> and a worldwide travel warning. if you need to fly, you need to watch this report and then check

and diana olick is live in washington with all of the results. nd rebounding, but not as large as expected and mostly on the back of multi-family housing. you have to parse them out. multi-families rose, and up 69% from a year ago and sing lsing m single-family starts are flat, up zero% month to month, and up 16% from last year. this morning, it was revealed that we are below the 1991 recession trough and around the 1981 recession trough, and of course, the populations were much smaller back then. permits with healthier, and single-family rising to the highest level since 2008, and multi-family took a breather. the good news is that we need more housing so construction jobs should be plentiful in the near future, and the home builders are con fident as we sw in to a report yesterday, but it is not translating to a big family start, and this as existing supplies of homes are way off from where they should be. looking at the supply crunch, look at california for example in may, the height of the spring sales season, and there is a 2.6 months supply

more on the housing report from diana olick and she has the full numbers for us, and what more can you> a big bead on the 2.4 increase and looking for under 1%, but it up 12.9% since a year ago and november of 2009 which is before the expiration of the first time home buyer tax credit. the median price came in $208,000 even up 15.4% a year ago and the highest since july of 2008. remember, this is partially due to a mix of home situation, and when you look at the median which is the middle of what is selling below and above, the homes priced on the lowest ends are down 10% from a year ago and the homes priced more expensively are way up from year ago and shifting the median price higher, and you are seeing low supplies of homes for sale, and the realtors are calling the price increases unsustainable, and say given the increases in the employment and the wage, it is clearly unsustainable to have a 15.4% price increase year over year. we are looking at the inventories up slightly, 3.3% to 2.22 million houses for sale which represents a 5.1% supply, and the days on market are shrinking dra

we want to bring in diana olick, and steve liesman, and start with this number on the homes? i am looking at is prices. we have been talking about the prices all morning with case-shiller and the prices for new homes jumped 10% from a year ago and the year over year and look year over year and not month to month, because they ease slightly. what is interesting is that the home builders have been increasing the prices a lot, and also slowing the sales of the lots in order to gain the pricing power. remember, this number is signed contracts in may and not closing numbers like the existing sales so this is the indicator on rising mortgage rates because they were rising in may, and they apparently kept the prices up over 10% which is a good sign for the builders going forward, but the skwe will that change as we see the rates jumping more in june, and we will see the signed contracts. again, the month supply is still lean, but the builders themselves have been admitting that they are slowing sales of lots and slowing production in order the gain the pricing power. so overall, a g

she is going to reveal it after we get a look first up, diana olick and jane wells taking us lou millionto this summer home that sits on about a quarter of an acre. it's not really the house you are paying for. it's straight down the garden path about 100 yard. the beach. this 20-year-old timber frame home on nearly 4 achers is one of the least expensive in the zip code, wide opened spaces, 10 miles from a famous resort town an some of the most spectacular scenery in the world in a state with no personal income taxes. the house boasts 2,000 square feet of living space, a roomy kitchen and a gorgeous wrap-around porch to watch sunburn rise before you set out t. house or should i say cabin is 3,900 square feet, cathedral ceilings. wood fireplace, views out of every room, western accents throughout, and the kitchen the size of new york city apartments. you will have no trouble finding room for your guests, you will want to stay here in the owner's suite, when you open the doors to the private terrace the sound of the ocean comes rolling in. the house has four bedrooms, three baths, plus a b

our diana olick is here to explain. good morning. >> good morning. you're right.it every buyer and every deal in the same way. let's take a look at where rates have gone. on the 30-year fixed we were at 4.15% last week. that's up from 3.59% at the beginning of may. that's a 14-month high. while that has pushed refinances down 36% in a month, purchase applications are only down just about 2%. but rates actually mean nothing to a large segment of the buying population. 32% of buyers in april were all cash up from 29% a year ago. that is no mortgage. and that's the latest reading from the national association of realtors before the rates really started to spike in may. they are keeping the low end, that is the distressed end of the market going. around 20% of the market still investors, again, who largely use cash. now, let's focus in on california. a big investor market where sales are now surging. the typical mortgage payment that home buyers committed to last month was $1,227 and that was up from $1,157 in april and up from just $1,006 a year earlier according to

and pending across the top is tieian na olick wi-- diana olic that. >> yes, that is right.pril figure from the national association of real estate and that is a big beat. pending home sales up 12.1% from a year ago. remember, these are contracts sign and not closing. so the contracts buying the contracts and existing homes in may, and it is the rising mortgage rates that you just talked about that may be getting a lot of people off of the fence and into the home sales contract, because they are af r afraid that the rates will go higher. the biggest spike in rates was in june and not may. so these contracts signed before the rates hit the highs, and across the nation, the pending sales index was flat. jumped up 16% out west, and 10.2% in the midwest. and it is only up 1% from the west, because there is such little supply there, and that is why the home prices are rising dramatically out west, but a big beat on the pending sales index, and likely due to people who are afraid that mortgage rates would go higher in june, and just as you said, they did. carl. >> diana, thank you