Have We Seen the Last of 3% Mortgage Rates?

Average interest rates rose for the second consecutive week for the first time since last summer, the 30-year fixed-rate mortgage shot above 4 percent, Freddie Mac reports in its weekly survey.

“This is the highest weekly average for the 30-year fixed-rate mortgage since May of 2017,” says Len Kiefer, Freddie Mac’s deputy chief economist. “Inflation is firming, the Federal Reserve’s Beige Book indicates broad-based economic growth, and labor markets are tightening. This means upward pressure on long-term rates, like the 30-year fixed-rate mortgage, is building.”

Freddie Mac reports the following national averages for the week ending Jan. 18:

  • 30-year fixed-rate mortgages: averaged 4.04 percent, with an average 0.6 point, up from last week’s 3.99 percent average. Last year at this time, 30-year rates averaged 4.09 percent.
  • 15-year fixed-rate mortgages: averaged 3.49 percent, with an average 0.5 point, increasing from last week’s 3.44 percent average. A year ago, 15-year rates averaged 3.34 percent.

Source: Freddie Mac

Foreclosed Homes Dip to 12-Year Low

Foreclosures hit a 12-year low in 2017, and the distressed properties remain increasingly difficult to find in many markets. Foreclosure filings in 2017—which include default notices, scheduled auctions, and bank repossessions—dropped to the lowest level since 2005.

Foreclosure starts are at a new record low nationwide. Lenders started the foreclosure process on 383,701 properties in 2017, down a whopping 82 percent from a peak of more than 2 million in 2009. That marks a new all-time low for foreclosure start data since ATTOM Data Solutions began collecting such data in 2006.

Source: DAILY REAL ESTATE NEWS | THURSDAY, JANUARY 18, 2018

Builders Reveal Top 10 Biggest Concerns

Homebuilding is still falling short in many markets in alleviating the shrinking inventories of homes for sale. But builders are blaming the construction shortfall on several factors.

Builders revealed the following top 10 “significant” increases in cost problems they expect to face in 2018, according to the National Association of Home Builders and Wells Fargo Housing Market Index:

  1. Cost/availability of labor: 84%
  2. Building material prices: 84%
  3. Cost/availability of developed lots: 62%
  4. Impact/hook up/inspection or other fees: 60%
  5. Local/state environment regulations and policies: 45%
  6. Inaccurate appraisals: 42%
  7. Federal environment regulations and policies: 42%
  8. Difficulty obtaining zoning/permit approval: 42%
  9. Gridlock/uncertainty in Washington making buyers cautious: 42%
  10. Development standards (parling, setbacks, etc.): 38%

Source: “Building Materials Prices and Labor Access Top Challenges for 2018,” National Association of Home Builders’ Eye on Housing blog (Jan. 16, 2018)

‘Aging in Place’ Begins Early: Report

Homeowners are getting older, and to continue on in their current house, improvements are necessary.

Homeowners at an earlier stage, aged 55-75, are also making modifications, but not necessarily due to aging concerns (though they are, fortuitously, ideal for just that). These include adding automated features like a programmable thermostat or voice activation, and, in bathrooms, grab bars and higher toilets. According to a HomeAdvisor report. The most common remodels, the report shows:

 

  • Add Lever-Style Doorknobs
  • Add Pull-Out Shelves
  • Add a Smart Fire Detection System
  • Add a Smart Security System
  • Replace Stone/Tile With Carpet/Wood

Other key improvements to consider, the report shows:

  • Lighting
  • Modifications in Shower (Bench, threshold)
  • Moving Master Bedroom to First Floor
  • Ramps
  • Wider Doorways

Source: HomeAdvisor

 

 

Retirees Still Face Years of Mortgage Payments

Fewer retirees own their home free and clear, as 32 percent of homeowners ages 60 to 70 say it will take them more than another eight years to pay off their mortgage, according to American Financing’s Retirement and Mortgages survey.

However, many say they intend to age in place, with 64 percent indicating they plan to remain in their current home. Seventy-one percent say they would prefer to make home renovations rather than move, even if a health issue affected their mobility and comfort at home. However, 48 percent say they are unsure what they would do if their retirement funds ran low, making modifications questionable?

“With so many older Americans carrying mortgage debt with them later in life—and many expressing uncertainty about their financial future—this could very well prove to be an increasing concern among retirees,” according to American Financing’s report. It highlights several options for retirees, such as refinancing a mortgage or reverse mortgages. The report showed that only 19 percent of respondents knew what a reverse mortgage is.

Source: “Does Your Mortgage Retire With You?” American Financing (2018)

Mortgage Rates Ring in New Year With a Dip

Borrowers kicked off 2018 with a mortgage rate drop.  The 30-year fixed-rate mortgage is now down a quarter of a percentage point from a year ago.

“The 30-year fixed-rate mortgage fell four basis points from a week ago to 3.95 percent in the year’s first survey. Despite increases in short-term interest rates, long-term interest rates remain subdued.”  says Len Kiefer, Freddie Mac’s deputy chief economist.

Freddie Mac reports the following national averages for the week ending Jan. 4:

  • 30-year fixed-rate mortgages: averaged 3.95 percent, with an average 0.5 point, dropping from last week’s 3.99 percent average. Last year at this time, 30-year rates averaged 4.20 percent.
  • 15-year fixed-rate mortgages: averaged 3.38 percent, with an average 0.5 point, dropping from last week’s 3.44 percent average. A year ago, 15-year ARMs averaged 3.44 percent.

Source: Freddie Mac

Prepay Property Taxes Before Losing Benefits

With tax reform signed into law, homeowners in areas with high property taxes are scrambling to prepay their 2018 tax bill in order to take advantage of deductions that will curtailed once the legislation takes effect Jan. 1. The new tax law, which Congress passed and President Donald Trump signed, caps the amount of state, local, and property taxes that homeowners can deduct at $10,000.

However, there’s no guarantee homeowners who prepay their 2018 property taxes will be able to deduct the payment. On Wednesday, the IRS posted an advisory notice that said prepaying property taxes will work only under limited circumstances. To qualify for the deduction, property taxes will need to be paid in 2017—but they also must be assessed in 2017, The New York Times reports.

Source: “Homeowners Scramble to Pre-Pay Property Taxes,” CNNMoney (Dec. 27, 2017) and “Prepaying Your Property Tax? IRS Cautions It Might Not Pay Off,” The New York Times (Dec. 27, 2017)

Home Loan Interest Rates Up Slightly This Week

“Thirty-year fixed mortgage rates have been bouncing around in a narrow 10 basis points range since October,” says Len Kiefer, Freddie Mac’s chief economist. “The U.S. average 30-year fixed mortgage rate increased 1 basis point to 3.94 percent in this week’s survey. The majority of our survey was completed prior to the surge in long-term interest rates that followed the passage of the tax bill. If those rate increases stick, we’ll likely see higher mortgage rates in next week’s survey.”

Freddie Mac reports the following national averages for the week ending Dec. 21:

  • 30-year fixed-rate mortgages: averaged 3.94 percent, with an average 0.5 point, rising from last week’s 3.93 percent average. Last year at this time, 30-year-rates averaged 4.30 percent.
  • 15-year fixed-rate mortgages: averaged 3.38 percent, with an average 0.5 point, increasing from last week’s 3.36 percent average. A year ago, 15-year rates averaged 3.52 percent.

Source: Freddie Mac

Insurers Could Drop Fire Coverage in California

California wildfires continue to scorch the Golden State’s southern cities, and now officials in the state fear that some insurers will drop homeowners’ coverage.

Wildfires in Southern California and earlier this fall in northern California have resulted in billions of dollars in claims. In the Sierra Nevada foothills, many homes were dropped after wildfires swept through in recent years, and some northern California homes also have seen their coverage dropped, California Insurance Commissioner Dave Jones told Reuters.

“We may see more of it,” Jones cautions.   Wow, don’t most insurance companies cover more than just California?

PS: Insurers are required to renew fire victims’ policies once. After that, homeowners could then be forced to go to specialty insurers, known as “surplus line carriers.”  Those policies can sometimes cost up to 40 percent more!

Source: “As California Fires Blaze, Homeowners Fear Losing Insurance,” Reuters/CNBC (Dec. 18, 2017)

Despite Fed Move, Mortgage Rates Hold Steady

Great News!  Mortgage rates were in a holding pattern this week, even after the Federal Reserve voted Wednesday to hike its benchmark interest rate.

“As widely expected, the Fed increased the federal funds target rate this week for the third time in 2017,” says Len Kiefer, Freddie Mac’s deputy chief economist. “The market had already priced in the rate hike, so long-term interest rates—including mortgage rates—hardly moved.”

Freddie Mac reports the following national averages for the week ending Dec. 14:

  • 30-year fixed-rate mortgages: averaged 3.93 percent, with an average 0.5 point, dropping from last week’s 3.94 percent average. Last year at this time, 30-year rates averaged 4.16 percent.
  • 15-year fixed-rate mortgages: averaged 3.36 percent, with an average 0.5 point, the same as last week. A year ago, 15-year rates averaged 3.37 percent.

Source: Freddie Mac