The 30-year fixed-rate mortgage this week dipped to its lowest level in more than a year, bringing borrowing costs down for home buyers and refinancers.
The 30-year fixed-rate mortgage, the most popular loan among home buyers, averaged 3.80 percent this week, meaning that it has remained below 4 percent for every week except for two since Oct. 16, Freddie Mac reports in its weekly mortgage market survey.
Still, “the temporary decline in rates will likely be short-lived,” says Jonathan Smoke, chief economist at realtor.com®. “Those who can take advantage now and lock in a purchase or refinance at these levels may never see these rates again. This is likely the last of the low rates. We’re likely to see increases in the weeks ahead.”
Freddie Mac reports the following national averages for the week ending Dec. 18:
- 30-year fixed-rate mortgages averaged 3.80 percent, with an average 0.6 point, dropping from last week’s 3.93 percent. The 30-year rate was at its lowest average this week since May 2013. A year ago, 30-year rates averaged 4.47 percent. The 30-year fixed-rate mortgage’s record low was set on Nov. 21, 2012, when it averaged 3.31 percent.
- 15-year fixed-rate mortgages averaged 3.09 percent, with an average 0.6 point, dropping from last week’s 3.20 percent average. Last year at this time, 15-year rates averaged 3.52 percent.
- 5-year hybrid adjustable-rate mortgages averaged 2.95 percent, with an average 0.5 point, dropping from last week’s 2.98 percent average. A year ago, 5-year ARMs averaged 3 percent.
Source: Freddie Mac and “Mortgage Rates Hit Lowest Level of the Year Again,” realtor.com® (Dec. 18, 2014)
The housing market doesn’t hibernate in the winter. Sellers who list and buyers who buy often find the winter season the most advantageous time to make a move in real estate, according to a new study by the real estate brokerage Redfin. The winter season officially takes place between Dec. 21 and March 20, and real estate professionals should be ready for a season that often brings in more focused and active sellers and buyers.
In an update to a two-year analysis it completed last year, Redfin researchers studied nationwide home listings, sales prices, and time-on-market data from 2010 through October 2014.
The winter tends to net sellers’ more than their asking price during the months of December, January, February, and March than listings from June through November. Listing during those four winter months has resulted in higher percentages of above-asking-price sales than listing during any months, other than April and May.
Researchers say the winter market is less competitive for sellers since many people tend to wait until the spring to list. The smaller inventory of active listings help sellers get more attention from buyers on their properties. Also, many large corporations often transfer employees or hire new ones early in the year, creating opportunities for winter sellers from very motivated purchasers.
Source: “Best Time to List a Home for Sale? Winter, Redfin Says,” Los Angeles Times (Dec. 14, 2014)
After four weeks of decreases, the 30-year fixed-rate mortgage inched up slightly this week, but stayed near yearly lows under 4 percent, Freddie Mac reported in its weekly mortgage market survey.
Freddie Mac reported the following national averages for the week ending Dec. 11:
- 30-year fixed-rate mortgages averaged 3.93 percent, with an average 0.5 point, rising from last week’s 3.89 percent average. Last year at this time, 30-year rates averaged 4.42 percent.
- 15-year fixed-rate mortgages averaged 3.20 percent, with an average 0.5 point, rising from last week’s 3.10 percent average. A year ago, 15-year rates averaged 3.43 percent.
- 5-year hybrid adjustable-rate mortgages averaged 2.98 percent, with an average 0.5 point, rising from last week’s 2.94 percent average. Last year at this time, 5-year ARMs averaged 2.94 percent.
Source: Freddie Mac
Seventy percent of adults in the U.S. say they’re unfamiliar with down-payment assistance programs for middle-income home buyers in their community, according to a NeighborWorks America survey of 1,000 people. But plenty of help is available.
NeighborWorks organizations provided 6,000 buyers with more than $100 million in down-payment assistance last year. NeighborWorks expects to increase its assistance this year, too. Many local and state organizations offer down-payment assistance as well, and there are specialized programs for military vets through the Veterans Affairs loan program, for first-time buyers through the Federal Housing Administration, and for rural home buyers through the U.S. Department of Agriculture.
“Down-payment assistance programs make home purchasing more accessible for first-time buyers,” says Marietta Rodriguez, vice president of Homeownership Programs and Lending at NeighborWorks America. “In addition, because many down-payment assistance programs require home-buyer education, these purchasers tend to be more successful in the long-term. Research has shown pre-purchase counseling helps reduce mortgage default and equips home owners with the information they need to budget for other expenses and maintain their property.”
Source: NeighborWorks America
Fannie Mae and Freddie Mac’s new lending guidelines went into effect Monday, which are expected to help loosen up the tight credit standards that home buyers and refinancers have faced in recent years.
The guidelines clarify when lenders will be penalized for making mistakes on mortgages they sell to the mortgage financing giants. Following the financial crisis, Fannie and Freddie forced banks to repurchase tens of billions of dollars in loans that they say did not meet their standards. It caused many lenders to tighten their lending, except to the most creditworthy borrowers with the highest credit scores. Lenders have blamed the lack of clarity from Fannie and Freddie on the tight credit conditions that have made it difficult for home buyers to qualify for a mortgage.
Fannie and Freddie’s latest lender guidance is “going to be big, but it’s going to take time” to see the full impact of the changes, Laurie Goodman, director of the Housing Finance Policy Center at the Urban Institute, told The Wall Street Journal. Earlier this year, the Urban Institute estimated that up to 1.2 million additional home loans would be made annually if mortgage availability was at “normal” levels.
Source: “Mortgage Lenders Set to Relax Standards,” The Wall Street Journal 11/28/14
The Federal Housing Finance Agency announced a new policy that will permit some foreclosed home owners to purchase the homes back that they once had lost at fair market value.
To regain ownership, the ex-owners must be able to pay the full current value of the property, and they still must wait at least three years after their foreclosure to regain ownership, which is required to purchase any home using a Freddie Mac or Fannie Mae–guaranteed loan following a foreclosure.
The FHFA, the regulator of Fannie Mae and Freddie Mac, says the new policy likely will lower the principal on the loans of the former home owners if they elect to buy their former homes back. Prior to the policy, the FHFA had required borrowers who had gone through foreclosure and who wanted to buy back their home to pay the entire debt they owed on the mortgage, even if it was much higher than the home’s current value.
“This is a targeted but important policy change that should help reduce property vacancies and stabilize home values and neighborhoods,” says FHFA Director Melvin L. Watt. “It expands the number of potential buyers of REO properties and is consistent with the enterprises’ practice of requiring fair-market value for those properties.”
The new policy applies only to buyers’ former primary residence. Second homes and investor properties are not eligible.
Source: “Regulator OKs Some Fannie, Freddie Foreclosure Buybacks at Fair Value,” Los Angeles Times (Nov. 25, 2014) and the Federal Housing Finance Agency
Mortgage financing giant Fannie Mae dropped its mortgage rate forecast for next year about two-tenths of a percentage points from its prior forecast, projecting 30-year fixed rates will remain lower than initially thought, at about 4.3 percent next year.
This will cheapen the borrowing costs for home buyers and refinancers, helping to make home ownership more affordable. However, with the forecasted rate drop, Fannie Mae economists didn’t adjust the forecast for total home sales for 2015.
“The housing market continues to grind its way upward, but we don’t expect a breakout performance in 2015 as the fundamentals remain somewhat muted,” says Doug Duncan, Fannie’s chief economist. “We believe that mortgage activity in 2015 will be very similar to 2014.”
But will another year of low rates spur more home buying?
“The relatively lower rates after the spikes of the early 80s did stimulate buying,” says David Crowe, chief economist at the National Association of Home Builders. “This time around, the low rates are still not as low as they [recently] were so the relative advantage is not as great. … [Also] the current situation is much more driven by the availability of mortgage credit than the cost.”
Source: “Fannie Cuts Mortgage-Rate Outlook, But Home Buyers May not Bite,” MarketWatch (Nov. 20, 2014)
Loan demand was on the rise last week, posting a strong rebound that was driven mostly by applications to purchase a home, the Mortgage Bankers Association reports in its seasonally adjusted weekly mortgage market survey, reflecting the week ending Nov. 14. The increase in demand came despite interest rates mostly staying flat for the week.
Total application volume, reflecting applications for home purchases and refinances, climbed nearly 5 percent. Refinance applications rose 1 percent week-to-week, while applications for home purchases, viewed as a gauge of future buying activity, surged 12 percent. It was the highest level for purchase applications since July, the MBA reports.
“The MBA and other data are showing strength in the market for new homes, likely reflecting the boost from continued job growth in recent months,” says Michael Fratantoni, the MBA’s chief economist.
Meanwhile, the 30-year fixed-rate mortgage declined slightly last week to 4.18 percent from 4.19 percent the week prior, the MBA reports.
Source: “Weekly Mortgage Applications Jump Unexpectedly,” CNBC (Nov. 19, 2014)
The 30-year fixed-rate mortgage is hovering around 4 percent. This has been keeping borrowing costs low for refinancers and home buyers for the last few weeks, Freddie Mac reports in its weekly mortgage market survey.
Freddie Mac reported the following national averages for the week ending Nov. 13:
- 30-year fixed-rate mortgages averaged 4.01 percent, with an average 0.5 point, dropping from last week’s 4.02 percent. A year ago, 30-year rates averaged 4.35 percent.
- 15-year fixed-rate mortgages averaged 3.2 percent, with an average 0.5 point, dropping from last week’s 3.21 percent average. Last year at this time, 15-year rates averaged 3.35 percent.
- 5-year hybrid adjustable-rate mortgages averaged 3.02 percent, with an average 0.5. point, rising from last week’s 2.97 percent average. A year ago, 5-year ARMs averaged 3.01 percent.
Source: Freddie Mac
With increased competition for units, rents are shooting up, and the increases are biting renters’ wallets as they find themselves increasingly getting priced out of the market, with wages failing to keep pace.
Nationwide rents have risen about 6 percent from a year ago, due to rising demand and still-limited supply, CNBC reports. Renters in many areas are paying more than 30 percent of their wages on a two-bedroom rental, according to an analysis by Trulia. Financial experts often recommend spending no more than 30 percent of wages on housing expenses (mortgage interest, principal, taxes, insurance).
Rental demand is strong and likely will remain so for the foreseeable future, analysts note. Apartment vacancies rose slightly in the third quarter for the first time in four-and-a-half years, but was mostly attributed to more rental supply coming on the market, according to Reis analytics firm.
“Units brought online during tight market environments have a tendency to actually push rents upward, not downward,” says Ryan Severino, economist at Reis, told CNBC. “So landlords should still be able to push asking rent increases on to their tenants.”
Source: “Rents Skyrocket Well Beyond Wages,” CNBC (Nov. 6, 2014)