Owners Question Appraised Values: Too Low?

Homeowners say their homes are worth more than what appraisers say they’re worth, and the gap between the values is growing, according to Quicken Loans’ latest Home Price Perception Index.

Appraisals, on average, were 1.77 percent lower than what homeowners expected, according to the index. This marks the fourth consecutive month in which the gap between homeowner estimates and appraiser opinions has widened.

That said, appraisals are showing higher values than what homeowners expected in some of the hottest housing markets, mainly on the West Coast, according to the index reading for March.

Source: Quicken Loans

‘Mortgage Rates Surprise’ They Near 2017 Low!

tThe 30-year fixed-rate mortgage dropped lower for the third consecutive week and neared its low for 2017, Freddie Mac reports in its weekly mortgage market survey.

“After three straight weeks of declines, the 30-year mortgage rate is now barely above the 2017 low. Next week’s survey rate may be determined by Friday’s employment report and whether or not it can sustain the strength from earlier this year.” says Sean Becketti, Freddie Mac’s chief economist.

Freddie Mac reported the following national averages for the week ending April 6, 2017:

30-year fixed-rate mortgages: averaged 4.10 percent, with an average 0.5 point, falling from last week’s 4.14 percent average. Last year at this time, 30-year rates averaged 3.59 percent.
15-year fixed-rate mortgages: averaged 3.36 percent, with an average 0.5 point, dropping from last week’s 3.39 percent average. A year ago, 15-year rates averaged 2.88 percent.

Source: Freddie Mac

Loan Activity Constrained by Prices, Inventory

A decrease in refinancing activity—due to the uptick in mortgage rates since November 2016—has curtailed overall mortgage application activity in recent weeks. It’s again what was behind the 1.6 percent drop in total mortgage applications last week, says the Mortgage Bankers Association.

Applications for refinances dropped 4 percent last week and are now 33 percent below a year ago.

Meanwhile, applications for home purchases are performing much stronger, rising 1 percent last week and now 8 percent higher than a year ago. Housing analysts say that purchase activity could be much higher, if it weren’t for high prices and a tight supply of homes for-sale in many markets.

Mortgage rates haven’t fluctuated too much over the past few weeks, giving borrowers a temporary reprieve. The average 30-year fixed-rate mortgage was 4.34 percent last week, up slightly from 4.33 percent the week prior.

Source: “Mortgage Applications Fall 1.6%, But Average Loan Size Hits Record High,” CNBC (April 5, 2017)

Company Offers Workers a ‘Delocation’ Package

Companies commonly offer relocation packages for employees who must move for a job, but one firm is providing its workers a “delocation” package—in which they’ll pay employees to move anywhere.

Zapier, a company producing workflow automation tools, says it’s offering the package to new employees living in the San Francisco area in hopes of expanding into new markets in the near future. New employees can choose the city that best fits their needs, and the company will reimburse up to $10,000 in moving expenses incurred during the first three months of work.

“When we first started hiring, we simply hired the best people in our networks—which happened to be outside of Silicon Valley because we’re originally from the Midwest—and the remote aspect continued,” says Wade Foster, CEO of Zapier. The company now has 80-plus employees who all work remotely across 13 countries and 22 states, Foster says. “We found a business model that works for us and incentivizes the best talent to live and work anywhere in the world.”

Source: “This Company Will Pay You to Relocate Wherever You Want,” Forbes.com (April 2, 2017)

Homeowners Don’t Want Cookie-Cutter Lawns

Homeowners are focused on making changes to their front yards so they’re markedly different from their neighbors’ yards and easier to maintain, finds the 2017 U.S. Houzz Landscaping Trends Survey.

Homeowners want their yards to look distinct. Only 6 percent of homeowners reported front yards that were nearly identical to those in the neighborhood after their outdoor project, compared to more than a third before the update (36 percent), the Houzz survey shows. Two in five owners say they wanted to make a statement with a new front yard that was “very” or “extremely” different from others in the neighborhood following their update.

More homeowners are turning to low-maintenance plants to enhance their front yards, along with native plants and those that attract insects and birds. More than half of those who updated their front yard say that beds or borders, shrubs, and perennials were the most important to improving curb appeal.

Source: “2017 U.S. Houzz Landscaping Trends Survey,” Houzz (March 29, 2017)

ARMs Rise in Popularity as Rates Increase

More borrowers are turning to shorter-term adjustable-rate mortgages as interest rates rise, but that may be a riskier move than your clients realize. While these mortgages offer lower interest rates, the rates reset after a certain preset time. Still, a five-year hybrid adjustable-rate mortgage averaged a 3.28 percent rate last week compared to 4.30 for the 30-year fixed-rate mortgage, according to Freddie Mac’s weekly mortgage market survey.

The share of ARMs in total mortgage application volume has doubled to 9 percent since November 2016. The highest level of ARM applications since October 2014. “Home buyers in a strong housing market are looking for ways to extend their purchasing power, and ARMs are one way to do that,” says Mike Fratantoni, chief economist for the Mortgage Bankers Association. “While the ARM share got as high as 35 percent pre-crisis, it is really unlikely it will get nearly as high now, given [new] regulations, which effectively prohibit many types of ARMs that were prevalent then.”

Source: “Mortgage Applications Fall 2.7%, as Borrowers Turn to Riskier Loans,” CNBC (March 22, 2017)

Which Is the Best Home Security System?

Your clients may have questions about home security systems. If so, Reviews.com has compiled a thorough list of the best home security systems, based on studies and surveys entailing installation, customer reviews, costs, and reliability.

Review.com’s analysis recognized the following brands in the following categories:

Best for recognizability and professional installation: ADT
Best technology and mobile app: Vivint
Best for low upfront cost and initial phone call: Protect America
Best for customer service and businesses: Protection 1
Best for overall reputation, customization, and DIY installation: Frontpoint
Best for all-around value: Link Interactive
Best for flexibility and easiest barrier to entry: SimpliSafe

Source: “Best Home Security System,” Reviews.com (Feb. 1, 2017)

Home Loan ‘Interest Rates Move Higher’

As expected, the FOMC announced its first rate hike of 2017 and hinted at additional increases throughout the remainder of the year. Although our survey was conducted prior to the Fed’s decision, the release of the February jobs report all but guaranteed a rate hike and boosted the 30-year mortgage rate this week. Increasing inflation, continued gains in the labor market and the Fed’s intentions for further rate increases—all three will keep pushing mortgage rates up this year.

Freddie Mac reports the following national averages rates for the week ending March 17:

’30-year fixed-rate mortgage’ (FRM) averaged 4.30 percent with an average 0.5 point for the week ending March 16, 2017, up from last week when it averaged 4.21 percent. A year ago at this time, the 30-year FRM averaged 3.73 percent.
’15-year fixed-rate mortgage’ (FRM) this week averaged 3.50 percent with an average 0.5 point, up from last week when it averaged 3.42 percent. A year ago at this time, the 15-year FRM averaged 2.99 percent.

Source: Freddie Mac

Fed Votes to Raise Rates: The Housing Impact?

The Federal Reserve is picking up the pace, voting on Wednesday to raise its key interest rate just three months after its last rate hike. The Fed announced that short-term interest rates will increase by one-quarter of a percentage point and suggested that two similar increases likely will occur later this year. Mortgage rates aren’t directly tied to the Fed’s short-term interest rates but tend to follow them.

As of Tuesday, the 30-year fixed-rate mortgage averaged 4.39 percent, according to Mortgage News Daily. Last summer, rates were near record lows of 3.44 percent.

“Rising inflation will predominantly dictate the next monetary policy decision, but another short-term rate hike should be expected by the end of the summer,” Lawrence Yun, the chief economist of the National Association of REALTORS®, notes at the association’s Economists’ Outlook blog. “Right now, rents and housing costs are increasing faster than other components because of the stubborn housing shortages in much of the U.S. To contain inflation and slow the pace of future rate hikes, more home construction is needed now.”

Source: “How the Fed’s Latest Move Is Expected to Hurt Buyers,” realtor.com® (March 15, 2017) and “Fed Quickens Pace, Raises Rate 3 Months After Last Hike,” RISMedia (March 15, 2017)

What Has Analysts Worried With FHA Loans?

The number of riskier mortgages is growing, which is increasing delinquencies—albeit slightly—and raising concerns about defaults, USA Today reports. Federal Housing Administration loans, which typically require down payments of 3 percent to 5 percent, are at the center of most of the concern.

FHA-backed loans are becoming more available through non-banker lenders, who have in some cases eased credit standards compared to banks.

The big concern to many economists is if home prices peak and then decrease, homeowners who made a down payment of just 5 percent and are less creditworthy may be more likely to default.

But non-bank lenders say the loosening of FHA standards is a welcome sign and not one to fear. Your comments?

Source: “Concerns About Riskier Mortgages Are Sprouting,” USA Today (March 12, 2017)