Mortgage Rates Drop

“Mortgage rates fell to the lowest level in thirteen weeks, as investors sought the quality and safety of the U.S. Treasury fixed income markets,” said Sam Khater, Freddie Mac’s Chief Economist. “The drop in mortgage rates, combined with the strong labor market, should propel a continued rise in homebuyer demand.”

News Facts:

  • 30-year fixed-rate mortgage averaged 3.64 percent with an average 0.7 point for the week ending January 9, 2020, down from last week when it averaged 3.72 percent. A year ago at this time, the 30-year FRM averaged 4.45 percent.
  • 15-year fixed-rate mortgage averaged 3.07 percent with an average 0.7 point, down from last week when it averaged 3.16 percent. A year ago at this time, the 15-year FRM averaged 3.89 percent.

Source: Freddie Mac

Home Flipping Is Losing Fans

Home flipping plunged 12.9% in the third quarter of this year, following an unusually active spring, according to ATTOM Data Solutions’ latest U.S. Home Flipping Report. In the third quarter, 56,566 single-family homes and condos were flipped, down 6.8% from a year ago. This marks the largest quarterly and annual drops in home flipping activity since the third quarter of 2014.

“After a springtime selling binge earlier this year, the home flipping business settled way down over the summer amid a continuing scenario of languishing profits,” says Todd Teta, chief product officer at ATTOM Data Solutions. “The retreat back to more normal levels of sales comes amid broader market forces that are making it harder and harder for investors to complete the kind of deals they were getting as recently as last year. Those forces are keeping profits way down from postrecession highs and show no signs of easing.”

Source: ATTOM Data Solutions

Specialty Rooms Are in Demand

home shoppers—particularly millennials—are ranking specialty rooms high on their priority list during their search. These rooms include laundry rooms, home offices, mud rooms, sun rooms, and more. The National Association of Home Builders surveyed buyers to find which of these rooms rank highest on their lists. The NAHB considers specialty rooms anything except bedrooms, bathrooms, or the kitchen—or what’s considered the essentials in a home.

Millennials also showed a strong preference for an exercise room (with 57% wanting one). But that preference tended to wane with age. For comparison, 50% of Gen Xers said they wanted an exercise room, 32% of baby boomers, and only 17% of seniors. Millennials also expressed an interest in media and game rooms and two-story entry foyers, more so than other age groups.

Source: “Specialty Rooms Wanted by Millennial Home Buyers,” National Association of Home Builders’ Eye on Housing blog (Dec. 5, 2019)

Growth of the Backyard Bungalow

Accessory dwelling units are popping up in more backyards, CNBC reports. These standalone housing units are either serving as rentals to generate extra income for homeowners or extra space for aging parents or adult children who move back home. The growing interest in ADUs has sparked changes to local and state zoning rules to allow for more construction. Some communities are even pointing to ADUs as a solution for a lack of affordable housing.

“ADU is still, for the most part, an affluent homeowner product, meaning you have to have cash on hand to take this on,” Steve Vallejos, CEO of Prefab ADU, told CNBC. His company’s most popular ADU model is a 288-square-foot home that costs about $105,000 to build. ADUs are “addressing financing, it’s addressing standardizing products within cities, and then also it’s creating partner relationships with contractors, architects, and even other builders,” Vallejos says. “There are many different scenarios that people look into based on income, lot size, different zoning rules—so we build ADUs that start at about 150 square feet up to 1,200 square feet.”

HUD Expands Affordable Housing

The U.S. Department of Housing and Urban Development announced this week that it is allocating $112 million to expand the supply of permanent affordable housing to low-income people with disabilities. Funding is available through the Section 811 program.

About half of the new funding will go toward the development of new supportive housing for people with disabilities. About $37 million also will go toward rental assistance, through eligible housing agencies.

“Very simply, we need more permanent supportive housing to assist people living with disabilities,” says HUD Secretary Ben Carson. “The funding will support existing developments and, for the first time in nearly a decade, help to produce new affordable housing at a time we need it the most.”

Source: HUD.gov

Home Loan Rates Remain Low!

“Mortgage rates continued the summer swoon due to weaker economic data,” says Sam Khater, Freddie Mac’s chief economist. “While economic growth is clearly slowing due to rising manufacturing and trade headwinds, economic fundamentals are still solid for U.S. consumers. The unemployment rate is low, housing affordability is improving, home buyer demand is rising, and home price growth is stable.”

Freddie Mac reports the following national averages for the week ending Sept. 5:

  • 30-year fixed-rate mortgages: averaged 3.49%, with an average 0.5 point, falling from last week’s 3.58% average. Last year at this time, they averaged 4.54%.
  • 15-year fixed-rate mortgages: averaged 3%, with an average 0.6 point, dropping from last week’s 3.06% average. A year ago, 15-year rates averaged 3.99%.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.30%, with an average 0.4 point, dropping from last week’s 3.31% average. A year ago, averaged 3.93%.
Source: Freddie Mac

Mortgage Rates Hold Steady

“Mortgage rates inched up slightly this week, closing the month with the 30-year fixed-rate mortgage rate averaging 3.6 percent – almost a full percent from the same time last year. Low mortgage rates along with a strong labor market are fueling the consumer-driven economy by boosting their purchasing power, which will certainly support housing market activity in the coming months,” says Sam Khater, Freddie Mac’s Chief Economist.

Freddie Mac reports the following national averages for the week ending Aug. 29:

  • 30-year fixed-rate mortgage averaged 3.58 percent with an average 0.5 point for the week ending Aug 29, 2019, up from last week when it averaged 3.55 percent. A year ago at this time, the 30-year FRM averaged 4.52 percent.
  • 15-year FRM averaged 3.06 percent with an average 0.5 point, up from last week when it averaged 3.03 percent. A year ago at this time, the 15-year FRM averaged 3.97 percent.

Mortgage Rates at 2016 Territory

The 30-year fixed-rate mortgage averaged 3.55% this week, the lowest average since November 2016, Freddie Mac reports. The lower mortgage rates are boding well for the housing market.

“The drop in mortgage rates continues to stimulate the real estate market and the economy,” says Sam Khater, Freddie Mac’s chief economist. “Home purchase demand is up five percent from a year ago and has noticeably strengthened since the early summer months, while refinances surged to their highest share in three and a half years.”

Freddie Mac reports the following national averages for the week ending Aug. 22:

  • 30-year fixed-rate mortgages: averaged 3.55%, dropping from last week’s 3.60% average. Last year at this time, they averaged 4.51%.
  • 15-year fixed-rate mortgages: averaged 3.03%, with an average 0.5 point, falling from last week’s 3.07% average. A year ago, 15-year rates averaged 3.98%.
Source: Freddie Mac

Refinance & Lower Loan Payments

Mortgage rates are hovering near three-year lows, and more homeowners may want to start taking advantage. Up to 20 million homeowners could “theoretically” see a 75-point drop in mortgage rates by refinancing, according to a recent analysis from Black Knight.

For homeowners with a credit score of at least 720 and with 20% of equity in their property, they could see savings of nearly $270 per month from lower rates.

Homeowners are starting to respond to lower rates. Refinances are at the highest point since mid-2016 and have doubled since late July. Refinances are up 37% over the past week alone, according to the Mortgage Bankers Association.

Rates Hover Near Record Lows

“The sound and fury of the financial markets continue to warn of an impending recession; however, the silver lining is mortgage demand reached a three-year high this week,” says Sam Khater, Freddie Mac’s chief economist. “The decline in mortgage ratesover the last month is causing a spike in refinancing activity—as homeowners currently have $2 trillion in conventional mortgage loans that are in the money—which will help support consumer balance sheets and increase household cash flow. On top of that, purchase demand is up 7% from a year ago.”

Freddie Mac reports the following national averages for the week ending Aug. 15:

  • 30-year fixed-rate mortgages: averaged 3.60%, with an average 0.5 point, unchanged from last week’s average. Last year at this time, 30-year rates averaged 4.53%.
  • 15-year fixed-rate mortgages: averaged 3.07%, with an average 0.5 point, rising from last week’s 3.05% average. A year ago, 15-year rates averaged 4.01%.
Source: Freddie Mac