Another Week of Mostly Flat Mortgage Rates

Borrowing costs haven’t budged much in recent weeks, offering some relief from the weekly rate increases that had almost become routine at the start of 2018.

“Rates have bounced around 4.4 percent since mid-February. Rates could break out and head higher if inflation continues to firm. … If inflation continues to trend higher, we may see two or three more rate hikes from the Fed this year, and mortgage rates could follow. For now, mortgage rates are still quite low by historical standards, helping to support home buyer affordability as the spring home buying season ramps up.” says Len Kiefer, Freddie Mac’s deputy chief economist.

Freddie Mac reports the following national averages for the week ending April 12:

  • 30-year fixed-rate mortgages averaged 4.42 percent, with an average 0.4 point, up from last week’s 4.40 percent average. Last year at this time, 30-year rates averaged 4.08 percent.
  • 15-year fixed-rate mortgages averaged 3.87 percent, with an average 0.4 point, holding the same average as last week. A year ago, 15-year rates averaged 3.34 percent.

Source: Freddie Mac

Desperate Buyers ‘Snag Homes Sight Unseen’

Some home shoppers are feeling hopeless this spring and making competitive moves in order to get a home. They’re reportedly rushing to making offers without seeing homes first, bidding well above the asking price, or waiving inspections entirely to get sellers to find their offer the most alluring.

Record low supplies of homes for sale are driving up prices across the country.

As for sellers, they may find some big profits when they do sell. “It’s going to have the feel of a hot market” with multiple offers and bidding wars, says Lawrence Yun, the chief economist for the National Association of REALTORS®. Still, Yun expects sales to be flat compared to a year ago due to the shortage of homes for sale as well as reduced affordability for many house hunters.

Source: “Home Buying Market so Brutal, Some Home Buyers Make Offer Sight Unseen,” USA Today (April 5, 2018)

Homeowner Equity Is Hitting a Record High

Homeowners are getting richer, thanks to rising home values. The amount of equity that homeowners can tap into is now at the highest level on record, according to Black Knight Financial Services, a mortgage and finance industry solution provider.

The amount a borrower can take out of a home—while still leaving 20 percent in it—increased by a collective $735 billion during 2017. That is the largest annual increase by dollar value on record, according to Black Knight. The collective amount of tappable equity now stands at $5.4 trillion, 10 percent more than the prerecession peak in 2005.

The amount of homeowner equity varies depending on location. Thirty-nine percent of the nation’s total tappable equity is in California alone. Seattle and Las Vegas have also seen large increases in home equity, Black Knight notes.

Source: “Homeowners Are Sitting on $5.4 Trillion in Ready Cash, the Most Ever,” CNBC (April 2, 2018)

Will ‘Granny Flats’ Resolve Housing Shortages?

Some housing economists believe that “granny flats” could be the key to alleviating housing shortages across the country, and they are calling on more municipalities to ease up the rules to allow such dwellings to be built on or into more single-family homes. Nicknamed “granny flats,” these accessory dwelling units tend to be separate, cottage-like structures, but may be a converted garage or basement that houses an extra living area.

In California, three new zoning laws in 2017 allowed for expanded development of granny flats. California has since seen a 63 percent increase in the number of building permits for these units—more than any other state, according to ATTOM Data Solutions, a real estate data firm. But many counties either still have zoning restrictions that don’t allow these units, or they are making the building permit process difficult.

Source: “Could ‘Granny Flats’ Be the Solution to America’s Affordable-Housing Crisis?” MarketWatch (March 26, 2018)

Mortgage Rates Barely Budge This Week

After last week’s first rate drop of the year, mortgage rates showed little change this week—a welcome sign for the week’s kickoff to the spring home shopping season. But home buyers and borrowers should expect several rate increases over the next few months, economists caution.

“The Federal Reserve raised interest rates [this week]—a much-anticipated move that comes as both U.S. and global economic fundamentals continue to strengthen,” says Len Kiefer, Freddie Mac’s deputy chief economist. “The Fed’s decision to raise interest rates by a quarter of a percentage point puts the federal funds rate at its highest level since 2008. The decision, while widely expected, sent the yield on the benchmark 10-year Treasury soaring.” (Read: Fed Raises Rates: What This Means for Mortgages)

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

  • 30-year fixed-rate mortgages: averaged 4.45 percent, with an average 0.5 point, rising from last week’s 4.44 percent average. Last year at this time, 30-year rates averaged 4.23 percent.
  • 15-year fixed-rate mortgages: averaged 3.91 percent, with an average 0.5 point, rising from last week’s 3.90 percent average. A year ago, 15-year rates averaged 3.44 percent.

Source: Freddie Mac

Homes are a Better Investment than Retirement Savings

Americans want to buy homes and they want to buy them as an investment option. According to a study on homebuyers by NerdWallet, a personal finance website, 75 percent Americans say that buying a home was a priority for them. NerdWallet analyzed data of more than 2,000 adults surveyed, the company’s mortgage calculator, data from the Consumer Financial Protection Bureau (CFPB), and other sources to develop the study on current home buying sentiments, concerns, and outlook.

The study found that most Americans considered buying a home as a good investment with 64 percent of the people surveyed citing this as a reason to buy a home. And it’s not only the older generation that feels this way. Around 56 percent millennials felt that they would rather own a home that appreciated in value than have more money in retirement savings, reflecting the sentiment of 52 percent of the overall people surveyed.

In fact, according to the survey, 82 percent millennials said that buying a home was a priority compared with 75 percent of generation X and 69 percent of baby boomers. Millennials also aspired to buy more homes, on average throughout their lifetime and were most likely to say that they would like to buy a home to rent out for extra income.

Source: dsnews.com/daily-dose/02-01-2018

Mortgage Rates Hit Highest Levels in 6 Weeks

The 30-year fixed-rate mortgage inched upwards this week, averaging 3.85 percent. It’s the highest average in six weeks, Freddie Mac reports. “After holding steady last week, rates ticked up this week,” says Sean Becketti, Freddie Mac’s chief economist.

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

’30-year’ fixed-rate mortgages: averaged 3.85 percent, with an average 0.5 point, rising from last week’s 3.83 percent average. Last year at this time, 30-year rates averaged 3.42 percent.

’15-year’ fixed-rate mortgages: averaged 3.15 percent, with an average 0.5 point, rising from last week’s 3.13 percent. A year ago, 15-year rates averaged 2.72 percent.

Source: Freddie Mac

Mortgage Rates End 2-Month Decline

The 30-year mortgage rate posted its first increase in several weeks after hovering near historic lows for much of the summer.

Freddie Mac reported the following national averages for the week ending Sept. 21:

’30-year’ fixed-rate mortgages: averaged 3.83 percent, with an average 0.5 point, rising from last week’s 3.78 percent average. Last year at this time, 30-year rates averaged 3.48 percent.

’15-year’ fixed-rate mortgages: averaged 3.13 percent, with an average 0.5 point, increasing from last week’s 3.08 percent average. A year ago, 15-year rates averaged 2.76 percent.

Source: Freddie Mac

Consumers: Home Appraisals Still Falling Short

Appraisals continue to lag homeowners’ price expectations, according to the latest Quicken Loans’ National Home Price Perception Index, which compares homeowners’ initial estimates and appraiser’s opinions of home values. Appraised values were 1.35 percent lower than homeowners’ expectations in August. That has narrowed from a 1.55 percent difference in July.

Many homeowners are still not understanding their home’s current value, according to the analysis. The perceptions can vary quite a bit across the country, too. For example, home values are 3 percent higher than homeowners’ estimated values in the West, while they are 3 percent lower than expected in the Midwest and Northeast.

More interesting data and graphs at: quickenloans.com/press-room/2017/09/12/quicken-loans-study-shows-consumers-continue-to-be-too-optimistic-with-anticipated-home-value/

‘Granny Flats’ Are Finding a Bigger Purpose

Accessory dwelling units are increasingly being used by homeowners to add small secondary housing options on their property. These “granny flats” may be in the form of a converted garage or even a tiny home in an over sized backyard.

As more municipalities look to grant permits for these structures, some hope the trend can help alleviate housing shortages. Many forms of guest houses were deemed illegal in California up until recently. But a new law that took effect at the beginning of this year makes ADUs easier to add, leading to an upswing of these units in the state. If just 10 percent of California’s single-family homeowners added granny flats to their properties, 600,000 new units could be added to the state’s housing supply, according to USMondularInc, a firm that specializes in secondary housing units.

“California is in a housing crisis, and allowing people to modify their existing home or build a small cottage in their backyard will increase the rental supply at no cost to taxpayers,” state Sen. Bob Wieckowski, D-Fremont, said in a statement late last year.

Source: “Granny Flats Are on the Upswing – and They’re Not Just for Grannies Anymore,” San Gabriel Valley Tribune (Sept. 10, 2017)