Home Loan Interest Rates Take a Leap This Week

Borrowers saw financing costs for a mortgage move higher this week. The 30-year fixed-rate mortgage posted its largest week-over-week increase since July.

“The 30-year mortgage rate increased for a second consecutive week, jumping 6 basis points to 3.91 percent,” says Sean Becketti, Freddie Mac’s chief economist.

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

  • 30-year fixed-rate mortgages: averaged 3.91 percent, with an average 0.5 point, rising from last week’s 3.85 percent average. Last year at this time, 30-year rates averaged 3.47 percent.
  • 15-year fixed-rate mortgages: averaged 3.21 percent, with an average 0.5 point, rising from last week’s 3.15 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)

Home Loan Interest Rates Hit New Yearly Lows

Average mortgage rates moved lower this week, as the 30-year fixed-rate mortgage continues to sit well below 4 percent.

“The 10-year Treasury yield fell to a new 2017 low on Tuesday,” says Freddie Mac chief economist Sean Becketti. “In response, the 30-year mortgage rate dropped four basis points to 3.82 percent, reaching a new year-to-date low for the second consecutive week.”

Freddie Mac reports the following national averages for the most recent week through Aug. 31:

30-year fixed-rate mortgages: averaged 3.82 percent, with an average 0.5 point, falling from last week’s 3.86 percent average. Last year at this time, 30-year rates averaged 3.46 percent.
15-year fixed-rate mortgages: averaged 3.12 percent, with an average 0.5 point, falling from last week’s 3.16 percent average. A year ago, 15-year rates averaged 2.77 percent.

Source: Freddie Mac

Are Supply Woes Causing Loan Demand Drop?

The number of mortgage applications for home purchases continues to underwhelm, despite rates being at their lowest levels since November. Mortgage applications for purchasing a home dropped 3 percent last week on a seasonally adjusted basis.

The annual gain in purchase applications remains positive (4 percent higher than a year ago), but they’re narrowing as the supply of homes for sale falls and makes it tougher for buyers to find and afford a home, CNBC reports.

Meanwhile, current homeowners may be holding out for even lower rates. Refinancing application volume dropped 2 percent last week and is down 41 percent from a year ago, when mortgage rates were lower.

Source: “Weekly Mortgage Applications Drop 2.3% as Borrowers Wait for Lower Rates,” CNBC (Aug. 30, 2017)

Fannie Mae Loosens ARM Down Payment Rules

Fannie Mae is changing the requirement that borrowers pay a higher down payment to qualify for an adjustable-rate mortgage, announcing that it is bringing this type of financing more in line with that of fixed-rate mortgages.

Now, borrowers can make as little as a 5 percent down payment on a one-unit primary property using an ARM. Also among the changes is that borrowers need less equity in order to refinance into an ARM; they now need just 5 percent of equity to refinance. For purchasing a two-unit property, borrowers will need a 15 percent down payment for an ARM, or a 25 percent down payment for a property with three or four units.

An ARM is fixed for a set part of the mortgage term—often 5 or 7 years—and then adjusts depending on the current market rate. There are caps on how much it can adjust in one year. ARMs tend to have lower rates than fixed rates, making them an attractive option to borrowers who need to lower their initial costs or plan to own for a short time.

Source: “Fannie Mae Lowers Down Payment Requirements for ARMs,” OriginatorTimes.com (Aug. 26, 2017)

30-Year Mortgage Rate Hits New 2017 Low

Borrowers applying for a 30-year fixed-rate mortgage this week locked in the lowest rate of the year, as it dropped to its lowest average since November 2016, Freddie Mac reports. Additionally, “the 10-year Treasury yield fell 6 basis points this week amid concerns over lagging inflation,” says Freddie Mac chief economist Sean Becketti.

Freddie Mac reported the following national averages for the week ending Aug. 24:

  • 30-year fixed-rate mortgages: averaged 3.86 percent, with an average 0.5 point, dropping from last week’s 3.89 percent average. Last year at this time, 30-year rates averaged 3.43 percent.
  • 15-year fixed-rate mortgages: averaged 3.16 percent, with an average 0.5 point, the same average as last week. A year ago, 15-year rates averaged 2.74 percent.

Source: Freddie Mac

A Cruel Season for Home Buyers

Typically, the housing market starts to slow in late summer, and prices drop slightly. But so far this year that hasn’t been the case.

“Homes are not selling faster than last July, but faster than last year’s peak months,” says Javier Vivas, manager of economic research at realtor.com®. “However, quick sales don’t necessarily mean more sales, particularly when there isn’t enough inventory, as is the current case. Home prices also remain stubbornly high, failing to show hints of the usual seasonal cool down. Low and moderately priced homes are being snatched up especially quickly, keeping many would-be buyers from being able to get into the market.”

“In this market, home buyers have to move fast, yet high prices and low inventory are slowing down even the most earnest of house hunters,” Nela Richardson, Redfin’s chief economist, told CNBC. “Faced with a low supply of homes for sale and extremely competitive conditions, many home buyers are struggling to make it to the offer stage.”

Source: “Housing Demand Strengthens Through Summer, But Here’s Why Some Buyers Are Giving Up,” CNBC (Aug. 2, 2017)

Home Loan Interest Rates Are Hovering Below 4%

Mortgage rates posted another drop this week, offering more relief to home buyers.

Freddie Mac reports the following national averages for the week ending July 27:

’30-year fixed-rate’ mortgages: averaged 3.92 percent, with an average 0.5 point, falling from last week’s 3.96 percent average. Last year at this time, 30-year rates averaged 3.48 percent.

’15-year fixed-rate’ mortgages: averaged 3.20 percent, with an average 0.5 point, dropping from last week’s 3.23 percent average. A year ago, 15-year rates averaged 2.78 percent.

Source: Freddie Mac

Walkable Areas Are Getting More Competition

Older Americans are placing a higher value on living in walkable urban centers, according to a new survey of 1,000 respondents nationwide about their living preferences

A majority of respondents surveyed by A Place for Mom, a national referral service, said it was “very important” or “somewhat important” to live in a walkable neighborhood. They also sought neighborhoods with low crime and those that are close to family.

“It’s time to abandon the idea that only millennials and Generation X care about walkability and the services available in dense urban neighborhoods,” says Charlie Severn, head of marketing at A Place for Mom. “These results show a growing set of senior housing consumers also find these neighborhoods desirable.

The survey authors say it’s important for developers to consider creating multigenerational communities in suburban centers that place an emphasis on walkability. Walkability ranked high regardless of income level in the survey. Walkability ranked highest for those under 70 years old who were seeking senior apartments.

Source: “Seniors Want Walkability Too, Survey Says,” Curbed.com (July 25, 2017)