Mortgage Rates Near Highest Averages of Year

Mortgage rates were back on the rise, increasing to their second highest level this year. The move follows the Federal Reserve’s vote on Wednesday to raise its federal fund rate by 25 basis points.

“The good news is that the impact on consumer budgets will be smaller than past rate hike cycles,” says Freddie Mac’s Chief Economist Sam Khater. “That is because a much smaller segment of mortgage loans in today’s market are pegged to short-term rate movements. The adjustable rate mortgage share of outstanding loans is a lot smaller now—8 percent versus 31 percent—than during the Fed’s last round of tightening between 2004 and 2006.”

Freddie Mac reports the following national averages with mortgage rates for the week ending June 14:

  • 30-year fixed-rate mortgages: averaged 4.62 percent, with an average 0.4 point, up from last week’s 4.54 percent average. Last year at this time, 30-year rates averaged 3.91 percent.
  • 15-year fixed-rate mortgages: averaged 4.07 percent, with an average 0.4 point, rising from last week’s 4.01 percent average. A year ago, 15-year rates averaged 3.18 percent.

Source: Freddie Mac

Is Break in Rate Hikes Significant to Buyers?

For the second consecutive week, mortgage rates decreased as the 30-year fixed-rate mortgage fell two basis points to average 4.54 percent, Freddie Mac reports. Rates had been on a steady incline for weeks before breaking trend.

Freddie Mac reports the following national averages for the week ending June 7:

  • 30-year fixed-rate mortgages: averaged 4.54 percent, with an average 0.5 point, dropping from last week’s 4.56 percent average. Last year at this time, 30-year rates averaged 3.89 percent.
  • 15-year fixed-rate mortgages: averaged 4.01 percent, with an average 0.4 point, falling from last week’s 4.06 percent average. A year ago, 15-year rates averaged 3.16 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.74 percent, with an average 0.4 point, falling from last week’s 3.80 percent average. A year ago, 5-year ARMs averaged 3.11 percent.

Source: Freddie Mac

Homeowner Equity Growth Streak Continues

Homeowners with a mortgage saw their equity rise 13.3 percent year over year, according to CoreLogic’s Home Equity Report for the first quarter of 2018, released Thursday. The average homeowner gained $16,300 in home equity between the first quarter of 2017 and the first quarter of 2018. That is the highest growth in home equity in four years.

Western states saw the largest uptick in home equity. California homeowners gained $51,000 on average in home equity, while Washington homeowners saw about $44,000 on average, in equity.

Source: “Homeowner Equity Report,” CoreLogic (June 7, 2018)

 

Home Loan Interest Rates Update!

“Mortgage rates so far in 2018 have had the most sustained increase to start the year in over 40 years,” says Sam Khater, Freddie Mac’s chief economist. “Through May, rates have risen in 15 out of the first 21 weeks (71 percent), which is the highest share since Freddie Mac began tracking this data for a full year in 1972.”

Freddie Mac reports the following national averages for the week ending May 24:

  • 30-year fixed-rate mortgages: averaged 4.66 percent, with an average 0.4 point, rising from last week’s 4.61 percent average. A year ago, 30-year rates averaged 3.95 percent.
  • 15-year fixed-rate mortgages: averaged 4.15 percent, with an average 0.4 point, rising from last week’s 4.08 percent average. A year ago, 15-year rates averaged 3.19 percent.

Source: Freddie Mac

Legislation to Ease Restrictions on Small Banks

The U.S. House passed a bipartisan bill on Tuesday that will roll back some of the strict rules placed on thousands of small- and medium-sized banks enacted as part of the 2010 Dodd-Frank law.

The Economic Growth, Regulatory Relief, and Consumer Protection Act contains several provisions that could ease mortgage credit through reduced regulatory burdens on smaller community banks and credit unions. The bill also contained several other provisions related to housing. For example, it would require Fannie Mae and Freddie Mac to evaluate and consider credit innovations, like adopting alternative credit scoring models. Currently, the mortgage giants’ credit scoring models do not take into account factors such as whether borrowers have paid their rent or utility bills on time. It also gives the Bureau of Consumer Financial Protection the authority to regulate Property Assessed Clean Energy, or PACE, loans and requires lenders to corroborate a homeowners’ ability to repay the loans that are levied as tax assessments on their homes.

The bill now heads to President Trump for his final signature.

Source: National Association of REALTORS® and “Congress Approves First Big Dodd-Frank Rollback,” The New York Times (May 22, 2018)

 

Mortgage Rates Hit Highest Level in 7 Years

“Healthy consumer spending and higher commodity prices spooked the bond markets and led to higher mortgage rates over the past week,” says Sam Khater, Freddie Mac’s chief economist. “Not only are buyers facing higher borrowing costs, gas prices are currently at four-year highs just as we enter the important peak home sales season.”

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

  • 30-year fixed-rate mortgages: averaged 4.61 percent, with an average 0.4 point, rising from last week’s 4.55 percent average. Last year at this time, 30-year rates averaged 4.02 percent.
  • 15-year fixed-rate mortgages: averaged 4.08 percent, with an average 0.4 point, increasing from last week’s 4.01 percent average. A year ago, 15-year rates averaged 3.27 percent.

Source: Freddie Mac

Best Tip to First-Time Buyers: Act Fast!

A shortage of homes for sale and rising home prices are making it challenging for first-time buyers, in particular, this spring. For those who want to land a home, urge them to move fast and be less picky.

The price of an existing home in March was about $250,000, up nearly 6 percent from a year ago, according to the National Association of REALTORS®. Homes are selling in about a month.

Home buyers needn’t wait for a 20 percent down payment. More than half of first-time buyers make down payments of 6 percent or less, according to NAR data from 2017. Both Freddie Mac and Fannie Mae support home loans to eligible buyers who put down as little as 3 percent on a home purchase, as does the FHA.

Source: “First-Time Home Buyers Learn to Move Quickly in Tight Markets,” The New York Times (May 11, 2018)

Remodelers Worry Over Labor Shortages

Remodelers report that growing labor shortages are delaying projects and increasing the amount they have to charge homeowners, according to the National Association of Home Builder’s Remodeling Market Index survey for the third quarter of 2017. Those needing a carpenter may find the most trouble; 91 percent of remodelers reported shortages of labor in carpentry work.

More than half of remodelers surveyed reported shortages in 12 of the 15 remodeling jobs analyzed. The most difficult building professionals to find were carpenters, bricklayers, masons, drywall installers, and concrete workers. Overall, labor shortages have been growing in recent years, particularly in the homebuilding sector.

Source: “For Remodelers, Labor Shortages Resume Aggravating Trend,” National Association of Home Builders’ Eye on Housing blog (May 8, 2018)

FHA Borrowers Get Help Funding Solar Panels

A growing number of lending programs are helping homeowners pay the upfront costs of solar panels. One lender, Guild Mortgage, an independent lender, recently announced a program that allows home buyers to lump the costs of solar panels into an FHA loan. California residents will be the first to have access to the program.

Guild Mortgage’s FHA Solar program follows Federal Housing Administration loan requirements and offers down payment options as low as 3.5 percent. The down payment is based on the purchase of the home before the panels are added into the cost of the mortgage. “This program will give more options to home buyers looking for solar because it gives them the flexibility to purchase panels and add them to any home they choose,” says Guild Mortgage President and CEO Mary Ann McGarry.

Other programs are also available for financing solar, such as PACE loans. Also, some homeowners fund the purchase of solar panels through a second trust deed.

Source: Guild Mortgage

After April Hikes, Mortgage Rates Slide in May

“While mortgage rates have increased by one-half of a percentage point so far this year, it has not impacted home purchase demand, which continues to grow this spring,” says Sam Khater, Freddie Mac’s chief economist. “The observed buyer resiliency in the face of higher rates reflects the healthy economy and strong consumer confidence, which are important drivers of home sales activity.

Freddie Mac reports the following national averages for the week ending May 3:

  • 30-year fixed-rate mortgages: averaged 4.55 percent, with an average 0.5 point, dropping from last week’s 4.58 percent average. Last year at this time, 30-year rates averaged 4.02 percent.
  • 15-year fixed-rate mortgages: averaged 4.03 percent, with an average 0.4 point, rising from last week’s 4.02 percent average. A year ago, 15-year rates averaged 3.27 percent.

Source: Freddie Mac