2020 Conforming Loan Limits

The Federal Housing Finance Agency approved a higher conforming loan limit that will take effect Jan. 1, 2020. The cap on loans purchased or acquired by Fannie Mae and Freddie Mac during 2020 will increase to $510,400, the FHFA said Tuesday. That marks an increase over the $484,350 limit for 2019.

Higher limits are available for properties that contain two, three, or four units. The limits for multiunit properties range from $653,550 to $981,700.

View a map showing the 2020 maximum loan limits nationwide. (Note: El Dorado County, CA. is $530,001 to $765,599 for 1 – 4 units)

Source: FHFA and “Conforming Loan Limit Increased to $510,400,” Mortgage News Daily (Nov. 26, 2019)

Mortgage Prepayments Climb

Mortgage prepayments, a common gauge for housing and refinancing demand, jumped to its highest level since May 2013—a good sign for the market, according to a new analysis from data and analystics firm Black Knight. Mortgage prepayments were at 1.81% in October, more than double the figure a year ago. That represents a 134% year-over-year increase, Black Knight reports.

What’s causing the improvement? Low mortgage rates are prompting more people to refinance their mortgage or buy a home. Consumers typically pay off previous loans when they buy a new home.The uptick is apparent: Existing-home sales increased 1.9% in October to a seasonally adjusted annual rate of 5.46 million—4.6% higher than a year ago, the National Association of REALTORS® reported last week.

Source: “Mortgage Prepays Surge to 6-Year High, Black Knight Says,” HousingWire (Nov. 25, 2019)

Drop in Mortgage Rates = Higher Home Buying Demand

Mortgage rates declined this week, After several weeks of increases, the drop in mortgage rates is a welcome sign for home buyers.

The housing market continues to steadily gain momentum with rising homebuyer demand and increased construction due to the strong job market, ebullient market sentiment, and low mortgage rates,” says Sam Khater, Freddie Mac’s chief economist. “Residential real estate accounts for one-sixth of the economy, and the improving real estate market will support economic growth heading into next year.”

Freddie Mac reports the following national averages for the week ending Nov. 21:

  • 30-year fixed-rate mortgages: averaged 3.66%, with an average 0.6 point, falling from last week’s 3.75% average. Last year at this time, they averaged 4.81%.
  • 15-year fixed-rate mortgages: averaged 3.15%, with an average 0.5 point, falling from last week’s 3.20% average. A year ago, 15-year rates averaged 4.24%.
Source: Freddie Mac

Home Loan Interest Rates Rise

“The modest uptick in mortgage rates over the last two months reflects declining recession fears and a more sanguine outlook for the global economy,” says Sam Khater, Freddie Mac’s chief economist. “Due to the improved economic outlook, purchase mortgage applications rose fifteen percent over the same week a year ago, the second highest weekly increase in the last two years. Given the important role residential real estate plays in the economy, the steady improvement of the housing market is a reassuring sign that the economy is on solid ground heading into next year.”

Freddie Mac reports the following national averages for the week ending Nov. 14:

  • 30-year fixed-rate mortgages: averaged 3.75%, with an average 0.6 point, rising from last week’s 3.69% average. Last year at this time, they averaged 4.94%.
  • 15-year fixed-rate mortgages: averaged 3.2%, with an average 0.5 point, rising rom last week’s 3.13% average. A year ago, 15-year rates averaged 4.36%.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.44%, with an average 0.4 point, rising from last week’s 3.39% average. A year ago, they averaged 4.14%.
Source: Freddie Mac

Which Home Security System?

Consumers show preferences for certain types of security options, according to Safehome.org, a home security survey. For example, the group of consumers who say they feel safe were two times more likely to have a front door security system, the survey found. Professionally monitored security systems help many consumers feel safe, but certain demographics felt more at ease with other features. For example, baby boomers prefer security cameras around the property, men surveyed felt most safe with guns, and renters and homeowners in rural areas felt safest with an entry keypad with a security code and alarm.

About a third of consumers surveyed with a home security system use a variety of accessories, including door sensors and security keypads. Thirty percent of those surveyed also chose all-in-one security systems, which usually consist of live streaming cameras, motion sensors, arming and disarming functionality, and sirens.

Source: “Security in the Home,” Safehome.org (2019)

“I Want to Buy a Home” Report

Many non-owners—those renting or living with someone else—are eager to buy a home. But their current financial situation is what is mostly holding them back.

The newly released “2019 Profile of Buyers and Sellers” report contained a new section this year, including a survey about non-owners and their views on home ownership. NAR released the report during the 2019 REALTORS® Conference & Expo in San Francisco this week.

But the main reason they aren’t buying yet is because they can’t afford to make the jump into ownership. “Making the largest financial purchase in one’s life relies on the financial strength to do so,” the report notes. Seventy-five percent of non-owners surveyed say they believe home ownership is part of the American dream. Eighty-one percent of non-owners say they want to own a home in the future.

Source: National Association of REALTORS®’

Re-Acceleration in Home Prices

Good news for sellers: Home prices are on the rise. But buyers should brace for higher prices.

Nearly all—93%—of the largest metros in the U.S. saw home prices rise in the third quarter over the past year. A shortage of homes for sale, combined with higher demand, continues to push home prices higher, according to the latest quarterly report from the National Association of REALTORS®, released Thursday.

While the majority of metros saw higher prices in the third quarter, a few markets did register lower prices, notably in areas long-known for high costs. Single-family median home prices moderated in the third quarter in markets such as San Jose-Sunnyvale-Santa Clara, Calif. (–4.6%); San Francisco-Oakland-Hayward, Calif. (–2.5%); and San Diego-Carlsbad, Calif. (–0.8%).

Mortgage Rates Reverse Course

Following three consecutive weeks of increases, the 30-year fixed-rate mortgage posted a drop this week. “The improvement in sentiment has been one of the main drivers behind the surge in equity prices and will provide a halo effect to consumer spending heading into the important holiday shopping season,” says Sam Khater, Freddie Mac’s chief economist.

Freddie Mac reports the following nationwide averages for the week ending Nov. 7:

  • 30-year fixed-rate mortgages: averaged 3.69%, with an average 0.5 point, falling from last week’s 3.78% average. Last year at this time, they averaged 4.94%.
  • 15-year fixed-rate mortgages: averaged 3.13%, with an average 0.4 point, dropping from last week’s 3.19% average. A year ago, they averaged 4.33%.
Source: Freddie Mac

Home Design Trends for 2020

From shiny kitchen cabinets to wooden ceiling beams, several home design trends aim to liven up neutral interiors in the new year. Home remodeling website Houzz recently asked designers to chime in about what design trends they expect to grow more popular over the next few months. Here are a few of their trends.

High-gloss kitchen cabinetry. Flat-panel cabinets with a high-gloss finish are gaining popularity. The shinier finish bounces light around the space. Also, the flat-panel design gives a modern look that makes the cabinets appear like they’re receding.

Wooden beams. More attention in home design is being placed on dressing up the home’s fifth wall. Wood ceiling beams are one way to do that.

Brass accents. Kitchen designs are incorporating more black or dark kitchen cabinets paired with brass or gold hardware for a visual pop.

Source: “10 Design Trends Coming to a Home Near You,” Houzz.com (Oct. 29, 2019)

Open House? Avoid This Mistake!

Besides staging, cluttering, and stowing away jewelry or valuables, home sellers are overlooking the need to tuck prescription drugs away from medicine cabinets and drawers, they say. A recent article at realtor.com® warns of the dangers and calls out specific medications like Oxycontin, attention deficit disorder medications like Concerta and Adderall, depression and anxiety medications like Zoloft and Xanax, and sleep aids like Ambien for being targets of open house vandals. Some over-the-counter cough suppressants or heartburn medications also may be at risk of being swiped.

“If you’re getting ready to show your home, walk around the house thinking like a stranger,” realtor.com® notes in the article. “What’s easy to pick up? What might be easy to sell? This is a great guideline for medications, but also for hiding any valuables in your home. Think about wine, perfume bottles and expensive lotions.”

Source: “The One Thing Home Sellers Forget to Hide Before an Open House,” realtor.com® (Nov. 5, 2019)