Fixed-rate mortgages continue their free fall, with the 30-year fixed rate mortgage averaging 3.63 percent this week and the 15-year fixed-rate mortgage staying below 3 percent, Freddie Mac reports. The 30-year fixed-rate mortgage is at its lowest level since the week ending May 23, 2013, when it averaged 3.59 percent.
“Mortgage rates continued to fall, albeit at a slower pace,” says Frank Nothaft, Freddie Mac’s chief economist. Mortgage rates are falling amid declining bond yields and oil prices, Freddie Mac notes.
Freddie Mac reports the following national averages for the week ending Jan. 22:
- 30-year fixed-rate mortgages: averaged 3.63 percent, with an average 0.7 point, dropping from last week’s 3.66 percent average. Last year at this time, 30-year rates averaged 4.39 percent.
- 15-year fixed-rate mortgages: averaged 2.93 percent, with an average 0.6 point, dropping from last week’s 2.98 percent average. A year ago, 15-year rates averaged 3.44 percent.
- 5-year hybrid adjustable-rate mortgages: averaged 2.83 percent, with an average 0.4 point, dropping from last week’s 2.90 percent average. Last year at this time, 5-year ARMs averaged 3.15 percent.
Source: Freddie Mac
U.S. cities are poised to see a rise in employment this year but only about half of the nation’s cities are expected to return to the employment peaks they had reached before the recession, according to a newly released report by the U.S. Conference of Mayors.
All 363 metros analyzed are expected to see an uptick in job growth this year, marking the first strong comeback year post-recession. About 317 of the metro areas will likely see job growth of at least 1 percent in 2015.
Many local economies still have a ways to go in reaching higher employment levels. Only 164 metro areas, around 45 percent, had returned to their pre-recession peak employment levels by the beginning of 2015. This percentage is expected to reach 55 percent of the 363 metros by the end of 2015, according to IHS Global forecast.
While employment is on the rise – viewed as an important factor in lifting housing – some mayors at a recent annual meeting expressed concerns that mostly low paying entry-level and part-time jobs were being created.
Source: “Jobs Growth Seen in U.S. Cities in 2015; Still Lagging Pre-Recession,” Reuters (Jan. 21, 2015)
Recent drops in oil prices and mortgage rates, along with positive tailwinds in the economy, are helping to jump-start the housing market in the new year, according to Freddie Mac’s newly released2015 U.S. Economic and Housing Market Outlook for January. Consumers are gaining confidence, which is expected to translate to higher home sales in the coming months. Some economists are skeptical on whether this latest jolt will stick around for the entire year, however.
Freddie Mac economists note that mortgage rates continue to remain well below expectations, and they predict that mortgage rates will remain low at the beginning of 2015, staying around 4 percent for the first two quarters of the year at least. Last week, mortgage rates dipped to a 20-month low with the 30-year fixed-rate mortgage rate plunging to a 3.66 percent national average and the 15-year fixed-rate mortgage dropping to 2.98 percent.
“We … expect these low mortgage rates to help the growing purchase market continue to expand and reach the highest levels we’ve seen since 2007,” the economists note.
But rates likely will move up by the end of the year. Lawrence Yun, chief economist for the National Association of REALTORS®, says that the 30-year fixed-rate mortgage could average around 5 percent – or higher – by the end of this year.
“I would not be surprised if it is above 5 percent because when mortgage rates move or interest rates move, it is generally not in a slow creep,” Yun told Bankrate.com.
Source: “January U.S. Economic & Housing Market Outlook,” Freddie Mac (January 2015) and “Housing Market’s ‘Interesting Times,’” Bankrate.com (Jan. 19, 2015)
Thursday and Friday are the most common days of the week when real estate professionals list a home, according to 2014 home sales data analyzed by the National Association of REALTORS®. Monday, Tuesday, and Wednesday follow in popularity in that order. The least popular days to post a new listing are Saturday and Sunday.
Also, “while home closings exhibit a strong tendency to get done at the end of the month, listings are much steadier throughout the course of the month, with a slight tendency to be posted earlier rather than later,” researchers write at NAR’s Economists’ Outlook blog.
Source: “EHS in 2014 by the Numbers – Part 3 – Popular Listing Dates,” National Association of REALTORS® Economists’ Outlook Blog (Jan. 14, 2015)
The Federal Housing Finance Agency has directed Fannie Mae and Freddie Mac to explore “alternate” credit-score models and the credit history of the loans they back. The move is part of several efforts by FHFA to ease tight mortgage standards and help more potential buyers qualify for financing.
FHFA Director Mel Watt has said expanding credit access is an important goal in 2015, but it needs to be balanced against the risk of loan losses. FHFA is the regulator of Fannie Mae and Freddie Mac; the two companies, which were brought under government conservatorship in 2008, purchase more than half of the new mortgages in the U.S. and then package them into securities.
Qualifying for financing has been a big hurdle that has sidelined many potential buyers from the housing market in recent years. REALTORS® continue to cite their clients’ financing struggles in qualifying for a mortgage as one of the top causes of derailing transactions, according to the latest REALTOR® Confidence Index, reflecting responses of more than 1,800 REALTORS® about their transactions in November.
At the end of 2014, FHFA made moves to expand credit availability, including offering loans through Fannie and Freddie that require down payments as low as 3 percent. FHFA also has ordered the GSEs to begin paying into the affordable housing fund, allocating millions of dollars a year to allow states and other government agencies to build low-income rental housing or rehab existing housing in an effort to increase affordability.
Source: “Fannie, Freddie Must Study ‘Alternate’ Credit Scoring: Regulator,” Reuters (Jan. 14, 2015) and “Fannie and Freddie Directed to Aid Underserved Borrowers in 2015,” Bloomberg (Jan. 14, 2015)
Last week, the Federal Housing Administration announced it will cut its annual mortgage insurance premiums, likely resulting in about $900 in savings for borrowers and potentially opening the door to thousands of new buyers. But there are no further FHA fee reductions under consideration, Julian Castro, secretary of the U.S. Department of Housing & Urban Development, told a crowd at the National Press Club on Tuesday. The FHA decided to reduce its annual mortgage insurance premium fees from 1.35 percent to 0.85 percent because its Mutual Mortgage Insurance Fund for single-family programs was “back in the black.” In his speech, Castro cited National Association of REALTORS® research that estimated that nearly 400,000 creditworthy borrowers were being priced out of the housing market in 2013 due to the high premiums. “We expect our premium reduction to help more than 2 million borrowers save an average of $900 annually over the next three years,” Castro told the crowd. “It will also encourage nearly a quarter-million new borrowers to purchase their first home.” Source: “Castro: No Further FHA Fee Reductions Under Consideration,” HousingWire (Jan. 13, 2015)
With home-price gains slowing in most parts of the country, sellers will be looking for ways to get top dollar for their listing. Cleaning and staging make a big difference. But for some sellers — such as investors seeking to bring a property up to neighborhood standards before the sale — remodeling work may be the ticket.
As the 2015 Remodeling Cost vs. Value Report makes clear, large-scale jobs aren’t likely to return sellers their full cost. But there are improvements worth doing in anticipation of an upcoming sale. Some will return almost 100 percent of their cost. Others may not have as great a payback, but they can improve the market position of the property in relation to the competition. (Think about the impact of beautiful kitchen photos on online home shoppers.) In addition, several pricier projects can provide owners with a few years of enjoyment while still offering a decent payback down the road.
Find out which remodeling projects get you the most bang for your buck.
Borrowing costs moved even lower this week, with the 30-year fixed-rate mortgage averaging 3.73 percent, its lowest average since May 2013.
“Mortgage rates fell to begin the year as 10-year Treasury yields slid beneath 2 percent for the first time in three months,” says Frank Nothaft, Freddie Mac’s chief economist. “Meanwhile, the Fed minutes indicated ongoing discussion regarding the timing of the first rate hike.” Many housing economists have predicted that mortgage rates will rise sometime this year, with the 30-year fixed-rate mortgage likely reaching the upper 4 percent or 5 percent range by the end of the year.
Freddie Mac reports the following national averages for the week ending Jan. 8:
- 30-year fixed-rate mortgages: averaged 3.73 percent this week, with an average 0.6 point, dropping from last week’s 3.87 percent average. The 30-year rate has not averaged this low since May 23, 2013, when it was 3.59 percent. A year ago at this time, 30-year rates averaged 4.51 percent.
- 15-year fixed-rate mortgages: averaged 3.05 percent, with an average 0.5 point, dropping from last week’s 3.15 percent average. Last year at this time, 15-year rates averaged 3.56 percent.
- 5-year hybrid adjustable-rate mortgages: averaged 2.98 percent, with an average 0.5 point, dropping from last week’s 3.01 percent average. A year ago, 5-year ARMs averaged 3.15 percent.
Source: Freddie Mac
Existing-home sales will likely rise about 7 percent this year, as a strengthening economy and job growth leads to a healthier market, according to the National Association of REALTORS®’ 2015 housing forecast.
“Home prices have risen for the past three years cumulatively about 25 percent, which boosts confidence in the market and traditionally gives current home owners the ability to use their equity buildup as a down payment towards their next home purchase,” says Lawrence Yun, NAR’s chief economist. “Furthermore, first-time buyers are expected to slowly return as the economy improves and new mortgage products are made available in the marketplace with low down payments and private mortgage insurance.”
Yun is forecasting growth in home prices, but at a more moderate pace than recent years. The national median existing-home price for 2014 will likely near $208,000, up 5.6 % from 2013, but it’s expected to moderate between 4 % and 5 % growth in 2015.
Source: National Association of REALTORS®
Mortgage applications dropped sharply during the holidays, plunging 9.1 percent for the week ending Jan. 2 compared to two weeks earlier, according to the Mortgage Bankers Association’s mortgage activity index. The index reflects adjustments for New Year’s Day and Christmas Day when banks are closed.
Applications for refinancings dropped 12 percent from two weeks ago, while mortgage applications for home purchases, viewed as a leading gauge activity, dropped 5 percent.
“Beyond the seasonal slowdown, purchase application volume remains about 8 percent below last year’s level, indicating that home buyers are still cautious,” says the MBA’s chief economist, Mike Fratantoni.
Home shoppers have been slow to jump into the housing market, despite low mortgage rates. The 30-year fixed-rate mortgage fell to 4.01 percent for the week ending Jan. 2, according to the MBA. Lower bond yields this week are pushing rates even lower, with the average 30-year fixed-rate mortgage now a full quarter point lower than average rates available in the second half of December, the MBA notes.
Source: “Weekly Mortgage Applications Fall Sharply Over Holidays,” CNBC (Jan. 7, 2015)