Mortgage Rates Retreat From 7-Year High

After climbing to their highest level in more than seven years, mortgage rates eased a bit this week. It was the first time they declined in four weeks, says Sam Khater, Freddie Mac’s chief economist. The 30-year fixed-rate mortgage fell 10 basis points to a 4.56 percent average this week.

“Extremely low inventory conditions in most markets are preventing sales from breaking out while also keeping price growth elevated,” Khater says. “Even if rates climb closer to 5 percent, sales have room to grow more—but only if current supply levels start increasing more meaningfully.”

Freddie Mac reports the following national averages for the week ending May 31:

  • 30-year fixed-rate mortgages: averaged 4.56 percent, with an average 0.4 point, down from last week’s 4.66 percent average. Last year at this time, 30-year rates averaged 3.94 percent.
  • 15-year fixed-rate mortgages: averaged 4.06 percent, with an average 0.4 point, dropping from last week’s 4.15 percent average. A year ago, 15-year rates averaged 3.19 percent.

Source: Freddie Mac

Climbing Mortgage Rates at 4-Year High

Mortgage rates continued to inch higher this week, marking the sixth consecutive week for borrowing cost increases for home shoppers.

“Wednesday’s Consumer Price Index report showed higher-than-expected inflation; headline consumer price inflation was 2.1 percent year-over-year in January, two-tenths of a percentage point higher than the consensus forecast,” explains Len Kiefer, Freddie Mac’s deputy chief economist.

Freddie Mac reports the following national averages for the week ending Feb. 15:

  • 30-year fixed-rate mortgages: averaged 4.38 percent with an average 0.6 point, rising from last week’s 4.32 percent average. Last year at this time, 30-year rates averaged 4.15 percent.
  • 15-year fixed-rate mortgages: averaged 3.84 percent, with an average 0.5 point, increasing from last week’s 3.77 percent average. A year ago, 15-year rates averaged 3.35 percent.

Source: Freddie Mac

Home Buyers Don’t Grasp ‘Mortgage Basics’

Many Americans begin looking for a home to buy without understanding the fundamentals of applying for a mortgage or what it takes to qualify for one, according to a new survey by Ally Home, a direct-to-consumer mortgage business.

Ninety-two percent of the more than 2,000 U.S. adults who responded to the survey admit they don’t know how much mortgage they can afford. Further, most say they’re confused about “rates” versus “points,” and only a third have a general idea of what their average closing costs might be. Only 8 percent are aware that the maximum debt-to-income ratio is usually 43 percent; most respondents believe it’s significantly lower or don’t know at all.

Ally Home is touting its free Mortgage Playbook, a resource that covers the basics of applying for a home loan. The book uses sports jargon to outline the mortgage application process, covering topics such as how to improve your financial fitness prior to applying for a loan, how to evaluate rate and points options, and how loan rates are determined.

Source: Ally Financial

Despite Fed Move, Mortgage Rates Hold Steady

Great News!  Mortgage rates were in a holding pattern this week, even after the Federal Reserve voted Wednesday to hike its benchmark interest rate.

“As widely expected, the Fed increased the federal funds target rate this week for the third time in 2017,” says Len Kiefer, Freddie Mac’s deputy chief economist. “The market had already priced in the rate hike, so long-term interest rates—including mortgage rates—hardly moved.”

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

  • 30-year fixed-rate mortgages: averaged 3.93 percent, with an average 0.5 point, dropping from last week’s 3.94 percent average. Last year at this time, 30-year rates averaged 4.16 percent.
  • 15-year fixed-rate mortgages: averaged 3.36 percent, with an average 0.5 point, the same as last week. A year ago, 15-year rates averaged 3.37 percent.

Source: Freddie Mac

Mortgage Rates Mostly Flat This Week

Mortgage rates mostly held steady this week after posting a sizable jump last week.

“Following a strong surge last week, rates held relatively flat this week,” says Sean Becketti, Freddie Mac’s chief economist. “The 30-year mortgage rate remained unchanged at 3.94 percent.  The markets’ reaction to the upcoming announcement of the next Fed chair may impact the movement of rates in next week’s survey.”

Freddie mac reports the following national averages for the week ending Nov. 2:

  • 30-year fixed-rate mortgages; averaged 3.94 percent, with an average 0.5 point, the same average as last week. Last year at this time, 30-year rates averaged 3.54 percent.
  • 15-year fixed-rate mortgages: averaged 3.27 percent this week, with an average 0.5 point, rising from last week’s 3.25 percent average. A year ago, 15-year rates averaged 2.84 percent.

Source: Freddie Mac

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)

Home Loan Interest Rates Push Above 4%

Average mortgage rates are moving up, posting increases for the second consecutive week.

“After fully absorbing the sharp increases in Treasury yields over the past couple of weeks, the 30-year mortgage rate has cleared the psychologically important 4 percent mark for the first time since May,” says Sean Becketti, Freddie Mac’s chief economist.

Freddie Mac reports the following national averages for the week ending July 13:

30-year fixed-rate mortgages averaged 4.03 percent, with an average 0.5 point, increasing from last week’s 3.96 percent average. Last year at this time, 30-year rates averaged 3.42 percent.

15-year fixed-rate mortgages averaged 3.29 percent, with an average 0.5 point, increasing from last week’s 3.22 percent average. A year ago, 15-year rates averaged 2.72 percent.

Source: Freddie Mac

Homeowners Cash in on Equity in Droves

Homeowners may be reluctant to sell, but they still want to see a piece of that equity in their homes now. They’re cashing out in levels that have not been seen since the financial crisis. Nearly half of borrowers who refinanced their homes during the first quarter did a cash-out option, the highest level since the fourth quarter of 2008, according to Freddie Mac.

While the number of cash-out refis grows, Len Kiefer, Freddie Mac’s deputy chief economist, does not see this as playing out similarly to the run-up to the financial crisis when borrowers were using their homes like ATMs. Borrowers must follower stricter underwriting standards now when they refinance a mortgage or get a loan. Also, there is less money at stake than a decade ago, Kiefer notes.

Source: “Homeowners Are Again Pocketing Cash as They Refinance Properties,” The Wall Street Journal (May 27, 2017)

Owners: Be Smart When Financing Renovations

The number of homeowners who are planning to take on home improvement projects or repairs this year is expected to increase 6.7 percent, according to the Joint Center for Housing Studies at Harvard University. As more owners look to remodel, they should be weighing how to fund their renovations.

Homeowners may be using credit cards, even though they intend to pay for the balance as soon as it’s due, because they want the benefits of getting airline miles or other rewards from using the credit card, says Todd Nelson LightStream’s business development officer. But for those who don’t intend to pay the credit card off right away should realize the interest rates are usually in double digits and is not tax-deductable.

An option is a home equity line of credit, the interest may be tax-deductible and there are few upfront frees. Another consideration may be a cash-out refinance is another option, where borrowers refinance for more than what they owe on the property and then take the difference out in cash. However, processing fees and closing costs are involved.

Source: “More Homeowners Pay for Repairs With Credit Cards,” realtor.com® (April 26, 2017)

Mortgage Rates Move Lower This Week

Mortgage rates broke a month long holding pattern and inched lower this week.

Freddie Mac reports the following national averages rates for the week ending March 2:

  • 30-year fixed-rate mortgages: averaged 4.10 percent, with an average 0.5 point, dropping from last week’s 4.16 percent average. A year ago, 30-year rates averaged 3.64 percent.
  • 15-year fixed-rate mortgages: averaged 3.32 percent, with an average 0.5 point, falling from last week’s 3.37 percent average. Last year at this time, 15-year rates averaged 2.94 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.14 percent, with an average 0.4 point, falling from last week’s 3.16 percent average. A year ago, 5-year ARMs averaged 2.84 percent.

Source: Freddie Mac