Little to Fear in Home Loan Interest Rate Hikes

Freddie Mac Chief Economist Sean Becketti is dismissing concerns that the Federal Reserve’s latest change in monetary policy could spell trouble for the real estate market. The Fed’s decision to raise its benchmark short-term rates will not cause mortgage rates to skyrocket, reduce housing affordability, or reverse recent improvements in the housing market, he writes on Freddie Mac’s Executive Perspectives blog.

In fact, Becketti predicts that the Fed’s move won’t take much of a toll on mortgage rates at all. As an example, he cites a time during the mid-2000s when the 17 consecutive monthly rate hikes issued by the Fed basically had no effect on mortgage rates, which remained at about 6 percent.

Becketti predicts that mortgage rates will increase gradually from 2015’s 4.1 percent to an average of 4.4 percent by the end of 2016. He expects home prices to moderate more in the new year too, increasing about 4.4 percent this year.

“While we believe the housing sector will remain strong in 2016, there is some uncertainty about the strength of the broader economy,” Becketti says.

Source: “Strong Housing Sector Trumps Tighter Monetary Policy in 2016,” Freddie Mac Executive Perspectives Blog (Jan. 4, 2016).

Higher Home Prices Push Affordability Down

Nationally, the median single-family home price is $221,000, up 10 percent from April 2014, NAR reports. The Midwest has seen some of the largest increases in home prices – climbing 11.6 percent in the past year alone. The Northeast, on the other hand, is seeing the slowest price growth regionally at 4.9 percent in the past year.

Housing affordability is down in all major regions of the U.S. from a year ago, except in the Northeast, where home price growth is moderating.

But mortgage rates are on their way up. Freddie Mac reported last week that the 30-year fixed-rate mortgage set a new high for 2015, averaging above 4 percent.

“This may be a good time for return and first-time home buyers to surge back into the housing market before rates climb higher, further reducing affordability,” NAR notes.

View NAR’s latest Housing Affordability Index for a full breakdown of affordability.

Source: “Housing Affordability Index,” National Association of REALTORS® Economists’ Outlook Blog (June 12, 2015)

Home Loan Interest Rates Stay Low Into Spring

The 30-year fixed-rate mortgage continues to average below 4 percent – a positive sign launching into the spring home-buying season, Freddie Mac reports in its weekly mortgage market survey. Average fixed-rate mortgages moved down this week. Freddie Mac reports the following national averages for the week ending March 19:

  • 30-year fixed-rate mortgages: averaged 3.78 percent, with an average 0.6 point, dropping from last week’s 3.86 percent average. Last year at this time, 30-year rates averaged 4.32 percent.
  • 15-year fixed-rate mortgages: averaged 3.06 percent, with an average 0.6 point, dropping from last week’s 3.10 percent average. A year ago, 15-year rates averaged 3.32 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 2.97 percent, with an average 0.5 point, dropping from last week’s 3.01 percent average. Last year at this time, 5-year ARMs averaged 3.02 percent.

Source: Freddie Mac

Mortgage Rates Drop, Near 2013 Lows

For the first time in four weeks, average fixed mortgage rates moved lower, according to Freddie Mac’s weekly mortgage market survey. Rates remain near May 2013 lows. The lower rates are attributed to a revision down of real GDP growth and the decline in consumer prices, said Freddie Mac’s deputy chief economist Len Kiefer.

Freddie Mac reports the following mortgage rates for the week ending Feb. 26:

  • 30-year fixed-rate mortgages: averaged 3.75 percent with an average 0.6 point, down from last week when it averaged 3.80 percent. A year ago, the 30-year FRM averaged 4.28 percent.
  •  15-year fixed-rate mortgages: averaged 3.03 percent with an average 0.6 point, down from last week when it averaged 3.07 percent. A year ago, the 15-year FRM averaged 3.32 percent.
  •  5-year Treasury-indexed hybrid adjustable-rate mortgages: averaged 2.96 percent this week with an average 0.5 point, down from last week when it averaged 2.99 percent. A year ago, the 5-year ARM averaged 3.03 percent.

Source: Freddie Mac

Home Loan Interest Rates Remain Near 2013 Lows

Average fixed-rate mortgages are holding near historical lows, but did inch higher this week, Freddie Mac reports in its weekly mortgage market survey.

The economy added 257,000 new jobs in January, following additional increases in December (329,000) and November (423,000).

Despite this week’s uptick in rates, fixed-rate mortgages remain near lows from May 23, 2013, Freddie Mac reports.

Freddie Mac reports the following mortgage rates for the week ending Feb. 12:

  • 30-year fixed-rate mortgages: averaged 3.69 percent, with an average 0.6 point up from last week’s 3.59 percent average. A year ago, 30-year rates averaged 4.28 percent.
  • 15-year fixed-rate mortgages: averaged 2.99 percent, with an average 0.6 point, rising from last week’s 2.92 percent average. Last year at this time, 15-year rates averaged 3.33 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 2.97 percent, with an average 0.5 point, up from last week’s 2.82 percent average. A year ago, 5-year ARMs averaged 3.05 percent.

Source: Freddie Mac

Hike in Home Loan Interest Rates Likely by Mid-Year

Many economists believe mortgage rates will be on the move upward this year after sitting near historic lows the past few weeks. The 30-year fixed-rate mortgage rose above 4 percent for only two weeks since Oct. 16, according to a Freddie Mac report. That has helped to lower borrowing costs for home buyers — but that may soon change.

The Federal Reserve is expected to boost its short-term interest rate target around the middle of the year if economic growth continues to move at a solid pace. “Bond yields and mortgage rates will begin moving higher as the timetable for Fed interest rate hikes comes into focus, with rates on credit cards, auto loans, and home equity lines of credit responding after the fact,” says Greg McBride, Bankrate.com’s chief financial analyst. “The bulk of next year’s increases will come in the back half of the year.”

“We’ll see rates near 4 percent on the low side if there’s an economic stumble or geopolitical crisis, and rates as high as 4.8 percent or 4.9 percent if the Fed missteps or misspeaks,” McBride says.

Lawrence Yun, chief economist for the National Association of REALTORS®, expects the Fed to act sooner with its uptick in rates due to inflationary pressures of rising wages and rents. Jonathan Smoke, chief economist at realtor.com®, is forecasting mortgage rates to reach 5 percent in 2015.

Source: “Bankrate.com: Expect Fed to Move on Interest Rates by Mid-Year,” HousingWire (Jan. 5, 2015)

Spread the Word: Mortgage Rates Below 4%

Fixed-rate mortgages fell back near yearly lows again this week, lowering borrowing costs for home buyers and refinancers. The 30-year fixed-rate mortgage averaged 3.99 percent this week, Freddie Mac reports in its weekly mortgage market survey.

“If you are planning to buy a home in the next year, it’s better to do it sooner rather than later,” Frank Nothaft, Freddie Mac’s chief economist, said in the VIDEO noted below.

Freddie Mac reported the following national averages for the week ending Nov. 20:

  • 30-year fixed-rate mortgages averaged 3.99 percent, with an average 0.5 point, dropping from last week’s 4.01 percent average. The 30-year fixed-rate mortgage dipped to 3.97 percent in mid-October, its lowest average so far this year.
  • 15-year fixed-rate mortgages averaged 3.17 percent, with an average 0.5 point, decreasing from last week’s 3.2 percent average. A year ago, 15-year rates averaged 3.27 percent.
  • 5-year hybrid adjustable-rate mortgages averaged 3.01 percent, with an average 0.5 point, falling slightly from last week’s 3.02 percent average. A year ago, 5-year ARMs averaged 2.95 percent.

Video at: https://www.youtube.com/watch?v=s9-KO08p6Gc

30-Year Mortgage Rates ‘Fall Back’ to Yearly Lows

Borrowing costs were down once again this week, giving home buyers another opportunity to lock in some of the lowest rates of the year.

Freddie Mac reported the following rate averages for the week ending Oct. 9:

  • 30-year fixed-rate mortgages: averaged 4.12 percent, with an average 0.5 point, dropping from last week’s 4.19 percent average. Last year at this time, 30-year rates averaged 4.23 percent.
  • 15-year fixed-rate mortgages: averaged 3.30 percent, with an average 0.5 pont, dropping from last week’s 3.36 percent average. Last year at this time, 15-year rates averaged 3.31 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.05 percent, with an average 0.5 point, dropping from last week’s 3.06 percent average. A year ago, 5-year ARMs averaged 3.05 percent.

Source: Freddie Mac

When Mortgage Rates Rise…

Mortgage rates have hovered around yearly lows for weeks. But with rate-hike forecasts looming, can buyers count on borrowing costs to stay low?

Many economists are predicting the average 30-year fixed-rate mortgage to reach 5% by the middle of the next year, The New York Times reports.  Freddie Mac reported the 30-year fixed-rate mortgage averaging 4.20 percent. The hike in rates is partially due to the Federal Reserve’s plan to withdraw from buying mortgage-backed securities.

Economists note that while a 5 percent mortgage rate is low by historical standards, such an increase still has the potential of reducing buying power in a home purchase. According to some estimates, a 1 percent increase in interest rates can raise a monthly mortgage payment on a typical home by more than $700 in pricier parts of the country. The increase would likely be much more modest in other, less expensive markets.

Source: “When Mortgage Rates Rise,” The New York Times (Sept. 25, 2014)

Mortgage Rates Hold at Yearly Low This Week

The 30-year fixed-rate mortgage is heading into the holiday weekend at its yearly low, giving home shoppers and home owners another opportunity to snag the lowest rate of the year,  weekly mortgage market surveys in its weekly mortgage market survey.

“Mortgage rates were little changed following mixed housing news,” says Frank Nothaft, Freddie Mac’s chief economist. “Existing-home sales rose for the fourth consecutive month to an annualized pace of 5.15 million, the highest of the year. On the other hand, new-home sales fell for the third consecutive month to an annualized rate of 412,000 units.”

Freddie Mac reports the following national averages for the week ending Aug. 28:

  • 30-year fixed-rate mortgages: averaged 4.10 percent, with an average 0.5 point, holding the same as last week’s new low for 2014. A year ago at this time, 30-year rates averaged 4.51 percent.
  • 15-year fixed-rate mortgages: averaged 3.25 percent, with an average 0.6 point, rising from last week’s 3.23 percent average. Last year at this time, 15-year rates averaged 3.54 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 2.97 percent, with an average 0.5 point, rising from last week’s 2.95 percent average. Last year at this time, 5-year ARMs averaged 3.24 percent.

Source: Freddie Mac