After four straight weeks of climbing, mortgage rates inched down this week, offering buyers some relief.
Freddie Mac reports the following national averages for the week ending March 6:
- 30-year fixed-rate mortgages: averaged 4.28 percent, with an average 0.7 point, dropping from last week’s 4.37 percent average. Last year at this time, 30-year rates averaged 3.52 percent.
- 15-year fixed-rate mortgages: averaged 3.32 percent this week, with an average 0.6 point, dropping from last week’s 3.39 percent average. A year ago at this time, 15-year rates averaged 2.76 percent.
- 5-year hybrid adjustable-rate mortgages: averaged 3.03 percent, with an average 0.4 point, dropping from last week’s 3.05 percent average. Last year at this time, 5-year ARMs averaged 2.63 percent.
- 1-year ARMs: averaged 2.52 percent, with an average 0.3 point, holding steady from last week. A year ago, 1-year ARMs averaged 2.63 percent.
Source: Freddie Mac
First-time home buyers are particularly being hit hard by rising prices and tougher credit standards — and their decreasing market share proves it.
The National Association of REALTORS® reports that first-time home buyers accounted for 26 percent of purchases in January, down from 30 percent a year earlier. It’s also the lowest market share for first-time buyers that NAR has recorded since it began measuring it in 2008.
The falling number of first-time home buyers has the potential to slow the pace of the recovery, Bloomberg reports. The decline of first-time home buyers is hampering home sales, which dropped 5.1 percent in January compared to a year earlier, NAR reports.
“It’s a huge problem,” says Leslie Appleton-Young, chief economist for the California Association of REALTORS®. “We have a ladder of home ownership and need first-time home buyers beginning the process of owning, building equity, and trading up to have a healthy housing sector.”
Some housing advocates are blaming investors for pushing out home buyers, particularly where first-time home buyers are being outbid by investors offering all-cash offers. Nearly 80 organizations are calling on federal regulators to address investors pushing potential home buyers out of the market, reports the California Reinvestment Coalition. They argue that federal housing agencies conducting bulk sales of foreclosed homes and distressed mortgages have heightened the problem.
The housing advocates are asking for greater oversight from federal regulatory bodies, such as with more oversight of new investor landlords and ensure that banks aren’t favoring investors over home buyers with FHA loans in REO purchases. The group is also asking for greater research on the disparate impact of REO properties on various communities, particularly the impact to minority communities. Read more about the housing advocates’ stance at the California Reinvestment Coalition website.
Source: “Americans Shut Out of Home Market Threaten Recovery: Mortgages,” Bloomberg Businessweek (March 5, 2014) and “80 Organizations Ask Federal Government to Address Investor Cash Flooding Into Neighborhoods,” California Reinvestment Coalition (March 4, 2014)
Public Wi-Fi can be a hotspot for hackers to prey on your private information, such as your Internet browsing history, email passwords, logins, and more. So before you take advantage of free Wi-Fi at coffee shops, hotel rooms, airports, and stores, take steps to protect yourself, says a recent article in Forbes.com.
“The proliferation of public Wi-Fi is one of the biggest threats to consumer data,” says David Kennedy, of information security firm TrustedSec. “A hacker can monitor the network traffic of an entire store with an iPad-sized device hidden away in his backpack.”
Forbes.com offers the following tips for information safety when using public Wi-Fi:
- Verify the network name. One common attack involves hackers who set up a public Wi-Fi hotspot of their own that resembles the name of the legitimate business’ offering. The hacker’s hotspot allows you to browse the Internet as normal, but all of your emails, site logins, and social media activity are routed through the hacker’s network. Make sure the network you use is the legitimate business one.
- Check for “https” in the URL bar. If a site address begins with “https,” that is an indication that it has SSL encryption. You will also see a padlock icon in the address bar. When this is present, the data will be encrypted for everything you send and receive. Also, if you get a pop-up window that says “untrusted” security certificate while on public Wi-Fi, experts recommend not visiting the site.
- Use a VPN. Consider signing up for a VPN – virtual private network – service, which will encrypt all your communications. Forbes.com cites several low-cost options for VPN services like Private Internet Access and TunnelBear, which can be used on both desktop computers and Android and iOS devices.
Source: “Hackers Love Public Wi-Fi, But You Can Make It Safe,” Forbes.com (March 4, 2014)
Completed foreclosures ticked up 11.8 percent in January compared to December 2013, but remained 19 percent below year-ago levels, CoreLogic reports in its latest National Foreclosure Report.
Completed foreclosures in January stood at 43,000. That remain elevated by historical standards: Completed foreclosures, which reflects the total number of homes that are lost to foreclosure, averaged 21,000 per month nationwide between 2000 and 2006.
Since September 2008 — when the financial crisis began — about 4.9 million completed foreclosures have occurred across the country, according to CoreLogic.
In January, about 794,000 homes in the U.S. were in some state of foreclosure, down from 1.2 million a year ago. January marked the 27th consecutive month for year-over-year declines, CoreLogic notes.
“We are recovering, but we’re not there yet,” says Mark Fleming, chief economist for CoreLogic. “For every completed foreclosure, there are 954 mortgaged homes in non-judicial foreclosure states and 896 mortgaged homes in judicial foreclosure states. Although this is a big improvement relative to the height of the foreclosure crisis, a healthier ratio would be one for every 2,000.”
The Demand Institute, a nonprofit think tank operated by The Conference Board and Nielsen, predicts an uneven recovery for the U.S. housing sector over the next five years. The study says it wont be until 2018 that the median price of single-family homes will be near the peak reached in 2006, before the housing crisis began. But some states will get there faster than others.
The study showed that among the 50 largest metros where housing prices are expected to appreciate between 2012 and 2018, the top five metros (Memphis, Tampa, Jacksonville, Milwaukee, and St. Louis) will see increases averaging 32 percent. The five cities projected to have the lowest price appreciation (Washington, D.C., Oklahoma City, Denver, Minneapolis, and Phoenix) will see gains of around 11 percent.
“The strength of the local housing market is among the most telling metrics that helps us assess community health and well-being,” says Louise Keely, chief research officer at the Demand Institute and co-author of the report. Researchers analyzed 2,200 cities and towns in the U.S. and conducted interviews with 10,000 consumers for the report.
The report notes that the double-digit price increases of the last two years were largely driven by investors buying distressed homes to meet rising rental demands. The report notes that a main driver of housing demand for the next five years will be the formation of new households, particularly as the economy strengthens and employment rises.
Source: “U.S. Housing Recovery Uneven Across Markets, Study Finds,” Reuters (Feb. 26, 2014)
First-time and low-income mortgage borrowers may have an easier time qualifying for a Federal Housing Administration loan. Ginnie Mae, a government agency that issues bonds backed by FHA loans, reports that the average credit score on FHA-backed loans fell to 680 in 2013, and the average debt-to-income ratio rose to 40.3 percent — both indicators that credit may be easing.
In comparison, Ginnie Mae reported in January 2013 that the average credit score was 701 and the debt-to-income ratio was 38 percent.
“The FHA theoretically allows credit scores as low as 580,” the L.A. Times reports. “But lenders, buffeted by defaulted loans and demands that they buy back troubled mortgages that they sold, generally have set standards higher since the mortgage meltdown.”
Source: “Average Credit Score Falls on FHA Loans,” Los Angeles Times (Feb. 27, 2014)
For the fourth straight week, the averages on fixed-rate mortgages edged higher, Freddie Mac reports in its weekly Mortgage Market Survey.
“Mortgage rates edged up, with new-home sales exceeding expectations and rising to a seasonally adjusted pace of 468,000 units in January, the strongest annual rate since July 2008,” notes Frank Nothaft, Freddie Mac’s chief economist.
Freddie reported the following national averages for the week ending Feb. 27:
- 30-year fixed-rate mortgages: averaged 4.37 percent, rising from last week’s 4.33 percent average. A year ago at this time, 30-year fixed-rate mortgages averaged 3.51 percent.
- 15-year fixed-rate mortgages: averaged 3.39 percent, up from last week’s 3.35 percent average. Last year at this time, 15-year rates averaged 2.76 percent.
- 5-year hybrid adjustable-rate mortgages: averaged 3.05 percent, dropping from last week’s 3.08 percent average. A year ago, 5-year ARMs averaged 2.61 percent.
Source: Freddie Mac
Housing affordability for teachers is in dire straits in the Golden State, according to a new study by real estate brokerage Redfin. The study found that 83 percent of homes in California are unaffordable on a teacher’s salary. Redfin analyzed average teacher salaries in markets in California and compared them with the median home price.
Only 17 percent of all homes for sale in the state are affordable to teachers. In some cities, the problem is even worse. In San Francisco, there isn’t one house on the market that teachers can afford on their average salary, the study showed.
According to Redfin’s data, the median list price in California is $485,000. The state’s 300,000 elementary, middle, and high school teachers have an average annual salary of $69,300. Using a general guideline that a monthly home payment should not exceed 28 percent of your gross monthly income, Redfin says that a teacher would likely not want to pay more than about $1,600 a month for a home.
“Given current interest rates, property taxes, home insurance, and home owners association expenses, a teacher can afford a $260,000 single-family home or condo,” Redfin says in its report. “Of the 50,559 for sale in California, just 17.4 percent are listed below $260,000.”
Redfin says that tight housing inventories are causing home affordability to slip in California. Its report breaks down what teachers can afford by county at: ”83 Percent of California Homes Unaffordable on a Teacher’s Salary,” Redfin Research Center (Feb. 25, 2014)
Rising student loan debt continues to take blame for curtailing the number of young Americans from home ownership, but lenders and real estate professionals say it doesn’t have to necessarily be a deal killer in qualifying for a mortgage.
Home ownership is possible for buyers saddled with student loan debt, says John Wheaton, Redfin Open Book lender. “Many young people with student loans delay buying a home because they don’t think they can’t qualify for a mortgage,” Wheaton says. “Yet, many of them actually can. Underwriters generally treat student debt in a more positive light than credit card or auto loan debt.”
For example, Wheaton says that a person with $45,000 in student loans and a FICO score of 741 with an income of about $75,000 per year would likely qualify for a property starting at around $375,000 with a 5 percent down payment.
The National Association of REALTORS® recently reported that the share of existing home purchases by first-time home buyers has fallen to 26 percent of sales. Last year, the percentage stood at 30 percent.
Source: “Higher Education or a House: Can Young Americans Have Both?” Redfin Research Center (Feb. 24, 2014)
More people moved to the United States from around the world in 2013, according to UniGroup Relocation’s International Migration Study. The UniGroup study includes foreigners moving to the U.S. and U.S. residents moving to foreign countries. UniGroup is affiliated with U.S. moving companies Mayflower Transit and United Van Lines.
The United Kingdom is the top country of origin for moves to the United States, according to the study. Meanwhile, several Western European countries — Germany, the United Kingdom, France, and Switzerland — continue to top the list of destinations for U.S. residents moving abroad.
Source: “Coming to America: More People Moved to U.S. From International Locations in 2013,” RISMedia (Feb. 22, 2014)