Loan demand was on the rise last week, posting a strong rebound that was driven mostly by applications to purchase a home, the Mortgage Bankers Association reports in its seasonally adjusted weekly mortgage market survey, reflecting the week ending Nov. 14. The increase in demand came despite interest rates mostly staying flat for the week.
Total application volume, reflecting applications for home purchases and refinances, climbed nearly 5 percent. Refinance applications rose 1 percent week-to-week, while applications for home purchases, viewed as a gauge of future buying activity, surged 12 percent. It was the highest level for purchase applications since July, the MBA reports.
“The MBA and other data are showing strength in the market for new homes, likely reflecting the boost from continued job growth in recent months,” says Michael Fratantoni, the MBA’s chief economist.
Meanwhile, the 30-year fixed-rate mortgage declined slightly last week to 4.18 percent from 4.19 percent the week prior, the MBA reports.
Source: “Weekly Mortgage Applications Jump Unexpectedly,” CNBC (Nov. 19, 2014)
Expect the home-purchase market to strengthen along with the economy in 2015, according to Freddie Mac’s U.S. Economic and Housing Market Outlook for November.
“The good news for 2015 is that the U.S. economy appears well-poised to sustain about a 3 percent growth rate in 2015 — only the second year in the past decade with growth at that pace or better,” says Frank Nothaft, Freddie Mac’s chief economist. “Governmental fiscal drag has turned into fiscal stimulus; lower energy costs support consumer spending and business investment; further easing of credit conditions for business and real estate lending support commerce and development; and consumers are more upbeat and businesses are more confident, all of which portend faster economic growth in 2015. And with that, the economy will produce more and better-paying jobs, providing the financial wherewithal to support household formations and housing activity.”
Freddie Mac economists have made 5 projections in housing for 2015 at: Freddie Mac
The 30-year fixed-rate mortgage is hovering around 4 percent. This has been keeping borrowing costs low for refinancers and home buyers for the last few weeks, Freddie Mac reports in its weekly mortgage market survey.
Freddie Mac reported the following national averages for the week ending Nov. 13:
- 30-year fixed-rate mortgages averaged 4.01 percent, with an average 0.5 point, dropping from last week’s 4.02 percent. A year ago, 30-year rates averaged 4.35 percent.
- 15-year fixed-rate mortgages averaged 3.2 percent, with an average 0.5 point, dropping from last week’s 3.21 percent average. Last year at this time, 15-year rates averaged 3.35 percent.
- 5-year hybrid adjustable-rate mortgages averaged 3.02 percent, with an average 0.5. point, rising from last week’s 2.97 percent average. A year ago, 5-year ARMs averaged 3.01 percent.
Source: Freddie Mac
More Americans are growing optimistic about home-price appreciation and selling, according to Fannie Mae’s October 2014 National Housing Survey of 1,000 adults.
Home-price expectations rose significantly in the latest survey, largely reversing a dip over the past four months, says Doug Duncan, Fannie Mae’s chief economist. Consumers who say now is a good time to sell a home reached another survey high this month.
“The narrowing gap between home buying and home selling sentiment may foreshadow increased housing inventory levels and a better balance of housing supply and demand,” Duncan says. “These results may help drive a healthier housing market in 2015.”
Duncan says the latest survey showed consumers are growing more optimistic about the housing market “in the face of broader improvement in economic sentiment. The share of consumers who expect their personal finances to get better is near its highest level since the survey’s inception, those expecting their finances to get worse reached a survey low.”
Additional highlights from the survey at source: Fannie Mae
With increased competition for units, rents are shooting up, and the increases are biting renters’ wallets as they find themselves increasingly getting priced out of the market, with wages failing to keep pace.
Nationwide rents have risen about 6 percent from a year ago, due to rising demand and still-limited supply, CNBC reports. Renters in many areas are paying more than 30 percent of their wages on a two-bedroom rental, according to an analysis by Trulia. Financial experts often recommend spending no more than 30 percent of wages on housing expenses (mortgage interest, principal, taxes, insurance).
Rental demand is strong and likely will remain so for the foreseeable future, analysts note. Apartment vacancies rose slightly in the third quarter for the first time in four-and-a-half years, but was mostly attributed to more rental supply coming on the market, according to Reis analytics firm.
“Units brought online during tight market environments have a tendency to actually push rents upward, not downward,” says Ryan Severino, economist at Reis, told CNBC. “So landlords should still be able to push asking rent increases on to their tenants.”
Source: “Rents Skyrocket Well Beyond Wages,” CNBC (Nov. 6, 2014)
For the second consecutive week, average fixed-rate mortgages inched higher, taking the 30-year fixed-rate mortgage back above 4 percent for the first time in three weeks, Freddie Mac reports in its weekly mortgage market survey.
Freddie Mac reports the national averages for the week ending Nov. 6:
- 30-year fixed-rate mortgages: averaged 4.02 percent, with an average 0.5 point, rising from last week’s 3.98 percent average. Last year at this time, 30-year rates averaged 4.16 percent.
- 15-year fixed-rate mortgages: averaged 3.21 percent, with an average 0.5 point, rising from last week’s 3.13 percent average. A year ago, 15-year rates averaged 3.27 percent.
- 5-year hybrid adjustable-rate mortgages: averaged 2.97 percent, with an average 0.5 point, increasing from last week’s 2.94 percent average. Last year at this time, 5-year ARMs averaged 2.96 percent.
Source: Freddie Mac
Recent reductions in the 30-year fixed-rate mortgage could net the population of borrowers big savings if they would refinance, according to Black Knight Financial Services’ latest Mortgage Monitor Report.
“Before the most recent reductions in the average 30-year mortgage interest rate, approximately 6 million borrowers met broad-based ‘refinancibility’ criteria,” says Trey Barnes, Black Knight’s senior vice president of Loan Data Products. “These criteria assume loan-to-value ratios of 80 percent or below, good credit, non-delinquent loan status, and current interest rates high enough that borrowers have an incentive to refinance. In light of where rates are today, and looking at borrowers with current notes at 4.5 percent and above, that population has now swelled to 7.4 million — almost a 25 percent increase. This is a relatively conservative assessment, though, as those with current rates of 4.25 percent to 4.5 percent could arguably benefit from refinancing as well. That group adds another 1.7 million borrowers to the population.”
A separate study by the National Bureau of Economic Research found in an analysis of 1 million fixed-rate mortgages that 20 percent of Americans who failed to refinance could have saved more than $45,000 in payments over the life of their loan. At the time of the study, average interest rates were around 4.3 percent. In recent weeks, the 30-year fixed-rate mortgage dipped below 4 percent, sinking to the lowest levels in more than a year, according to Freddie Mac. However, some home owners are struggling to refinance as their home values continue to recover.
Source: Black Knight Financial Services
There are fewer home owners in the United States today than last year. The home ownership rate dropped to a 20-year low in the third quarter as more Americans became renters, another sign that the housing recovery is still mending. While millennials’ changing preferences often take the most heat for the decline in home ownership numbers, they can’t take the blame for the latest dip, per an article in The Atlantic.
Instead, it’s Generation X, those aged between 35 and 44, who have had the sharpest drop in home ownership since the recession. Home ownership among the 35 to 44 age group has dropped 9 percent since 1994.
Millennials, in the last 20 years, home ownership has fallen less for young people than for any other age group under 64, according to an analysis of Census data by The Atlantic.
Why are Gen Xers shying away from home ownership? Employment may be key. Researchers note that employees in their forties once outnumbered the 55-plus cohort in the workforce by 16 million, but now there are actually more workers older than 55 than forty somethings.
Source: “Home Ownership in America Has Collapsed – Don’t Blame Millennials,” The Atlantic (10/28/14); “U.S. Home Ownership Rate Falls to 20-Year Low,” Reuters (10/28/14); and “Census Bureau: Home Ownership Continues to Drop,” HousingWire (10/28/14)
Average fixed-rate mortgages inched up from last week’s lowest rates of the year but are still below historical lows, Freddie Mac reports in its weekly mortgage market survey.
Freddie Mac reports the following average mortgage rates for the week ending Oct. 30:
- 30-year fixed-rate mortgages: averaged 3.98 percent, with an average 0.5 point, rising from last week’s 3.92 percent average. Last year at this time, 30-year rates averaged 4.10 percent.
- 15-year fixed-rate mortgages: averaged 3.13 percent, with an average 0.5 point, rising from last week’s 3.08 percent. A year ago, 15-year rates averaged 3.20 percent.
- 5-year hybrid adjustable-rate mortgages: averaged 2.94 percent, with an average 0.5 point, rising from last week’s 2.91 percent average. Last year at this time, 5-year ARMs averaged 2.96 percent.
Source: Freddie Mac
Mortgage rates continue to hover at yearly lows, but home buyers aren’t flocking to lock in the rates. Applications for mortgages dropped 6.6 percent last week for both home purchases and refinances, the Mortgage Bankers Association report.
Broken out, refinancing applications dropped 7.4 percent last week, while applications for home purchases, viewed as a gauge of future home sales, continued its drop, falling 5 percent last week. Last week, home purchase applications had fallen by another 5 percent and were about 9 percent from year-ago levels, the MBA reported.
Meanwhile, the 30-year fixed-rate mortgage continues to stay low by historical standards. The average rate nationwide was 4.13 percent week, up 3 basis points from 4.10 percent the week prior, according to the MBA’s survey, which reflects about 75 percent of the U.S. retail residential mortgage application market.
Source: “U.S. Mortgage Applications Fall in Latest Week as Rates Rise: MBA,” Reuters (Oct. 29, 2014)