Holiday Gift: ‘Low Mortgage Rates’

Mortgage rates moderated this week after posting a big drop last week, and the Federal Reserve’s decision on Wednesday to raise its short-term key interest rate hasn’t had much on an effect on rates. (The Fed’s key rate is not directly tied to mortgage rates, but does often influence it.) Now’s the time to start a loan and home search.

Freddie Mac report of mortgage rates for the week ending Dec. 20:

  • 30-year fixed-rate mortgages: averaged 4.62 percent, with an average 0.4 point, dropping slightly from last week’s 4.63 percent average. Last year at this time, 30-year rates averaged 3.94 percent.
  • 15-year fixed-rate mortgages: averaged 4.07 percent, with an average 0.4 point, unchanged from last week. A year ago, 15-year rates averaged 3.38 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.98 percent, with an average 0.3 point, falling from last week’s 4.04 percent average. A year ago, 5-year ARMs averaged 3.39 percent.
Source: Freddie Mac

A ‘Welcome Sign’ for Housing!

For the second consecutive month, existing-home sales rose, as three of the four major U.S. regions saw an increase in sales last month, the National Association of REALTORS® reported 12/19/18.

“The market conditions in November were mixed, with good signs of stabilizing home sales compared to recent months, though down significantly from one year ago,” says Lawrence Yun, NAR’s chief economist. “Rising inventory is clearly taming home price appreciation.”

For a closer look at some of the leading indicators in existing-home sales in November, visit details and chart at: National Association of REALTORS®

FHA Raises Loan Limits for 2019

The Federal Housing Administration has announced that most of the country will see an increase to loan limits in the new year. The loan limit for lower-cost areas will be set at $314,827—or 65 percent of the national conforming loan limit of $484,350. In high-cost areas, the new FHA limit for 2019 will increase to $726,525, up from $679,650. The new loan limits will take effect Jan. 1, 2019.

Source: “FHA Loan Limits to Increase in Most of U.S. in 2019,” HousingWire (12/14/18)

Mortgage Rates Are Easing

Home buyers may be finding a window of opportunity to lock in lower rates. Mortgage rates fell this week, after several weeks of moderating, Freddie Mac reports.

“Mortgage rates declined this week amid a steep sell-off in U.S. stocks,” says Sam Khater, Freddie Mac’s chief economist.

Freddie Mac report of mortgage rates for the week ending Dec. 6:

  • 30-year fixed-rate mortgages: averaged 4.75 percent, with an average 0.5 point, down from last week’s 4.81 percent average. Last year at his time, 30-year rates averaged 3.94 percent.
  • 15-year fixed-rate mortgages: averaged 4.21 percent, with an average 0.4 point, falling from last week’s 4.25 percent average. A year ago, 15-year rates averaged 3.36 percent.
Source: Freddie Mac

Are Mortgage Rates Stabilizing?

Mortgage rates mostly held steady this week—and home buyers responded by rushing to lock in rates. “Mortgage rates stabilized the last couple of months as interest rate-sensitive sectors, such as new auto and home sales, have clearly softened the outlook for the economy,” says Sam Khater, Freddie Mac’s chief economist.

Freddie Mac report for the week ending Nov. 29:

  • 30-year fixed-rate mortgages: averaged 4.81 percent, with an average 0.5 point, unchanged from last week. Last year at this time, 30-year rates averaged 3.90 percent.
  • 15-year fixed-rate mortgages: averaged 4.25 percent, with an average 0.4 point, rising from last week’s 4.24 percent average. A year ago, 15-year rates averaged 3.30 percent.

More Buyers Turn to ARM Loans

Rising interest rates are prompting more home buyers to turn to adjustable-rate mortgages—which come with potential financial risks. Though these mortgages typically come with lower interest rates initially, they reset to market rates after five or seven years, potentially shocking borrowers with much higher costs.

“As interest rates continue to rise, the percentage of adjustable-rate mortgages is increasing, as home buyers are looking to take advantage of the best rates from their lenders,” says Jonathan Corr, president and CEO of Ellie Mae.

Source: “Ellie Mae Origination Insights Report: October 2018,” Ellie Mae (Nov. 21, 2018)

Mortgage Rates Take a Breather

Mortgage rates mostly held stable this week, a welcome relief .

“Despite recent market volatility, mortgage rates remained steady this week,” says Sam Khater, Freddie Mac’s chief economist. “The stability in mortgage rates reflects the moderation in inflationary pressures in the economy due to the lower oil prices and subdued wage growth. On the margin, lower energy costs are a positive for the home sales market, particularly for lower-middle income suburban buyers who spend proportionately more income on transportation costs.”

Freddie Mac reports the following rates for the week ending Nov. 15:

  • 30-year fixed-rate mortgages: averaged 4.94 percent, with an average 0.5 point, unchanged from last week’s average. Last year at this time, 30-year rates averaged 3.95 percent.
  • 15-year fixed-rate mortgages: averaged 4.36 percent, with an average 0.4 point, increasing slightly from last week’s 4.33 percent average. A year ago, 15-year rates averaged 3.31 percent.
Source: Freddie Mac

The Makings of a Buyer’s Market

Buyers are pulling back. Home prices have been rising too much relative to income for many would-be buyers to keep pace. Since 2011, the U.S. median home price has risen 55 percent while wages are up only 18 percent. Now, the Federal Reserve has become more aggressive against inflation; with several short-term interest rate increases over the past year. A monthly mortgage payment on a typical home today is $1,136, up from $639 in 2011.

And confidence is down. Only 38 percent of consumers today strongly believe it’s a good time to buy, down from 43 percent last year, and the numbers are lower for renters who don’t have equity to tap for a down payment.

With buyers stepping back a bit, inventory is no longer falling. New-home construction is increasing and more homeowners are considering listing. A recent survey NAR conducted shows 50 percent of consumers strongly indicate it is a good time to sell, compared to only 28 percent just two years ago. Most home sellers will also be buyers. With inventory expected to grow, prices will stop rising so fast. That’s a healthy adjustment. Buyers can soon resume their search for the American dream.

Source: magazine.realtor/news-and-commentary/economy/article/2018/10/the-makings-of-a-buyer-s-market?

Mortgage Rates Are on the Rise

Borrowers were faced with rising mortgage rates again this week, after a slight pause from increases the week before. “We expect rates to continue to rise, which will put downward pressure on home buying activity. While higher borrowing costs will keep some people out of the market, buyers with more flexibility could take advantage of the decreased competition,”  says Sam Khater, Freddie Mac’s chief economist.

Freddie Mac reports these rates for the week ending Oct. 25, 2018:

  • 30-year fixed-rate mortgages: averaged 4.86 percent, with an average 0.5 point, rising slightly from last week’s 4.85 percent average. Last year at this time, 30-year rates averaged 3.94 percent.
  • 15-year fixed-rate mortgages: averaged 4.29 percent, with an average 0.4 point, rising from last week’s 4.26 percent average. A year ago, 15-year rates averaged 3.25 percent.
Source: Freddie Mac

Why Home Buyers Need to Hurry

While there have been signs recently that the market may be shifting toward the favor of home buyers, prices are still on the rise in many areas around the country. The median sales price in July was $230,411, up 5.8 percent year over year.

The typical mortgage payment jumped 13.1 percent over that same one-year period, due to a nearly 0.6 percentage point increase in mortgage rates, according to new data from CoreLogic, a real estate research firm.

Rates are expected to increase by about 0.43 percentage points between July 2018 and July 2019. Housing forecasters predict median home sale prices to continue to rise by 1.8 percent in real terms over that same period.

With these projections, CoreLogic researchers predict the inflation-adjusted typical monthly mortgage payment to rise from $937 in July 2018 to $1,003 by July 2019.

Source: “Homebuyers’ ‘Typical Mortgage Payment’ Rising at Twice the Rate of Prices,” CoreLogic Insights Blog (Oct. 17, 2018)