Deeper Debt Isn’t Stopping Millennial Buyers

Millennials are taking out the greatest share of all new mortgages and buying homes across price ranges. But a new study also shows they’re going more into debt at an alarming rate.

Realtor.com®’s research team analyzed records for more than 3.2 million mortgages originated from January 2013 to October 2017 and divided it by age groups.

Compared to other generations, millennials are narrowing the gap in the price of homes they’re purchasing. In September, millennials obtained mortgages on homes with a median purchase price of $237,000. Generation Xers (born between 1965 and 1981) purchased homes with mortgages on a median price of $280,000, and baby boomers (born between 1946 and 1964) purchased at $258,000.

Millennials are making down payments nearly as high as Generation Xers. The average down payment for a millennial originated mortgage is 9.1 percent. Gen X buyers have been making down payments of 11 percent, since early 2013.

Source: “Millennials Are Taking Over Real Estate—But They’re Going Deeper Into Debt Too,” realtor.com® (Dec. 5, 2017)

Home Loan Rates Sink Lower This Week

The 30-year fixed-rate mortgage is averaging lower than it did a year ago, and remains well below the 4 percent threshold this week.

“The market implied probability of a Fed rate hike in December neared 100 percent, helping to drive short term interest rates higher,” says Len Kiefer, Freddie Mac’s deputy chief economist.

Freddie Mac reports the following national averages for the week ending Nov. 30:

  • 30-year fixed-rate mortgages: averaged 3.90 percent, with an average 0.5 point, decreasing from last week’s 3.92 percent average. Last year at this time, the 30-year fixed-rate mortgage averaged 4.08 percent.
  • 15-year fixed-rate mortgages: averaged 3.30 percent, with an average 0.5, down from last week’s 3.32 percent. A year ago, 15-year rates averaged 3.34 percent.

Source: Freddie Mac

FHFA Raises Conforming Home Loan Limits

The Federal Housing Finance Agency announced it will raise its conforming loan limit on Jan. 1, 2018. Mortgage financing giants Fannie Mae and Freddie Mac will allow maximum conforming loan limits for mortgages in most parts of the U.S. to be $453,100.  “El Dorado County, CA.” will be $517,500.

For 10 years, the FHFA had set the conforming loan limit in most places at $417,000. But as home prices started rising, the FHFA bumped up the conforming loan limit in 2017 to $424,100. As prices continued to move higher this year, the FHFA has raised limits again for 2018.

The Housing and Economic Recovery Act requires the conforming loan limit of the government-sponsored entities to be adjusted each year to reflect any changes in the average U.S. home price.

Source: Federal Housing Finance Agency

Lift in Housing Starts Indicates Inventory Relief

Housing starts neared their postrecession high in October, with expectations that the new-home market will soon provide much-needed inventory relief, the Commerce Department reports.

Starts, which reflect combined totals within the single-family and multifamily sectors, jumped 13.7 percent in October to a seasonally adjusted annual rate of 1.29 million. That’s the highest reading for new-home production since October 2016, when starts had reached a high of 1.33 million.

Starts for single-family homes in October increased 5.3 percent last month, reaching a seasonally adjusted annual rate of 877,000. They are now up 8.4 percent from a year ago. Multifamily starts surged nearly 37 percent, reaching 413,000 units in October after a weak September production report.

 

Source: National Association of Home Builders

Rates Hit Pause, Consumers Rush to Lock In?

A slight dip in interest rates last week brought more homeowners and home buyers to the mortgage market. More homeowners were quick to refinance before interest rates rise again, and home buyers were able to lock in lower rates during the week.

The Mortgage Bankers Association reported that total mortgage application volume—which includes for refinancings and home purchases—rose 3.1 percent last week on a seasonally adjusted basis. Mortgage applications, however, still remain 8.5 percent below a year ago.

Additional data at: “Weekly Mortgage Applications Rise as Rates Briefly Fall Back,” CNBC (Nov. 15, 2017)

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

When to Drop Your Listing Price

Though low inventory is prompting buyers to raise their offers in order to beat out competitors, you still want your sellers to know: an overpriced listing will linger on the market. Buyers pay attention to time on market and may erroneously assume something is wrong with a property that has gone “stale.” Real estate pros say it’s critical to determine what time frame is considered stale in your market and drop the price of your listing before getting to that pivotal moment.

Soaring home prices may make buyers pause, but houses are still selling fast. Nationwide, the average time a home spent on the market was 34 days in September, down from 39 days a year prior, according to the National Association of REALTORS®. Some sellers may be adamant about “testing the market” with a high asking price, so you should have a game plan for what to do if it backfires.

Source: “How to Know When to Drop the Asking Price on Your Home,” CNBC (Oct. 27, 2017)

Home Loan Rates Jump to 3-Month High

Mortgage rates reached their highest averages since July this week.

“The 30-year mortgage rate followed suit, increasing 6 basis points to 3.94 percent. Today’s survey rate is the highest rate in three months,”  says Sean Becketti, Freddie Mac’s chief economist.

Freddie Mac reports the following national averages for the week ending Oct. 26:

  • 30-year fixed-rate mortgages: averaged 3.94 percent, with an average 0.5 point, rising from last week’s 3.88 percent average. Last year at this time, 30-year rates averaged 3.47 percent.
  • 15-year fixed-rate mortgages: averaged 3.25 percent, with an average 0.5 point, increasing from 3.19 percent last week. A year ago, 15-year rates averaged 2.78 percent.

Source: Freddie Mac

Wildfire Victims Get ‘Mortgage Reprieve’

Homeowners affected by the California wildfires may be eligible to defer their mortgage payments for up to 12 months. Mortgage financing giants Fannie Mae and Freddie Mac have issued guidelines for wildfire victims with single-family mortgages.

Victims may be eligible to stop making mortgage payments in three-month intervals, up to 12 months. They also may be eligible to avoid late fees during this temporary payment break, and to not have delinquencies reported to the credit bureaus.

Mortgage servicers have been authorized by Fannie and Freddie to suspend or reduce a homeowner’s mortgage payments immediately for up to 90 days without any contact from the homeowner if the servicer believes the homeowner has been affected by the disaster. For any additional payment forbearance of up to 12 months, homeowners will need to reach out to their lenders. Fannie Mae and Freddie Mac provide disaster relief information.

Also, HUD’s Section 203(h) program provides FHA insurance to disaster victims who have lost their homes and now face the task of rebuilding or buying another home. Borrowers with FHA-approved lenders may be eligible for 100 percent financing, including closing costs.

Source: “HUD Announces Disaster Help for Wildfire Victims,” Napa Valley Register (Oct. 19, 2017); “Fannie Mae Reminds Homeowners and Servicers of Mortgage Assistance Options for Areas Affected by California Wildfires,” Fannie Mae (Oct. 13, 2017); “Freddie Mac Confirms Disaster Relief Policies Amid California Wildfires,” Freddie Mac (Oct. 13, 2017)

Survey: Buyers Leery of Online Mortgage Info.

Consumers trust real estate professionals and lenders more than online sources or family and friends when it comes to obtaining information about mortgages, according to a new Fannie Mae survey based on 1,000 responses. Recent home buyers surveyed, including younger age groups, say they consulted multiple sources of information about the mortgage process but found lenders and real estate agents to be more credible than mobile apps, websites, and social media.

Though survey respondents say online sources are more convenient, they indicated a higher level of confidence in getting information through person-to-person interaction. However, home buyers do report using online sources to shop for a home much more often than to shop for a mortgage, according to the survey.

Source: “Lenders and Real Estate Agents Still Beat Online Sources as Top Mortgage Influencers,” Fannie Mae National Housing Survey (Oct. 19, 2017)