After April Hikes, Mortgage Rates Slide in May

“While mortgage rates have increased by one-half of a percentage point so far this year, it has not impacted home purchase demand, which continues to grow this spring,” says Sam Khater, Freddie Mac’s chief economist. “The observed buyer resiliency in the face of higher rates reflects the healthy economy and strong consumer confidence, which are important drivers of home sales activity.

Freddie Mac reports the following national averages for the week ending May 3:

  • 30-year fixed-rate mortgages: averaged 4.55 percent, with an average 0.5 point, dropping from last week’s 4.58 percent average. Last year at this time, 30-year rates averaged 4.02 percent.
  • 15-year fixed-rate mortgages: averaged 4.03 percent, with an average 0.4 point, rising from last week’s 4.02 percent average. A year ago, 15-year rates averaged 3.27 percent.

Source: Freddie Mac

Kitchens Dethroned as Top Remodeling Project

Bathrooms overtook kitchens as the most popular remodeling project, according to a new NAHB survey. NAHB has released the results highlighting the most common remodeling projects to kick off National Home Remodeling Month in May.

While remodeling is commonly associated with kitchens and baths, demand for green upgrades continues to swell as home owners seek to save on utility costs, improve air quality and increase the value of their homes. An additional survey by NAHB Remodelers showed that high-performing, low-emissivity (Low-E) windows are the most common green-building product installed by residential remodelers.

Source: National Association of Home Builders

 

Warning of Russian Cyberattacks to Private Homes

The U.S. and Britain have issued a warning about Russian cyberattacks that could extend to individual homes. The warning was the first of its kind, The New York Times reports. The warning extends to possible cyberattacks to government and private organizations in both countries as well.

The countries are asking the public to upgrade passwords and computer security to make themselves less vulnerable. U.S. and U.K. officials are warning that Russians are tapping into internet-connected devices in homes and businesses. Hackers allegedly could secretly inserting themselves into the exchange of data between a computer or server to eavesdrop, collect confidential information, misdirect payments, etc.

The officials said that the full extent of Russia’s ability to penetrate Western computer networks is still unknown.

More information at source: “U.S.-U.K. Warning on Cyberattacks Includes Private Homes,” The New York Times (April 16, 2018)

‘Nonprime’ Loans Expand Mortgage Options

Subprime mortgages—which were blamed for sparking the last housing crisis—are reappearing, this time being dubbed “nonprime” loans. This lending option, which carries new quality standards, is growing for buyers who have damaged credit.

California-based Carrington Mortgage Services is one company expanding its nonprime loan offerings. “We believe there is actually a market today for people who want to buy nonprime loans that have been properly underwritten,” saysRick Sharga, of Carrington Mortgage Holdings, told CNBC.

Carrington Mortgage Services, which plans to manually underwrite each loan, will qualify borrowers with FICO credit scores as low as 500. The lender also will qualify borrowers who’ve had recent problems reported on their credit histories, such as a foreclosure, bankruptcy, or a history of late payments. But borrowers who are at higher risks will be required to make a bigger down payment, and the interest rate on the loan will be higher.

Other lenders also are getting into the nonprime space, including Angel Oak and Caliber Home Loans; more than 80 percent of Angel Oak loans are nonprime.

Source: “Subprime Mortgagees Make a Comeback—With a New Name and Soaring Demand,” CNBC (April 12, 2018)

Home Loan Payments Up 13% This Year

Monthly mortgage payments have risen an average of nearly 13 percent nationwide over the last year—or an extra $168—as buyers grapple with both higher home prices and increasing mortgage rates, according to a realtor.com® analysis. Luxury buyers are feeling the worst sticker shock, paying double the rate. In the top 10 percent of the market, owners are now paying an average $241 more per/mo.

Mortgage interest rates are about a half of a percentage point higher than they were at the beginning of the year, and the Federal Reserve has signaled there are more hikes to come.

Different generations of home buyers may have varying tolerance levels for mortgage rate fluctuations. Millennials are pursuing homeownership at a time when interest rates are at historic lows, averaging in the 4 percent range, while older buyers remember when they were in the double digits. So for millennials, “even a minor upswing [in interest rates] may seem significant,” The Wall Street Journal reports.

Source: “Rising Interest Rates Squeeze Homeowners’ Budgets,” The Wall Street Journal (April 4, 2018) [Log-in required.]

Mortgage Interest Rates Ease This Week

Borrowers found some relief for the second consecutive week with lower mortgage rates.

“After dropping earlier this week on trade-related anxiety in financial markets, the benchmark 10-year Treasury stabilized on Wednesday, but at a level slightly lower than from the start of last week,” explains Len Kiefer, Freddie Mac’s deputy chief economist.

Freddie Mac reported the following national averages for the week ending April 5:

  • 30-year fixed-rate mortgages: averaged 4.40 percent, with an average 0.5 point, dropping from last week’s 4.44 percent average. Last year at this time, 30-year rates averaged 4.10 percent.
  • 15-year fixed-rate mortgages: averaged 3.87 percent, with an average 0.4 point, dropping from last week’s 3.90 percent average. A year ago, 15-year rates averaged 3.36 percent.

Source: Freddie Mac

Home Loan Rates Ease Slightly This Week

“Treasury yields fell from a week ago, helping to drive mortgage rates modestly lower,” asys Len Kiefer, Freddie Mac’s a economist. “The yield on the 10-year Treasury dipped below 2.8 percent for the first time since early February of this year. The decline in Treasury yields comes as investors move into safer assets amid increased trade tensions. Following Treasury yields, mortgage rates fell slightly.”

Freddie Mac reports the following national averages for the week ending March 29:

  • 30-year fixed-rate mortgages: averaged 4.44 percent, with an average 0.5 point, dropping from last week’s 4.45 percent average. Last year at this time, the 30-year fixed-rate mortgage averaged 4.14 percent.
  • 15-year fixed-rate mortgages: averaged 3.90 percent, with an average 0.5 point, dropping from last week’s 3.91 percent average. A year ago, 15-year rates averaged 3.39 percent.

Source: Freddie Mac

Will ‘Granny Flats’ Resolve Housing Shortages?

Some housing economists believe that “granny flats” could be the key to alleviating housing shortages across the country, and they are calling on more municipalities to ease up the rules to allow such dwellings to be built on or into more single-family homes. Nicknamed “granny flats,” these accessory dwelling units tend to be separate, cottage-like structures, but may be a converted garage or basement that houses an extra living area.

In California, three new zoning laws in 2017 allowed for expanded development of granny flats. California has since seen a 63 percent increase in the number of building permits for these units—more than any other state, according to ATTOM Data Solutions, a real estate data firm. But many counties either still have zoning restrictions that don’t allow these units, or they are making the building permit process difficult.

Source: “Could ‘Granny Flats’ Be the Solution to America’s Affordable-Housing Crisis?” MarketWatch (March 26, 2018)

More Homeowners, Appraisers Agree on Values

Homeowners and appraisers are seeing more eye-to-eye when it comes to home values. Appraised values in February were, on average, just 0.53 percent below homeowner estimates—the fifth consecutive month where the gap between the two groups has been less than 1 percent, according to the National Quicken Loans Home Price Perception Index.

When shopping for a home—or even refinancing a current mortgage—consumers should always keep the changes in their local market in mind before estimating a home’s value.”

The Home Price Perception Index chart and other data at article source: Quicken Loans

Household Net Worth Reaches Record High

Americans are feeling richer. Household net worth neared $100 trillion in the final quarter of last year, falling into record territory, according to new data released by the Federal Reserve on Thursday. Rising stock markets and property prices were attributed to the jolt in the fourth quarter. (Household net worth is the value of all of a consumer’s assets, like stocks and real estate, minus any liabilities like mortgage and credit card debt.)

Household net worth increased more than $2 trillion last quarter to a record $98.7 trillion in the final three months of last year, according to the report. Households in the U.S. saw their net worth increase to nearly seven times their disposable personal income in 2017.

More at source: “U.S. Household Net Worth Pushes Further Into Record Territory,” The Wall Street Journal (March 8, 2018) [Log-in required.] and “Stock Market Lifts U.S. Household Wealth to $98.7 Trillion,” The Associated Press/USA Today (March 8, 2018)