Rates Increased, But Don’t Worry

No reason for home shoppers to get nervous: Economists largely predict mortgage rates will dip in the weeks ahead. Also, rates are still more than a percentage point lower than a year ago.

“Despite this week’s uptick in mortgage rates, the housing market remains on the upswing, with improvement in construction and home sales,” says Sam Khater, Freddie Mac’s chief economist. “While there has been a material weakness in manufacturing and consistent trade uncertainty, other economic trends like employment and homebuilder sentiment are encouraging.”

Freddie Mac reports the following national averages for the week ending Oct. 17:

  • 30-year fixed-rate mortgages: averaged 3.69%, with an average 0.6 point, rising from last week’s 3.57% average. Last year at this time, 30-year rates averaged 4.85%.
  • 15-year fixed-rate mortgages: averaged 3.15%, with an average 0.5 point, rising from a 3.05% average last week. A year ago, they averaged 4.26%..
Source: Freddie Mac

Blame Housing If Recession Hits?

Economists say that if the country goes into recession, it won’t be the real estate market’s fault. While a slowdown in housing was largely blamed for the Great Recession, economics this time around does not correlate with weakness in the real estate sector.

In fact, it’s the opposite: The housing market has gotten a boost this fall, with more robust existing-home sales and an uptick in new-home construction. Buyers are being drawn to the market by lower mortgage rates, housing analysts say. “Housing is a critical sector because it acts as a multiplier by touching a wide swath of industries, from construction to financial services to home-improvement and appliance sales,” NBC News reports.

Mortgage applications have been on the rise since interest rates have decreased in recent weeks. The lower rates are giving home buyers an average of about $50,000 more in “purchase ability,” Todd Teta, chief product officer at ATTOM Data Solutions, told NBC. “It allows people to buy more home. That is meaningful on an absolute dollar basis for a lot of buyers.”

Source: “Recession Coming? Don’t Blame Housing,” NBC News (Oct. 8, 2019)

Mortgage Rates ‘Are Dropping’

The 30-year fixed-mortgage fell 8 basis points this week, averaging 3.57%, Freddie Mac reports. The lower rates are drawing out more home buyers in the fall market.

“The 50-year low in the unemployment rate combined with low mortgage rates has led to increased home buyer demand this year. Much of this strength is coming from entry-level buyers—the first-time home buyer share of the loans Freddie Mac purchased in 2019 is 46%, a two-decade high,” says Sam Khater, Freddie Mac’s chief economist.

Freddie Mac reports the following national averages for the week ending Oct. 10:

  • 30-year fixed-rate mortgages: averaged 3.57%, with an average 0.6 point, falling from last week’s 3.65% average. Last year the 30-year rates averaged 4.90%.
  • 15-year fixed-rate mortgages: averaged 3.05%, with an average 0.5 point, falling from last week’s 3.14% average. A year ago, 15-year rates averaged 4.29%.
Source: Freddie Mac

Home Loan Rates Hold Firm

Home buyers looking for a purchase loan and homeowners who want to refinance are responding well to low mortgage rates. “While mortgage rates generally held steady this week, overall mortgage demand remained very strong, rising over 50% from a year ago thanks to increases in both refinance and purchase mortgage applications,” says Sam Khater, Freddie Mac’s chief economist.

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

  • 30-year fixed-rate mortgages: averaged 3.65%, with an average 0.6 point, up slightly from last week’s 3.64% average. Last year, 30-year rates averaged 4.71%.
  • 15-year fixed-rate mortgages: averaged 3.14%, with an average 0.5 point, falling from last week’s 3.16% average. A year ago, 15-year rates averaged 4.15%.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.38%, with an average 0.4 point, unchanged from last week’s average. A year ago, they averaged 4.01%.
Source: Freddie Mac

Mortgage Rates Recede Last Week

September has proven to be the most volatile month for the 30-year fixed-rate mortgage since March. Average weekly movement on rates has fluctuated 11 basis points in that time, Freddie Mac reports. This week, mortgage rates fell after posting the largest uptick in nearly a year last week.

Freddie Mac reported national averages for the week ending Sept. 26:

  • 30-year fixed-rate mortgages averaged 3.64%, with an average 0.6 point, falling from last week’s 3.73% average. Last year at this time, rates averaged 4.72%.
  • 15-year fixed-rate mortgages averaged 3.16%, with an average 0.5 point, falling from last week’s 3.21% average. A year ago, 15-year rates averaged 4.16%.
  • 5-year hybrid adjustable-rate mortgages averaged 3.38%, with an average 0.4 point, falling from last week’s 3.49% average. A year ago,  ARMs averaged 3.97%.
Source: Freddie Mac

Home Ownership Market Survey

Low mortgage rates are fueling more favorable opinions on home buying. Nearly two-thirds of Americans—or 63%—believe now is a good time to buy a home, shows the National Association of REALTORS®’ newly released Housing Opportunities and Market Experience Survey, reflecting more than 2,700 consumer responses from the third quarter. Thirty-four percent in the third quarter said they “strongly” believe now is a good time to buy, which is down slightly from the previous quarter.

NAR’s Chief Economist Lawrence Yun offers a cautionary response to the favorable findings. “The fact that slightly fewer are expressing strong intensity compared to recent prior quarters is implying some would-be buyers have concerns about the direction of the economy,” Yun says. Fewer of the respondents—52%—believe the U.S. economy is improving. Millennials tended to be the most pessimistic about the direction over the economy.

Older consumers with higher incomes tended to be the most optimistic over the prospects of homebuying. The silent generation (those born between 1925 and 1945) were the most upbeat about buying at 75%, followed closely by older baby boomers (those born between 1946 and 1954) at 72%, the study showed. Further, 72% of consumers with incomes of $100,000 felt now is a good time to buy compared to 54% of consumers with incomes under $50,000.

Source: “2019 Q3 Homeownership Opportunities and Market Experience (HOME) Survey,” National Association of REALTORS® (Sept. 23, 2019)

Home Loan Rates Increase

Mortgage rates jumped dramatically this week but stand to dip some in the near future after the Federal Reserve lowered interest rates Wednesday. However, despite the uptick, rates remain historically low, Freddie Mac reports.

“Home buyers flocked to lenders with purchase applications, which were up 15 percent from a year ago, and residential construction permits increased 12 percent from a year ago to 1.4 million—the highest level in 12 years. While there was initially a slow response to the overall lower mortgage rate environment this year, it is clear that the housing market is finally improving due to the strong labor market and low mortgage rates,” says Freddie Mac Chief Economist Sam Khater.

Freddie Mac reported the following national averages for the week ending Sept. 19:

  • 30-year fixed-rate mortgages: averaged 3.73%, with an average 0.5 point, rising from last week’s 3.56% average. Last year at this time, they averaged 4.65%.
  • 15-year fixed-rate mortgages: averaged 3.21%, with an average 0.5 point, rising from last week’s 3.09% average. A year ago, 15-year rates averaged 4.11%.
Source: Freddie Mac

 

 

Latest Fed Rate Cut Benefit

The Federal Reserve lowered its benchmark interest rate by another quarter of a percentage point on Wednesday to a range of 1.75% to 2%, citing concerns over a global economic slowdown. Mortgage rates aren’t directly tied to the Fed’s interest rate, but they do tend to be influenced by them.

Still, while mortgage rates remain low, the Fed’s actions Wednesday will likely have little impact, at least initially, in directly bringing rates down more, several economists said after the Fed’s announcement.

Following its meeting, the Fed said that the U.S. economy is in “strong shape and unemployment remains low.” “If the economy does turn down, a more extensive series of rate cuts could be warranted,” Fed Chairman Jerome Powell said at a news conference following the Fed’s meeting.

Mortgage Rates Increase

“Purchase mortgage applications up nine percent from a year ago. The improved demand reflects the still healthy underlying consumer economic fundamentals such as a low unemployment rate, solid wage growth and low mortgage rates. While there has been a material weakness in manufacturing and consistent trade uncertainty, so far, the American consumer has proved to be resilient with solid home purchase demand,” says Sam Khater, Freddie Mac’s Chief Economist.

Freddie Mac reports the following national averages for the week ending Sept. 12:

  • 30-year fixed-rate mortgage averaged 3.56 percent with an average 0.5 point for the week ending September 12, 2019, up from last week when it averaged 3.49 percent. A year ago at this time, the 30-year FRM averaged 4.6 percent.
  • 15-year fixed-rate mortgage averaged 3.09 percent with an average 0.5 point, up from last week when it averaged 3.0 percent. A year ago at this time, the 15-year FRM averaged 4.06 percent.

Source: Freddie Mac

Record Rates by Year’s End?

By the end of this year, the 30-year fixed-rate mortgage could drop to 3.3%, which would put this popular loan product near its lowest average since Freddie Mac began tracking back data 48 years.

Lawrence Yun, chief economist for the National Association of REALTORS®, made the prediction after seeing the latest Labor Department report last week, showing a slowing job market. “The economy is clearly weakening, and the employment conditions show a lagging indicator,” Yun says. “The soft job gains in August assures that the Federal Reserve will be cutting interest rates.”