Are Supply Woes Causing Loan Demand Drop?

The number of mortgage applications for home purchases continues to underwhelm, despite rates being at their lowest levels since November. Mortgage applications for purchasing a home dropped 3 percent last week on a seasonally adjusted basis.

The annual gain in purchase applications remains positive (4 percent higher than a year ago), but they’re narrowing as the supply of homes for sale falls and makes it tougher for buyers to find and afford a home, CNBC reports.

Meanwhile, current homeowners may be holding out for even lower rates. Refinancing application volume dropped 2 percent last week and is down 41 percent from a year ago, when mortgage rates were lower.

Source: “Weekly Mortgage Applications Drop 2.3% as Borrowers Wait for Lower Rates,” CNBC (Aug. 30, 2017)

Home Loan Interest Rates Surge to 4-Month High

For the second week, mortgage rates moved higher. This time, the 30-year fixed-rate mortgage inched above 3.5 percent for the first time since June.

Freddie Mac reports the following national averages for the week ending Oct. 20:

’30-year fixed-rate’ mortgages: averaged 3.52 percent, with an average 0.5 point, rising from last week’s 3.47 percent average. Last year at this time, 30-year rates averaged 3.79 percent.

’15-year fixed-rate’ mortgages: averaged 2.79 percent, with an average 0.5 point, also rising from last week’s 2.76 percent average. A year ago, 15-year rates averaged 2.98 percent.

Source: Freddie Mac

Loan Demand Drops Despite Low Rates

Total mortgage activity – including refinances and home purchases – dropped 4 percent last week on a seasonally adjusted basis even though mortgage rates are near all-time lows, the Mortgage Bankers Association reported Wednesday.

“A strong job market and low rates continue to support home sales,” says Michael Fratantoni, MBA’s chief economist. MBA reports the average on the 30-year-fixed rate mortgage remains near all-time lows, decreasing last week to 3.64 percent (from 3.65 percent the previous week).

Source: “Mortgage Applications Fell 4% Even as Rates Sit Near Record Lows,” CNBC (Aug. 17, 2016)

Market Unrest Pushes Down Mortgage Interest Rates

For the third consecutive week, mortgage rates edged down, with the 30-year fixed-rate mortgage continuing below 4 percent, Freddie Mac reports in its weekly market survey.

“The Freddie Mac mortgage rate survey had difficulty keeping up with market events this week,” says Sean Becketti, Freddie Mac’s chief economist. “The 30-year mortgage rate dropped 11 basis points to 3.81 percent, the lowest rate in three months. This drop reflected weak inflation and nonstop financial market turbulence that is driving investors to the safe haven of Treasuries. However, the survey was largely complete prior to Wednesday’s Treasury rally that drove the yield on the 10-year Treasury below 2 percent, down 29 basis points since the end of 2015.”

Freddie Mac reports the following mortgage rates for the week ending Jan. 21:

  • 30-year fixed-rate mortgages: averaged 3.81 percent, with an average 0.6 point, dropping from last week’s 3.92 percent average. Last year at this time, 30-year rates averaged 3.63 percent.
  • 15-year fixed-rate mortgages: averaged 3.10 percent, with an average 0.5 point, falling from last week’s 3.19 percent average. A year ago, 15-year rates averaged 2.93 percent.

Source: Freddie Mac

Little to Fear in Home Loan Interest Rate Hikes

Freddie Mac Chief Economist Sean Becketti is dismissing concerns that the Federal Reserve’s latest change in monetary policy could spell trouble for the real estate market. The Fed’s decision to raise its benchmark short-term rates will not cause mortgage rates to skyrocket, reduce housing affordability, or reverse recent improvements in the housing market, he writes on Freddie Mac’s Executive Perspectives blog.

In fact, Becketti predicts that the Fed’s move won’t take much of a toll on mortgage rates at all. As an example, he cites a time during the mid-2000s when the 17 consecutive monthly rate hikes issued by the Fed basically had no effect on mortgage rates, which remained at about 6 percent.

Becketti predicts that mortgage rates will increase gradually from 2015’s 4.1 percent to an average of 4.4 percent by the end of 2016. He expects home prices to moderate more in the new year too, increasing about 4.4 percent this year.

“While we believe the housing sector will remain strong in 2016, there is some uncertainty about the strength of the broader economy,” Becketti says.

Source: “Strong Housing Sector Trumps Tighter Monetary Policy in 2016,” Freddie Mac Executive Perspectives Blog (Jan. 4, 2016).

Mortgage Interest Rates Drop Even Lower This Week

For the second consecutive week, mortgage rates continued to fall, with the 30-year fixed-rate mortgage still well below 4 percent and 15-year rates dipping below 3 percent, Freddie Mac reports in its weekly mortgage market survey.

“Low mortgage rates are a welcome sign for those in the market to buy a home this spring season and will help to support homebuyer affordability,” says Len Kiefer, deputy chief economist at Freddie Mac.

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

  • 30-year fixed-rate mortgages: averaged 3.69 percent, with an average 0.6 point, dropping from last week’s 3.78 percent average. Last year at this time, 30-year fixed-rates averaged 4.40 percent.
  • 15-year fixed-rate mortgages: averaged 2.97 percent, with an average 0.6 point, dropping from last week’s 3.06 percent average. A year ago, 15-rates averaged 3.42 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 2.92 percent, with an average 0.4 point, dropping from last week’s 2.97 percent average. Last year at this time, 5-year ARMs averaged 3.10 percent

Source: Freddie Mac

Sign of Home Buying ‘Rebounding Soon’

After several recent drops, mortgage applications reversed course last week, with those for home purchases jumping 5 percent on a seasonally adjusted basis, according to the Mortgage Bankers Association’s latest report. The rise, which reflects data from the week ending Feb. 20, also came despite higher mortgage interest rates, MBA notes. (The survey includes adjustments for the President’s Day holiday.) Nevertheless, purchase applications still remain 2 percent lower than the same week a year ago.

Applications for refinancings continued to fall last week, dropping 8 percent to its lowest level this year. The drop prompted MBA’s overall mortgage application index, reflects both applications for home purchases and refinancings, to fall 3.5 percent for the week.

“The one exception to this trend was VA refinance volume, which increased 27 percent last week as certain lenders refocused on VA production,” says Mike Fratantoni, MBA’s chief economist. “The VA share of total applications increased to 9.6 percent from 8 percent the week prior as a result.”

Source: “Mortgage Applications Point to More Buyers,” CNBC (Feb. 25, 2015)

‘Mortgage Interest Rates’ on the Rise Again This Week

Mortgage rates ticked up slightly this week, as the 30-year fixed rate mortgage averaged 4.41 percent – more than a full percentage point higher than it was a year ago at this time, according to Freddie Mac’s Primary Mortgage Market Survey.

Freddie Mac reported the following national averages for the week ending April 3:

  • 30-year fixed-rate mortgages: averaged 4.41 percent, with an average 0.7 point, up slightly from last week’s 4.40 average. Last year at this time, 30-year rates averaged 3.54 percent.
  • 15-year fixed-rate mortgages: averaged 3.47 percent, with an average 0.6 point, rising from last week’s 3.42 percent average. A year ago, 15-year rates averaged 2.74 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.12 percent, with an average 0.5 point, up from last week’s 3.10 average. Last year at this time, 5-year ARMs averaged 2.65 percent.
  • 1-year ARMs: averaged 2.45 percent, with an average 0.4 point, rising from last week’s 2.44 percent average. A year ago, 1-year ARMs averaged 2.63 percent.

Source: Freddie Mac

Mortgage Rates Are Inching Back Up

Fixed mortgage rates were on the rise this week, “applying additional pressure for those markets that are already feeling an affordability pinch,” Freddie Mac reports in its weekly mortgage market survey.

“Mortgage rates rose following the uptick on the 10-year Treasury note after comments by the Federal Reserve Chair Janet Yellen indicated a possible increase on interest rates as soon as early 2015,” Frank Nothaft, Freddie Mac’s chief economist, explains.

Freddie Mac reports the following national averages for the week ending March 27:

  • 30-year fixed-rate mortgages: averaged 4.40 percent, with an average 0.6 point, rising from last week’s 4.32 percent average. A year ago at this time, 30-year rates averaged 3.57 percent.
  • 15-year fixed-rate mortgages: averaged 3.42 percent, with an average 0.6 point, rising from last week’s 3.32 percent average. Last year at this time, 15-year rates averaged 2.76 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.10 percent, with an average 0.5 point, increasing from last week’s 3.02 percent average. A year ago, 5-year ARMs averaged 2.68 percent.

Source: Freddie Mac

No More Record-Low Mortgage Interest Rates?

While mortgage rates have been rising the last few months, they are still historically low compared to the trend over the last four decades, Freddie Mac says in a blog post.

But rates as low as they were in November 2012 — when the 30-year fixed-rate mortgage reached an all-time low of 3.31 percent — aren’t likely to return any time soon, the mortgage giant says. Still, Freddie assures borrowers that the all-time record high of 18.63 percent reached in October 1981 isn’t on the horizon either. (At 18.63 percent, monthly mortgage payments on a $200,000 loan would be $3,117, compared to $992 a month at today’s 4.32 percent average.)

With mortgage rates at 4.32 percent, 123 of the 157 metros that Freddie Mac tracks remain very affordable to households earning the median income. In order for affordability to be hampered in the majority of markets, interest rates would have to reach 7 percent, according to Freddie Mac.

“Stubbornly high unemployment over the last several years coupled with stagnant income growth exacerbates declining affordability in a rising interest rate environment,” per Freddie’s blog post. “More jobs and income growth would help blunt the effects of higher interest rates and make buying a home more accessible. While jobs and income have shown some improvement in recent months, they continue to be challenged.”

Historic overview of mortgage rates at source:  Mortgage Rates: From Dirt Cheap, to Cheap,” Freddie Mac (March 24, 2014)