Housing Affordability to get ‘Worse in Spring”

As mortgage rates continue to inch higher, consumers are bracing for steeper homebuying costs this spring. Households earning the national median income of $68,000 a year could afford about 59.6 percent of new and existing homes that were sold in the fourth quarter of 2017, according to the National Association of Home Builders. The trade group’s latest report looks at home prices, mortgage interest rates, and median household income across 238 U.S. metros.

Mortgage rates have increased for the past five consecutive weeks. Lawrence Yun, chief economist for the National Association of REALTORS®, predicts that mortgage rates will reach 4.5 percent by the second half of the year. Inventory shortages along with high buyer demand, have prompted home prices to escalate, fueling bidding wars.

Source: “Will It Become Harder to Afford a Home? Experts Say Yes,” realtor.com® (Feb. 9, 2018) and National Association of Home Builders

Mortgage Interest Rates Climb This Week

Rates are increasing, but home buyers can still snag an interest rate that is lower than a year ago.

“The 30-year mortgage rate has been bouncing around in a 10 basis point range since September. While long-term rates have been relatively steady week-to-week, shorter term interest rates have been on the rise. The spread between the 30-year fixed mortgage and the 5/1 Hybrid ARM rate was 59 basis points this week, down 43 basis points from earlier this year. With a narrower spread between fixed and adjustable mortgage rates, more borrowers are opting for a fixed product.” says Len Kiefer, Freddie Mac’s deputy chief economist.

Freddie Mac reports the following national averages for the week ending Dec. 7:

  • 30-year fixed-rate mortgages: averaged 3.94 percent, with an average 0.5 point, increasing from last week’s 3.90 percent average. Last year at this time, 30-year rates averaged 4.13 percent.
  • 15-year fixed-rate mortgages: averaged 3.36 percent, with an average 0.5 point, increasing from last week’s 3.30 percent average. A year ago, 15-year rates averaged 3.36 percent.

Source: Freddie Mac

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