Mortgage Rates Ease for Second Week

Borrowers had slightly more relief with mortgage rates again this week. The 30-year fixed-rate mortgage rate dipped again, averaging 4.53 percent, Freddie Mac reports.

“The stability in borrowing costs comes despite the highest core inflation rates since 2008 and turbulence in the currency markets,” says Sam Khater, Freddie Mac’s chief economist. “Unfortunately, this pause in rates is not leading to increasing home sales.”

Freddie Mac reports the following national averages for the week ending Aug. 16:

  • 30-year fixed-rate mortgages: averaged 4.53 percent, with an average 0.5 point, falling from last week’s 4.59 percent average. Last year at this time, 30-year rates averaged 3.89 percent.
  • 15-year fixed-rate mortgages: averaged 4.01 percent, with an average 0.5 point, dropping from last week’s 4.05 percent average. A year ago, 15-year rates averaged 3.16 percent.
Source: “Mortgage Rates Step Back,” Freddie Mac (Aug. 16, 2018)

Millions of Consumers Getting a Credit Score Boost

An overhaul in how several major credit reporting agencies factor in negative credit information is prompting millions of consumers’ credit scores to rise. Collection events were struck from 8 million consumers’ credit reports in the 12 months ending in June. The New York Federal Reserve reported Tuesday that consumers who had at least one collections account removed from their credit reports are seeing an 11-point increase to their scores.

Critics have long claimed such dings to scores are prone to errors or that they’ve unfairly kept many out of the borrowing market. Equifax, Experian PLC, and TransUnion have all agreed to revamp reports, which stems from a 2015 settlement with state attorneys general on the matter. In the settlement, the firms agreed to remove some non-loan related items that were sent to collection firms, such as gym memberships, library fines, and traffic tickets. They also agreed to strike medical-debt collections that have been paid by a patient’s insurance company.

Source: “Overhaul Boosts Credit Scores of Millions of U.S. Consumers,” The Wall Street Journal (Aug. 15, 2018)

Wildfires May Make Insurance Harder to Get in California

As firefighters work on the containment of at least 11 wildfires that continue to burn throughout the state, the California Department of Insurance is already warning homeowners about the insurance headaches they will likely face, even for those whose homes weren’t affected in the latest fires.

The increasing number and severity of wildfires will likely make it more difficult for homeowners in the state to find and hold onto insurance, the California Department of Insurance warns.

California Insurance Commissioner David Jones told the Associated Press that more insurance companies may choose not to renew policies, or may stop writing homeowners policies in areas with the highest fire risk. He also says homeowners in the state should be prepared to face rate increases. Also, some portions of the state may be reclassified from safe to high-risk for wildfires that could jump costs for homeowners.

Source: “California fires may make homeowners insurance harder to get,” Associated Press (Aug. 13, 2018)

5M Renters Have Fallen Prey to Online Scams

More than 43 percent of renters say they’ve found online rental listings that seemed fraudulent, and more than 5 million say they’ve actually been scammed—sometimes to the tune of thousands of dollars—according to a new report released by rental website ApartmentList.com.

The survey revealed that the most common scam is a “bait-and-switch” one, where a different property is advertised than the one that is actually available. The scammer is often able to collect a deposit or get a lease signed for the fake property. Another common scam is the “hijacked ad,” where a scammer takes a home that is legitimately for sale and poses as a fake landlord to collect funds. Apartment List also warns of a growing scam in which a listing property that is already leased is posted online. The scammer then attempts to collect application fees or security deposits from an unsuspecting consumer.

Source: “Ready to Rent a Home? Beware of These New Scams,” CNBC (Aug. 9, 2018)

Dip in Rates Provides ‘Stability’ for Home Sales

Borrowers saw a little relief from recent increases. Mortgage rates dropped slightly this week, with the 30-year fixed-rate mortgage averaging 4.59 percent, Freddie Mac reports. “This stability is much needed for home sales, which have crested because of the multiyear run up in prices, tight affordable inventory, and this year’s higher rates,” says Sam Khater, Freddie Mac’s chief economist.

Home prices are still climbing and rates are up from 3.90 percent a year ago. “Some prospective buyers are definitely feeling an affordability crunch,” Khater says.

Freddie Mac reports the following national averages for the week ending Aug. 9:

  • 30-year fixed-rate mortgages: averaged 4.59 percent, with an average 0.5 point, dropping from last week’s 4.60 percent average. Last year at this time, 30-year rates averaged 3.90 percent.
  • 15-year fixed-rate mortgages: averaged 4.05 percent, with an average 0.5 point, falling from last week’s 4.08 percent average. A year ago, 15-year rates averaged 3.18 percent.
Source: “Mortgage Rates Inch Backward,” Freddie Mac (Aug. 9, 2018)

Another ‘Client’ to Please: The Family Pet

Home buyers are increasingly being swayed by their pets when choosing which property to purchase. Three-quarters of home buyers say they would even pass up an otherwise perfect home—their dream home—if it did not meet their pets’ needs, according to a new realtor.com® survey of more than 1,000 consumers who’ve closed on a home in 2018.

Pet owners comprised 80 percent of recent home buyers—with dogs and cats being the most common types of pet—according to the survey. Younger buyers and those with children appeared to be the most influenced by their pets’ needs when shopping for a home, according to the survey.

Pet owners gave their two most desired features in a home: a large backyard and outdoor space. Other top features pet owners say they valued in a home included a garage, large square footage, a dog run and sturdy flooring.

Source: “One of the Family: Three-Quarters of Home Buyers Would Pass Up Dream Home for Pets’ Needs,” Move Inc. (Aug. 8, 2018)

New Program Aims to Cap Rent Hikes

Similar to the concept of rent control, Freddie Mac announced a new program to incentivize rental property owners to ease their continuous rent hikes. The mortgage giant is offering discounted financing to owners who agree to cap rent increases for the life of their loans. Owners who take part in the program must limit rent increases on 80 percent of their units. Owners also must agree to make at least 50 percent of their units affordable to those earning the local median income or less.

The program, now available across the country, is voluntary. Freddie Mac officials say they will check rents on an annual basis to make sure participating property owners are complying with the program’s rules. Those who are in violation will be assessed a penalty fee until they return rents to a level that Freddie deems compliant.

Source: “Freddie Mac to Lower Financing Costs for Landlords who Cap Rent Rises,” The Wall Street Journal (Aug. 7, 2018)

Hike in Mortgage Rates Reduces Affordability

Borrowers got stuck with higher mortgage rates again this week. Mortgage rates are now at their fourth highest level of the year, Freddie Mac reports.

“The higher rate environment, coupled with the ongoing lack of affordable inventory, has led to a drag on existing-home sales in the last few months,” says Sam Khater, Freddie Mac’s chief economist.

The Federal Reserve this week voted to hold off on raising its short-term rate, “but the embers of a strong economy potentially stoking higher inflation, borrowing costs will likely modestly rise in the coming months,” Khater adds.

Freddie Mac reports the following national averages for the week ending Aug. 2:

  • 30-year fixed-rate mortgages: averaged 4.60 percent, with an average 0.4 point, rising from last week’s 4.54 percent average. Last year at this time, 30-year rates averaged 3.93 percent.
  • 15-year fixed-rate mortgages: averaged 4.08 percent, with an average 0.4 point, increasing from last week’s 4.02 percent average. A year ago, 15-year rates averaged 3.18 percent.
Source: Freddie Mac

Federal Reserve Leaves Interest Rates Alone

The Federal Reserve decided Wednesday to hold off on raising its short-term interest rates. But it hinted that it likely will deliver its third interest rate increase of the year at its next meeting in late September. The Fed’s key rate does not have a direct impact on mortgage rates.

“Economic activity has been rising at a strong rate,” the Fed’s statement read. Economic output rose at a 4.1 percent annual rate in the second quarter, which is the highest three-month increase since 2014.

The economy, the Fed, and inflation all have an influence on long-term fixed-rate mortgages. Rates are rising, the 30-year fixed-rate mortgage averaging about 4.71 percent, up from 4.09 percent in 2015, CNBC reports.

Source: “The Fed Didn’t Raise Rates. How to Prepare for the Next Hike,” CNBC (Aug. 1, 2018) and “Federal Reserve Holds Rates Steady, Says Economy Is Strong,” The Wall Street Journal (Aug. 1, 2018) [Log-in required.]

Too Much Income Devoted to Making Rent

Renters are struggling to catch a break. In seven of the largest U.S. cities, the average household would need to make at least six figures to comfortably afford the rent on a two-bedroom apartment, according to a new study by SmartAsset, a personal financial website. SmartAsset researchers looked at how much it takes to afford average rental rates in the nation’s 25 largest cities.

Households that spend more than 30 percent of their incomes on housing are considered “cost burdened” by most economists. SmartAsset researchers found rents in California’s largest cities took some of the biggest bites out of American’s paychecks. Four California cities ranked in the top 10 on the list: San Francisco, Los Angeles, San Jose, and San Diego.

A separate study, recently released by PropertyShark and RentCafe, found that if renters could save enough for a down payment they may fare better as homeowners. Renters in more than half of the 50 cities in the study could barely make it until payday, while in 44 of the 50 cities tracked, homeowners were projected to be able to save money each month.