Mortgage Interest Rates Jump to 6-Week High

A strong job market and consumer credit are driving up mortgage rates for the third consecutive week and now to their highest level in six weeks. Mortgage rates are 0.82 percent higher than a year ago—the largest year-over-year increase since May 2014, Freddie Mac reports.

Despite the higher rates, Sam Khater, Freddie Mac’s chief economist, expects buyer demand to remain high. “This spectacular stretch of solid job gains and low unemployment should help keep home buyer interest elevated,” Khater says. “However, mortgage rates will likely also move up, as the Federal Reserve considers short-term rate hikes this month and at future meetings.”

Freddie Mac reports the following national averages for the week ending Sept. 13:

  • 30-year fixed-rate mortgages: averaged 4.60 percent, with an average 0.5 point, up from last week’s 4.54 percent average. Last year at this time, 30-year rates averaged 3.78 percent.
  • 15-year fixed-rate mortgages: averaged 4.06 percent, with an average 0.5 point, climbing from last week’s 3.99 percent average. A year ago, 15-year rates averaged 3.08 percent.
Source: Freddie Mac

Home Loan Interest Rates Inch Up

Mortgage rates rose slightly for the second consecutive week, and economists warn that more rises are likely to come. Mortgage rates are now up three-quarters of a percentage point from last year.

“Borrowing costs may be slowly on the rise again in coming weeks, as investors remain optimistic about the underlying strength of the economy,” says Sam Khater, Freddie Mac’s chief economist. Home prices have been rising too—although at a slower pace recently—but are still “outrunning rising inflation and incomes,” Khater notes. “The weakening in affordability is hindering many interested buyers this fall, even as the robust economy brings them into the market.”

Freddie Mac reports the following averages for the week ending Sept. 6:

  • 30-year fixed-rate mortgages: averaged 4.54 percent, with an average 0.5 point for the week, increasing from last week’s 4.52 percent average. Last year at this time, 30-year rates averaged 3.78 percent.
  • 15-year fixed-rate mortgages: averaged 3.99 percent, with an average 0.4 point, increasing from last week’s 3.97 percent average. A year ago, 15-year rates averaged 3.08 percent.
Source: Freddie Mac

Home Loan Approval with a Lower Credit Score

New mortgages are being approved with lower credit scores, and FHA loans appear to be leading the shift, according to studies by credit developer FICO and other entities. “As we get further away from the Great Recession, underwriting criteria seems to have eased, and a broader section of consumers are obtaining mortgages as a result,” according to FICO’s report.

From January to March of this year, borrowers who were approved for FHA loans—which offer low down payment options for first-time home buyers—had an average credit score of 672, according to FHA data. During that same period in 2011, the average credit score for an FHA borrower was 701. FHA borrowers also have had higher debt-to-income ratios in recent years. Debt-to-income ratios measure monthly household income against other debt, such as credit cards, auto loans, and personal loans.

Mortgage Interest Rates ‘Mostly Holding Steady’

Mortgage rates haven’t been this stable since the fall of 2016. Rates did inch up this week, but only slightly and are still offering prospective buyers a window of opportunity, says Sam Khater, Freddie Mac’s chief economist.

The recent slowdown in price appreciation in several markets, mixed with these steady mortgage rates, is “good news” for many prospective buyers who may have been priced out earlier this year. “Given the strength of the economy, it is possible for home sales to pick up even more before year’s end,” Khater says. “The key factor will be if affordably priced inventory increases enough to continue this recent trend of cooling price appreciation.”

Freddie Mac reports the following national averages for the week ending Aug. 30:

  • 30-year fixed-rate mortgages: averaged 4.52 percent, with an average 0.5 point, rising from last week’s 4.51 percent average. Last year at this time, 30-year rates averaged 3.82 percent.
  • 15-year fixed-rate mortgages: averaged 3.97 percent, with an average 0.5 point, falling from last week’s 3.98 percent average. A year ago, 15-year rates averaged 3.12 percent.
Source: “Mortgage Rates Tick Up,” Freddie Mac (Aug. 30, 2018)

Home Loan Interest Rates ‘Continue to Decline’

Borrowers continued to get relief with mortgage rates this week, as the 30-year fixed-rate mortgage sank lower for the third consecutive week. Mortgage rates are now at their lowest level since April.

“Backed by very strong consumer spending, the economy is red-hot this month, which is in turn rippling through the financial markets and driving equities higher,” says Sam Khater, Freddie Mac’s chief economist. “It is clear affordability constraints” have cooled the housing market, particularly in expensive coastal markets. “Many metro areas desperately need more new and existing affordable inventory to break out of this slump,” he notes.

Freddie Mac reports the following national averages for the week ending Aug. 23:

  • 30-year fixed-rate mortgages: averaged 4.51 percent, with an average 0.5 point, falling from last week’s 4.53 percent average. Last year at this time, 30-year rates averaged 3.86 percent.
  • 15-year fixed-rate mortgages: averaged 3.98 percent, with an average 0.5 point, falling from last week’s 4.01 percent average. A year ago, 15-year rates averaged 3.16 percent.
Source: “Mortgage Rates Maintain Downward Trend,” Freddie Mac (Aug. 23, 2018)

 

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)