Are Mortgage Rates Stabilizing?

Mortgage rates mostly held steady this week—and home buyers responded by rushing to lock in rates. “Mortgage rates stabilized the last couple of months as interest rate-sensitive sectors, such as new auto and home sales, have clearly softened the outlook for the economy,” says Sam Khater, Freddie Mac’s chief economist.

Freddie Mac report for the week ending Nov. 29:

  • 30-year fixed-rate mortgages: averaged 4.81 percent, with an average 0.5 point, unchanged from last week. Last year at this time, 30-year rates averaged 3.90 percent.
  • 15-year fixed-rate mortgages: averaged 4.25 percent, with an average 0.4 point, rising from last week’s 4.24 percent average. A year ago, 15-year rates averaged 3.30 percent.

More Buyers Turn to ARM Loans

Rising interest rates are prompting more home buyers to turn to adjustable-rate mortgages—which come with potential financial risks. Though these mortgages typically come with lower interest rates initially, they reset to market rates after five or seven years, potentially shocking borrowers with much higher costs.

“As interest rates continue to rise, the percentage of adjustable-rate mortgages is increasing, as home buyers are looking to take advantage of the best rates from their lenders,” says Jonathan Corr, president and CEO of Ellie Mae.

Source: “Ellie Mae Origination Insights Report: October 2018,” Ellie Mae (Nov. 21, 2018)

Relief in Cooling Housing Market?

The housing market is showing several signs of slowing, providing a much-needed break for potential buyers who have been waiting to jump into the market. Existing-home sales were 2.4 percent lower in the third quarter than a year ago, and the drop comes at a time when many areas are starting to see an uptick in new listings.

Home prices in many markets are no longer rising by double digits—or even single digits—annually. But with a strong economy and low unemployment, the housing dip is more of a rebalancing of the market than a sign of a downturn.

Source: “Cooling Down of Housing Market Could Be Good News for Buyers,” The Washington Post (Nov. 14, 2018)

Homes with Patios now Popular

More new homes are being built with patios, as homeowners show a greater craving for more outdoor space. About 58.6 percent of new single-family homes started in 2017 included a patio, according to an analysis by the National Association of Home Builders. That makes patios more common than decks (23.8 percent), but still shy of the popularity of porches (64.7 percent).

The Annual Builder Practices Survey, conducted by Home Innovation Research Labs, shows that the average size of a patio on a new home is about 260 square feet. Poured concrete is the most often material used for the surface, followed by concrete pavers, natural stone, and brick pavers.

Read more ideas about getting the most out of a patio space: That Small Backyard Can Still Be a Selling Point and 5 Biggest Yard and Patio Staging Mistakes

Why Home Buyers Need to Hurry

While there have been signs recently that the market may be shifting toward the favor of home buyers, prices are still on the rise in many areas around the country. The median sales price in July was $230,411, up 5.8 percent year over year.

The typical mortgage payment jumped 13.1 percent over that same one-year period, due to a nearly 0.6 percentage point increase in mortgage rates, according to new data from CoreLogic, a real estate research firm.

Rates are expected to increase by about 0.43 percentage points between July 2018 and July 2019. Housing forecasters predict median home sale prices to continue to rise by 1.8 percent in real terms over that same period.

With these projections, CoreLogic researchers predict the inflation-adjusted typical monthly mortgage payment to rise from $937 in July 2018 to $1,003 by July 2019.

Source: “Homebuyers’ ‘Typical Mortgage Payment’ Rising at Twice the Rate of Prices,” CoreLogic Insights Blog (Oct. 17, 2018)

Zero-Down Home Loan Program

A new effort is underway to raise the low rate of home ownership among under served groups of home buyers. The Neighborhood Assistance Corp. of America is hosting several events across the country, helping borrowers with low credit scores to apply for 15- or 30-year mortgages with cheaper interest rates.

NACA CEO Bruce Marks told CNBC. “There have been zero foreclosures among the loans that we’ve originated in the past six years.”

Borrowers are required to go through an education session about the program, as well as counseling for budget planning to make sure they can afford a mortgage payment. They also must still submit all necessary documents, such as income statements amd phone bills. The program serves only those who are buying a primary residence, not an investment property.

Mortgage Rate Update!

“Rising rates paired with high and escalating home prices is putting downward pressure on purchase demand,” says Sam Khater, Freddie Mac’s chief economist. “While the monthly payment remains affordable due to the still low mortgage rate environment, the primary hurdle for many borrowers is the down payment.”

Freddie Mac reports these national averages for the week ending Oct. 11:

  • 30-year fixed-rate mortgages: averaged 4.90 percent, with an average 0.5 point, rising from last week’s 4.71 percent average. Last year at this time, 30-year rates averaged 3.91 percent.
  • 15-year fixed-rate mortgages: averaged 4.29 percent, with an average 0.4 point, rising from last week’s 4.15 percent average. A year ago, 15-year rates averaged 3.21 percent.
Source: Freddie Mac

Foreclosures Sink to 13-Year Low

Foreclosures are disappearing from most community listings. Foreclosure filings—default notices, scheduled auctions, or bank repossessions—fell 6 percent in the third quarter, dropping to the lowest level since the fourth quarter of 2005. Foreclosure activity in the third quarter is now 36 percent below the pre-recession average of 278,912 properties with foreclosure filings, according to ATTOM Data Solutions’ latest report.

Properties that were foreclosed in the third quarter are seeing a slightly shorter process. The foreclosure process is averaging 713 days, which is down from 899 days a year ago. The states with the longest average timelines for foreclosed homes are Hawaii (1,491 days); Indiana (1,295 days); Florida (1,177 days); Utah (1,170 days); New Jersey (1,137 days); and New York (1,092 days).

Buyers Should ‘Ask After a Home Inspection’

After an inspector has finished a home report, buyers may feel overwhelmed by any flaws that might have been found. That’s why it’s important they take the opportunity to learn more so that they can move forward confidently in the transaction.

A recent article at realtor.com® recommends home buyers ask their inspector clarifying questions like: “I don’t understand this; what does it mean?” or “Is this a major or minor problem?” and “Do I need to call in another expert for a follow-up?”

If the inspector identifies a potentially major problem, consumers will want to follow up whether they should call an additional expert in to investigate further. For example, consumers may need to bring in an electrician to take a closer look at potential electrical issues that were flagged or a roofer if a roofing problem is suspected. Those specialists can then give an idea of the cost to fix it, which the real estate agent can take to the seller to request a concession, if the seller doesn’t want to fix it prior to the sale.

Source: “Home Inspection’s Complete? Here’s What You Must Ask Afterward,” realtor.com® (Oct. 9, 2018)

Home Loan Interest Rates Keep Increasing

For the fourth consecutive week, mortgage rates continued to climb as home buyers face higher borrowing costs. But, mortgage applications for home purchases have managed to increase.

“Mortgage rates are drifting upwards again and represent continued affordability challenges for prospective buyers—especially first-time buyers,” says Sam Khater, Freddie Mac’s chief economist. “Borrowing costs are moving right now for three main reasons: the very strong economy, higher U.S. government debt issuances, and global trade tensions.”

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

  • 30-year fixed-rate mortgages averaged 4.65 percent, with an average 0.5 point, rising from last week’s 4.6 percent average. Last year at this time, 30-year rates averaged 3.83 percent.
  • 15-year fixed-rate mortgages averaged 4.11 percent, with an average 0.5 point, increasing from last week’s 4.06 percent average. A year ago, 15-year rates averaged 3.13 percent.
Source: Freddie Mac