After Steady Decline, ‘Mortgage Rates Rise’

Mortgage rates increased this week for the first time in more than a month, but they still remain near their yearly lows.

Freddie Mac reports the following national averages for the week ending June 15:

  • 30-year fixed-rate mortgages: averaged 3.91 percent, with an average 0.5 point, rising from last week’s 3.89 percent average. Last year at this time, 30-year rates averaged 3.54 percent.
  • 15-year fixed-rate mortgages: averaged 3.18 percent, with an average 0.5 point, increasing from last week’s 3.16 percent average. A year ago, 15-year rates averaged 2.81 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.15 percent, with an average 0.5 point, rising from last week’s 3.11 percent average. A year ago, 5-year ARMs averaged 2.74 percent.

Source: Freddie Mac

Fewer Options for Home Equity Loans?

Bank of America says it’s ending the loans because it is working on “product simplification,” but Wells Fargo attributes its decision to the “Know Before You Owe” rule, which goes into effect Oct. 3. The rule — also known as TILA-RESPA Integrated Disclosure — brings new documents to the mortgage lending process.

Home equity loans come in two types: closed-ended (usually just called a home equity loan) and open-ended (referred to as a home equity line of credit). A HELOC involves revolving credit where borrowers can choose when and how often to borrow against the equity in the property (a lender sets an initial limit to the credit). On the other hand, a home equity loan is a one-time lump-sum loan, often with a fixed interest rate.

“Because closed-end loans were a small percentage of our overall home equity volume, we chose to focus on our line-of-credit offering and not to extend the resources required to retool our closed-end home equity disclosures to meet the new [integrated disclosure] regulations,” Wells Fargo told Bankrate.

Source: “Time to Say ‘Goodbye’ to Home Equity Loans?” Bankrate.com (Aug. 7, 2015) and “TRID Pushes Wells Fargo Out of Home Equity Loans,” HousingWire (Aug. 11, 2015)

What Generation Faces the Most Financial Hurdles?

A recent Experian study finds that, among millennials (ages 19-34), generation Xers (35-49), and baby boomers, and the greatest generation (ages 50-87), generation Y has the biggest job ahead of them in terms of repairing their credit. They also have the worst credit scores of all groups combined.

“Given the significance millennials play in financial services and the credit marketplace, it is crucial to understand this influential consumer segment and how they use credit as a tool,” says Michele Raneri, vice president of analytics and business development at Experian. “While this generation may not look like they are on the right track financially, it’s important to keep in mind that credit scores are built on credit experiences, and while this generation has been slower to use credit, they have plenty of opportunities to build a positive credit history.”

Source: Experian

 

Buyers Are Paying Less in Closing Fees than in 2014

Closing costs dropped 7.1 percent year-over-year, falling from $1,989 in 2014 to $1,847 in 2015, according to a newly released Bankrate.com survey. The Bankrate analysis requested Good Faith Estimates from up to 10 lenders in large cities for a hypothetical $200,000 mortgage for a single-family home assuming a 20 percent down payment.

While average origination fees were down about 22 percent in this year’s survey, average third-party fees rose nearly 22 percent.

However, industry leaders are warning that mortgage lending and its costs will likely rise, notably on title insurance. We agree and suggest you seek today’s buying opportunities!

Source: “Even as Mortgage Closing Costs Drop, You’d Better Shop Around,” Bankrate.com (Aug. 3, 2015)

72% Rejected by Feds ‘Asset Relief Loan Program’

An alarming number of borrowers are being rejected from a federal mortgage-assistance program that sets out to help make monthly mortgage payments more affordable so owners can remain in their homes, a federal watchdog report shows.

Seventy-two percent of struggling borrowers who apply to the Troubled Asset Relief Program are rejected from mortgage servicers.

“There is a massive lost opportunity for an emergency program designed to help home owners through the crisis if only 20 percent to 30 percent of families seeking help from HAMP actually get into HAMP,” says Christy Romero, special inspector general.

The report says the U.S. Treasury Department’s requirements for mortgage servicers fail to provide a “clear picture of why home owners were denied.”

Source: “72% of Struggling Borrowers Rejected From Federal Mortgage-assistance Program,” MarketWatch (July 29, 2015)

Home Loan Interest Rates Dip Back Below 4%

Average fixed mortgage rates continue to fluctuate week-to-week, with the 30-year fixed-rate mortgage dropping below 4 percent this week, offering temporary relief to home buyers and refinancers after hitting its highest average for the year earlier this month, Freddie Mac reports in its weekly mortgage market survey.

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

  • 30-year fixed-rate mortgages: averaged 3.98 percent, with an average 0.6 point, dropping from last week’s 4.04 percent average. A year ago, 30-year rates averaged 4.12 percent. Earlier this month, 30-year rates reached the highest average for the year at 4.09 percent.
  • 15-year fixed-rate mortgages: averaged 3.17 percent, with an average 0.6 point, dropping below its 3.21 percent average last week. A year ago, 15-year rates averaged 3.23 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 2.95 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 3.01 percent.

Source: Freddie Mac

Retirees Choosing to ‘Upsize’ Homes

Americans traditionally have chosen to downsize in retirement, but that may no longer be the case. A wave of retirees are choosing to upsize and enjoy the best home of their lives in retirement, according to a recent Merrill Lynch and Age Wave retirement study of more than 3,600 respondents. In fact, 65 percent of retirees recently surveyed say they’re currently living in the best home of their lives.

The study showed that 49 percent of retirees say they didn’t downsize in their last move and 30 percent ended up moving into larger homes. Retirees’ top reasons for upsizing were wanting a home large and comfortable enough for family members to visit (33 percent) or even live with them (20 percent). One out of six retirees – or 16 percent – say they have a “boomerang” child who has moved back in with them, according to the study.

Nineteen percent of retirees also said they upsized in retirement in order to have a more prestigious home and 16 percent say they wanted a larger home to have more room for friends to visit, according to the study.

Source: “Home in Retirement: More Freedom, New Choices,” Merrill Lynch (July 2015)

Economy to Strengthen in Second Half of This Year

Economic activity is expected to accelerate in the second half of the year, according to Fannie Mae’s Economic & Strategic Research Group.

“We believe consumer spending will be the largest contributor to growth for the remainder of the year, particularly as consumers’ confidence, household net worth, and income growth prospects have continued to strengthen amid an improving jobs market,” says Doug Duncan, Fannie Mae’s chief economist. “On the downside, the drop in oil prices will likely continue to weigh on nonresidential investment in structures, and on balance we expect net exports to be a drag on growth this year, due in large part to the debt crisis in Greece and deteriorating economic conditions in China.”

Fannie Mae economists expect the housing market to remain part of that strength.

Source: Fannie Mae

Better Days Ahead for First-Time Buyers

First-time home buyers have found themselves in a sellers market, faced with above-average price appreciation and bidding wars due to limited inventories of homes for-sale.

But in the second half of the year, the market is expected to shift toward more of a balance as more sellers – motivated by higher home prices – put their homes on the market, alleviating the inventory shortage. This will help provide buyers with more choices of homes to buy as well as likely soften the speed at which home prices are rising.

For potential first-time home buyers, the housing market will soon be more inviting, writes Jonathan Smoke, realtor.com®’s chief economist, in recent commentary. “Combined with a temporary reprieve from rising mortgage rates and slightly easier access to credit, buyers should find it easier to purchase a home in the months ahead,” Smoke says.

Source: “Don’t Lose Faith, Would-Be Home Buyers: It Will Get Better,” realtor.com® (July 23, 2015)

Home Loan Interest Rates Ease From Yearly High

Fixed-rate mortgages this week reversed course and dropped from last week’s highest average for the year, Freddie Mac reports in its weekly mortgage market survey. Freddie Mac reported the following rates for the week ending July 23:

  • 30-year fixed-rate mortgages: averaged 4.04 percent, with an average 0.6 point, dropping from last week’s 4.09 percent average. A year ago, 30-year rates averaged 4.13 percent.
  • 15-year fixed-rate mortgages: averaged 3.21 percent, with an average 0.6 point, dropping from last week’s 3.25 percent average. A year ago, 15-year rates averaged 3.26 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 2.97 percent, with an average 0.5 point, rising from last week’s 2.96 percent average. Last year at this time, 5-year ARMs averaged 2.99 percent.

Source: Freddie Mac