Homeowners Cash in on Equity in Droves

Homeowners may be reluctant to sell, but they still want to see a piece of that equity in their homes now. They’re cashing out in levels that have not been seen since the financial crisis. Nearly half of borrowers who refinanced their homes during the first quarter did a cash-out option, the highest level since the fourth quarter of 2008, according to Freddie Mac.

While the number of cash-out refis grows, Len Kiefer, Freddie Mac’s deputy chief economist, does not see this as playing out similarly to the run-up to the financial crisis when borrowers were using their homes like ATMs. Borrowers must follower stricter underwriting standards now when they refinance a mortgage or get a loan. Also, there is less money at stake than a decade ago, Kiefer notes.

Source: “Homeowners Are Again Pocketing Cash as They Refinance Properties,” The Wall Street Journal (May 27, 2017)

Mortgage Rates Hit Lowest Averages of the Year

“As we predicted, the 30-year mortgage rate fell 7 basis points this week in a delayed reaction to last week’s sharp drop in Treasury yields,” says Sean Becketti, Freddie Mac’s chief economist.

Freddie Mac reported the following national averages for the week ending May 25:

’30-year fixed-rate’ mortgages: averaged 3.95 percent, with an average 0.5 point, falling from last week’s 4.02 percent average. Last year at this time, 30-year rates averaged 3.64 percent.

’15-year fixed-rate’ mortgages: averaged 3.19 percent, with an average 0.5 point, falling from last week’s 3.27 percent average. A year ago, 15-year rates averaged 2.89 percent.

Source: Freddie Mac

Home Loan Interest Rates Hover Around 4%

For the fifth consecutive week, the 30-year fixed-rate mortgage remained around 4 percent.

Freddie Mac reports the following national averages for the week ending May 18:

’30-year fixed-rate mortgages’ averaged 4.02 percent, with an average 0.5 point, dropping from last week’s 4.05 percent average. Last year at this time, 30-year rates averaged 3.58 percent.

’15-year fixed-rate mortgages’ averaged 3.27 percent, with an average 0.5 point, falling from last week’s 3.29 percent average. A year ago, 15-year rates averaged 2.81 percent.

Source: Freddie Mac

Foreclosures Plunge to Lowest Level Since 2005

Foreclosure filings—which include default notices, scheduled auctions, and bank repossessions—are down 23 percent from a year ago and have hit their lowest level since November 2005, according to the April 2017 U.S. Foreclosure Market report, released Thursday by ATTOM Data Solutions.

A total of 34,085 properties started the foreclosure process in April, well below the pre-recession average of more than 77,000 foreclosure starts per month between April 2005 and November 2007, according to the report.

More details at ATTOM Data Solutions and source: RealtyTrac

Home Loan Interest Rates are Barely Moving?

Mortgage rates were mostly in a holding pattern last week, which may have been welcome news to borrowers after the previous week’s uptick.

Freddie Mac reports the following national averages for the week ending May 4:

  • 30-year fixed-rate mortgages averaged 4.02 percent, with an average 0.5 point, falling slightly from last week’s 4.03 percent average. Last year at this time, 30-year rates averaged 3.61 percent.
  • 15-year fixed-rate mortgages averaged 3.27 percent, with an average 0.5 point, the same average as last week. A year ago, 15-year rates averaged 2.86 percent, ARMs averaged 2.80 percent.

Source: Freddie Mac

Millennials Finally Flee Parents’ Homes

The pace of young adults leaving their parents’ homes is accelerating significantly, Fannie Mae’s Economic and Strategic Research Group notes in a new analysis.

Young adults aged 24 to 25 in 2013 and 26 to 27 in 2015 residing with their parents dropped by 7.6 percentage points. On the other hand, those who passed through that same age range between 2010 and 2012 saw a decline of only 5.4 percentage points, researchers note.

Millennials in their 20s or early 30s saw their income, adjusted for inflation, grow by at least 23 percent between 2013 and 2015 when compared to 2010 and 2012. Further, their incomes are at least 81 percent greater than between 2008 and 2010.

Also, millennials between 2013 and 2015 were getting married at a markedly faster rate than their predecessors did in that same age range during the recession and the recovery thereafter, Fannie Mae’s report notes.

Source: “Starting to Launch: Millennials Are Leaving Mom and Dad’s Basement,” Fannie Mae’s Housing Insights (2017)

Owners: Be Smart When Financing Renovations

The number of homeowners who are planning to take on home improvement projects or repairs this year is expected to increase 6.7 percent, according to the Joint Center for Housing Studies at Harvard University. As more owners look to remodel, they should be weighing how to fund their renovations.

Homeowners may be using credit cards, even though they intend to pay for the balance as soon as it’s due, because they want the benefits of getting airline miles or other rewards from using the credit card, says Todd Nelson LightStream’s business development officer. But for those who don’t intend to pay the credit card off right away should realize the interest rates are usually in double digits and is not tax-deductable.

An option is a home equity line of credit, the interest may be tax-deductible and there are few upfront frees. Another consideration may be a cash-out refinance is another option, where borrowers refinance for more than what they owe on the property and then take the difference out in cash. However, processing fees and closing costs are involved.

Source: “More Homeowners Pay for Repairs With Credit Cards,” realtor.com® (April 26, 2017)

More Homeowners Tackle Renovation Projects

Homeowners are sprucing up their properties and undertaking more remodeling and repair projects, according to a recent study.

The Leading Indicator of Remodeling Activity, released by the Joint Center for Housing Studies at Harvard University, shows an annual growth in home improvement and repair expenditure this year that will remain above its long-term trend of 5 percent. Index authors, however, foresee a steady decline from 7.3 percent in the first quarter to 6.1 percent by the first quarter of 2018.

The National Association of Home Builders’ Remodeling Market Index also showed an increase in the first quarter of 2017, marking the highest reading in activity since 2015. The NAHB’s index shows that more remodelers are reporting that activity is higher now compared to the prior quarter. “A milder than usual winter has led to increased remodeling activity and a positive outlook for spring,” says Dan Bawden, the chairman of NAHB Remodelers. “Remodelers are seeing stronger market conditions with customers more willing to spend money on both small and large projects.”

—Melissa Dittmann Tracey, REALTOR® Magazine

Home Loan Interest Rates Drop Below 4%

The 30-year fixed-rate mortgage has fallen to its lowest average since November 2016, Freddie Mac reports in its weekly mortgage market survey.

“Weak economic data and growing international tensions are driving investors out of riskier sectors and into Treasury securities. This shift in investment sentiment has propelled rates lower,” says Sean Becketti, Freddie Mac’s chief economist.

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

  • 30-year fixed-rate mortgages: averaged 3.97 percent, with an average 0.5 point, falling from last week’s 4.08 percent average. Last year at this time, 30-year rates averaged 3.59 percent.
  • 15-year fixed-rate mortgages: averaged 3.23 percent, with an average 0.5 point, falling from last week’s 3.34 percent average. A year ago, 15-year rates averaged 2.85 percent.

Source: Freddie Mac

Survey: Outdoor Kitchens Making a Comeback

A few years ago, outdoor kitchens were considered a hot amenity. In a December 2015 survey by the National Home Builders Association, builders indicated that outdoor kitchens would be one of the least likely features to be added to new single-family homes in 2016. But now, architects say homeowners and prospective buyers are showing resurgent demand for outdoor cooking spaces, according to the American Institute of Architects’ most recent Home Design Trends Survey.

“Homeowners continue to find ways to add value to their homes by creating more functional space, which is apparent in the rise in popularity of outdoor kitchens,” says Kermit Baker, chief economist of the AIA. “Kitchens have become a hub for the home. Now homeowners want to bring some of that activity to their outside space.”

Many buyers will even pay a premium for outdoor kitchens, according to a realtor.com® survey last year. Researchers found that buyers were willing to pay up to 26 percent more for a home with an outdoor kitchen compared to a similar home without one in the same ZIP code.

When it comes to indoor kitchens, homeowners continue to eye certain upgrades, with the most desired being a charging station or computer area, a double island, high-end appliances, and sensory faucets, according to AIA.

Source: “Outdoor Kitchens: Still on the Way Out?” RISMedia (April 15, 2017) and “Are Outdoor Kitchens on the Outs?” RISMedia (March 17, 2016)