2016 Home Loan Rates to Stay Near Record Lows

Mortgage rates edged slightly higher for the second consecutive week.

“We take the Fed at its word that monetary tightening in 2016 will be gradual, and we expect only a modest increase in longer-term rates. Mortgage rates will tick higher but remain at historically low levels in 2016,” says Sean Becketti, Freddie Mac’s economist.

Freddie Mac reports the following mortgage rates for the week ending Dec. 17:

  • 30-year fixed-rate mortgages: averaged 3.97 percent, with an average 0.6 point, rising from last week’s 3.95 percent average. A year ago, 30-year rates averaged 3.80 percent.
  • 15-year fixed-rate mortgages: averaged 3.22 percent, with an average 0.5 point, increasing from last week’s 3.19 percent average. Last year at this time, 15-year rates averaged 3.09 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.03 percent, with an average 0.4 point, holding the same average as last week. A year ago, 5-year ARMs averaged 2.95 percent.

Source: Freddie Mac

Borrowers Fail to “Shop Around for Mortgages”

More borrowers could be able to snag a lower mortgage rate — and save lots more money on their mortgage costs — if they would shop around, according to recent data from Fannie Mae’s November National Housing Survey. By not shopping around for a mortgage, borrowers often end up paying $1,000 or more in closing costs and may not get the lowest mortgage rate that could unlock savings for the life of the loan, according to the survey.

The survey showed that nearly half of lower-income mortgage borrowers only obtained one quote when signing up for their current mortgage.

Meanwhile, about 75 percent of higher-income borrowers received competitive offers in shopping around for a mortgage.

“Although a home purchase is the largest financial obligation most people will ever make, many borrowers do not fully understand their mortgage products and costs,” says Doug Duncan, Fannie Mae’s chief economist. “As a result, some home owners in this position may find themselves with unsustainable payments down the road.”

Source: “Fannie Mae: Failure to Mortgage Shop Costs Borrowers,” HousingWire (Nov. 27, 2012)

More Buyers “Eye Unlisted Homes” as Options!

As housing inventories shrink, more buyers are reportedly finding their perfect home in properties that haven’t even been listed on the market yet. Our “Buyers Broker/Agent” objectives when working with clients are to seek and show these, FSBO’s, etc!

“Such back-pocket deals used to involve mostly luxury homes where buyers and sellers wanted to keep the sale hush-hush,” The Star Tribune reports. “But lower-priced houses are becoming a bigger part of the mix because even those are in short supply.”

As real estate professionals we are helping buyers sniff out these unlisted homes by working to identify sellers who would like to sell but are unsure if the market will give them enough on a sale. We find these sellers through referrals and also by home owners who once listed their homes for sale but removed their homes from the MLS after they lingered on the market. Please provide your objectives and we’ll work for you!

Source: “Impatient Buyers Target Homes Before They go on Sale,” Star Tribune (Minneapolis) (April 28, 2012)

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Home Foreclosures don’t just hurt Adults!

Let’s look at the total picture of reality as it relates to today’s family home dreams!

 About 8 million children have been hurt by foreclosure, according to a newly-released report by First Focus, a bipartisan advocacy group for families. “Children are the often invisible victims of the foreclosure crisis,” says Julia Isaacs, the author of the report.

The report highlights the widespread affect the foreclosure crisis has had on the nation’s children: About 2.3 million children have lived in homes lost to foreclosure; 3 million have lived in homes at-risk of foreclosure; and another 3 million have lived in rental homes lost to foreclosure or currently live in rentals that are at-risk of foreclosure.

The foreclosure impact has been greatest on children in Nevada, where nearly one in five — or 20 percent — of children lived or live in a home that was lost to foreclosure or is at-risk of being lost to foreclosure. In Florida, 15 percent of children have been affected by foreclosure, followed by Arizona (14%) and California (12%).

Foreclosures have been found to hamper children’s performance at school. Children who have been affected by foreclosure often see math and reading scores drop as much as if they’d missed school for a month, Isaacs says. Please provide your comments.

Source: “Report Estimates 8 Million Children Hurt by Foreclosures”  USA Today (4/18/12)

Short Sales Start to Outpace Foreclosures

Start of a new trend? Banks are agreeing to more short sales, and for the first time, short sale transactions are exceeding foreclosure deals, according to the most recent housing data from Lender Processing Services (LPS) Inc. “It’s a fairly recent phenomenon that short sales have been increasing,” Jonathon Weiner, a vice president with LPS, told Bloomberg News.

So why are banks getting more agreeable to short sales? Banks are realizing that short sale transactions usually sell for higher prices than foreclosures. In fact, foreclosed homes tend to sell for 29 percent less, on average, than comparable non-distressed properties. Short sales tend to sell at a 23 percent discount, according to Lending Processing Services data from January.

Banks and government agencies in recent weeks have taken steps to speed up the short sale process, setting new timelines for how long mortgage servicers have to respond to short sales offers. Also, some banks, such as Wells Fargo and JPMorgan Chase, are even offering some home owners cash incentives — up to $35,000 — if they agree to do a short sale instead of let the home fall into foreclosure.

Source: “Short Sales Surpass Foreclosures as Banks Agree to Deals,” Bloomberg News (April 17, 2012)

Low Rates Send Mortgage Applications Soaring 12.8%

Mortgage applications, a future gauge of home buying, had a sharp jump as more consumers rushed to take advantage of low interest rates, the Mortgage Bankers Association reports. 

For the week ending Dec. 2, mortgage applications increased 12.8 percent. Applications for home purchase jumped 8.3 percent from a week earlier while applications for refinancing soared 15.3 percent.

Of the home purchase applications, 85.5% were for fixed-rate 30-year loans.

Source: “Mortgage Applications Jump 12.8% as Refinancing Volume Soars,” HousingWire (Dec. 7, 2011)

For assistance in the Sierra Foothills, El Dorado, Placer, Amador or Sacramento Counties of California visit: www.sierraproperties.com or www.dougandbudzeller.com

Foreclosures Are Selling Quicker?

In several markets, Bank of America is reporting that it has picked up its pace in moving through its inventory of foreclosed homes faster than it has in the past, The Wall Street Journal reports. 

Brian Moynihan, Bank of America Corp.’s chief executive,  said at a press conference that in cases where banks can take ownership of the properties quickly and get them cleaned up, they are able to get them back on the market and selling the fastest. 

“It moves as fast now as it’s ever moved,” Moynihan said at a press conference. 

But, overall, Moynihan says mortgage delinquencies are dropping in its portfolios and that home prices seem to be hovering at “a bottom” as the backlog of unsold homes reaches the market. 

Source: “BofA: Foreclosed Homes Selling Faster,” The Wall Street Journal (Nov. 15, 2011)

Other information about the Sierra Foothills and Placerville, El Dorado County, California regions at: www.sierraproperties.com

 

More Home Owners Try ‘Reluctant Landlord’ Role

Daily Real Estate News | Tuesday, November 15, 2011

More sellers who are tired of their home lingering on the market or don’t want to have to take a loss on their home are opting to become landlords instead. 

For example, according to an article at NPR, one couple describes owning a two-bedroom bungalow in Oakland, Calif., which they purchased for $500,000, that was appraised recently at $260,000. When a job relocation was sending them across the country, they decided to rent instead of sell. 

But becoming a landlord isn’t an easy role to step into, as some of these “accidental landlords” describe difficult tenants and constant problem or maintenance issues that require fixing. This is not unique to your area or our Placerville, Calif., regions.

The number of unintentional landlords is growing. About 2.3 million single-family homes became rentals during 2005 to 2009, a significant increase compared to about 700,000 single-family homes that became rentals during 2001 to 2005, according to Eric Belsky with Harvard’s Center for Housing Studies. 

“The good news for the owners or the reluctant landlords has been that the rental market has been so good, they’ve been able to cover pretty much all their expenses and just been able to basically go on with their lives,” Ron Abrams with the Chicago Association of REALTORS® told NPR.

Source: “Would-be Sellers Become Reluctant Landlords,” NPR (Nov. 13, 2011)

Home Mortgage Rates Drop Under 4% Again!

For the second time this year, the 30-year fixed-rate mortgage dropped below 4 percent and continues to hover around record lows, Freddie Mac reported in its weekly mortgage market survey. 

Yet overall, “fixed mortgage rates were little changed this week amid a mix of economic data reports,” Frank Nothaft, Freddie Mac’s chief economist, said in a statement. 

Here’s a closer look at mortgage rates for the week ending Nov. 10:

  • 30-year fixed-rate mortgages: averaged 3.99 percent with an average 07 point, down from last week’s 4 percent average. The last time the 30-year fixed-rate mortgage dropped below 4 percent was Oct. 6 when it averaged 3.94 percent. Last year at this time, 30-year rates averaged 4.17 percent. 
  • 15-year fixed-rate mortgages: averaged 3.30 percent with an average 0.8 point, dropping slightly from last week’s 3.31 percent average. Last year at this time, 15-year rates averaged 3.57 percent. 
  • 5-year adjustable-rate mortgages: averaged 2.98 percent, with an average 0.6 point, rising from last week’s 2.96 percent average. A year ago at this time, the 5-year ARM averaged 3.25 percent. 
  • 1-year ARMs: averaged 2.95 percent with an average 0.6 point, up from last week’s 2.88 percent average. A year ago at this time, the 1-year ARM averaged 3.26 percent. 

Source: Freddie Mac

Other information about the Sierra Foothills and Placerville, El Dorado County, California regions at: www.sierraproperties.com or www.dougandbudzeller.com

 

Appraisals are Derailing Home Sales

Appraisals continue to hamper deals. In the first six months of the year, one-third of real estate professionals say appraisals have caused a delay or canceling of contracts — that’s up from 29 percent for all of last year, the National Association of REALTORS® reports. Rural areas where similar comparable sales may be hard to find seem to experience more delays. At least we find this in foothill areas like the Placerville, California region.

Lenders are requiring more thorough appraisals, which appraisers are saying requires them to pull more comparable sales, which sometimes may include foreclosures or short sales that sell at discounted prices. Appraisers used to cite about three recently sold homes but now lenders require two to three times that, David Stevens, president of the Mortgage Bankers Association told SmartMoney. 

When the appraisals come in lower then the accepted offer — which more frequently is what is occurring — the seller either has to lower their price or the buyer has to pay the difference. From the three months ending September, 13 percent of real estate professionals say contracts were renegotiated to a lower sales price due to a low appraisal, according to NAR data.

Housing experts recommend that buyers add a statement in their contracts that says they’ll receive their initial down payment back if financing doesn’t come through the agreed price or the appraised value is below the offer in the contract, according to the SmartMoney article. 

 

Source: “How Appraisals Are Derailing Home Sales,” SmartMoney (Nov. 4, 2011)