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).

Mortgage Rates Surge to 7-Year High

Mortgage rates surged to their highest averages since 2011 following the Federal Reserve’s announcement Wednesday that it is raising its benchmark interest rate by a quarter point. The 30-year fixed-rate mortgage jumped to 4.72 percent, up from 4.65 percent last week.

“The robust economy, rising Treasury yields, and the anticipation of more short-term rate hikes caused mortgage rates to move up,” says Freddie Mac Chief Economist Sam Khater. “Even with these higher borrowing costs, it’s encouraging to see that prospective buyers appear to be having a little more success. With inventory constraints and home prices starting to ease, purchase applications have now trended higher on an annual basis for six straight weeks.”

 Freddie Mac reports the following national averages for the week ending Sept. 27:

  • 30-year fixed-rate mortgages: averaged 4.72 percent, with an average 0.5 point, rising from last week’s 4.65 percent average. Last year at this time, 30-year rates averaged 3.83 percent.
  • 15-year fixed-rate mortgages: averaged 4.16 percent, with an average 0.5 point, rising from last week’s 4.11 percent average. A year ago, 15-year rates averaged 3.13 percent.
Source: Freddie Mac

Market Shifting to Home Buyers’ Favor

A housing market defined by rapidly rising home prices, bidding wars, a lack of inventory, and sellers with the upper hand in negotiations may be changing. “The signs are pointing to a market that’s shifting toward buyers,” says Danielle Hale, realtor.com®’s chief economist. “But in most places, we’re still a long way from a full reversal.”

After all, home sales aren’t exactly tanking. Prices for existing homes were up 4.6 percent from a year ago in the National Association of REALTORS®’ latest housing report. The median home list price in August was up 7 percent from last year.

While these numbers are still higher than last year, economists point to a slowing growth in the percentage jumps. Last year, median home list prices increased by 10 percent from the previous year and by 9 percent the year before that.

Housing Hurdles Taint Healthy Economy

As housing inventory increases and home prices begin to ease, the door to home ownership is opening for more buyers. But Freddie Mac economists aren’t optimistic that the real estate market will be able to break even with last year’s sales levels.

In their September forecast, Freddie’s economists point to a booming economy and job market, but point out a stalled housing market. They consider the main factors to be weaker housing affordability, constraints that are limiting home building, and ongoing supply and demand imbalances.

Economists predict that many prospective buyers will continue to have difficulty breaking into the market. They are forecasting home sales for both new and existing homes to fall 0.8 percent this year and for home price growth to moderate at 5.5 percent.

Source: “Freddie Mac September Forecast,” Freddie Mac (Sept. 24, 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

Down Payments Jump to Record Highs

Home buyers are putting more money down on a home purchase than ever before. The size of down payments during the second quarter climbed to a median of $19,900, a record high, according to ATTOM Data Solutions’ research, which dates back to the first quarter of 2000. What’s more, this marks a 19 percent jump from $16,750 in this year’s first quarter.

The median down payment was 7.6 percent of the median sales price of homes purchased with finances during the second quarter, according to the report. That percentage is at a nearly 15-year high. California buyers tend to bring the highest down payments.
Source: “U.S. Refinance Originations Drop to Four-Year Low in Q2 2018,” ATTOM Data Solutions (Sept. 11, 2018

Labor Shortages Push Up Construction Costs

Builders are being forced to raise home prices and are having a more difficult time meeting project deadlines because of the ongoing labor shortage in the construction industry, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index. Eighty-four percent of builders say they have had to pay higher wages to subcontractor bids, 83 percent say they have had to raise home prices, and 73 percent say they can’t complete projects on time without more manpower. The number of builders reporting labor and subcontractor shortages reached a record high in July.

“The steepest upward trend has been in the share of builders saying the labor/subcontractor shortages are causing higher home prices, which increased by 22 percentage points between 2015 and 2018—to the point where it is now nearly tied with higher wages/sub bids as the most widespread effect of the shortages,” NAHB reports on its Eye on Housing blog. The survey also shows other effects of the labor shortage, such as builders saying that, in some cases, they’ve been forced to turn down projects.

Source: “Housing Market Index (HMI),” National Association of Home Builders/Eye on Housing (September 2018)

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