Mortgage Rates Continue to Slide This Week

Mortgage rates this summer have been dropping the past few weeks after sharp rises this spring. “A record number of people quit their job last month, most likely for a new opportunity with higher wages and better benefits,” says Sam Khater, Freddie Mac’s chief economist. “This positive trend, along with these lower mortgage rates, should increasingly give some previously priced-out prospective home buyers the financial wherewithal to resume their home search.”

Freddie Mac reports the following national averages for the week ending July 12:

  • 30-year fixed-rate mortgages: averaged 4.53 percent for the week, up from last week’s 4.52 percent average. Last year at this time, 30-year rates averaged 4.03 percent.
  • 15-year fixed-rate mortgages: averaged 4.02 percent this week, up from last week’s 3.99 percent average. A year ago, 15-year fixed-rates averaged 3.29 percent.
Source: Freddie Mac

Delayed Ownership and Wealth Disparities

Millennials aren’t purchasing homes on the same timelines as previous generations, and that has some economists worried. The homeownership rate for millennials was 37 percent in 2015, which is about eight percentage points lower than Generation X and baby boomers when they were at the same age between 25 to 34, according to a new report released by the Urban Institute.

Economists point to several factors for millennials’ delay into homeownership, including their delays to get married (being married increases probability of owning a home by 18 percentage points), rising student debt, delayed child bearing, and increasing rents that are making it more difficult to save for a down payment.

But the Urban Institute’s report notes that such delays into ownership are sparking concern. Less educated young adults are falling further behind in homeownership, the report notes. The gap in homeownership rates between the more educated versus the less educated population has grown significantly, increasing from 3.3 percent to 9.7 percent between 1990 and 2015. “Less educated millennials could be falling behind homeownership because of their unstable incomes and rising rents,” the report notes.

Source: “Millennial Homeownership,” Urban Institute (July 11, 2018)

Mortgage Rates Fall to 3-Month Low

Mortgage rates were back down across the board again this week, offering some temporary relief to home buyers. Rates posted a rapid increase throughout most of the spring but have recently reversed course, declining in five of the past six weeks to the lowest average since April.

Freddie Mac reports the following national averages for the week ending July 5:

  • 30-year fixed-rate mortgages: averaged 4.52 percent, with an average 0.5 point, dropping from last week’s 4.55 percent average. Last year at this time, 30-year rates averaged 3.96 percent.
  • 15-year fixed-rate mortgages: averaged 3.99 percent, with an average 0.4 point, falling from last week’s 4.04 percent average. A year ago, 15-year rates averaged 3.22 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.74 percent, with an average 0.3 point, falling from last week’s 3.87 percent average. A year ago, 5-year ARMs averaged 3.21 percent.
Source:

Falling Mortgage Rates Offer Affordability Relief

Mortgage rates declined this week, marking the fourth drop in the past five weeks, Freddie Mac reports.

“The decrease in borrowing costs is a nice slice of relief for prospective buyers looking to get into the market this summer,” says Sam Khater, Freddie Mac’s chief economist. “Some are undoubtedly feeling the affordability hit from swift price appreciation and mortgage rates that are still 67 basis points higher than this week a year ago.”

Freddie Mac reports the following national averages for the week ending June 28:

  • 30-year fixed-rate mortgages: averaged 4.55 percent, with an average 0.5 point, falling from last week’s 4.57 percent average. Last year at this time, 30-year rates averaged 3.88 percent.
  • 15-year fixed-rate mortgages: averaged 4.04 percent, with an average 0.5 point, which is unchanged from a week ago. Last year at this time, 15-year rates averaged 3.17 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.87 percent, with an average 0.3 point, rising from last week’s 3.83 percent average. A year ago, 5-year ARMs averaged 3.17 percent.
Source: Freddie Mac

Manufactured Homes for Affordable Housing?

Home inventory of has fallen near record lows across the country, but more consumers are in need of a place to live. Some economists say manufactured homes—also known as mobile homes or trailers—may be the answer to relieve housing shortages in some markets needing more affordable housing.

In the nation’s 100 largest metros, residents living in manufactured homes—either renting or owning—spend an average of 40 percent less on housing than those living in more traditional “stick-built” homes. The average monthly gross housing cost for a mobile home is $564, compared with $1,057 for a traditionally built home or apartment, according to the report by Apartment List. (The gross housing cost includes rent or mortgage payments and property taxes, lot rent for mobile homes, and utility costs.)

Seniors on fixed incomes may find the option more appealing. Upscale mobile home parks are popping up that are aimed at attracting the 55-plus crowd, offering spacious “double-wide” manufactured homes , community centers, and pools, among other amenities.

Will Driverless Cars Change Home Values?

The era of autonomous vehicles is coming, but what influence could that have on your home? Autonomous vehicles could usher in greater car sharing among families and neighbors. The car drops off a passenger and then goes to pick up another. Since the vehicles are self-driving and will come when called upon, they may not even need to be parked at home and could be parked in a remote lot. Ride sharing services may grow to become a normal option for homeowners.

“A decrease in car ownership/leasing will likely translate to a decrease in the need for garage space,” says Justin Thompson, a columnist at Forbes.com . “Two-car homes could become one-car homes, rendering the two-car garage obsolete.” “The impact of an increase of this magnitude on home values would certainly have far-reaching economic effects,” Thompson notes. “Increased living area square footage, a rise in home value, additional property tax revenue, and more revenue from permitting fees is an impressive list of benefits.”

Mortgage Rates Near Highest Averages of Year

Mortgage rates were back on the rise, increasing to their second highest level this year. The move follows the Federal Reserve’s vote on Wednesday to raise its federal fund rate by 25 basis points.

“The good news is that the impact on consumer budgets will be smaller than past rate hike cycles,” says Freddie Mac’s Chief Economist Sam Khater. “That is because a much smaller segment of mortgage loans in today’s market are pegged to short-term rate movements. The adjustable rate mortgage share of outstanding loans is a lot smaller now—8 percent versus 31 percent—than during the Fed’s last round of tightening between 2004 and 2006.”

Freddie Mac reports the following national averages with mortgage rates for the week ending June 14:

  • 30-year fixed-rate mortgages: averaged 4.62 percent, with an average 0.4 point, up from last week’s 4.54 percent average. Last year at this time, 30-year rates averaged 3.91 percent.
  • 15-year fixed-rate mortgages: averaged 4.07 percent, with an average 0.4 point, rising from last week’s 4.01 percent average. A year ago, 15-year rates averaged 3.18 percent.

Source: Freddie Mac

Half of Home Buyers Fret About Down Payments

According to a new study, more than half of Americans who have or plan to purchase a home admit they’re concerned about the ability to afford a home in the current market. The study is based on a survey of 1,000 consumers and was released by national online lender Laurel Road. One of the biggest barriers to affordability, respondents said, is the down payment.

Nearly half—or 46 percent—of Americans say they are unfamiliar with alternative down payment options, according to the survey. Nearly three in five respondents plan to put down a traditional 20 percent down payment. Some may feel like they have no other choice. However, the median down payment for first-time buyers in 2017 was 6 percent of the total home price, according to the National Association of REALTORS®.

Source: Laurel Road Bank

Is Break in Rate Hikes Significant to Buyers?

For the second consecutive week, mortgage rates decreased as the 30-year fixed-rate mortgage fell two basis points to average 4.54 percent, Freddie Mac reports. Rates had been on a steady incline for weeks before breaking trend.

Freddie Mac reports the following national averages for the week ending June 7:

  • 30-year fixed-rate mortgages: averaged 4.54 percent, with an average 0.5 point, dropping from last week’s 4.56 percent average. Last year at this time, 30-year rates averaged 3.89 percent.
  • 15-year fixed-rate mortgages: averaged 4.01 percent, with an average 0.4 point, falling from last week’s 4.06 percent average. A year ago, 15-year rates averaged 3.16 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.74 percent, with an average 0.4 point, falling from last week’s 3.80 percent average. A year ago, 5-year ARMs averaged 3.11 percent.

Source: Freddie Mac

Homeowner Equity Growth Streak Continues

Homeowners with a mortgage saw their equity rise 13.3 percent year over year, according to CoreLogic’s Home Equity Report for the first quarter of 2018, released Thursday. The average homeowner gained $16,300 in home equity between the first quarter of 2017 and the first quarter of 2018. That is the highest growth in home equity in four years.

Western states saw the largest uptick in home equity. California homeowners gained $51,000 on average in home equity, while Washington homeowners saw about $44,000 on average, in equity.

Source: “Homeowner Equity Report,” CoreLogic (June 7, 2018)