Consumers: Home Appraisals Still Falling Short

Appraisals continue to lag homeowners’ price expectations, according to the latest Quicken Loans’ National Home Price Perception Index, which compares homeowners’ initial estimates and appraiser’s opinions of home values. Appraised values were 1.35 percent lower than homeowners’ expectations in August. That has narrowed from a 1.55 percent difference in July.

Many homeowners are still not understanding their home’s current value, according to the analysis. The perceptions can vary quite a bit across the country, too. For example, home values are 3 percent higher than homeowners’ estimated values in the West, while they are 3 percent lower than expected in the Midwest and Northeast.

More interesting data and graphs at: quickenloans.com/press-room/2017/09/12/quicken-loans-study-shows-consumers-continue-to-be-too-optimistic-with-anticipated-home-value/

Home Loan Interest Rates Hit New Yearly Lows

Average mortgage rates moved lower this week, as the 30-year fixed-rate mortgage continues to sit well below 4 percent.

“The 10-year Treasury yield fell to a new 2017 low on Tuesday,” says Freddie Mac chief economist Sean Becketti. “In response, the 30-year mortgage rate dropped four basis points to 3.82 percent, reaching a new year-to-date low for the second consecutive week.”

Freddie Mac reports the following national averages for the most recent week through Aug. 31:

30-year fixed-rate mortgages: averaged 3.82 percent, with an average 0.5 point, falling from last week’s 3.86 percent average. Last year at this time, 30-year rates averaged 3.46 percent.
15-year fixed-rate mortgages: averaged 3.12 percent, with an average 0.5 point, falling from last week’s 3.16 percent average. A year ago, 15-year rates averaged 2.77 percent.

Source: Freddie Mac

Fannie Mae Loosens ARM Down Payment Rules

Fannie Mae is changing the requirement that borrowers pay a higher down payment to qualify for an adjustable-rate mortgage, announcing that it is bringing this type of financing more in line with that of fixed-rate mortgages.

Now, borrowers can make as little as a 5 percent down payment on a one-unit primary property using an ARM. Also among the changes is that borrowers need less equity in order to refinance into an ARM; they now need just 5 percent of equity to refinance. For purchasing a two-unit property, borrowers will need a 15 percent down payment for an ARM, or a 25 percent down payment for a property with three or four units.

An ARM is fixed for a set part of the mortgage term—often 5 or 7 years—and then adjusts depending on the current market rate. There are caps on how much it can adjust in one year. ARMs tend to have lower rates than fixed rates, making them an attractive option to borrowers who need to lower their initial costs or plan to own for a short time.

Source: “Fannie Mae Lowers Down Payment Requirements for ARMs,” OriginatorTimes.com (Aug. 26, 2017)

30-Year Mortgage Rate Hits New 2017 Low

Borrowers applying for a 30-year fixed-rate mortgage this week locked in the lowest rate of the year, as it dropped to its lowest average since November 2016, Freddie Mac reports. Additionally, “the 10-year Treasury yield fell 6 basis points this week amid concerns over lagging inflation,” says Freddie Mac chief economist Sean Becketti.

Freddie Mac reported the following national averages for the week ending Aug. 24:

  • 30-year fixed-rate mortgages: averaged 3.86 percent, with an average 0.5 point, dropping from last week’s 3.89 percent average. Last year at this time, 30-year rates averaged 3.43 percent.
  • 15-year fixed-rate mortgages: averaged 3.16 percent, with an average 0.5 point, the same average as last week. A year ago, 15-year rates averaged 2.74 percent.

Source: Freddie Mac

Report: Kids Have Big Say in Real Estate

Buyers with children put more weight on the neighborhood, local schools, and size of homes when shopping for the right property, according to the 2017 Moving With Kids report, produced by the National Association of REALTORS®.

The neighborhood, in particular, has a big influence on home buyers with children under the age of 18. Forty-nine percent of buyers who have children consider the neighborhood based on the quality of the school district, and 43 percent choose a neighborhood by the convenience to schools.

Sellers with kids also have unique needs. One notable need is that they usually have to sell their homes faster. Twenty-six percent of owners with children under the age of 18 sold their home urgently compared to 14 percent of owners with no children at home. The main reasons for selling a home for sellers with children were that the home was too small or they faced a job relocation or a change in their family situation.

Source: “2017 Moving With Kids,” National Association of REALTORS® (Aug. 21, 2017)

New Program to Help Buyers Bypass Appraisals

Mortgage giant Freddie Mac has announced a new program allowing some home buyers to skip a traditional appraisal, which could lower the fees the buyers pay and speed up the closing process. Freddie’s Automated Collateral Evaluation (or ACE) will determine a property’s collateral risk by culling data from multiple listing services, public records, and historical home values, and then assess whether a buyer needs a traditional appraisal or an automated one. Borrowers who are refinancing may also be eligible for the program.

Those who qualify for an automated appraisal could save up to $500 in fees and make it to settlement up to 10 days sooner, Freddie says. “By leveraging big data and advanced analytics, as well as 40-plus years of historical data, we’re cutting costs and speeding up the closing process for borrowers,” says David Lowman, Freddie Mac’s executive vice president of single-family business. “At the same time, we’re providing immediate collateral representation and warranty relief to lenders. This is just one example of how we are reimagining the mortgage process to create a better experience for consumers and lenders.”

Source: “Freddie Mac Extends Appraisal-Free Mortgage Program to Purchase Loans,” HousingWire (Aug. 18, 2017) and Freddie Mac

Mortgage Rates at Lowest Point in 6 Weeks

The 30-year fixed-rate mortgage reversed course this week, averaging 3.90 percent.

Freddie Mac reports the following national averages for the week ending Aug. 10:

  • 30-year fixed-rate mortgages: averaged 3.90 percent, with an average 0.5 point, dropping from last week’s 3.93 percent average. Last year at this time, 30-year rates averaged 3.45 percent.
  • 15-year fixed-rate mortgages: averaged 3.18 percent, with an average 0.5 point, the same average as last week. A year ago, 15-year rates averaged 2.76 percent.

Source: Freddie Mac

A Cruel Season for Home Buyers

Typically, the housing market starts to slow in late summer, and prices drop slightly. But so far this year that hasn’t been the case.

“Homes are not selling faster than last July, but faster than last year’s peak months,” says Javier Vivas, manager of economic research at realtor.com®. “However, quick sales don’t necessarily mean more sales, particularly when there isn’t enough inventory, as is the current case. Home prices also remain stubbornly high, failing to show hints of the usual seasonal cool down. Low and moderately priced homes are being snatched up especially quickly, keeping many would-be buyers from being able to get into the market.”

“In this market, home buyers have to move fast, yet high prices and low inventory are slowing down even the most earnest of house hunters,” Nela Richardson, Redfin’s chief economist, told CNBC. “Faced with a low supply of homes for sale and extremely competitive conditions, many home buyers are struggling to make it to the offer stage.”

Source: “Housing Demand Strengthens Through Summer, But Here’s Why Some Buyers Are Giving Up,” CNBC (Aug. 2, 2017)

Is Calif.’s Housing Crisis Spinning Out of Control?

California has a severe lack of affordable homes and apartments for middle-class families, The New York Times reports. Their median cost of a home has surged to $500,000—double the national cost.

“The extreme rise in housing costs has emerged as a threat to the state’s future economy and its quality of life,” The New York Times reports. “It has pushed the debate over housing to the center of state and local politics, fueling a resurgent rent control movement and the growth of neighborhood ‘Yes in My Back Yard’ organizations, battling long-established neighborhood groups and local elected officials as they demand an end to strict zoning and planning regulations.”

The state has introduced 130 housing measures this year. Among one of the most recent actions, the Senate approved a bill to crack down on communities that have delayed or derailed housing construction proposals. The bill would restrict the ability to use zoning, environmental, and procedural laws to kill projects that may be considered “out of character” with the neighborhood. The bill is expected to be voted on again later this summer.

Source: “The Cost of a Hot Economy: A Severe Housing Crisis,” The New York Times (July 17, 2017)

Home Loan Interest Rates Push Above 4%

Average mortgage rates are moving up, posting increases for the second consecutive week.

“After fully absorbing the sharp increases in Treasury yields over the past couple of weeks, the 30-year mortgage rate has cleared the psychologically important 4 percent mark for the first time since May,” says Sean Becketti, Freddie Mac’s chief economist.

Freddie Mac reports the following national averages for the week ending July 13:

30-year fixed-rate mortgages averaged 4.03 percent, with an average 0.5 point, increasing from last week’s 3.96 percent average. Last year at this time, 30-year rates averaged 3.42 percent.

15-year fixed-rate mortgages averaged 3.29 percent, with an average 0.5 point, increasing from last week’s 3.22 percent average. A year ago, 15-year rates averaged 2.72 percent.

Source: Freddie Mac