Mortgage Rates Are Easing

Home buyers may be finding a window of opportunity to lock in lower rates. Mortgage rates fell this week, after several weeks of moderating, Freddie Mac reports.

“Mortgage rates declined this week amid a steep sell-off in U.S. stocks,” says Sam Khater, Freddie Mac’s chief economist.

Freddie Mac report of mortgage rates for the week ending Dec. 6:

  • 30-year fixed-rate mortgages: averaged 4.75 percent, with an average 0.5 point, down from last week’s 4.81 percent average. Last year at his time, 30-year rates averaged 3.94 percent.
  • 15-year fixed-rate mortgages: averaged 4.21 percent, with an average 0.4 point, falling from last week’s 4.25 percent average. A year ago, 15-year rates averaged 3.36 percent.
Source: Freddie Mac

House Hunts Are Lasting Longer

Buyers are spending significant time trying to find the perfect home. Fifty-four percent of active buyers say they’ve been trying to find the right home for three months or longer, according to the National Association of Home Builders’ Housing Trends Report poll.

Buyers say the biggest delays that are stretching out their home search is they can’t find a home at an affordable price (49%), followed by not being able to find a home with the desired features they want (40%) or in their ideal neighborhood (38%).

Source: “Active Home Buyers Are Spending Significant Amounts of Time Looking for the Right Home,” National Association of Home Builders’ Eye on Housing blog 12/4/18

Why Buyers May Find Mortgages Easier to Get

Good news for potential home shoppers: A Mortgage Bankers Association index shows lender requirements regarding credit scores, down payments, and other key terms are finally loosening up. Some lenders are even expanding the types of mortgages they offer. These moves come after years of lenders tightening loan requirements.

The newly-released MBA index shows recent improvements in lending are mostly tied to the government’s efforts to ease regulations and improve affordability in the housing market. For example, mortgage financing giant Fannie Mae is now allowing purchases of conventional mortgages that have down payments as low as 3 percent; Freddie Mac is planning to do the same for mortgages closed on or after March 23.

Also, the Federal Housing Administration, which insures loans with down payments as low as 3.5 percent, reduced its upfront mortgage insurance premiums last month, which is expanding eligibility for home purchases to thousands of potential home shoppers.

Source: “Lenders Begin Easing Requirements to get a Mortgage,” The Los Angeles Times (Feb. 22, 2015)

HUD: ‘2015 Is Year of Housing Opportunity’

Housing and Urban Development Secretary Julian Castro sees big opportunity in the housing market this year, with the easing of credit opening the door to more buyers.

“I see 2015 as the year of housing opportunity, particularly home ownership,” Castro told CNN.  “A good example of that is the reduction in the FHA mortgage premium.”

Castro points to the recent move of the Federal Housing Administration, which reduced its insurance premiums from 1.35 percent to 0.85 percent. The reduction is expected to amount to about $900 per year for borrowers. Castro says the reduction in premiums will likely spur a quarter of a million more home buyers in the next three years.

Also in expanding home loan opportunities, mortgage financing giants Fannie Mae and Freddie Mac recently announced they will allow FHA mortgage premium to qualify for loans with down payments as low as 3 percent.

Source: “2015: The Year to Buy a House,” CNNMoney (Feb. 2, 2015)

The Best Seasons to Sell a Home

Spring is traditionally considered the best season to list a home, but it doesn’t inch out the other seasons by much, according to a new analysis by the real estate brokerage Redfin.

Redfin’s research team analyzed 7 million homes listed from 2010 through 2014 to gauge how important the season is in listing a home. It examined how many of the homes went under contract within 30 days and how often they sold for more than their list price.

Here’s how the seasons stacked up:

  • 39% of the homes listed in the spring (between March 21 and June 20) in the past five years went under contract within 30 days, and 15 percent sold for more than the list price.
  • 38% of homes listed in the winter (Dec. 21 – March 20) sold within 30 days and 14 percent sold for more than the list price.
  • 36% of homes listed in the summer (June 21 – Sept. 20) were under contract within 30 days and 12 percent sold above the list price.
  • 34% of homes listed in the fall (Sept. 21 – Dec. 20) went under contract within 30 days and 11 percent sold at a premium.

Source: “Should I Wait Until Spring to List My Home? Not Necessarily,” Redfin Research Center (Feb. 5, 2015)

Stage Set to Revive First-Time Home Buyer Market

The move by Fannie Mae and Freddie Mac this week to offer 3 percent down payment loans may reignite the first-time home buyer market.

The new loans announced by Fannie Mae and Freddie Mac will be fixed-rate mortgages for up to 30 years, available only on a primary residence. Fannie plans to begin issuing the 3 percent loans before the end of the year. Mortgage insurance payments will be required, and qualified buyers will need to complete a financial counseling program.

Freddie Mac plans to start issuing its 3 percent loans to low- and moderate-income borrowers in March 2015. Eligible borrowers will be required to earn less than an area’s median income and will have to pay mortgage insurance and do financial counseling. Monthly payments also will have to fall under 43 percent of the borrower’s income.

Source: “More Americans to Buy Homes with 3 Percent Down,” The Associated Press (Dec. 11, 2014)

Rates Haven’t Been This Low Since 2013

The 30-year fixed-rate mortgage took another dip this week, staying below the 4 percent threshold and keeping borrowing costs at the lowest rate in more than a year. It marks the fifth consecutive week that mortgage rates decreased.

Freddie Mac reports the following national averages for the week ending Oct. 23:

  • 30-year fixed-rate mortgages: averaged 3.92 percent, with an average 0.5 point, reaching a new low for the year and dropping from last week’s 3.97 percent. Last year at this time, 30-year rates averaged 4.13 percent.
  • 15-year fixed-rate mortgages: averaged 3.08 percent, with an average 0.5 point, dropping from last week’s 3.18 percent average. A year ago, 15-year rates averaged 3.24 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 2.91 percent, with an average 0.5 point, dropping from last week’s 2.92 percent average. Last year at this time, 5-year ARMs averaged 3 percent.

Source: Freddie Mac

Prospects of Condominiums Comeback Are High

Condo sales have been on a roller coaster ride in recent years, as the recession hit the sector hard. But is the country ready for a condo revival?

“Condo sales moved sideways several years after the recession before picking up steam again in 2013,” CoreLogic Deputy Chief Economist Sam Khater writes on the company’s blog. “This year, it continues to rebound and currently accounts for 12.3 percent of all sales in 2014.”

As of June 2013, 22 of the 25 top condo markets reported rises in sales compared to prior years. But interest-rate rises in the second half of 2013 caused sales to cool off somewhat, similar to what occurred in the overall market. By June 2014, only 14 of those same markets were showing increases year-over-year, CoreLogic reports.

Housing analysts are optimistic the condo market is poised for a big rebound, particularly since the largest cohort in the U.S. is the 20-to-24 age group.

“This specific age cohort might currently be driving today’s rental market, but they will likely be driving the first-time home buyer and condo markets over the next five to 10 years, driving demand for newly built condos,” Khater notes. “That demand is heavily needed in the market now, given that newly built condos were hit harder in the last housing downturn than newly constructed homes overall.”

Source: “The Long-Term Rising of Condo Sales,” CoreLogic (Sept. 30, 2014)