Posted tagged ‘Mortgage Rates’

Pending Home Sales Surge in May

July 3, 2014

home-for-sale-sign-twoThis is good news all around for the housing industry but the most encouraging points have to be the nice increase in new homes followed closely by lower interest rates. For a more detailed look at this subject – please read the article below.

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Pending home sales surged in May, spurred by lower interest rates and increased inventory, the National Association of Realtors (NAR) reported Monday.

The group’s Pending Home Sales Index (PHSI), which measures contract signings as an indicator of future sales figures, jumped 6.1 percent month-over-month to 103.9. It was the largest one-month increase since April 2010, when the index spiked 9.6 percent as first-time buyers moved to sign purchase contracts to qualify for the First-Time Homebuyer Tax Credit.

With both new and existing-home sales showing promise in May, the association expects the momentum to continue.

“Sales should exceed an annual pace of five million homes in some of the upcoming months behind favorable mortgage rates, more inventory and improved job creation,” said NAR chief economist Lawrence Yun. “However, second-half sales growth won’t be enough to compensate for the sluggish first quarter and will likely fall below last year’s total.”

All four regions of the country posted increases in pending sales numbers, with the Northeast leading with an 8.8 percent month-over-month gain to an index of 86.3. The Northeast was also the only region where pending sales increased year-over-year, rising 0.2 percent.

In the Midwest, NAR reports pending home sales were up 6.3 percent to an index of 105.4, while pending sales in the West rose 7.6 percent to 95.4. Pending home sales in the South, meanwhile, increased 4.4 percent to 117.0.

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Home Sales Surge

Mortgage Rates Continue Month-Long Slide

June 1, 2014

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This is good news for all parties in the housing industry. For a more detailed look at this subject – please read the article below.

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Mortgage rate declines have continued now for more than a month straight, bringing interest rates down once again to new 2014 lows.

In its weekly released Primary Mortgage Market Survey, Freddie Mac found the average rate for a 30-year fixed-rate mortgage (FRM) was 4.12 percent (0.6 point) for the week ending May 29, down from 4.14 percent last week and the lowest 30-year fixed average since October 2013.

The 15-year FRM also slid down, averaging 3.21 percent (0.5 point) compared to last week’s 3.25 percent.

The latest rate movements accompanied mixed news in the housing market, noted Frank Nothaft, Freddie Mac’s chief economist: “Fixed mortgage rates eased a bit for the fifth consecutive week as reports that existing home sales are up 1.3 percent but not as much as expected. However, new home sales rose 6.4 percent in April to a seasonally adjusted annual rate of 433,000, which followed an upward revision of 11,000 units for the prior two months.”

Movements were mixed for adjustable-rate mortgages (ARMs). According to Freddie Mac, the 5-year Treasury-indexed hybrid ARM averaged 2.96 percent (0.3 point), unchanged from the last survey. Meanwhile, the 1-year ARM averaged 2.41 percent (0.4 point), down from 2.43 percent.

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Mortgage Rates Slide

Economists Outline What to Watch for in the Real Estate Market of 2014

January 28, 2014

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Nobody is really sticking their nose out too far in this article. Slow growth with not much action in the younger segment of buyers is just about what is to be expected. For a more detailed look at this subject – please read the article below.

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Experts at Freddie Mac and Equifax expect falling unemployment and economic growth to keep the housing market steady in 2014. This, despite climbing interest rates and anticipated growth in housing prices nationwide.

Unemployment dipped to 6.7 percent nationally in December, and the Federal Reserve is expecting that figure to drop below 6.5 percent later this year. If the Fed is right, it will be the first time since the Great Recession began in 2008 that unemployment will be so low.

What this spells for the housing market is greater buying power and an upswing in new-home construction, according to Ilyce Glink, managing editor of the Equifax Finance Blog. “The housing market may not return to its pre-recession ‘normal’ in 2014 or even 2015,” Glink said, “but with more Americans employed and able to buy homes, we should see the real estate market, especially new construction housing, continue to pick up steam.”

This rise in the number of employed Americans dovetails with expected growth in the U.S. economy. Frank Nothaft, chief economist at Freddie Mac, says the economy should increase by 2.5 percent to 3 percent in 2014, which should empower more Americans to buy homes.

Experts feel this double-edged uptick will be enough to overcome a 3.7 percent increase in home sale prices nationally (as predicted by the National Association of Realtors) and an increase in mortgage interest rates.

Interest rates hit historic lows in 2013 and then gradually rose a full percentage point by year’s end. Freddie Mac reported that as of mid-January, rates on fixed 30-year mortgages averaged 4.41 percent; rates on fixed 15-year mortgages averaged 3.45 percent.

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Real Estate Market of 2014

Even in Buyer’s Market, Homeownership Expected to Decline

January 2, 2014

forecast-fourThis is good news in spite of what it sounds like. The rapid growth in home prices would only lead to another “Bubble” and more than likely a crash down the line. For a more detailed look at this subject – please read the article below.

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Zillow expects conditions next year to be a bit friendlier to homebuyers—but that doesn’t mean we’ll necessarily see more owner-occupied housing, experts at the real estate marketplace say.

Looking at ongoing trends, Zillow made four major predictions about the course of housing over 2014.

First, home values are forecast to rise by 3 percent at the national level over the year. The prediction projects a retreat from 2012 and 2013 levels, which Zillow says were “unsustainable and well above historic norms for healthy, balanced markets.”

“This year, home value gains will slow down significantly because of higher mortgage rates, more expensive home prices, and more supply created by fewer underwater homeowners and more new construction,” said Dr. Stan Humphries, Zillow’s chief economist. “For buyers, this is welcome news, especially for those in markets where bidding wars were becoming the norm and bubble-like conditions were starting to emerge.”

Second, the company predicts mortgage rates will reach 5 percent by the end of the year—a level not seen since early 2010—as the economy improves and the Federal Reserve adapts its policies. That news may not be as bright for buyers, but Erin Lantz, director of mortgages for Zillow, says it’s important to keep perspective.

“While this will make homes more expensive to finance—the monthly payment on a $200,000 loan will rise by roughly $160—it’s important to remember that mortgage rates in the 5 percent range are still very low,” Lantz said. “Because affordability is still high in most areas relative to historic norms, rising rates won’t derail the housing recovery.”

However, Lantz noted affordability has already turned into an issue for some markets, particularly those in California.

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Homeownership Expected to Decline

Sales of Existing Homes Slip for Second Straight Month

November 24, 2013

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It seems that this is really a seller’s market except for the stringent requirement to qualify for a mortgage. Most mortgage brokers think that the lenders are taking advantage for this increase in sales to demand that buyers are “Over Qualified” before they will grant a mortgage. For a more detailed look at this subject – please read the article below.

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October saw existing-home sales decline for the second straight month as low inventory propped up prices, the National Association of Realtors (NAR) reported Wednesday.

Total existing-home sales—completed transactions of single-family homes, townhomes, condominiums, and co-ops—fell 3.2 percent from September to October, coming out to a seasonally adjusted annual rate of 5.12 million. Compared to last year, sales were still up 6.0 percent, marking the 28th consecutive month of year-over-year improvement.

“The erosion in buying power is dampening home sales,” said NAR chief economist Lawrence Yun. “Moreover, low inventory is holding back sales while at the same time pushing up home prices in most of the country. More new home construction is needed to help relieve the inventory pressure and moderate price gains.”

The national median existing-home price for all housing types was $199,500, up 12.8 percent annually.

Part of the rise in median price came from a smaller share of discounted distressed sales: Foreclosures and short sales together made up 14 percent of October’s sales (9 percent foreclosures and 5 percent short sales) compared to 25 percent last year.

At the same time, inventory remains a challenge. The total number of existing homes available for sale at the end of October was 2.13 million, down 1.8 percent year-over-year. At the current sales pace, inventory levels come to a 5.0-month supply, NAR reported.

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Sales of Existing Homes

Housing’s ‘Perfect Storm’ Puts Homeownership out of Reach for Some

November 18, 2013

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It would only make sense that with rising prices along with higher interest rates that more homes would be classified as unaffordable. For a more detailed look at this subject – please read the article below.

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Steady gains in home prices and rising mortgage rates across the United States contributed to weakening housing affordability in the year’s third quarter.

According to the Housing Opportunity Index (HOI) published by the National Association of Home Builders (NAHB) and Wells Fargo, 64.5 percent of new and existing homes from the start of July through the end of September were considered affordable to families earning the national median income of $64,400. That share is down from 69.3 percent in the second quarter, marking the biggest HOI decline since Q2 2004.

NAHB chairman Rick Judson said the third quarter’s drop was the result of a “‘perfect storm’ scenario.”

“With markets across the country recovering, home values are strengthening at the same time that the cost of building homes is rising due to tightened supplies of building materials, developable lots and labor,” Judson said.

David Crowe, chief economist for NAHB, added that the decline may have been amplified by the current lending environment.

“Some of the decline in the affordability index could be the result of a loss in some more modest priced homes as tight underwriting standards have limited the purchases by moderate income families,” he said. “While affordability has come down from the peak in early 2012, the index still means a family earning a median income can afford 65 percent of homes recently sold.”

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Homeownership out of Reach

Borrowers Refinancing in Q3 Expected to Save $6B Next Year

November 17, 2013

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With interest rates still in the low to mid 4s it just makes sense that if you can lower your current rate by a point or more you do it. For a more detailed look at this subject – please read the article below.

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Despite a steady climb in mortgage interest rates since May, borrowers continued to take advantage of low rates to refinance into lower monthly payments, Freddie Mac reported Tuesday.

According to the results of the company’s latest quarterly refinance analysis, the average interest rate reduction among those who refinanced in Q3 was about 1.8 percentage points, representing a savings of about 30 percent ($3,500 over 12 months on a $200,000 loan). For borrowers who refinanced last quarter, the estimated interest savings over the next year will be about $6 billion.

For those who refinanced through the Home Affordable Refinance Program (HARP), the average rate reduction in Q3 was 1.9 percent points, representing savings of $3,850 over the next 12 months.

The number of borrowers deciding to shorten their loan terms last quarter rose 5 percent to a share of 37 percent, the highest level since 1992, Freddie Mac reported. Out of those who refinanced outside of HARP, 40 percent shortened their term; 32 percent of HARP borrowers did the same.

Out of all refinancers, 59 percent kept the same term, and 4 percent lengthened their term.

The vast majority—more than 95 percent, according to Freddie Mac—of refinancing borrowers went with a fixed-rate loan in Q3, with fixed rates being preferable regardless of what the original loan product had been. Only 3 percent of borrowers who had a fixed-rate late chose to refinance into an adjustable-rate mortgage.

The median age the original loan was outstanding before refinance in Q3 was 6.7 years, an increase from Q2 and the highest age since analysis began in 1985.

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Borrowers Refinancing