September 2015

Survey Finds Mortgage Rates Down Slightly

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were relatively flat last week. There were slight declines in rates on 30-year fixed-rate mortgages with conforming balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. Loans with jumbo balances, on the other hand, ticked up from the week before. Despite favorable rates, however, demand for mortgage applications fell from the week before. In fact, refinance demand was down 9 percent and purchase application demand – which is a good indicator of future home sales – was down 4 percent. Michael Fratantoni, MBA’s chief economist, told CNBC that the Fed’s anticipated rate hike – which may’ve played a role in declining demand – may not come as soon as some have expected. “Given recent economic growth and job market health, we had been expecting a September rate hike,” Fratantoni said. “However, given recent financial market volatility and global growth concerns, along with still-low US inflation, we are expecting the first rate hike to be moved to December 2015.” The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

Potential Rate Hike Won’t Derail Housing

For months, speculation that the Federal Reserve would begin to raise interest rates has loomed over the housing market. The rumored rate hike has spurred some potential buyers to enter the market earlier than they may’ve planned but it’s also led many to theorize that higher mortgage rates would doom the housing market’s recent progress. According to a survey conducted by Reuters of 22 top economists, however, the housing market is now strong enough to endure a gradual increase in mortgage rates. In fact, all but two of the 22 said they felt rising rates would not hamper sales, citing job creation and growing demand for houses among younger buyers as reasons demand would not be affected. “The recent strength of housing activity suggests the market is well placed to cope with a gradual rise in interest rates,” Capital Economics economist, Matthew Pointon, told Reuters. “Rising rates will also be accompanied by an improving labor market and gradually loosening of credit conditions.” In addition, the surveyed economists felt home price increases wouldn’t be big enough to discourage first-time home buyers but will be enough to encourage current homeowners to put their homes up for sale, which could help address current inventory issues in many markets across the country. More here.

September May Be Best For Buyers

Spring and summer are known to be the hottest times of year for home shoppers and sellers. But, according to a recent article from Realtor.com’s chief economist, Jonathan Smoke, September may actually be the best month for buyers to sign a contract to buy a house. Smoke says prospective buyers will find more choices and less competition if they’re looking to buy now. “Normally inventory peaks in August and begins to slow as the nights grow longer,” Smoke says. “But this year the typical seasonal decline will start a bit later. There will be more choices in September than any other month in 2015.” And, since the school year has started, overall demand will be down, which means prospective buyers will have less competition than they would earlier in the year. Also, fewer buyers and more homes available for sale means upward pressure on prices will start to ease, giving potential buyers an edge. Finally, Smoke argues that now is the best time to buy because mortgage rates remain historically low, which makes affordability conditions even more favorable for prospective buyers. More here.

Climbing Prices Top List Of Buyer Concerns

Buying a home requires a little forethought. It is, after all, the largest purchase most people will ever make. So thinking things through before taking the plunge is always a good idea. But what issues weigh most heavily on the minds of potential home buyers? According to a recently released survey, today’s buyers are most concerned about rising home prices. In fact, nearly 27 percent of respondents named affordability their biggest concern – with too much competition from other buyers running a distant second at 17 percent. The results highlight a change from last year. Although prices, competition, and inventory retain their hold on the top three positions, rising mortgage rates have fallen from the top five and were named by just 5 percent of participants. Still, despite fewer worries about a spike in mortgage rates, a growing number of home buyers have legitimate concerns about price increases, especially first-time home buyers. Among first-time buyers, 31 percent named prices their top concern. On the other hand, some issues that may have ranked higher in the past appear to have receded from buyers’ minds. For example, worries about the economy and job security, difficulty getting a loan, and confusion about the buying process were each named by just 3 percent of prospective buyers. More here.

Majority Of Recently Sold Homes Affordable

During the second quarter of this year, 63.2 percent of the new and existing homes sold were affordable to families earning the U.S. median income of $65,800, according to the National Association of Home Builders Housing Opportunity Index. And though that’s down from 66.5 percent in the first quarter, David Crowe, NAHB’s chief economist, says conditions are still favorable. “Though affordability edged slightly lower in the second quarter, the HOI remains well above 50, where half the households can afford half the homes sold,” Crowe said. “Low mortgage rates, pent-up demand and continued job growth should contribute to a gradual, steady rise in housing throughout the year.” The slight drop in affordability is largely due to the fact that home prices continue to rise. In fact, the national median home price increased from $210,000 in the first quarter to $230,000 in the second quarter. On the other hand, average mortgage rates actually moved lower during the same period, which should help offset some of the effects of continued price gains. More here.

Mortgage Demand Falls As Rates Rise

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates increased last week from the previous week. Rates were up on 30-year fixed-rate loans with conforming balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate mortgages. Jumbo loans, on the other hand, saw a slight decrease. The change in rates was enough to send mortgage application demand downward, however. In fact, the total number of requested applications for mortgage loans fell 6.2 percent, mainly due to a drop in refinance activity. Michael Fratantoni, MBA’s chief economist, told CNBC borrowers with larger loans are more sensitive to mortgage rate changes. “The decline in the average loan size for both purchase and refinance applications last week showed again that borrowers with larger loans are much more sensitive to a given change in rates,” Fratantoni said. “The slight uptick led to a fairly sharp weekly drop in refinance volume, and purchase volume slipped as well.” The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

Housing Sentiment Cools Slightly After Hot Summer

Fannie Mae’s newly announced Home Purchase Sentiment Index takes the results of their monthly National Housing Survey – which polls Americans about their attitudes toward the housing market and their personal finances – and distills them into a single number that can be used to track consumer attitudes toward buying and selling a home. According to the results, the index fell 0.5 points in August to 80.8. That’s down slightly from the all-time high reached in June but still up 5.3 points from one year earlier. Doug Duncan, Fannie Mae’s senior vice president and chief economist, said attitudes toward the current home selling climate have slid back a bit. “Expectations of rising mortgage rates and increasing concerns in the last six months about the direction of the economy seem to be weighing on consumers’ assessment of the housing market,” Duncan said. “Those who think it’s a good time to buy or sell a home have consistently pointed to favorable mortgage rates as the primary reason for their optimism. Those who think it’s a bad time to buy or sell a home have consistently pointed to unfavorable economic conditions as the primary reason for their pessimism.” Still, this month’s survey found the number of people who think it’s a good time to sell and those who think it’s a good time to buy both rose 2 percent from the month before. More here.

Natural Disaster Report Ranks Housing Risk

RealtyTrac’s recently released 2015 U.S. Natural Disaster Housing Risk Report ranked 2,318 counties across the country based on their overall risk of suffering a natural disaster. The results found that – within the counties included in the analysis – 43 percent of the single-family homes and condos were at high or very high natural hazard risk. That’s 35.8 million homes with a combined estimated market value of $6.6 trillion. Daren Blomquist, RealtyTrac’s vice president, said prospective buyers should be aware of any natural disaster risk impacting a potential home purchase. “In most cases, learning about natural disaster risk will not stop a home sale, but it will help buyers make a better-informed decision about where to buy and also be prepared in terms of appropriate insurance coverage and family contingency plans depending on the type of natural disaster risks most affecting the home they end up purchasing,” Blomquist added. Not surprisingly, homes on the coasts received the highest risk rating, with California, New York, North Carolina, Florida, and New Jersey ranking in the top five. More here.