mortgage rates Archives

Global Woes Haven’t Hurt Housing Health

In today’s world, everything is connected. Because of this, global economic conditions can impact the U.S. economy and housing market. And, according to Fannie Mae’s latest Economic and Housing Outlook from their Economic & Strategic Research Group, the economy does appear to have slowed in response to sluggish global markets. However, Doug Duncan, Fannie Mae’s chief economist, says the housing market should still improve despite the headwinds. “We expect our 2016 theme ‘housing affordability constrains as expansion matures’ to hold true as home price gains are likely to outpace household income growth as the year continues,” Duncan said. “However, the expected increase in home prices should help lift underwater mortgages and create a healthier housing market. Meanwhile, increased household formation, low mortgage rates, and easing credit standards and more access to credit for residential mortgages are positive factors for a continued housing expansion.” Duncan also says builders should be able to build new single-family homes at a faster pace this year, which should help moderate price increases and provide more options for prospective buyers. In short, though there has been a lot of economic uncertainty in the news lately, the housing market still appears to be on solid footing. More here.

Average Mortgage Rate Falls To 10-Month Low

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates dropped again last week, hitting their lowest point since last April. Rates were down across all loan categories, including 30-year fixed-rate loans with both conforming and jumbo balances, as well as loans backed by the Federal Housing Administration and 15-year fixed-rate mortgages. The decline spurred refinance activity, which increased 16 percent over the week before. Michael Fratantoni, MBA’s chief economist, told CNBC that the refinance rush was once again led by jumbo borrowers. “Treasury rates fell again last week, and mortgage rates fell to their lowest level in over a year, with rates on jumbo loans dropping to their lowest level since December 2012,” Fratantoni said. “As we have noted in recent weeks, borrowers with larger loans tend to be more sensitive to a drop in rates, because they stand to benefit more from refinancing.” Because of this, the average loan size for refinances set a new record at $316,000. Demand for loans to purchase homes, on the other hand, fell 4 percent from the week before, though they are now 30 percent higher than at the same time last year. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

New Home Market Still Poised For Growth

The most recent National Association of Home Builders Housing Market Index shows builder confidence in the new-home market slipped in February. The index asks home builders for their perception of the current and upcoming market for new homes. Their answers are then scored on a scale where any number above 50 indicates that more builders view conditions as good than poor. In February, the Index fell three points to 58. David Crowe, NAHB’s chief economist, said the dip in confidence is reflective of the current economic mood in the country but that the fundamentals are still strong. “Builders are reflecting consumers’ concerns about recent negative economic trends,” Crowe said. “However, the fundamentals are in place for continued growth of the housing market. Historically low mortgage rates, steady job gains, improved household formations, and significant pent up demand all point to a gradual upward trend for housing in the year ahead.” A closer look at the survey’s individual components supports Crowe’s optimism. For example, while the components gauging current sales conditions and buyer traffic declined, the measure of sales expectations for the next six months rose one point to 65. More here.

Income Growth Key To Housing Sentiment

Fannie Mae’s Home Purchase Sentiment Index looks at consumers’ attitudes toward buying and selling a home, mortgage rates, household income, prices, employment and more in an effort to measure Americans’ feelings about the residential real estate market. According to the most recent release, housing optimism slipped slightly in January, falling 1.7 points from the month before. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says income growth isn’t keeping up with home price increases and it’s causing affordability concerns among potential buyers. “Housing affordability is being constrained because the pace of growth in real income has not kept up with gains in real home prices as demand has grown faster than supply,” Duncan said. “On the bright side, consumers have been increasingly positive about their ability to get a mortgage, suggesting that credit tightness is not the main issue limiting housing market activity today, a feeling that we also see conveyed by lenders in our Mortgage Lender Sentiment Survey.” Duncan expects that consumers’ attitudes toward buying a house will likely remain flat until income growth picks up or there is an increase in the number of lower-priced homes available for sale. More here.

Baby Boomer Buyers Are On The Move

There’s been plenty of talk about the fact that there are fewer young Americans buying homes over the past few years. On the flip side, however, the market for new homes among buyers 55 and older has remained strong and continues to improve. In fact, the National Association of Home Builders 55+ Housing Market Index – which measures builders’ perceptions of the market among older buyers – has now seen seven consecutive quarters of positive readings. David Crowe, NAHB’s chief economist, says those gains will likely continue. “This quarter’s 55+ HMI is in line with our forecast for the overall housing market, which shows a gradual, steady recovery,” Crowe said. “In addition, the 55+ housing market is benefitting from growing home equity on the balance sheets of 55+ households, an improving economic outlook, historically low mortgage rates and a growing population as baby boomers age.” In other words, there are an increasing number of baby boomer households that have seen their current home’s value rise and are looking to capitalize on the equity they’ve gained by shopping for a new house that fits better with their needs and lifestyle. With affordability conditions still favorable across much of the country, builders expect to see many older buyers active in the market in the coming months. More here.

Strong January Heats Up Spring Forecast

Early indications are that economic uncertainty and turmoil in the financial markets didn’t curb consumers’ interest in buying a home at the beginning of this year. In fact, according to Realtor.com’s chief economist, Jonathan Smoke, an initial look at the data shows buyer interest increased in January. “Our initial readings on January affirm the positive growth we expect to see in the residential real estate market in 2016,” Smoke said. “Our traffic, searches and listing views exhibited the January ‘pop’ we saw last year, which made for a strong spring.” Additionally Smoke says there have been large numbers of prospective buyers who have indicated that they intend to buy a home in the spring or summer of 2016. This is encouraging news for the housing market, especially since mortgage rates have declined rather than increased since the Fed’s decision to raise interest rates. That leaves low inventory and tight credit standards as the two major obstacles for home buyers this year. Fortunately, credit availability has been easing recently and increasing new-home construction should help alleviate some of the upward pressure on home prices that comes from a lower-than-usual number of homes available for sale. According to Smoke, the best advice for buyers hoping to buy a house in 2016 is to start early. More here.

Local Markets Stable In Majority Of Metros

The housing market has come a long way since hitting its bottom in 2010. To prove it, Freddie Mac’s Multi-Indicator Market Index tracks just how far individual states and metropolitan areas have progressed since then. The index takes a look at home purchase applications, payment-to-income ratios, proportion of on-time mortgage payments, and the local employment picture in each market and determines how it compares to their long-term averages. According to the most recent release, 57 of the 100 metro areas included in the survey are within their stable range. At the same time last year, only 28 metros had values in stable range. Len Kiefer, Freddie Mac’s deputy chief economist, says the latest results show a strong year-over-year improvement, though there’s a lot of variation from market to market. “The regional variation of housing activity continues to become more pronounced,” Kiefer said. “For example, we’re still seeing declines in oil-dependent housing markets, whereas the hardest hit metros from the Great Recession continue to see some of the best improvement as they recover. And at the same time, other markets are seeing even stronger improvement because of robust home sales fueled by strong local economies that remain largely affordable for the typical home buyer. In the short term, we expect home buyer affordability to remain strong with mortgage rates continuing to look very attractive to prospective home buyers.” Among the metro areas that were most improved from last month, Orlando, Denver, Portland, Albany, and Phoenix led the way. More here.

Mortgage Rates Fall For 3rd Straight Week

According to the Mortgage Bankers Association’s Weekly Applications Survey, mortgage rates continue to defy expectations, falling for the third week in a row. In fact, rates were down across all loan categories including 30-year fixed-rate loans with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate mortgages. The drop led to another bump in home loan demand, with both the refinance and purchase indexes seeing large gains. Refinance activity – which is generally more sensitive to rate fluctuations – was up 11 percent over the previous week, while demand for loans to buy homes rose 5 percent over the week before. Joel Kan, an MBA economist, told CNBC that mortgage rates are being affected by volatility in the financial market. “As a result of more financial market volatility and continued flight to quality by investors, mortgage rates have decreased 18 basis points since the first week of January 2016,” Kan said. That drop has rates at their lowest point since last October. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

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Home Prices Continue To Show Strength

Following the financial crisis and housing crash, there were many years when analysts wondered when the housing market would, once again, be among the main drivers of the economy. Now, after its best year since home prices plummeted, housing is showing strength just as other parts of the economy seem to have slowed. For example, the latest S&P/Case-Shiller U.S. National Home Price Index shows November home prices were 5.3 percent higher than year-before levels – an improvement over October when they were 5.1 percent higher than one year earlier. David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, said the results show housing continues to improve. “Home prices extended their gains, supported by continued low mortgage rates, tight supplies, and an improving labor market,” Blitzer said. “Sales of existing homes were up 6.5 percent in 2015 vs. 2014, and the number of homes on the market averaged about a 4.8 months’ supply during the year; both numbers suggest a seller’s market.” He went on to say that though the consumer portion of the economy, like automobile sales and housing, were strong last year other parts of the economy, such as the oil and energy sector, have slowed. According to Blitzer, housing’s growth will not be “enough to offset all of these weak spots.” More here.

December Home Sales Surge Nearly 15%

Sales of previously owned homes surged in December, according to new numbers released by the National Association of Realtors. The 14.7 percent sales spike was caused, in part, by delayed transactions that would normally have closed in November but were slowed by new mortgage disclosure rules. Regardless, Lawrence Yun, NAR’s chief economist, says the two months together show sales ended the year at a healthy pace. “While the carryover of November’s delayed transactions into December contributed greatly to the sharp increase, the overall pace taken together indicates sales these last two months maintained the healthy level of activity seen in most of 2015,” Yun said. “Additionally, the prospect of higher mortgage rates in coming months and warm November and December weather allowed more homes to close before the end of the year.” Totals for 2015 show existing-home sales recorded their best year since 2006 and ended the year 7.7 percent higher than at the close of 2014. Despite the strong end to the year, however, Yun says low for-sale inventory, rising mortgage rates, and tepid economic expansion may mean sales numbers will struggle to replicate this year’s gains in 2016. Also in the report, regional results found large increases in all four regions, with the West leading the way with a 23.2 percent sales improvement in December. More here.