mortgage rates Archives

Steady Rates Lead To Increasing Demand

According to the Mortgage Bankers Association’s Weekly Applications Survey, demand for mortgage applications rose last week, though home buying activity was relatively flat from the week before. The Purchase Index – which tracks application demand for loans to buy homes and is considered a good indicator of future sales – was down 1 percent, though it remains 17 percent above last year’s level. The year-over-year improvement suggests buyer interest has been strong so far this spring due, in part, to the fact that mortgage rates remain historically low. Combined with solid job creation, low interest rates are expected to help keep demand high this year by counteracting home price increases and low for-sale inventory. Last week, rates continued to hold firm. In fact, average rates for 30-year fixed-rate mortgages with both jumbo and conforming balances were virtually unchanged from the week before. On the the other hand, mortgage rates for loans backed by the Federal Housing Administration and 15-year loans both decreased. Spurred on by low rates, refinance activity jumped 3 percent, which helped boost overall demand by 1.3 percent. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications.

Affordability Index Finds Mixed Results

The National Association of Realtors Housing Affordability Index looks at the median price of an existing single-family home and compares it to the country’s median family income to determine whether or not the typical American family could qualify for a mortgage on the typical American home. According to the most recent results, affordability conditions across the country improved month-over-month in February but declined from one year earlier. Michael Hyman, a research data specialist with the NAR, says that housing affordability has fallen over the past year due to slightly higher mortgage rates and home prices that continue to outpace household income growth. For example, incomes increased approximately 2.1 percent year-over-year while home prices, during the same time period, have gone up 4.3 percent. However, home price gains have begun to moderate and grew at a slower pace in February than they did in January. Regionally speaking, the Midwest, South, and West saw affordability conditions decline from last year, while the Northeast actually improved. The Midwest remains the country’s most affordable area to buy a house. Also in the report, the median sales price for single-family homes sold during the month was $212,300. More here.

Mortgage Demand Spikes With Rate Drop

According to the Mortgage Bankers Association’s Weekly Applications Survey, demand for mortgage applications spiked last week, rising 10 percent over the previous week. The improvement, which included an 11 percent jump in refinance activity and an 8 percent increase in the purchase index, is a sign that low mortgage rates are beginning to inspire more Americans to enter the spring housing market. Mike Fratantoni, MBA’s chief economist, says demand for loans to buy homes – which are now 24 percent higher than last year – almost hit a six-year high last week. “Helped by a persistently strong job market and low rates, applications for both conventional and government home purchase loans increased last week,” Fratantoni said. “The purchase index was at its second highest level since May 2010. Applications to refinance also increased as the 30-year contract rate decreased to its lowest level since January 2015.” In fact, mortgage rates were down across most loan categories, including loans backed by the Federal Housing Administration, and 30-year fixed-rate mortgages with both conforming and jumbo balances. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

Optimistic Outlook Sees Brighter Days Ahead

According to Freddie Mac’s March Outlook, the housing market is poised to have its best year since 2006. The optimistic forecast is based on the belief that an improved job market – combined with low mortgage rates and a growing number of housing starts – will help boost sales this year and build momentum for 2017. “Housing markets are poised for their best year in a decade,” Sean Becketti, Freddie Mac’s chief economist, said. “In our latest forecast, total home sales, housing starts, and house prices will reach their highest levels since 2006. Low mortgage rates, robust job growth and a gradual increase in housing supply will help drive housing markets forward. Low levels of inventory for-sale and for-rent and declining housing affordability will be major challenges, but on balance the nation’s housing markets should sustain their momentum from 2015 into 2016 and 2017.” According to the outlook, Freddie Mac expects housing starts to increase this year, which will help slow down the rate at which home prices have been increasing. In fact, the outlook says annual house price appreciation will be 4.8 percent in 2016. In 2015, it was about 6 percent. More here.

Mortgage Rates Rise As Spring Season Begins

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates moved up last week from the week before. Rates increased for 30-year fixed-rate loans with conforming balances, mortgages backed by the Federal Housing Administration, and 15-year fixed-rate loans. Interest rates for jumbo loans fell slightly. Despite higher interest rates, however, there is evidence that the spring buying season has begun. In fact, demand for purchase applications was up 2 percent from the week before and is now 21 percent higher than at the same time last year. The improvement was welcome news during a week when overall mortgage application demand was down 1 percent due to dropping refinance activity. But – though higher rates have contributed to fewer homeowners looking to refinance their loans – Lynn Fisher, MBA’s vice president of research and economics, told CNBC that recent comments from Federal Reserve Chair Janet Yellen indicate that the Fed likely won’t raise interest rates again any time in the near future. “As the market incorporates beliefs about a lower rate path in the wake of chairwoman Yellen’s comments, mortgage rates are likely to follow the 10-year Treasury yield downwards this week,” Fisher said. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

Pending Home Sales Improve In February

Pending sales refer to the number of contracts to buy homes signed during the month. Because they track signings – and not closings – they are considered a good indicator of future existing home sales. In other words, any increase in pending sales will likely be reflected in upcoming home sales numbers, as those buyers complete the closing process. For this reason, the National Association of Realtors’ Pending Home Sales Index is closely watched by analysts and industry experts. In February, the index rose 3.5 percent and hit a seven-month high. According to Lawrence Yun, NAR’s chief economist, the results are a good indication that the real estate market is beginning to heat up. “After some volatility this winter, the latest data is encouraging in that a decent number of buyers signed contracts last month, lured by mortgage rates dipping to their lowest levels in nearly a year and a modest, seasonal uptick in inventory,” Yun said. “Looking ahead, the key for sustained momentum and more sales than last spring is a continuous stream of new listings quickly replacing what’s being scooped up by a growing pool of buyers. Without adequate supply, sales will likely plateau.” A look at regional results shows February’s improvement was driven primarily by an 11.4 percent gain in the Midwest. However, contract signings also rose in the South and West. The Northeast, on the other hand, was relatively flat, falling just 0.2 percent. More here.

Wages, Home Prices Key To Housing Growth

Last year, high hopes for the housing market looked bleak during what turned out to be a slow winter. Harsh weather stalled activity in some parts of the country and the experts and analysts began to question their optimistic outlook for the year. As spring rolled in, however, sales picked up and 2015 turned out to be a strong overall year for the residential real estate market. This year got off to a similarly slow start. But, according to Fannie Mae’s most recent Economic and Housing Outlook, financial market conditions now appear to be improving and, though challenges remain, strong consumer and business spending combined with a healthy labor market is expected to keep the economy stable. Doug Duncan, Fannie Mae’s chief economist, says that, while the economy has regained its footing, many Americans aren’t seeing similar gains in their income and – along with higher home prices – it’s beginning to cause concern. “A less optimistic outlook for future wage gains, especially among small business employees, coupled with continued strong home price appreciation boosted by lean inventory, is adding to the housing affordability challenge,” Duncan said. “Our latest Home Purchase Sentiment Index shows that high home prices are a top reason for consumers’ perception that it’s a bad time to buy a home. However, low mortgage rates should help support moderate housing expansion as we move through the year.” More here.

Average Mortgage Rates Rise But Remain Low

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates increased last week from the week before. In fact, rates were up across all loan categories including 30-year fixed-rate mortgages with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. Though still low by historical standards, mortgage rates have moved upward two consecutive weeks and the increases have led to a slowing of refinance activity. Last week, refinance demand fell 6 percent. Lynn Fisher, MBA’s vice president of research and economics, told CNBC rates have returned to levels last reached at the beginning of the year. “Financial market volatility subsided last week, allowing rates to increase to levels last seen in January,” Fisher said. “Even though mortgage rates have remained below 4 percent, the appetite to refinance has consistently declined over the last month. Relatively low rates should continue to assist the purchase market.” Purchase demand, however, was flat from the week before, rising just 0.3 percent. Still, demand for loans to buy homes is now 33 percent higher than it was at the same time one year ago. The MBA’s weekly applications survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

Builder Confidence Holds Firm In March

The National Association of Home Builders’ Housing Market Index measures builders’ confidence in the market for newly-built single-family homes on a scale where any number above 50 indicates that more builders view conditions as good than poor. In March, the index was unchanged from the month before but remained at a high level, holding firm at 58. David Crowe, NAHB’s chief economist, said the March reading is in line with the group’s forecast for 2016. “While builder sentiment has been relatively flat for the last few months, the March HMI reading correlates with the NAHB’s forecast of a steady firming of the single-family sector in 2016,” Crowe said. “Solid job growth, low mortgage rates and improving mortgage availability will help keep the housing market on a gradual upward trajectory in the coming months.” Of the three index components gauging buyer traffic, sales expectations for the next six months and current sales conditions, only current buyer traffic saw an increase, rising four points from the month before. Also in the release, three-month moving averages show the Midwest gaining a point, the South flat, and the West and Northeast declining from the month before. However, every region but the Northeast remains above 50, with the West leading all other regions with a March reading of 69. More here.

Gov’t Housing Scorecard Shows Strength

The Department of Housing and Urban Development collects and analyzes key housing data each month in an effort to measure government programs put in place to help stabilize the housing market following the financial crisis. The Housing Scorecard provides information on home prices, new and existing home sales, foreclosure mitigation efforts, delinquencies, equity, etc. According to the most recent release, the housing market had a strong 2015 and ended the year on the upswing. For example, sales numbers show new home sales rose 14.6 percent last year over 2014, while existing home sales had their best year since 2006. At the same time, the number of delinquent prime mortgage loans fell 16.7 percent from one year earlier and seriously delinquent loans were down even further, dropping nearly 30 percent. But while low mortgage rates and a stronger economy boosted demand and helped struggling homeowners, improved conditions also brought higher home prices. In fact, home prices are now 27 percent above their low point, reached in March 2011. At the end of last year, they were about 5.5 percent higher than the year before and at their highest level since 2007. But despite the encouraging news, the report cautions that there is still work to be done to help underwater homeowners, further reduce mortgage delinquencies, and foster home sales. More here.