The most recent National Housing Survey from Fannie Mae reveals a slight yet significant decrease in the number of consumers who believe mortgage rates will increase in the next twelve months. Following a record-high 64% last month, the number dropped to 62%. What makes this dip noteworthy is that it indicates that consumers are rapidly gaining hope for more affordable mortgage rates in 2018. After mortgage rates fell below 4% for the first time in 2017, homebuyers and refinancing homeowners indicated hope that the trend will continue into the next year. To put things into perspective, Freddie Mac reports that mortgage rates have averaged about 8.25% over the past 45 years, making today’s rates nothing to grumble about as they linger in the low 4’s. While consumer concerns over mortgage rates decrease, their worries increase about housing availability. Fears are mounting particularly for renters who are getting priced out of their rented spaces. The latest Fannie Mae survey showed consumers fully anticipate rent increases of 4.0% over the next year. Rising rental prices – along with fees associated with a move into a rental unit – are lowering the relative cost of homeowner ownership every day. In addition, savvy renters […]
Americans are still as confident in the U.S. housing market as has been recently reported, yet they are decidedly more cautious. The quarterly Modern Homebuyer Survey*, released by ValueInsured, revealed the Q1 index finished at 67.7 out of 100. Sixty-three percent of Americans said they are hopeful that 2017 will be a better year for housing opportunities than in 2016. This is a slight dip from the 69% that felt the same optimism in January. The survey was conducted following the most recent Federal Reserve interest rate increase. Despite assuaged confidence, Americans still have a strong desire to buy and still value owning a home in America. In fact: 76% of Americans said owning home is an important part of their American Dream. 77% of Americans believe buying a home is one of the best financial investments they can make. 79% believe buying a home is more financially favorable than renting. 79% of non-homeowners said they would like to purchase a home. Guarded sentiment came mostly as a result of prospective first-time homebuyers and upgrading homeowners, who reported a sense of increasing risk when it comes to escalating home prices and rising interest rates. Sixty-one percent of interested homebuyers expressed […]
The Federal Reserve announced it had decided against raising its benchmark interest rate following central bankers’ two-day summit recently in Washington. Citing the fact that economic progress had “slowed” at the start of 2017 and that household spending “rose only modestly,” the Federal Open Market Committee (FOMC) declared in a statement that it would “maintain” nationwide interest rates for the moment. “The committee views the slowing in growth during the first quarter as likely to be transitory and continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, labor market conditions will strengthen somewhat further, and inflation will stabilize around 2% over the medium term,” according to the statement . The decision was largely anticipated following the FOMC’s third meeting of this year, with the Fed having already increased rates in March. “The outcome of the meeting is not a surprise. However, the Fed should continue raising rates at a modestly faster pace than previous years – two to three rate hikes total this year,” Jason Pride, Director of Investment Strategy at Glenmede, commented. Fed officials seemed willing to overlook the 2017 Q1 relaxed growth rate, under the presumptions […]
The economic case for a Federal Reserve interest-rate hike at their next meeting in June just lost its footing. Two recent U.S. government reports revealed that inflation showed a slight setback in March while at the same time retail sales decreased sharply for a second consecutive month. Labor Department data showed the consumer-price index (CPI) dropped 0.3%, while a measure that excludes energy and food decreased by the most since 1982. “Both reports would be arguments in a case that a dove would make for why the Fed needs to be more patient,” commented Stephen Stanley, Chief Economist at Amherst Pierpont Securities LLC. “It’s a relatively soft consumer performance in the first quarter, and you couple that with a pretty abrupt halt in the gradual uptrend in inflation.” Retail sales were down 0.2% last month after a 0.3% drop in February that had previously been reported as a gain, Commerce Department data showed. Six of 13 major retail categories recorded lower receipts for the month of March. Auto purchases dipped 1.2% following a 1.5% slip in the previous month. While the pullback at retailers highlights a weak first quarter for consumer spending – one that economic experts had already accounted […]
March marked the best month for real estate sales since February of 2007, with sales increases of 5.9% over the previous month. The amount of home buyers for existing homes boomed in March after stumbling unexpectedly in February for various speculated reasons. The National Association of Realtors® (NAR) said sales of existing single-family houses, townhouses, condominiums, and cooperative apartments were at a seasonally adjusted annual rate of 5.71 million, an increase of 4.4% from the adjusted February number of 5.47 million. NAR Chief Economist Lawrence Yun attributed the solid sales during the month to strong gains in the Northeast and Midwest. “Although finding available properties to buy continues to be a strenuous task for many home buyers, there was enough of a monthly increase in listings in March for sales to muster a strong gain. Sales will go up as long as inventory does.” Sales of single-family homes rose 4.3% to a seasonally adjusted annual rate of 5.08 million from 4.87 in February, marking 6.1% higher sales over the same month in 2016. Condo sales also increased, growing 5.0% to a seasonally adjusted annual rate of 630,000 units, a 5.0% annual gain. The median existing-home price for all housing types […]
The Q1 2017 U.S. Home Sales Report released by ATTOM Data Solutions reveals that the typical U.S. home seller earns 24% return on their investment (about $44,000 per sale), which is the highest profit for home sellers since the middle of 2007. According to Daren Blomquist, Senior Vice President for ATTOM Data Solutions, many homeowners aren’t ready to sell to home buyers despite the increased ROI, which is causing the market’s ever-worsening inventory problem. “The first quarter of 2017 was the most profitable time to be a home seller in nearly a decade, and yet homeowners are [staying] in their homes longer before selling,” Blomquist commented. “This counterintuitive combination is in part the result of the low inventory of move-up homes available for current homeowners, while also perpetuating the scarcity of starter homes available for first-time homebuyers.” Nonetheless, Blomquist reports some promising signs that inventory may be loosening up. “There are some early signs this inventory logjam may be loosening up in some markets,” Blomquist said, “with the average homeownership tenure down from a year ago in nine of the 66 markets we analyzed, including Memphis, Dallas, Boston, Portland, and Tampa. Sky-high potential price gains may be finally prompting more […]
In a surprising move, Fannie Mae announced its new programs to make it easier for consumers to qualify to be first time home buyers, or pay off their student loans via a refinance. The new program is called Student Loan Solutions. This is undoubtedly fantastic news for Americans who hold some of the $1.4 trillion in student loan debt. Effective immediately, Fannie Mae is easing the home loan process with three major changes so that becoming home buyers or reducing student loan debt may become a reality. Change #1: Student Loan Payment Calculation Fannie Mae has changed how lenders calculate student loan payments. Whereas before the change, mortgage lenders had to use 1% of the outstanding balance or the fully amortizing repayment amount, now lenders can calculate debt to income ratio (DTI) based on the student loan payment just as it appears in the credit report. This is good news for borrowers on an income-driven repayment (IDR) plan such as PAYE and REPAYE. Change #2: Student Debt Paid By Others In the case that a parent or other third party pays the bill, Fannie Mae is disregarding the payment altogether. That applies not only to student loans, but payments for […]
The U.S. Treasury has received billions in profit from post-crisis Fannie Mae and Freddie Mac revenues – and investors are suing for it. For decades, Fannie Mae and Freddie Mac helped in causing a steady rise in home buyers—until the subprime crisis hit and Fannie and Freddie were on the hook for billions in losses. Legislators swore to reorganize the two companies and some planned to phase them out entirely. However, over eight years later, Fannie and Freddie still operate under government control—and they’re now a bigger part of the system, guaranteeing payment on nearly 50% of all U.S. mortgages, an increase from 38% before the crisis. There is one crucial difference: Any profits the companies generate go to the government instead of investors. In 2012 the government altered the terms to say that every quarter Fannie and Freddie would send Treasury all their profits except for a certain amount of money kept in reserve. That reserve started at $3 billion in 2013 and was scheduled to fall by $600 million every subsequent year, until hitting zero in 2018. The latest payment, a combined $9.9 billion to the U.S. Treasury at the end of March, made the total amount of […]
According to the MCAI, credit availability increased in March led by a swell in jumbo mortgage loans and an uptick in government loans.
Data reveals that purchase mortgage loans spiked to a 57% share of all mortgage loan originations in February, an increase of 5 percentage points.