After spiking at the end of last year, mortgage rates have spent most of this year falling. Now they’re a motivating factor not only for potential homebuyers, but existing homeowners as well. In fact, Fannie Mae’s latest outlook sees a refinance boom ahead. “Mortgage rates are approaching their lowest level in recent decades, and as they have moved lower, more and more homeowners are finding incentive to refinance,” Doug Duncan, Fannie Mae’s senior vice president and chief economist, said. “We estimate that 35 percent of outstanding mortgages are now ‘in the money,’ meaning borrowers may realize significant cost savings by refinancing; as such, we expect the share of refinance originations to grow through the remainder of the year.” However, though favorable rates are helping to increase refinance activity, the purchase mortgage market may not see the same boost. That’s because buyers have to find a home in addition to a mortgage, and some housing markets are lacking in inventory. More here.
According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell last week 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 loans. Mike Fratantoni, MBA’s senior vice president and chief economist, said lower rates will likely spur refinance activity. “The Federal Reserve cut rates as expected last week, but the bigger influence on the financial markets was the beginning of a trade war with China. The result was a sharp drop in mortgage rates which will likely draw many refinance borrowers into the market in the coming weeks. Rates for 30-year fixed-rate loans fell to their lowest level since November 2016. As a result, refinance activity was up 12 percent from one week earlier and up 116 percent higher from 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 sales data from the end of last year was delayed because of the government shutdown. Now that the numbers have been released, they contain an unexpected surprise. Sales of newly built, single-family homes rose nearly 4 percent in December from the month before. The gains put 2018 new home sales 1.5 percent higher than the year before. It was also a seven-month high. However, though rising sales are an encouraging sign, especially since a healthy new home market leads to better conditions for all homebuyers, new home sales data tends to be volatile and is often revised. For example, part of the reason December numbers increased was that November’s sales were revised downward. This is because new home sales data is based on permits, so it can be unreliable. Still, the fact that there was any improvement at the end of last year is a good sign that buyer demand remains healthy. More here.
According to the Mortgage Bankers Association’s Weekly Applications Survey, mortgage demand increased 3.6 percent last week from the week before. Though the majority of the improvement was refinance activity, purchase demand also rose. The news is encouraging, as it points to gaining interest as spring approaches. Joel Kan, MBA’s Associate Vice President of Industry Surveys and Forecasts, says the numbers show promise. After four consecutive declines, purchase applications increased almost 2 percent over the week and 2.5 percent compared to a year ago showing some promise as we edge closer to the spring home buying season, Kan said. When it comes to specific loan categories, FHA and VA loan applications made up less of a share of total applications, compared to the previous week. Meanwhile, the share of USDA loans increased. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.
Buying a home means making an investment in the real estate market. While it may not be your main motivation for home buying, there’s a high chance that you’ll see a return on investment. It’s among the reasons that homeownership has retained its appeal over the years. New numbers from ATTOM Data Solutions show that an increasing number of homeowners are benefitting from their home purchase. Their Year-End 2018 U.S. Home Equity & Underwater Report shows that in the fourth quarter of 2018, more than 14.5 million properties were considered equity rich, which means that the loans used to purchase the property are 50 percent or less than the estimated value. In short, an increasing number of American homeowners are seeing their investment grow. Todd Teta, ATTOM’s Chief Product Officer, says that in addition to increasing values, homeowners are seeing their equity grow because they’re staying in their homes longer. With homeowners staying put longer, homeownership equity will most likely continue to strengthen, Teta said. The rise of equity rich homeowners also coincides with a dramatic decline in the number of seriously underwater properties, which have dropped from nearly 30 percent in 2012 to just 8.8 percent at the end […]
Last year’s housing market had its challenges. There was plenty of interest from home buyers, but too few homes for sale and high prices dampened some of the enthusiasm. This year, Americans may be feeling more optimistic, according to the most recent Home Purchase Sentiment Index from Fannie Mae. In addition to an 8 percent increase in the number of respondents who say their income is substantially higher than it was last year, there are also a declining number who feel home prices will keep rising. Essentially, consumers feel more confident in their money and see affordability conditions starting to improve. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says the boosted optimism and more favorable conditions may help home sales this year. Overall, these results are in line with our forecast that, amid improving affordability conditions, home sales should stabilize in 2019 after declining last year for the first time in four years. More here.
Fannie Mae’s quarterly Mortgage Lender Sentiment Survey asks senior mortgage executives for their perceptions of the market and their forecast for the future. According to the most recent release, mortgage lenders point to an insufficient supply of homes available for sale as the primary reason for slow home sales growth last year. In fact, 48 percent of responding lenders said that too few homes for sale held home buyers back, while higher prices was also a commonly cited factor. Similarly, when asked for suggestions for what could be done to improve affordability, almost half said increasing the supply of housing stock. In short, mortgage execs see low housing inventory as the market’s biggest issue. This isn’t a surprise. There’s been a lower-than-typical number of homes for sale in recent years, which increases competition and pushes home prices upward. If more homes get built, it could help provide some relief to home buyers this year. More here.
There’s a fairly common misconception that you’ll need a 20 percent down payment before you can buy a house. It’s recommended since it’ll help you avoid paying mortgage insurance, reduce your monthly payment, and get you a lower mortgage rate. But, depending on the terms of your loan, the amount of money you need to put down is flexible. So, what do most home buyers put down and how do they get it? According to a recent report by Zillow, just 43 percent of home buyers nationally put down 20 percent or more, which means many homebuyers opt for a smaller down payment. Seventy percent of buyers said they used savings as part of their down payment. Proceeds from a home sale and gifts from family or friends were also popular sources for down payment funds. Other sources included investments and retirement accounts. In short, the amount and source of your down payment will be unique to your financial situation and the home you’re hoping to buy. It’s important to go over how much you can afford to put down and what costs will be associated with a smaller investment. Your down payment will have a long-term effect on your […]
When surveyed, Americans who currently don’t own a home consistently say they’d like to buy one someday. For example, the National Association of Realtors’ Housing Opportunities and Market Experience survey asked non-homeowners whether homeownership is part of their American Dream, and 75 percent of respondents said it was. This means there are a lot of people who’d like to buy a home. What factors influence their decision to buy now or wait? It may come as no surprise that money leads the list. Most non-homeowners, when asked why they don’t currently own a home, said they couldn’t afford a mortgage. Other reasons included needing the flexibility that comes with renting and a lifestyle that wasn’t compatible with ownership. Similarly, when asked what might spur a future decision to buy, respondents said that having more money would motivate them to become a homebuyer. But an improved financial situation wasn’t the only thing that could encourage them to buy. An almost equal number of respondents said a lifestyle change like marriage or retirement might push them to pursue homeownership. More here.
Demand for mortgage applications saw a dramatic jump last week, according to new numbers from the Mortgage Bankers Association. Overall, application demand was up 23.5 percent from one week earlier. A large share of the rebound was from homeowners looking to refinance now that rates have fallen to their lowest level since last February. Though much of the surge was from refinance activity, home purchase loans also had a good week. Joel Kan, MBA’s vice president of economic and industry forecasting, said purchase activity rebounded after an end-of-the-year slump. “Purchase applications had their strongest week in a month, finishing over 4 percent higher than a year ago, as both conventional and government purchase activity bounced back with solid gains after a sluggish holiday season,” Kan said. Though the gains were impressive, the week’s results follow an unusually slow holiday season and include an adjustment for the New Year’s Day holiday. Going forward, there is some concern that the government shutdown and stock market volatility may negatively affect housing market activity, but lower mortgage rates and surging demand are an encouraging sign to start the year. More here.