Looking at mortgage rates and this week’s economic and real estate news and if it will mean rates will increase…
Time once again to check out the average mortage rates from the MBA, Freddie Mac and bankrate.com. Plus a big chart from the FHFA.
Then we will look at some of the recent real estate and economic news and if it means we could see mortgage rates increase!
But first, let’s look at the rates reported this week:
FHFA on Mortgage Rates:
While not as recent as reports I usually include, this is still good for a look at the big picture.
Well they said that interest rates on conventional purchase-money mortgages increased from November to December. Like I said, this is not as up to date.
Besides, this does NOT tell you what is possible for everybody. Some buyers may get a lower rates and some may get a higher rate.
So what did the FHFA say?
The average interest rate on all mortgage loans was 3.96% in December
This is up 10 basis points from 3.86% in November.
The average interest rate on conventional, 30-year, fixed-rate mortgages of $417,000 or less was 4.20%.
This is up 12 basis points from 4.08% in November.
The effective interest rate on all mortgage loans was 4.10% in December. The effective interest rate accounts for the addition of initial fees and charges over the life of the mortgage.
This is up 9 basis points from 4.01% in November.
The average loan amount for all loans was $318,000 in December.
This is down $1,800 from $319,800 in November.
Check out the chart from FHFA showing mortgage rates over the past year:
As you can see, rates have moved up and down over the past year but really have not changed radically.
FHFA also released their latest Home Price Index this week:
US house prices increase in November, up 0.5% on a seasonally adjusted basis from October.
From November 2014 to November 2015, house prices were up 5.9%.
Check out the chart showing how US home prices have finally reached their previous peak back in 2007:
Moving on to more up to date information…
Freddie Mac Reported:
- 30-year fixed-rate mortgages averaged 3.79%
- This is down from last week when it averaged 3.81%
- Last year at this time, 30-year fixed-rate mortgages averaged 3.66%
- 15-year fixed-rate mortgages this week averaged 3.07%
- This is down from 3.10% last week
- Last year at this time, 15-year fixed-rate mortgages averaged 2.98%
This is the 4th week that Freddie has reported falling mortgage rates! But can we expect rates to keep falling?
More on that later! First check out the chart from Freddie:
30 year fixed rate mortgages decreased to 3.94%
15 year fixed rate mortgages were unchanged at 3.21%
30 year fixed rate jumbo mortgages decreased to 3.83%
The Mortgage Bankers Association Reported:
The average contract interest rate for 30 year fixed rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.02% from 4.06% for 80% loan-to-value ratio (LTV) loans. This is the lowest level since October 2015!
The average contract interest rate for 30 year fixed rate mortgages with jumbo loan balances (greater than $417,000) decreased to 3.89% from 3.93% for 80% LTV loans.
The average contract interest rate for 15 year fixed rate mortgages decreased to 3.28% from 3.29% for 80% LTV loans.
The MBA reported a serious increase in mortgage activity as their unadjusted Purchase Index was 22% higher than the same week last year!
What Happened This Week:
Well the BIG news was the FED announced that it will keep their benchmark rate unchanged. The average mortgage rates in this report have NOT had time to react to this news.
Right now, there is more affecting mortgage rates than just the FED. The financial markets are going nuts and investors are looking to the safety of bonds. This drives mortgage rates down.
Sean Becketti, chief economist, Freddie Mac said:
The yield on the 10-year Treasury stabilized around 2 percent this week, and the 30-year mortgage rate dipped 2 basis points to 3.79 percent. The recent market turmoil has given the Fed pause; as was universally expected, the Fed stood pat this week but kept its options open for a rate increase in March. This week’s housing releases confirmed the momentum of home sales going into 2016. A hesitant Fed, sub-4-percent mortgage rates (at least for a little while longer), and strong housing fundamentals should generate a three percent increase in home sales this year.
Will home sales increase 3% in 2016?
Hard to say and may be a bit optimistic as Q4 2015 GDP was at 0.7% annualized rate. Weak!
Which is not good and growth slowed across all categories. However there was good news this week!
The Bloomberg Consumer Comfort Index reached a three-month high this week!
Fifty percent say they are better off than eight years ago according to a recent Gallup poll.
We found out this week that NAR’s Pending Home Sales Index has increased year-over-year for 16 consecutive months.
US Initial Jobless Claims 4 week average decreased.
Unemployment for the entire US was 5.0% in December and this is 0.6 lower than December 2014. In South Carolina the unemployment rate was 5.5% and this was the same as the previous month.
Locally, Anderson County was at 4.6% which is much lower than the 5.8% reported in December 2014.
Oconee County was at 5.4% which is also better than the 6.1% reported in December 2014.
Pickens County came in at 5% which is much better than the 5.9% reported last December.
New home sales increased to the highest level since 2007 as I reported the other day.
Existing home sales in December 2015 increased 7.7% compared to December 2014. 2015 is the best year for existing home sales since 2006!
I also reported on several home price indexes increasing. While national reports don’t help you as far as local market conditions, they DO help you to understand the economy.
And real estate and the economy go hand in hand!
The Take Away:
For the past several years, it seems that this time of the year is filled with reports about how mortgage rates will increase.
I can tell you I do not see mortgage rates doing anything drastic UNLESS something drastic happens. You know like another 9-11 or a natural disaster or global unrest (either political or financial).
But what do I know…
It doesn’t matter what mortgage rates do IF people don’t take the time to actually talk to a mortgage professional.
I can post all the average mortgage rates week after week from now until Hell freezes over…
Until YOU take the first step and sit down with a lender, it really means nothing.
Talking to a lender and getting a Pre Approval Letter is and always has been one of the very first steps of serious legitimate home buyers.
The Fine Print:
As always, I am providing this to you for informational purposes only! I am a REALTOR and not a mortgage lender. You should contact the lender of your choice directly to learn more about its mortgage products and your eligibility for such products.