Discussing the latest mortgage rate reports and where rates are headed, home affordability, how people feel about buying or selling plus much more!
Looking at Mortgage Rates
Freddie Mac reported:
- 30-year fixed-rate mortgages averaged 4.32% with an average 0.6 point
- This is up from last week when it averaged 4.22%
- Last year at this time, 30-year fixed-rate mortgages averaged 4.17%
- 15-year fixed-rate mortgages averaged 3.77% with an average 0.5 point
- This is up from last week when it averaged 3.68%
- Last year at this time, 15-year fixed-rate mortgages averaged 3.39%
Check out the chart:
From the MBA:
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to its highest level since April 2014, 4.50%, from 4.41%, with points increasing to 0.57 from 0.56 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) increased to its highest level since April 2014, 4.47%, from 4.34%, with points increasing to 0.44 from 0.40 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
The average contract interest rate for 15-year fixed-rate mortgages increased to its highest level since April 2011, 3.92%, from 3.85%, with points increasing to 0.65 from 0.60 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
Normally I would say remain calm and while there is no reason to panic, the way rates are increasing should motivate many. A higher mortgage rate means a higher monthly payment!
Freddie Mac recently released some data in their Freddie Mac’s U.S. Economic & Housing Marketing Outlook that was used to create this chart showing where rates are headed:
Even a small increase in mortgage rates can mean a higher monthly payment or that you will need to lower the price range of homes you are looking at.
If both mortgage rates and home prices increase as they are predicted to do, it will have a seriously negative effect on your home buying power!
Jobless Claims Drop to Lowest Level in Almost 45 Years
In the week ending February 3, the advance figure for seasonally adjusted initial claims was 221,000, a decrease of 9,000 from the previous week’s unrevised level of 230,000. The 4-week moving average was 224,500, a decrease of 10,000 from the previous week’s unrevised average of 234,500. This is the lowest level for this average since March 10, 1973 when it was 222,000.
Amazing! Check out the chart of the 4-week moving average:
This was below the consensus forecast and the low level could mean few layoffs. The low level of claims could also mean we will see stronger wage growth in 2018.
Construction Employment Increased in 269 out of 358 Metro Areas
Construction employment increased in 269 out of 358 metro areas between December 2016 and December 2017, declined in 43 and stagnated in 46, according to a new analysis of federal employment data released today by the Associated General Contractors of America. Association officials said new infrastructure funding would help ensure firms continue to expand their headcount in 2018.
Ken Simonson, AGC’s chief economist, said
Construction employment continues to expand amid robust private-sector demand in many parts of the country,” said. But with public-sector funding lagging, there is little doubt that more firms would be able to expand their headcount this year if Congress would enact a substantial boost in infrastructure projects, as many members of both parties advocate.
Stephen E. Sandherr, AGC CEO, said:
One of the biggest threats to the current economic expansion is that our aging infrastructure will cause shipping and traffic delays, which will raise costs, slow schedules and create new inefficiencies. Rebuilding public infrastructure will help our economy remain competitive and ensure that construction employers continue to add jobs.
POTUS Trump mentioned improving infrastructure in his State of the Union speech. Whether or not we finally see something done about our infrastructure is hard to say…
When the economy hit the skids, I often thought the best way to get things going again was by creating jobs via infrastructure improvement projects. I guess this does not shovel enough money to Wall Street and the big banks to be popular with the politicians…
Rail Traffic Increases
Total U.S. weekly rail traffic was up 2.5 percent compared with the same week last year. Total carloads for the week ending February 3 were down 1.4 percent compared with the same week in 2017, while U.S. weekly intermodal volume was up 6.3 percent compared to 2017.
AAR Senior Vice President John T. Gray said:
Recent stock market gyrations remind all of us that, when it comes to things related to the economy, conditions can change quickly. For now, though, rail volumes are not flashing strong warning signs. In January, intermodal picked up where it left off last year, when it set a new annual record, and several carload categories showed gains for the month. To be sure, we could do without January’s sharp fall in motor vehicle and coal carloads, among others, but we’re hopeful that the basic economy remains on a firm footing and that the recent turmoil in the markets simply represents an adjustment to potential interest rate changes.
While the increases are a good sign, the craziness in the stock market lately is very concerning to me.
Home Purchase Sentiment Index Hit a New High
Fannie Mae’s latest Home Purchase Sentiment Index just reached an new all-time high. some of the highlights:
- 59% say it is a good time to buy a home
- 65% say it is a good time to sell a home
- 58% say home prices are going to increase
- 55% say mortgage rates will increase in the next 12 months
- 86% said they are not concerned about losing their jobs
Doug Duncan, senior vice president and chief economist at Fannie Mae said:
HPSI rebounded from last month’s dip to a new survey high in January, in large part due to the spike in consumers’ net expectations that home prices will increase over the next year. Results may continue to fluctuate over the coming months as consumers sort out the implications of the newly passed tax legislation on their household finances. Over the past year, continued home price growth has helped spur a sizable increase in the net share of consumers who say it’s a good time to sell a home but also a modest weakening in the net share who say it is a good time to buy. At the start of 2018, it is still too early to determine the overall effect of the new tax legislation on housing, and we will need to see whether positive impacts on both housing demand and supply materialize in the coming months.
It is still early to say for sure what will happen in housing because of the tax changes. Heck, no one knows what the future holds…
It is up to you to do what is best for you!
Housing Affordability Remains Flat in 2017
According to the latest NAHB/Wells Fargo Housing Opportunity Index, data for all four quarters of 2017 show housing affordability remaining essentially flat throughout the last year.
NAHB said that 59.6% of homes sold between the beginning of October and end of December 2017 were affordable to families earning the U.S. median income of $68,000. This is just slightly up from the 58.3% of in the third quarter, andabout the same as in the fourth quarter of 2016.
NAHB Chairman Randy Noel said:
Builder confidence and consumer demand remain strong, and this should help bring more buyers into the marketplace in the year ahead, At the same time, builders are working hard to keep home prices affordable as they continue to grapple with persistent labor and lot shortages, burdensome regulations and rising costs for building materials. Another factor that could have a negative impact on housing affordability in the first quarter is a recent rise in mortgage interest rates.
There is no doubt that mortgage rates have been increasing as I discussed earlier. Both home prices and mortgage rates are predicted to increase and this will negatively impact what a home buyer will be able to afford.
My suggestion is IF buying a home makes sense for you, do not waste time. Sit down with the mortgage lender of your choice and discuss your options ASAP.
Determine a maximum price based upon a monthly payment that is comfortable for you. Be sure to allow for taxes, insurance, maintenance etc.
Get a Pre-Approvale Letter and find a local experienced Buyer’s Agent that you like and fell comfortable with. Commit to them by signing a Buyer’s Agent Agreement and get to work!