Discussing this week’s reports on mortgage rates, business conditions in the Carolinas, the high cost of renting, looking at renting versus buying, another big mortgage settlement, GSE reform still not happening and more!
Time to check in on this week’s reports on mortgage rates! First up…
Freddie Mac reported:
- 30-year fixed-rate mortgages averaged 4.44% with an average 0.5 point
- This is down from last week when it averaged 4.45%
- Last year at this time, 30-year fixed-rate mortgages averaged 4.14%
- 15-year fixed-rate mortgages averaged 3.90% with an average 0.5 point
- This is down from last week when it averaged 3.91%
- Last year at this time, 30-year fixed-rate mortgages averaged 3.39%
Len Kiefer, Deputy Chief Economist, said:
Treasury yields fell from a week ago helping to drive mortgage rates modestly lower. The yield on the 10-year Treasury dipped below 2.8 percent for the first time since early February of this year. The decline in Treasury yields comes as investors move into safer assets amid increased trade tensions. Following Treasurys, mortgage rates fell slightly. The U.S. weekly average 30-year fixed mortgage rate fell 1 basis point to 4.44 percent in this week’s survey.
I bet plenty of people were surprised by the decreases in mortgage rates reported by Freddie this week. Could the negativity about Trump’s tariffs could prove to beneficial to home buyers?
Hard to say since you also have to consider more than just the mortgage rates when you are buying a home. Moving on…
The Mortgage Bankers reported:
Mortgage applications were up 4% compared to the previous week and 8% compared to the same week last year!
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to 4.69% from 4.68%, with points decreasing to 0.43 from 0.46 (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 4.60% from 4.55%, with points decreasing to 0.36 from 0.37 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.09% from 4.12%, with points decreasing to 0.46 from 0.51 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
So the MBA is also reporting that mortgage rates decreased. Remember these are the average rates and the ONLY way to determine what is possible for you is to talk to a lender about your options.
Mixed Business Conditions in the Carolinas
From the Richmond Fed:
Firms in the Carolinas experienced mixed business conditions in March, according to results from the latest survey by the Federal Reserve Bank of Richmond. While the survey’s sales index increased, the indicator for general business conditions dropped from 27 in February to 13 in March. However, business owners remained optimistic, expecting both sales and general conditions to improve in the coming months.
Survey results suggested that employment growth slowed in March, amid signs that skills shortages persisted. While firms indicated that they plan to hire more workers in the next six months, they also expect skills shortages to continue.
Indicators of expenditures remained positive in March but rose from February only for business services. Firms in the Carolinas reported an increase in growth of both prices paid and prices received. While input price increases continued to outpace output price growth, firms anticipated a narrowing of this gap in the coming months.
Not exactly great but still good so we will call it a win. Not a pretty win but still a win is a win…
Barclays Pays $2 Billion to Settle Mortgage Probe
Barclays Plc agreed to pay $2 billion to settle a probe into how it sold the sort of mortgage bonds that fueled the financial crisis, securing a penalty less than half of what U.S. authorities originally demanded.
The British lender was the only bank to push back against the size of the settlement demanded by the Justice Department, prompting the prosecutor to file a lawsuit in the waning days of the Obama administration in 2016. The DOJ wanted a fine of about $5 billion, but the bank refused to pay any more than $2 billion, Bloomberg news reported in 2016.
Paid less and to my knowledge, no one from Barclays will do any time. There is a lesson to be learned here and sadly, it is the wrong lesson.
Until banks and their executives are punished for their wrongdoing, we cannot expect this type of behavior to change. If a slap on the wrist is all that happens, it is almost like encouraging this type of behavior.
The High Cost of Renting
Millennials pay a whopping $92,600 in total rent by the time they turn 30, more than what their Baby Boomer parents paid by the time they hit the same age. It seems that Millennials do put a massive amount of money into renting, but the numbers also show that their total median income is the highest among generations, earning about $206,600 in 8 years. However, they spend 45% of this income on rent between the ages of 22 and 30, which is more than the recommended 30%. In fact, none of the two previous generations managed to keep the rent burden under 30% with Gen Xers witnessing a rent burden of 41% and Baby Boomers of 36%.
Ouch! I will never suggest buying a home before you are ready or if the timing isn’t right for you but this is disturbing.
The thought of how much wealth could be built by owning a home instead of blowing this money on rent is staggering. I totally understand that there are many different reasons for NOT buying a home.
Maybe you are not financially secure. Or your debt burden is too high due to student loans. Or your career path means you will be moving constantly.
But setting yourself up for financial success is a pretty compelling reason to buy a home.
I understand that the decision whether to rent or buy a house is a very difficult one. What is right for one person is not going to be the best choice for someone else.
Looking at the data from RentCafe, it looks like a boatload of money being spent without anything to show for it in the long run. I understand that many think they cannot afford a home.
Let’s compare the cost of renting compared to buying using Q4 2017 data from Pulsenomics:
That is another pretty compelling reason to seriously consider buying a home. Just like whether to buy or rent is different for every person, so is every real estate market.
No GSE Reform for You!
From American Banker:
It was always going to be an uphill struggle to pass housing finance reform this year. But it now appears to be downright impossible.
The sharp debate over the Senate’s banking relief bill this past month has renewed doubts that a bipartisan consensus on housing can be reached anytime soon, according to sources tracking the negotiations. Crucially, the relief legislation pitted moderate Democrats, who are backing the bill with Republicans, against their more progressive colleagues. The fight proved tougher — and more personal — than many predicted. That makes the chances of winning moderates over on yet another controversial deal, this time over resolution of the government-sponsored enterprises, remote at best.
They have been kicking the can down the road for so long that I doubt we will ever see GSE reform. Unless the politicians somehow sneak it by with a bunch of perks for Wall Street and the big banks.
Not that the American public would ever be distracted by anything meaningless happening in DC…
Well that is all I have time for today!