Discussing this week’s reports on mortgage rates, affordability improves, the disparate impact regulation could be eliminated, unemployment claims and more!
Saturday means it is time to check in on this week’s mortgage rate reports!
Freddie Mac reported:
- 30-year fixed-rate mortgages averaged 4.55% with an average 0.5 point
- This is the same as last week!
- Last year at this time, 30-year fixed-rate mortgages averaged 4.05%
- 15-year fixed-rate mortgages averaged 4.01% with an average 0.4 point
- This is down from last week when it averaged 4.03%
- Last year at this time, 15-year fixed-rate mortgages averaged 3.29%
Sam Khater, Freddie Mac’s chief economist, said:
The minimal movement of mortgage rates in these last three weeks reflects the current economic nirvana of a tight labor market, solid economic growth and restrained inflation. As we head into late spring, the demand for purchase credit remains rock solid, which should set us up for another robust summer home sales season.
While this year’s higher rates – up 50 basis points from a year ago – have put pressure on the budgets of some home shoppers, weak inventory levels are what’s keeping the housing market from a stronger sales pace.
Nice to see the increases have stopped for now…
The MBA reported:
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased to 4.78% from 4.80%, with points decreasing to 0.50 from 0.53 (including the origination fee) for 80% 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) decreased to 4.65% from 4.69%, with points decreasing to 0.36 from 0.42 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.20% from 4.21%, with points decreasing to 0.48 from 0.49 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
Wow! Lots of good news about mortgage rates this week . Just remember these are the average rates and will not reflect exactly what everyone buying a home will qualify for.
Strong wage growth more than offset an increase in mortgage interest rates to boost nationwide housing affordability in the first quarter of 2018, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI).
In all, 61.6 percent of new and existing homes sold between the beginning of January and end of March were affordable to families earning the U.S. median income of $71,900. This is up from the 59.6 percent of homes sold that were affordable to median-income earners in the fourth quarter of 2017.
More good news but remember that every buyer needs to determine what is truly affordable according to their budget! Sitting down with a mortgage lender to discuss your options and getting a Pre-Approval Letter is a great way to start the home buying process.
FTC Lays Smackdown on Foreclosure Prevention Companies
From the FTC:
The Federal Trade Commission has charged a mortgage relief operation with deceiving distressed homeowners by falsely promising to make their mortgages more affordable and prevent foreclosure. A federal court temporarily halted the scheme and froze the defendants’ assets at the FTC’s request.
According to the FTC, the defendants claim a 99 percent success rate and guarantee results regardless of a consumer’s situation, and falsely say they work with certain lenders and government mortgage assistance programs. One of the defendants, Capital Home Advocacy Center, falsely claims to be accredited by the Better Business Bureau, which rated it F, the BBB’s lowest rating.
Soon after consumers apply for the purported services, the defendants falsely tell them they are “confirmed” for a specific and substantial mortgage payment reduction, and direct them to pay several thousand dollars in “closing costs.” Federal law prohibits mortgage assistance providers from seeking or accepting payment before consumers contract with their loan holders or servicers on terms obtained by the providers.
The defendants encourage consumers to stop paying their lenders and fail to tell them that, by doing so, they could lose their homes and damage their credit ratings. The defendants also indicate that a consumer cannot or should not communicate with their mortgage lender or servicer.
There is a special place in hell for those that prey on home owners facing foreclosure…
That being said, everyone is innocent until proven guilty.
Could We See Disparate Impact Regulations Eliminated?
The U.S. Department of Housing and Urban Development (HUD) today announced that it will formally seek the public’s comment on whether its 2013 Disparate Impact Regulation is consistent with the 2015 U.S. Supreme Court ruling in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc.
The Department’s Disparate Impact Regulation provides a framework for establishing legal liability for facially neutral practices that have discriminatory effects on classes of persons protected under the Fair Housing Act.
The Supreme Court upheld the use of a ‘disparate impact’ theory to establish liability under the Fair Housing Act in cases where seemingly neutral practices have a discriminatory effect on protected classes of persons. While the Supreme Court referred to HUD’s Disparate Impact Regulation in its Inclusive Communities ruling, it did not directly rule upon it.
Shortly, HUD will formally seek the public’s comment on whether its Disparate Impact Regulation is consistent with the Supreme Court’s Inclusive Communities ruling.
As much as I hate discrimination, I am not a big fan of disparate impact. It could be used in a lawsuit to prove someone is guilty of discrimination without any evidence of the intent to discriminate.
Disparate impact is a legal tool that has been used to bring bias lawsuits over actions that have a discriminatory effect with no evidence of discriminatory intent. I understand the intention of this regulation is good…
But the road to hell is paved with good intentions…
If someone or a company or bank is guilty of discrimination, the penalty should be extremely stiff in my opinion. And not the normal slap on the wrist that we have seen so many big banks get from the shenanigans that lead to the Great Recession and housing market crash.
But saying someone is guilty when there is no intent to discriminate is a slippery slope that could lead to all kinds of trouble for the housing market, lenders, home builders, Realtors, etc.
In the week ending May 5, the advance figure for seasonally adjusted initial claims was 211,000, unchanged from the previous week’s unrevised level of 211,000. The 4-week moving average was 216,000, a decrease of 5,500 from the previous week’s unrevised average of 221,500. This is the lowest level for this average since December 20, 1969 when it was 214,500.
Check out the chart of the 4-week moving average to see to see where we are where we have been in the past:
More good news for the economy! Remember we watch the 4-week moving average as it is less “noisy”.
Why Home Buyers Need to Think About Oil Prices
The U.S. decision to pull out of the Iran nuclear deal has potentially profound implications for the oil market. While withdrawal from the Joint Comprehensive Plan of Action (JCPOA) creates many known unknowns, any reduction in Iranian supply will likely exacerbate market deficits, suggesting upward pressure on pricing.
While there is no guarantee that oil prices will rise, if they do it would make gas prices rise. Which will affect how much it costs to commute.
When someone is considering a home, the location is VERY important. Not just the neighborhood but how far from work and shopping the home is.
You can find homes that are further out in the country that are cheaper than homes in town. But you have to think about how much gas costs and more importantly, the additional time it will take to get to work or the grocery store.