Discussing this week’s reports on mortgage rates and the serious way that monthly payments have been increasing…
Freddie Mac reported that rates hit the highest level in 7 years:
- 30-year fixed-rate mortgages averaged 4.61% with an average 0.4 point
- This is up from last week when it averaged 4.55%
- Last year at this time, 30-year fixed-rate mortgages averaged 4.02%
- 15-year fixed-rate mortgages averaged 4.08% with an average 0.4 point
- This is up from last week when it averaged 4.01%
- Last year at this time, 15-year fixed-rate mortgages averaged 3.27%
Sam Khater, Freddie Mac’s chief economist, said:
Healthy consumer spending and higher commodity prices spooked the bond markets and led to higher mortgage rates over the past week. Not only are buyers facing higher borrowing costs, gas prices are currently at four-year highs just as we enter the important peak home sales season.
While this year’s higher mortgage rates have not caused much of a ripple in the strong demand levels for buying a home seen in most markets, inflationary pressures and the prospect of rates approaching 5 percent could begin to hit the psyche of some prospective buyers.
While this is not good news, you can see that mortgage rates were much higher in the past 10 years. This will be bad as we enter what is typically the busiest time of the year for real estate BUT it is not the end of the world.
The MBA reported:
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased to 4.77% from 4.78%, with points remaining unchanged at 0.50 (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) increased to 4.73% from 4.65%, with points decreasing to 0.35 from 0.36 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
The average contract interest rate for 15-year fixed-rate mortgages remained unchanged at 4.20%, with points increasing to 0.53 from 0.48 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
Not quite as bad as the news from Freddie Mac but anyone looking to buy a home MUST be aware that mortgage rates are finally rising. I know we all heard predictions that rates were going to rise for the past several years and nothing much happened.
With the economy humming along and the Fed raising their benchmark rate and decreasing their MBS holdings, this is not a surprise to many. I doubt it will dampen the strong demand among buyers and will only shift the price range they are looking in or cause them to act even faster.
Speaking of acting quickly, if a home buyer wants to act quickly, it means they have already spoken to the mortgage professional of their choice. They have explored their options and have that super important Pre-Approval in hand.
In a recent article, CoreLogic said:
While the U.S. median sale price rose about 6 percent over the past year the principal-and-interest mortgage payment on that median-priced home increased nearly 9 percent. Moreover, the CoreLogic Home Price Index Forecast suggests U.S. home prices will be up 6.2 percent year-over-year in February 2019, while some mortgage rate forecasts translate into a 13 percent gain in the mortgage payments homebuyers will face.
Waiting or dragging your feet could prove to be very expensive. Again, I strongly suggest that all serious home buyers take the first step and sit down with several mortgage lenders of their choice to discuss their options.
Short post today but having to Hot Spot through my phone and deal with a pack of adorable children distracting me to go outside and play!
Be sure to check back ASAP as I still have plenty of real estate, housing and economic news to share and discuss!