Discussing this week’s reports on mortgage rates, how hard it is to get a mortgage today, why getting pre-approved is a must and how excessive zoning regulations hurts the economy…
Time once again to check out this week’s mortgage rate reports!
Freddie Mac reported:
- 30-year fixed-rate mortgages averaged 4.62% with an average 0.4 point
- This is up from last week when it averaged 4.54%
- Last year at this time, 30-year fixed-rate mortgages averaged 3.91%
- 15-year fixed-rate mortgages averaged 4.07% 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 3.18%
Check out the chart from Freddie showing mortgage rates:
You can see the way that rates have increased in the past year. And with the Fed raising their benchmark rate this week, we could see rates increase even more!
Moving on, the Mortgage Bankers Association reported:
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to 4.83% from 4.75%, with points increasing to 0.53 from 0.46 (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 4.74% from 4.70%, with points increasing to 0.37 from 0.35 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
The average contract interest rate for 15-year fixed-rate mortgages increased to 4.23% from 4.21%, with points increasing to 0.51 from 0.50 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
Both Freddie and the MBA are reporting on rates from BEFORE the Fed raised their benchmark rate AND before the trade war/tariff issue heated up even more.
And these are also the average rates and may not reflect what is possible for you. The best thing to do is sit down with several mortgage lenders of your choice and discuss your options and what is possible!
One of the first parts of the home buying process should be getting pre-approved by a lender. Getting pre-approved and setting your home buying budget should come BEFORE you start looking at homes!
Understanding exactly how much you can afford gives you the confidence of knowing you will not spend more than you should. Getting pre-approved shows home sellers that you are serious.
Most sellers will not consider an offer unless you include a pre-approval letter or a proof of funds letter if you are paying all cash. In today’s ultra competitive and fast paced market, the time it takes you to get a pre-approval could mean another buyer will get the home you want!
I am sure some people are thinking that it is too hard to get a mortgage today. But there are some people that are thinking that lending standards are too loose and we will repeat the mistakes that led up to the housing market crash.
You may have missed my post the other day about mortgage credit availability increasing as reported by the MBA in their most recent Mortgage Credit Availability Index (MCAI). Check out this chart showing the MCAI going back to 2004:
You can see that lending standards were very loose between 2004 and 2007. And we all know what that led to…
But if then mortgage lending got too tight as lender over corrected. The MCAI has risen slightly over the last several years and is better than it was just few years ago.
Sadly, mortgage lending standards are still tighter than they should be today. Because of the changes, it is very likely that many potential buyers are not 100% sure of where they stand.
This is another reason that talking to a mortgage lender and getting pre-approved is so important today. Both for the peace of mind of sellers when making an offer and for ensuring that you do not spend too much.
Do Excessive Zoning Regulations Hurt the Economy?
From The Regulatory Review:
Economists find that strict housing regulations may significantly lower U.S. gross domestic product.
According to a recent paper, relaxing land use regulations in the San Francisco Bay Area and New York City could increase the average U.S. worker’s income by almost $9,000 a year and add trillions to the economy.
Economists Chang-Tai Hsieh of the University of Chicago and Enrico Moretti of the University of California, Berkeley argue that U.S. workers are poorer because certain cities use zoning to constrain their housing supply, limiting the number of workers who can share in those cities’ economic success. They conclude that these exclusionary zoning policies lowered the U.S. gross domestic product (GDP) by more than 50 percent between 1964 and 2009.
Interesting how over zealous zoning in other areas appears to hurt the economy all over the country. It is important to have some zoning regulations…