Looking at this week’s mortgage rates and the percentage of income required to buy a home compared to how much it will take to rent…
Mortgage Rates This Week
From Freddie Mac:
- 30-year fixed-rate mortgages averaged 4.54% with an average 0.5 point
- This is down from last week when it averaged 4.56%
- Last year at this time, 30-year fixed-rate mortgages averaged 3.89%
- 15-year fixed-rate mortgages averaged 4.01% with an average 0.4 point
- This is down from last week when it averaged 4.06%
- Last year at this time, 15-year fixed-rate mortgages averaged 3.16%
Sam Khater, Freddie Mac’s chief economist, said:
Homebuyers have taken advantage of the recent moderation in rates, which led to a 4 percent increase in purchase applications last week. Although demand has remained steadfast against the backdrop of this year’s higher borrowing costs, it’s important to note that the growth rate of purchase loan balances has moderated so far this year – and particularly since March. This slowdown indicates that buyers are having difficulty stretching to keep up with the pace of home-price growth.
While the very healthy job market continues to fuel interest in buying a home, the supply shortages in most markets are pushing prices higher and currently keeping sales at a standstill. Listings for new and existing homes need to increase in the months ahead to moderate price growth and reignite sales activity.
Once again we hear that the lack of homes for sale is hurting the housing market.
From the Mortgage Bankers Association:
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased to 4.75% from 4.84%, with points decreasing to 0.46 from 0.47 (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 4.70% from 4.73%, 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 decreased to 4.21% from 4.24%, with points decreasing to 0.50 from 0.51 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
While both Freddie and the MBA reported small decreases, you must remember that these are the average rates. They may not reflect what is possible or realistic for every home buyer.
The best way to see what is possible is by sitting down with several mortgage lenders of your choice to discuss your options.
Mortgage rates for a 30-year mortgage have increased by half a percentage point already in 2018 according to Freddie Mac. The MBA, Fannie, Freddie and the National Association of Realtors are all forecasting that mortgage rates will increase by nearly a full percentage point in the next 12 months.
The ‘cost’ of a home is determined by two major things: the price of the home and the mortgage rate. Home prices are STILL increasing and despite the tiny decrease this week, mortgage rates are supposed to increase.
If buying is the right thing for you to do, sooner could be better than later. Waiting to buy a home could prove to be costly.
If you are renting, you could be paying a mortgage and not realize it. This is because you are paying the landlord’s mortgage!
I understand that the decision to rent or buy is a tough one. But difference between the percentage of income to rent or buy a median priced home indicates that buying could be better:
Like I always say, you must figure out what is best for you, your financial situation and long range goals. There is nothing wrong with renting if it makes more sense for you at this point in your life.
And you need to consider the advantages of owning a home compared to renting a home…
Plus the data from Pulsenomics is national and not local so you may find things are different in your area. Remember that every local market is different and national reports don’t help you understand what is happening in your area.
That is one of the many things that your Realtor will help you with…