Discussing this week’s reports on mortgage rates, home buyer demand is still strong and what that means, unemployment claims, kids and the American Dream plus more!
Saturday means it is time to once again check out the latest mortgage rate reports!
From Freddie Mac:
- 30-year fixed-rate mortgages averaged 4.53% with an average 0.4 point
- This is up from last week when it averaged 4.52%
- Last year at this time, 30-year fixed-rate mortgages averaged 4.03%
- 15-year fixed-rate mortgages averaged 4.02% with an average 0.4 point
- This is up from last week when it averaged 3.99%
- Last year at this time, 15-year fixed-rate mortgages averaged 3.29%
Sam Khater, Freddie Mac’s chief economist, said:
The 10-year Treasury yield continues to hover along the same narrow range, as increased global trade tensions are causing investors to take a cautious approach. This in turn has kept borrowing costs at bay, which is certainly welcoming news for those looking to buy a home before the summer ends.
As long as we have uneasy investors, mortgage rates shouldn’t increase much if at all. But this is the first increase reported by Freddie since June.
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 4.76% from 4.79%, with points increasing to 0.43 from 0.41 (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 4.68% from 4.71%, with points decreasing to 0.24 from 0.43 (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 4.18% from 4.22%, with points decreasing to 0.46 from 0.47 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
Different news from the MBA! The decreases are not that big but neither were the increases reported by Freddie.
Besides these are the average mortgage rates and what is possible varies from one person to the next. As always, I suggest talking to the mortgage lender of your choice to discuss your options.
I know that we have all heard how rising mortgage rates will hurt the housing market and home prices….
Home Buyer Demand STILL Strong
You can see in the chart above how mortgage rates have been climbing since last year. Every increase in mortgage rates will affect how much buyers will be able to safely afford.
You would think that increasing mortgage rates an home prices would cause less demand from home buyers. But so far, demand is STILL strong. Maybe part of that is because mortgage rates are low if we look at how high they have been in the past 30 ye years.
According to First American’s Real Estate Sentiment Index, real estate professionals have not seen any decrease in demand among young home buyers.
First American Chief Economist Mark Fleming said:
On a national level, mortgage rates would need to hit 5.6%, 1 percentage point above the current rate, before first-time homebuyers withdraw from the market.
It is hard to say if the predictions of rising mortgage rates will finally come true. Waiting to find out could prove to be costly…
While there is still strong demand from buyers, the number of homes sold has decreased nationally. NAR’s May 2018 Existing Home Sales Report showed home down for the 3rd consecutive month and down 3% year-over-year.
So what is causing the slowdown in home sales if demand is strong?
A lack of homes for sale!
Fleming said that the housing market is struggling with the biggest inventory shortage in 60 years! Fleming is talking about the entire country BUT you may find that nice homes that are priced correctly will sell quickly.
The key thing is that home buyers MUST be properly prepared and working with an experienced local Realtor to be successful in today’s hectic housing market.
Consider this snippet from a recent NAR article:
Realtors® in areas with strong job markets report that consumer frustration is rising. Home shoppers are increasingly struggling to find an affordable property to buy, and the prevalence of multiple bids is pushing prices further out of reach.
A booming economy and stable employment in most parts of the country have created a new generation of eager home buyers – and led to fevered price battles spilling over into some unexpected, smaller markets.
You can expect competition for homes in some price ranges in the Anderson area. Buers must already have a pre-approval letter and make sure they are made aware of listings as soon as they hit the MLS.
In some cases, a few hours delay could mean losing a home to another buyer. Or you may face multiple offers since a nice home should get offers from other buyers.
Remember, being prepared is essential in today’s real estate market!
Unemployment Claims Decrease
In the week ending July 7, the advance figure for seasonally adjusted initial claims was 214,000, a decrease of 18,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 231,000 to 232,000. The 4-week moving average was 223,000, a decrease of 1,750 from the previous week’s revised average. The previous week’s average was revised up by 250 from 224,500 to 224,750.
This was below the consensus forecast. Check out the chart showing the 4-week moving average:
You can see the steady decreases for the 4-week moving averages over the past 5 years. Remember to watch the 4-week moving average as it is less “noisy”.
Kids and The American Dream
From Rent Cafe:
The number of families with minor children who own their home has decreased by almost 3.6 million in one decade (2006-2016), while the number of families with children living in rentals has increased by 1.9 million over the same period of time, according to U.S. Census Bureau estimates.
Very distressing news. What will be the impact on society and the attitude about owning a home for these children?
The FCC Won’t Rule on Complaints Unless You Pay $225
From Ars Technica:
The Federal Communications Commission today voted 3-1 to stop reviewing informal consumer complaints about telecom companies. To get an FCC review of a company’s bad behavior, a consumer will have to file a formal complaint—which requires a payment of $225 to the FCC.
Even if an ISP fails to respond to a customer’s informal complaint, the FCC would not review the complaint until after a consumer pays $225 and goes through the formal complaint process.
This is not a very consumer friendly decision. But that is probably the point…