Looking at this week’s reports on mortgage rates, foreclosure data from FHFA, another big bank fined for mortgage hanky panky and why rising wages may not mean much!
From Freddie Mac:
- 30-year fixed-rate mortgages averaged 4.52% with an average 0.5 point
- This is down from last week when 30-year fixed-rate mortgages averaged 4.55%
- Last year at this time, 30-year fixed-rate mortgages averaged 3.96%
- 15-year fixed-rate mortgages averaged 3.99% with an average 0.4 point
- This down from last week when 15-year fixed-rate mortgages averaged 4.04%
- Last year at this time, 15-year fixed-rate mortgages averaged 3.22%
Sam Khater, Freddie Mac’s chief economist, said:
The run-up in mortgage rates earlier this year represented not just a rise in risk-free borrowing costs, but for investors, the mortgage spread also rose back to more normal levels by about 20 basis points. What that means for buyers is good news. Mortgage rates may have a little more room to decline over the very short term.
Although the current economic expansion is in its 10th year, residential single-family real estate was initially slow to recover. Now, backed by the demographic tailwind provided by millennials reaching the peak age to buy their first home, the housing market should have some room to grow going forward.
I really hope Khateer is correct both about rates declining more and the housing market growing. Only time will tell if he is correct…
The MBA reported:
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) remained unchanged at 4.84%, with points remaining unchanged at 0.45 (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 4.74% from 4.76%, with points increasing to 0.39 from 0.37 (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 4.26% from 4.29%, with points decreasing to 0.48 from 0.53 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
More good news! Remember that these are the average mortgage rates and may not reflect what is possible for you.
The best thing for anyone serious about buying a home is to sit down with the mortgage lender of their choice and discuss their options.
Foreclosure Starts Decrease
Highlights from the FHFA’s May 2018 Foreclosure Prevention Report:
- Foreclosure starts decreased 19.3% from the previous month and 16.1% compared to May 2017
- The serious delinquency rate decreased from the previous month and compared to last May
- Third-party and foreclosure sales increased 4.85% from the previous month
- Third-party and foreclosure sales decreased 23% compared to last May
- The number of short sales and deeds-in-lieu of foreclosure completed decreased 4% from the previous month
- The number of short sales and deeds-in-lieu of foreclosure completed decreased 40% compared to last May
Pretty good report overall! These are national and not local statistics so as always, your best bet is to consult with a local Realtor to determine what is happening in your area.
Another Big Bank Fined for Shoddy Mortgage Practices
From the Federal Reserve:
The Federal Reserve Board on Friday announced an $8.6 million fine against Citigroup for the improper execution of residential mortgage-related documents.
The $8.6 million penalty addresses the deficient execution and notarization of certain mortgage-related affidavits prepared by a subsidiary, CitiFinancial. The improper practices occurred in 2015 and were corrected. CitiFinancial exited the mortgage servicing business in 2017.
This is not as bad as the news about Wells Fargo improperly foreclosing on 400 home owners. But it still isn’t right and shows how NOT breaking up the big banks may prove to be a big mistake.
Rising Wages Mean Little Compared to Inflation
The weak wage growth e have seen is not going to mean much if inflation keep increasing. Check out the latest Consumer Price Index for All Urban Consumers (CPI-U) numbers from the BLS:
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in July on a seasonally adjusted basis after rising 0.1 percent in June, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 2.9 percent before seasonal adjustment.
The index for all items less food and energy rose 0.2 percent in July, the same increase as in May and June.
Rising inflation will give the Federal Reserve more motivation to increase their benchmark interest rate in September.
The decreases in mortgage rates may mean little in the coming months if the Fed increases interest rates. While the Fed does not directly set mortgage rates, their actions can affect them!