Looking at this week’s reports on mortgage rates and the impact of rising rates on your monthly payment, looking at interesting mortgage data for July 2018, Millennial survey on home buying, we are seeing more price reductions and more!
Time to check the mortgage rate reports for the week ending August 17 2018!
Freddie Mac reported:
- 30-year fixed-rate mortgages averaged 4.53% with an average 0.5 point
- This is down from last week when it averaged 4.59%
- Last year at this time, 30-year fixed-rate mortgages averaged 3.89%
- 15-year fixed-rate mortgages averaged 4.01% with an average 0.5 point
- This is down from last week when it averaged 4.05%
- Last year at this time, 30-year fixed-rate mortgages averaged 3.16%
Check out the chart showing Freddie’s mortgage rates:
Sam Khater, Freddie Mac’s chief economist, said:
This stability in borrowing costs comes despite the highest core inflation rates since 2008 and turbulence in the currency markets. Unfortunately, this pause in rates is not leading to increasing home sales.
Purchase mortgage applications trailed year ago levels again last week, and it’s clear that in some markets the combination of ascending home prices, limited affordable inventory and this year’s higher rates are curtailing homebuyer demand.
Good news from Freddie about the continuing decrease in mortgage rates but as Khater points out this is not leading to more home sales…
The Mortgage Bankers Association reported:
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased to 4.81% from 4.84%, with points decreasing to 0.43 from 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 4.73% from 4.74%, with points decreasing to 0.29 from 0.39 (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 4.27% from 4.26%, with points increasing to 0.52 from 0.48 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
More decreases reported by the MBA but how many people are missing out on the still historically low mortgage rates? And we have to wonder why anyone would not be taking advantage of the opportunities in today’s real estate market…
Especially since increasing mortgage rates can dramatically impact your monthly mortgage payment:
I know that many people in the Anderson area spend much less than $250,000 BUT you still get the point. Waiting will cost you more each and every month if mortgage rates increase as projected! If you add up the additional monthly costs over the life of the mortgage, the savings would be incredible!
Of course, all this is talking average and what if’s. The best thing for anyone serious about buying a home is sitting down with the mortgage professional of their choice to discuss their options.
Getting Pre-Approved, setting your budget and finding out exactly how much down payment and closing costs you need is one of the very first steps of savvy home buying!
Only 48% of Millennials Think Buying a Home is Good Investment
From Value Insured:
In the third quarter of 2018, only 48% of all millennials believe buying a home in America today is a good investment. 58% of millennials think buying a home is the best financial decision they can make for themselves and their family and 61% believe buying a home is more beneficial than renting.
If 61% think owning beats renting, why are we seeing so few buying? According to the survey, many think they will need to sacrifice and are very anxious about buying a home.
Some of their concerns include:
- 49% think mortgage rates will increase so much they cannot afford to buy
- 67% think they cannot afford a home they like
- 52% think a home they buy today will drop in value in a year
- 68% are concerned about another housing crisis
- 64% are concerned about having buyer’s remorse
All of these legitimate concerns BUT all of these concerns can be overcome…
Mortgage rates were much higher in the past and people still bought homes…
You may not be able to afford a home you love but you can change a home over time to create the home of your dreams…
Home values may fall but we have seen home values recover or exceed the values from before the housing crash…
Many laws and regulations have been enacted to help to prevent another housing crisis…
You can beat having buyer’s remorse by reading House Buying Regrets
You can live in fear or you can one day look back and say I am glad I did. This is true for lots of things that require hard work and sacrifice.
While the Great Recession was bad, it as not as bad as the Great Depression in many ways. And many people that lived through the Great Depression never gave up on achieving the American Dream of owning a home!
Mortgage Insight for July 2018
Highlights form Ellie Mae’s July 2018 Origination Insight Report:
- The average time to close a purchase mortgage was 44 days
- The average 30-year rate for all loans increased to 4.91% in July 2018
- 75% of purchase mortgages were closed in July 2018
- 72% of purchase mortgage had FICO scores over 700
- The average FICO score for FHA purchase mortgages was 676
- The average FICO score for conventional mortgages was 751
These are just the averages and you may experience something different. Do not let the average FICO scores discourage you since 65% of all FHA mortgages had a FICO below 699!
More Price Reductions
- About 14 percent of all listings across the U.S. had a price cut in June 2018
- Home value growth is slowing in almost half of the 35 largest U.S. metros
- In two-thirds of the nation’s 35 largest housing markets, the overall share of listings with at least one price cut has risen over the past year
- US home values rose 8.3% over the past year
- Zillow is predicting 6.6% increase in home values over the next year
Sounds bad but remain calm! Many of the price reductions are happening in the higher price ranges according to Zillow.
Something else to consider is how many of these price reductions are because the home was initially listed too high? The initial listing price is one of the most important factors in getting a home to sell at the best possible price in the shortest amount of time.
Zillow senior economist Aaron Terrazas said:
The housing market has tilted sharply in favor of sellers over the past two years, but there are very early preliminary signs that the winds may be starting to shift ever-so-slightly. A rising share of on-market listings are seeing price cuts, though these price cuts are concentrated at the most expensive price-points and primarily in markets that have seen outsized price gains in recent years.
It’s far too soon to call this a buyer’s market, home values are still expected to appreciate at double their historic rate over the next 12 months, but the frenetic pace of the housing market over the past few years is starting to return toward a more normal trend.
Still, we could be seeing the very strong seller’s market starting to shift to favor buyers. Which is strange since there has NOT been any dramatic increase in the number of homes for sale nationwide…
Initial Unemployment Claims Decrease
In the week ending August 11, the advance figure for seasonally adjusted initial claims was 212,000, a decrease of 2,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 213,000 to 214,000. The 4-week moving average was 215,500, an increase of 1,000 from the previous week’s revised average. The previous week’s average was revised up by 250 from 214,250 to 214,500.
Remember that we should watch the 4-week moving average since it is less “noisy”:
You can see the way things have progressed since the dark days back in 2009. Just remember that the Feeral Reserve can also see this progress and the employment numbers is one of the things they are tracking when they decide whether or not the raise rates…
Minion Pay Compared to CEO Pay
Average compensation for CEOs of the top 350 publicly traded firms increased 17.6 percent to $18.9 million; the compensation of a typical worker in these industries, meanwhile, rose 0.3 percent.
The ratio of CEO-to-worker compensation rose to 312-to-1—far greater than the 20-to-1 ratio in 1965 and more than five times greater than the 58-to-1 ratio in 1989. 2017 represents the first year since before the Great Recession that the ratio rose above 300-to-1, although it is still lower than its peak of 344-to-1, reached during the tech boom and stock bubble of 2000.
If any company says they care about their employees but are paying their execs at a disgusting rate compared to the average worker, well that company is full of $#!+. If a company’s greatest asset is their employees, why aren’t they paying all of the employees the best possible wage they can?
While things are much better than they were during the Great Recession, we still need to see more income growth for ALL Americans and not just the top! Stock dividends and executive compensation is important but it is short sighted to forget who makes or breaks a company: the employees!
Sadly, that is all I have time for today! Be sure to hit those share buttons and as always, if you have any questions about real estate in the Anderson SC area, contact me!