Mortgage Rates Zoom to 2017 High

Mortgage Rates Zoom to 2017 High

The 30-year fixed-rate mortgage surged to its highest average of the year this week, reaching 4.21 percent, Freddie Mac reports in its weekly mortgage market survey.

“The 10-year Treasury yield rose about 10 basis points this week,” said Sean Becketti, Freddie Mac’s chief economist. “For the first time in weeks, the 30-year mortgage rate moved with treasury yields and jumped 11 basis points to 4.21 percent. The strength of Friday’s employment report and the outcome of next week’s Federal Open Market Committee meeting are likely to set the direction of next week’s survey rate.”

Freddie Mac reported the following national averages with mortgage rates for the week ending March 9:

• 30-year fixed-rate mortgages averaged 4.21 percent, with an average 0.5 point, rising from last week’s 4.10 percent average. Last year at this time, 30-year rates averaged 3.68 percent.
• 15-year fixed-rate mortgages averaged 3.42 percent, with an average 0.5 point, increasing from last week’s 3.32 percent average. A year ago, 15-year rates averaged 2.96 percent.
• 5-year hybrid adjustable-rate mortgages averaged 3.23 percent, with an average 0.4 point, increasing from last week’s 3.14 percent average. A year ago, 5-year ARMs averaged 2.92 percent.

Source: Freddie Mac

Rising Rates Will Impact Home Prices

Rising Rates Will Impact Home Prices

Americans have, so far, stood resilient to rising mortgage rates, but a bigger impact will come soon, say Goldman Sachs economists.

Housing’s share of the economy rose above normal levels from November to January, despite mortgage rates surging 60 basis points at the time.

Still, economists caution that there may be a lag to the impact of rising rates and particularly their effect on home prices. In an analysis—pulling data from past 100-basis point increases in mortgage rates—economists found that the median home price often drops 3 to 4 percent.

“This median estimate suggests that the recent 60 basis point rise in mortgage rates should, all other things equal, lower house prices by 2 to 3 percent,” the Goldman analysts concluded. “This estimate thus supports our forecast that national house prices will continue to rise, but at a slower pace in the next few years.”

That said, buyer demand is much stronger than supply at the moment and the economy and job growth are continuing to support the housing market.

“The housing market is also in a more virtuous cycle: Home equity has recovered, mortgage rates remain low enough to be manageable, and high rents make home ownership attractive,” MarketWatch reports.

Many economists are skeptical whether mortgage rates will actually rise much more than they already have. A survey conducted by MarketWatch in December 2016 showed an average for rates of 4.5 percent throughout 2017, a 35 basis point increase from current readings.

Source: “Here’s How Home Prices May Respond to Rising Mortgage Rates,” MarketWatch (March 7, 2017)

If Pets Could Pick a Home, They’d Pick Here

If Pets Could Pick a Home, They’d Pick Here

Pet owners in some states do a better job than those in others creating a thriving home for their furry friends, according to a new survey by Care.com.

Care.com recently looked at a variety of data about pet care to rank the states based on four categories: illness; access to vet care; health environment; and a “total pet spend” rank. The states with the highest rankings have the lowest prevalence of pet illnesses, higher access to veterinary care, healthier environments for pets, and higher pet-related spending.

The following states ranked as the healthiest homes for pets:

1. Montana
2. Nebraska
3. Colorado
4. New Mexico
5. Idaho
6. New Hampshire
7. South Dakota
8. Wyoming
9. Kansas
10. North Dakota

Source: “How Are the States With the Healthiest Pets—Is Yours One of Them?” Care.com (March 2017)

Homeowners Turn to Their Equity Again

Homeowners Turn to Their Equity Again

As home values rise fast, homeowners are starting to realize they have a lot of wealth tucked into their homes, and it’s become enticing to tap into it.

Since the housing crash, homeowners have been shy about accessing any of their home equity, even those who still had money in their homes. But as millions of borrowers emerge from their underwater home loans and see their home values jump again, they’re turning to home equity lines of credit, or HELOCs, once again.

HELOC volume has increased 21 percent over the past two years. It’s now at the highest level since 2008, according to Moody’s data. Still, it is far from the levels of the housing boom.

“The more second liens that people take out, it adds a risk that comes from the rising home prices,” says Peter McNally, a senior analyst at Moody’s. “The fact that people are leveraging their homes more than before makes things more risky.”

Mixed with that, borrowers also are putting down smaller down payments. Prior to the last housing boom, the median down payment was just over 7 percent. Down payments dropped to 3 percent during the housing boom, but were back up to about 6 percent in 2016, according to ATTOM Data Solutions. Down payments are projected to move lower as more lenders offer greater low down payment options again.

Source: “More Homeowners Cashing in on Their New Housing Wealth,” CNBC (March 3, 2017)

What Home Buyers Wish They’d Known

What Home Buyers Wish They’d Known

Nearly half of American homeowners recently surveyed said they would do something differently if they were to go through the home buying process again, according to the NerdWallet’s Home Buyer Reality Report, which analyzed the steps more than 2,200 Americans took to home ownership.

If you want to help prevent buyers’ remorse, the following are some things you can focus on with your clients. These are the top things consumers say they regretted:

• 20 percent wished they had saved more money before buying a home;
• 13 percent would do more research on the mortgage-lending process;
• 14 percent would have shopped around more for a mortgage;
• 13 percent would research the home buying process more.

The majority of buyers’ remorse seems to stem around the financing of a home purchase, the report finds.

“According to our research, borrowers who don’t understand the mortgage process or don’t know enough about their own credit history tend to hit obstacles or be rejected when applying for mortgages,” says Tim Manni, mortgage expert at NerdWallet. “They also tend to feel regret after their deal is done, even if they succeeded in buying a home. That tells me borrowers aren’t doing enough research—on themselves or the mortgage process—before applying for a home loan.”

Forty-one percent of Americans surveyed who applied for a mortgage say they felt they were not aware of all of their loan options during the lending process. Twenty-eight percent of consumers say they felt like they were not a priority to their mortgage professional during the loan process.

Overall, 42 percent of American homeowners called the home buying process stressful. Thirty-two percent said it was “complicated” and 21 percent called it “intimidating,” the survey found. That said, 41 percent of respondents also called the process manageable and 30 percent called it rewarding. Thirty-two percent of respondents say their real estate agent made the home buying process easy.

Source: “Home Buyer Reality Report 2017,” NerdWallet (Feb. 23, 2017)