Posts Tagged ‘Mortgage Rates’

housing-rebound

Many of you are seeing it in the field: Low inventory, houses flying off the market and a groundswell of demand from buyers. As a result, home prices are steadily increasing.

Combine all those factors with signs of strength in the economy, and you have a recipe for another market change: higher mortgage rates.

The average for a 30-year fixed-rate mortgage jumped to 4.29 percent in early July—nearly a whole percentage point above where it was in early May, according to Freddie Mac.

While some industry watchers predict that rising rates could stall the positive momentum in housing’s recovery, I tend to agree with the school of thought that says the rebound will continue despite upward ticks over time.

Rates are still historically low compared to what they were before the recession hit, and prices are still affordable in many areas.

Will some home-buyers see a decrease in their buying power if rates climb too far, particularly young, first-timers or low-income families? Unfortunately, yes.

But it won’t affect all buyers.

Recent data reported by the MBA notes that although we’re seeing slight dips in overall mortgage applications as rates increase, conventional home loan applications are picking up by a few percentage points.

This indicates two things: 1) people with steady incomes and employment, a sizeable down payment, and strong credit are finally coming off the sidelines to buy before rates go up further; and 2) many of these borrowers are more than likely move-up or repeat buyers who saw the equity return to their homes and were able to finally sell so they could make their next move.

Recent data reported by the MBA notes that although we’re seeing slight dips in overall mortgage applications as rates increase, conventional home loan applications are picking up by a few percentage points.

Perhaps you know of potential buyers who have been waiting for the bottom of the market. If what we’re seeing is any indication, the bottom has come and gone. We’re in a steady recovery, and now’s the time to encourage those would-be buyers to explore their options. It’s worth noting, though, that home prices and mortgage rates could go up more as demand continues to outpace existing supply and new construction.

These recent market shifts are an opportunity for you to shine a spotlight on your professional expertise, as well as employ creative marketing strategies to communicate these trends to your entire database of contacts. Use local and national statistics to show them what’s happening in real estate.

If you know of potential buyers who’ve been waiting it out, tell them what’s going on in frank terms, then connect them with a trusted lender who will show them what their monthly payment might look like at the current mortgage rate for a property within their price, as well as a comparison of what it might be if rates reach 5 percent or more. Seeing the numbers in black and white could be the impetus indecisive buyers need to make their big move.

It’s natural for some people to panic a little when they see home prices and mortgage rates make big jumps, but it’s an inevitable part of the crests and troughs of a housing cycle. Remind home-buyers and sellers of your value by giving them the facts without the frills. With the right approach, you’ll help get those buyers and sellers off the sidelines and back into the game.

For more information regarding mortgage rates or your housing needs contact us at adim@rochesterhomesplus.com

While the Federal Reserve has promised to keep rates “low” until 2013, it is clear to many experts that the current historical lows we are experiencing will not last.

According to the latest projections from the National Association of Realtors® (NAR), interest rates should gradually rise out of historic lows as we move through 2012.

This isn’t the most welcome news for a housing market that has continued to falter and a credit market that already has tightened lending standards

The NAR reports that current surveys reflect the tight credit conditions. They report that recent buyers are staying well within their means, with higher incomes and higher downpayments.

Richard Peach, Senior Vice President at the Federal Reserve Board of New York, who said the economy is under-performing, reports, “Nearly two-and-a-half years since the end of ‘the great recession,’ the economy continues to operate well below its potential. Among the significant structural impediments are the legacy of the housing boom and bust, and fiscal contrition at the state and local level.”

Lawrence Yun, chief economist of the National Association of Realtors®, said home sales should be stronger. “Tight mortgage credit conditions have been holding back home buyers all year, and consumer confidence has been shaky recently,” he said. “Nonetheless, there is a sizable pent-up demand based on population growth, employment levels and a doubling-up phenomenon that can’t continue indefinitely. This demand could quickly stimulate the market when conditions improve.”

It is this improving jobs markets that many analysts are waiting for. Yun projects the GDP will grow 1.8 percent this year and 2.2 percent in 2012. The unemployment rate should decline, albeit modestly, to around 8.7 percent by the end of 2012.

Around this same time, experts expect that “mortgage interest rates should gradually rise from recent record lows and reach 4.5 percent by the middle of 2012.”

This is still an incredibly low rate and many experts feel that housing market, while still struggling, will improve throughout next year and after. In fact, the NAR expects new home sales to reach 372,000 next year. Existing home sales could fare just as well, rising 4 to 5 percent in 2012.

“Housing affordability conditions, based on the relationship between median home prices, mortgage interest rates, and median family income, have been at a record high this year,” Yun said. “Very favorable affordability conditions will dominate next year as well, which will probably be the second best year on record dating back to 1970. Our hope is that credit restrictions will ease and allow more home buyers to take advantage of current opportunities.”

The bottom line is that the housing market should improve over the next year and along with that improvement will come higher interest rates. Buyers interested in making a move should take heed of today’s historically low rates and high levels of affordability.

Written by Carla Hill

McLean, VA – Freddie Mac (OTC: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®) which shows long- and short-term rates rising this week.

30-year fixed-rate mortgage (FRM) averaged 5.05% with an average 0.7 point for the week ending February 10, 2011, up from last week when it averaged 4.81%. Last year at this time, the 30-year FRM averaged 4.97%. Interest rates on a 30-year fixed-rate mortgage rose to the highest level since the last week in April 2010.

15-year FRM this week averaged 4.29% with an average 0.7 point, up from last week when it averaged 4.08%. A year ago at this time, the 15-year FRM averaged 4.34%.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.92% this week, with an average 0.6 point, up from last week when it averaged 3.69%. A year ago, the 5-year ARM averaged 4.19%.

1-year Treasury-indexed ARM averaged 3.35% this week with an average 0.6 point, up from last week when it averaged 3.26%. At this time last year, the 1-year ARM averaged 4.33%.