FHFA extends forbearance period to 18 months

Borrowers with mortgages backed by Fannie Mae and Freddie Mac may be eligible for an additional forbearance extension of up to six months, the Federal Housing Finance Agency announced Thursday.

On Feb. 9, the FHFA extended forbearance plans an additional three months past beyond their initial 12 month expiration. With the latest edict, the agency is now allowing borrowers up to 18 months of coverage.

According to the FHFA, eligibility for the extension is limited to borrowers who are on a COVID-19 forbearance plan as of Feb. 28, 2021. The FHFA said other limits may apply to the extension but did not provide further details.

With the new extension set in motion, some borrowers may now be in forbearance through Aug. 31, 2022.

The FHFA extended its multifamily forbearance policies in December, pushing forbearance options for multifamily mortgages backed by the GSEs to March 31, 2021, though the agency has yet to say whether the latest extension will also be offered to owners of multifamily properties.


From forbearance to post-forbearance: How to make the process effective

To accommodate the large volume of loans still in forbearance, mortgage servicers must have functional, flexible and effective forbearance processes in place. Here are some actionable steps to create that process.

Presented by: FICS

Alongside its forbearance announcement, the FHFA also said the GSEs will be extending the moratoriums on single-family foreclosures and real estate owned (REO) evictions through June 30, 2021 – three months past the previous deadline set for Mar. 31, 2021. The new date matches the moratorium set by HUD for FHA and USDA loans.

According to FHFA director Mark Calabria, borrowers and the capital markets investors both benefit from consistent treatment.

“From the start of the pandemic, FHFA has worked to keep families safe and in their home, while ensuring the mortgage market functions as efficiently as possible,” Calabria said in a statement Thursday. “Today’s extensions of the COVID-19 forbearance period to 18 months and foreclosure and eviction moratoriums through the end of June will help align mortgage policies across the federal government.”

As of Feb. 22, the Mortgage Bankers Association estimates 2.6 million homeowners are in some form of forbearance. The MBA reported on Monday that the portfolios of Fannie Mae and Freddie Mac dipped down to 2.97%. The GSEs have consistently had lower forbearance rates than other owners of mortgages during the pandemic.

Economic data is starting to show some of the effects of long-term moratoriums. Black Knight’s December mortgage monitor report revealed that foreclosure starts hit a record low in 2020, falling by 67% from the year prior as moratoriums protected homeowners.

According to Black Knight, recent forbearance and foreclosure moratorium extensions have reduced near-term risk, but at the same time may have the effect of extending the length of the recovery period.

Based on the rate of improvement to date, Black Knight estimates there could be more than 2.5 million active forbearance plans remaining at the end of March 2021, when the first wave of plans reaches their 12-month expirations.

Source: housingwire.com

Berkeley considers ending single-family zoning by December 2022

Berkeley is considering ending single-family zoning by December 2022 in an effort to right the wrongs of the past and address the region’s housing crisis, city leaders say.

The City Council will vote on a symbolic resolution that calls for an end to single-family zoning in the city. But the controversial proposal has already upset some residents who’ve expressed concern that the change could ruin their neighborhoods.

Berkeley is the latest city looking at opening up these exclusive neighborhoods to more housing as the region struggles with exorbitant rents and home prices and increasing homelessness. Sacramento recently took a big step in allowing fourplexes in these neighborhoods and one San Francisco politician is pushing a similar plan.

Berkeley may also allow fourplexes in city neighborhoods. Next month, the council will consider that proposal, which will likely spark pushback from tenants groups fearful it could fuel displacement if more protections aren’t included.

For Berkeley, which has historically been anti-development, the moves are the latest shift as the city slowly embraces more density, including plans to add housing around the North Berkeley and Ashby stations.

Councilwoman Lori Droste, who is introducing the resolution, said she’s trying to undo the legacy of racism that created single-family neighborhoods, which cover 50% of the city.

In 1916, single-family zoning was born in Berkeley’s Elmwood neighborhood, forbidding the construction of anything other than one home on each lot. At the time, an ordinance stated that its intent was to protect “the home against the intrusion of the less desirable and floating renter class.”

“I live in the Elmwood area where it is sort of the birthplace of single-family zoning,” Droste said. “I thought it was incumbent upon me as representing this neighborhood to say that I want to change something that I think is detrimental to the community.”

Dean Metzger, the founder of the Berkeley Neighborhoods Council, a collective of nearly 40 neighborhoods, said he wants the opportunity to give more input before the city changes any zoning laws. He said he worries that if a developer builds a multistory building next to a single-family home, it could obstruct views, block solar panels and clog available parking.

Metzger said it’s hard to specify what kind of design would be most appropriate for Berkeley’s single-family neighborhoods. He said he wants developers to be required to seek input from neighbors before building.

“They’ve labeled us anti-growth; it’s really not true,” he said. “We are trying to find ways to accommodate the development and make our neighborhoods livable. (The council) just wants to build whatever they want to build.”

After a year of racial reckoning, the same criticism of law enforcement practices should be applied to housing policies, said Councilman Terry Taplin, one of the authors of the resolution.

“This is really a historical moment for us in Berkeley because now the racial justice reckoning really has come home,” Taplin said.

As the state grapples with a housing crisis, many housing advocates say city leaders have to undo decades’ worth of anti-density housing policies. They say Berkeley’s efforts are a necessary step in addressing the region’s crisis even if it takes time. If the resolution passes, it will take years before the city sees a change in its housing stock.

“It will take time,” said Grover Wehman-Brown, a spokesperson for East Bay Housing Organizations, which represents nonprofit builders. “It’s many, many decades and centuries in the making. Building housing takes time, especially in areas like ours where there are not just wide open lots that you can drive large equipment up to and start digging to build one house.”

David Garcia, the policy director at UC Berkeley’s Terner Center for Housing Innovation, said the proposal was a “big deal.”

“It wasn’t that long ago when Berkeley wasn’t considered the most forward-thinking on housing,” he said.

But he added that it’s crucial these policies don’t jeopardize existing housing. Outreach to residents is key, he said.

“It’s important to be thoughtful about these decisions because they cannot be easily reversed,” Garcia said. “Creating such a significant change of land use in such a large part of the city is going to involve a lot of planning and critical thinking on how to ensure the best policy outcome. You’re going to want to make sure the policy itself does result in the kind of housing city leadership wants to see.”

Eliminating single-family zoning is changing a status quo that has long favored wealthy, white property owners, and opposition can often stall change, said Jassmin Poyaoan, the director of the Community Economic Justice Clinic at East Bay Community Law Center.

She said local, state and federal officials have to focus on shifting a culture and mind-set around housing policies that focuses on “housing is a human right.” She emphasized that policy changes must focus on creating housing for very low-income residents, protecting rent-controlled units and fortifying tenant protections. This includes Berkeley’s future efforts to allow fourplexes.

But change is coming. Recently, the Berkeley council approved rezoning the Adeline Street corridor and even added an extra floor of height to what builders could do there. The plan allows 1,450 new housing units, about half for low-income families in an area that was once a thriving Black, working-class community, but has become increasingly white as the high cost of housing has driven out many families. Officials are now trying to undo that.

“I think it’s really easy to look at racism and injustice in other cities and other places, but it takes a lot more courage, introspection and vulnerability to look at the mistakes that we’ve made in these areas,” Taplin said. “We have to really take an honest look at our shortcomings and be open to changes that might make us uncomfortable.”

Sarah Ravani is a San Francisco Chronicle staff writer. Email: sravani@sfchronicle.com Twitter: SarRavani

Source: nationalmortgagenews.com

Lender credits: How a mortgage lender can pay your closing costs

What are lender credits?

Lender credits are an arrangement where the lender agrees to cover part or all of a borrower’s closing costs. In exchange, the borrower pays a higher interest rate.

Lender credits
can be a smart way to avoid the upfront cost of buying a house or refinancing.

Getting
closing costs to $0 means you can put more of your savings toward a down
payment — or, in the case of a refinance, lock in a lower interest rate without
having to pay upfront fees.

But lender credits aren’t always the right
choice. For some borrowers, it makes sense to pay more upfront and
get a lower interest
rate. 

Here’s how to negotiate the best mortgage deal for you.

Check your no-closing-cost mortgage options (Feb 25th, 2021)


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How lender credits work

Lender credits are a type of ‘no-closing-cost mortgage’ where the mortgage lender covers all or part of the borrower’s closing costs.

Of course, lenders don’t pay borrowers’ closing costs out of generosity. In exchange for absorbing closing costs, the lender charges a higher interest rate. The ‘extra’ interest paid by the homeowner over time eventually repays any fees covered by the lender. 

Lender credits can be structured a few different ways, depending on what the lender agrees to cover and how much the borrower is willing to increase their mortgage rate.

For example:

  • The lender might cover all the borrower’s closing costs
  • The lender might cover its own fees and third-party services (like the
    appraisal) but not prepaid items (like property taxes and homeowners insurance)
  • The lender might cover only its own
    fees and none of the third-party services or prepaid items

The more of your closing costs a lender pays via lender credits, the higher your interest rate will be, and vice-versa.

Mortgage
pricing is flexible, and you can take advantage of tools like lender credits to
negotiate a rate and fee structure that works well for you.

Check your no-closing-cost mortgage options (Feb 25th, 2021)

How to compare mortgages
with lender credits

If you’re
considering a home loan with lender credits, it’s important to weigh the
short-term savings versus the long-term cost.

You might
eliminate your upfront cost with lender credits. But accepting a higher
interest rate means you’ll pay more interest in the long run. You’ll also have
a higher monthly payment.

If you keep
your loan its full term — typically 30 years — the amount of ‘extra’ interest
you pay could far exceed the amount you would have spent on upfront closing
costs.

However, most
home buyers don’t keep their mortgages for the full term. They sell or
refinance within a decade or so. And if you’ll only keep your loan a few years,
having a slightly higher interest rate might not matter as much.

So you need to
consider how long you plan to keep the mortgage before selling or refinancing
to decide if lender credits are worth it.

You should
also compare no-closing-cost loans from a few different mortgage lenders.

Each lender
structures lender credits differently — so you might find one that covers the
same amount of closing costs, but charges a lower interest rate than
another. 

And be sure to compare offers on equal footing.

If you look at
one lender quoting a zero-cost mortgage, and another that’s only covering origination
fees, for example, you’re going to see very different rates. So make sure all
the lenders you compare are covering the same amount and types of closing
costs.

You can find you total closing costs and how many lender credits are included on the standard Loan Estimate you’ll receive after applying with any lender. These documents make it easy to compare home loan offers side-by-side to find the better deal.

Are lender credits worth
it? An example

Typically, the
less time you keep your mortgage, the more you’ll benefit from lender credits.

Here’s an
example:

  No Lender Credits With Lender Credits
Loan Amount $250,000 $250,000
Interest Rate* 3.0% 3.75%
Upfront Closing Costs $9,000 $0
Interest Paid In 5 Years $35,500 $44,500
Interest Paid In 30 Years $129,500 $166,800

*Interest
rates are for sample purposes only. Your own interest rate with or without
lender credits will vary.

This home
buyer can take a 3% interest rate on a 30-year fixed-rate mortgage, with $9,000
in closing costs (3.6% of the loan amount). Or, they can accept a 3.75%
interest rate with $0 in upfront closing costs.

If the
homeowner keeps the mortgage 5 years or less, lender credits are likely worth
it.

At the end of
year 5, they will have paid $9,000 in ‘extra’ interest due to their higher
rate. But they saved $9,000 upfront. So if they sell or refinance any time before
the end of year 5, the savings from lender credits outweigh the added cost.

This point —
where the upfront savings level out with the long-term cost — is known as the
‘break-even point.’

If this
homeowner stays beyond the break-even point, they end up paying their
lender more in added interest than they saved upfront. So it’s easy to see how
lender credits don’t make as much sense if you plan to keep your loan a long
time.

However, there
are some scenarios where lender credits are worth it even for long-term
borrowers.

Lender credits in a rising interest rate environment

Even if you’ll
spend more in the long run, there are still scenarios where lender credits can
make sense. That’s especially true in a rising rate environment.

For example:

  1. A first-time home buyer wants to buy at today’s low interest rates, but
    only has enough saved for a down payment — not closing costs. This person could
    take a small rate increase, and may still lock in a lower rate than the one
    they’d get if they had to save another year or two and rates rose during that
    time  
  2. A homeowner bought their home a couple years
    ago and has an interest rate 2% higher than today’s rates. They want to
    refinance at today’s low rates but can’t afford closing costs. They could
    likely take a rate above the current market, get their closing costs paid by
    the lender, and still save money every month compared to their old loan

In these
cases, the higher interest rate is relative. Some homeowners can take a rate
increase on their lowest offer and still ‘save’ money overall.

Often, lender
credits are a matter of timing. They allow homeowners and home buyers to lock
during a low-rate environment, even if they don’t have the cash to cover
upfront fees out of pocket.

And remember,
lender credits aren’t all-or-nothing.

You don’t need
to take a big rate increase and get closing costs to $0. You can have the
lender cover part of your closing costs and take only a slight rate increase.

Make sure you
talk to lenders about all your options. And if one lender doesn’t offer the
right combination of rate and fees for you, shop around for another company
that will.

Compare no-closing-cost loans (Feb 25th, 2021)

Lender credits vs. discount points

Lender credits
work the opposite way, too. Instead of paying less upfront and taking a higher
rate, you can pay more upfront and get a lower interest rate.

This strategy
is known as ‘points,’ ‘mortgage points,’ or ‘discount points.’

Whereas lender
credits save you money upfront but increase your long-term cost, discount points cost you more
at closing but can save you a huge amount of money over the life of the loan.
Having a lower interest rate also reduces your mortgage payments.

Take a look at
an example:

  With 1 Discount Point No Points Or Credits  With Lender Credits
Loan Amount $250,000 $250,000 $250,000
Interest Rate* 2.75% 3.0% 3.75%
Upfront Closing Costs $11,500 $9,000 $0
Interest Paid In 5 Years $32,500 $35,500 $44,500
Interest Paid In 30 Years $117,500 $129,500 $166,800

*Interest
rates are for sample purposes only. Your own interest rate with or without points
or credits will vary.

One discount
point typically costs 1 percent of the loan amount and lowers your rate by
about 0.25%.

In this case,
one point costs the borrower an extra $2,500 at closing and lowers their rate
from 3% to 2.75%.

By the end of
year 5, the homeowner has already saved $3,000 in interest compared to the
original rate quote. And the longer they keep their mortgage, the more that
discount point will pay off.

By the end of
year 30, they’ve saved $12,000 compared to the original rate — and nearly
$50,0000 compared to the no-closing-cost mortgage.

This is just
another example of how borrowers can use mortgage pricing to their advantage.

The homeowner
staying long-term can pay for discount points and save themself tens of
thousands of dollars over 30 years. The person buying a starter home or a
fix-and-flip can eliminate their upfront cost and sell before the higher
interest rate starts to matter.

It’s up to you
to decide what makes the most sense based on your home buying or refi goals,
and your personal finances.

Your loan
officer or mortgage broker can help you compare options and choose the right
pricing structure.

Negotiating your interest rate

Both lender
credits and discount points involve negotiating with your mortgage lender for
the deal you want.

You’ll be in a
better position to negotiate low closing costs and a low rate if lenders
want your business. That means presenting yourself as a creditworthy borrower
in as many areas as you can.

Lenders
typically give the best rates to borrowers with a:

Of course, you
don’t need to be perfect in all these areas to qualify for a mortgage. For
instance, FHA loans allow credit scores as low as 580. And if you qualify for a
USDA or VA loan, you can buy with 0% down.

But making
improvements where you can — for instance, by raising your credit score or
paying down debts before applying — can make a big difference in the rate
you’re offered. 

Today’s mortgage rates with lender credits

Today’s rates are still at historic lows. Many
borrowers can get their closing costs paid for and still walk away with a great
deal on their mortgage.

The trick is to compare mortgage loans from a
few different lenders.

If you want a zero-cost mortgage, make sure
you ask specifically for quotes with lender credits so you can find the lowest
rate on the mortgage you want.

Verify your new rate (Feb 25th, 2021)

Compare top lenders

Source: themortgagereports.com

Delinquency Rate Lowest in COVID Era; but Lingering Risks Remain

Loan performance continued to
improve in January although the number of delinquencies remains significantly elevated
from pre-pandemic levels. Black Knight’s first look at the month’s loan
performance data has both good news and some that is disquieting. The good news
is a 121,000-loan decline in the number of loans that are 30 or more days past
due but not in foreclosure when compared to the prior month. This reduced the national
delinquency rate to 5.85 percent, the first time the rate has been under 6
percent since the pandemic hit
in March 2020.

The number of seriously delinquent loans,
those 90 or more days past due but not in foreclosure, was reduced by 56,000
loans. Black Knight includes loans that are in active forbearance plans in its
delinquency numbers if they are non-current.

However, despite the improvement,
there are still over 3.1 million delinquent loans nationwide
, 1.4 million or 82
percent more than in January of 2020. Of these, slightly more than 2 million
are over 90 days past due. Black Knight says this is five times the
pre-pandemic level.

Because of relief provided by
Congress, there are relatively few loans entering the foreclosure process. There
were 5,900 foreclosure starts in January, 86 percent fewer than a year earlier.
The foreclosure inventory, the number of loans in the process of foreclosure,
at 171,000, is down by 7,000 from December and 75,000 year-over-year.

Black Knight says recent extensions
in forbearance plans terms and of the national foreclosure moratorium have
reduced near-term risk, but at the same time may have the effect of extending
the length of the recovery period.
 
At the current rate of improvement,
1.8 million mortgages will still be seriously delinquent at the end of June
when foreclosure moratoriums on government-backed loans are currently slated to
expire.

It doesn’t appear at present, even
with the elevated levels of serious delinquency, that the country is looking at
a repeat of the last decade’s foreclosure epidemic. Of the five states with the
highest rates of seriously past due loans, Mississippi, Louisiana, Hawaii,
Nevada, and Maryland, none have rates exceeding 6.25 percent rate. At the peak
of the housing crisis all had higher levels of delinquency and Mississippi,
Louisiana, and Nevada had rates in double digits.

Black Knight will provide a more
in-depth review of this data in its monthly Mortgage Monitor report. It will be
published on March 8.

Source: mortgagenewsdaily.com

Mortgage rates climb higher to 2.97%

The average mortgage rate for a 30-year fixed loan is now just 3 basis points away from 3%, after a 16 basis point jump last week pushed mortgage rates to 2.97%, according to Freddie Mac’s Primary Mortgage Market Survey.

The average mortgage rate hasn’t risen this high since the end of July 2020, but Sam Khater, Freddie Mac’s chief economist, noted higher rates signals an economy slowly regaining its footing.

“Though rates continue to rise, they remain near historic lows,” said Khater. “However, when combined with demand-fueled rising home prices and low inventory, these rising rates limit how competitive a potential homebuyer can be and how much house they are able to purchase.”

Rising rates didn’t slow new home sales in January though, after the U.S. censes bureau reported sales of new single-family houses in January were at a seasonally adjusted annual rate of 923,000 — 4.3% above December’s rate.

“However, recent increases in mortgage interest rates threaten to exacerbate existing affordability conditions. Builders are exercising discipline to ensure home prices do not outpace buyer budgets,” said National Association of Home Builders Chief Economist Robert Dietz.


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While purchase demand hasn’t shown any sign of decline, the refi wave is showing more vulnerability. As rates rose, refi activity fell 11% according to data from the Mortgage Bankers Association.

For many potential borrowers, the opportunity to refinance is lost before the chance even arises, while other prospective borrowers are caught in a clogged loan pipeline and don’t get the opportunity to lock in that low rate.

According to HousingWire’s lead analyst Logan Mohtashami, a one-eighth to a quarter turn in mortgage rates (high or low) can move the market substantially.

“There are people who had a 4.00% rate that refinanced to 3.25% and then said, ‘Oh well now that rates are low, I’ll refinance again to 2.75%.’ But if that rate sneaks up a quarter it’s no longer ideal and it’s lost its appeal. They are going to wait for it to come back down, right? And then it doesn’t,” Mohtashami said.

Source: housingwire.com

Years of Work Needed to Afford a Down Payment – 2021 Edition

Years of Work Needed to Afford a Down Payment – 2021 Edition – SmartAsset

Tap on the profile icon to edit
your financial details.

Assembling enough money for a down payment is typically the largest hurdle to clear when securing a mortgage. The median home price in the U.S. is up 14% year-over-year, according to a November 2020 Redfin report, and as the housing market gets more expensive, so too will the deposit that you have to front for a home. Working with professional financial advisors can help you strategize so that your money’s doing the most for you, but in some places compared to others, scraping together that bundle of cash can be particularly daunting. Keeping all this in mind, SmartAsset investigated where it takes longest to save for a down payment.

To do this, we examined data on the 50 largest U.S. cities, using median home values, median income figures and assuming that workers would save 20% of their income each year. We calculated the years needed to save for both the recommended 20% down payment as well a 12% down payment (the median down payment among all homebuyers in 2019, according to the National Association of Realtors). For details on our data sources and how we put all the information together to create our final rankings, check out the Data and Methodology section below.

This is SmartAsset’s fifth look at how many years of work it takes to afford a down payment. You can read the 2020 edition here.

Key Findings

  • Oakland takes over in the Bay. In the last three editions of this study, San Francisco homeowners have always needed to work longer than Oakland homeowners to afford a down payment. This year, however, Oakland has surpassed San Francisco and moved to the No. 2 spot, bumping the Golden Gate City to No. 3. San Francisco real estate is still pricier – with a median home value of more than $1.2 million – but the differences in average income make Oakland second only to Los Angeles on our list.
  • It still takes less time in Midwestern and Southern cities to assemble funds for a down payment. Residents in the East Coast and West Coast cities that comprise our top 10 will need more than three times longer to save up for a down payment than residents in the Midwestern and Southern cities that comprise the bottom 10. To save up for a 20% down payment, those in the top 10 will need to work an average of 8.90 years, compared to only 2.83 years in the bottom 10. For a 12% down payment, it will take 5.34 years for residents in the top 10 cities to reach their home buying goals, while it will take 1.70 years for residents in the bottom 10 to do so.

1. Los Angeles, CA

It will take residents in Los Angeles, California the longest to save for a down payment. The median home value is $697,200, which means that they will need to save $139,440 for a 20% down payment. If a person earns the median household income of $67,418 and saves 20% of that each year, then he or she will need to work 10.34 years to have enough money to afford a down payment.

2. Oakland, CA

In Oakland, California where the median home costs $807,600, a 20% down payment equals $161,520. The median household income here is $82,018, so a person saving 20% annually will need to work for 9.85 years to afford a down payment. For comparison, saving up a 12% down payment of $96,912 will require 5.91 years, but this means having to pay significantly higher mortgage payments.

3. San Francisco, CA

The median home value in San Francisco, California is $1,217,500 – the only city in our study with a seven-figure price tag. A 20% down payment on that median value would cost $243,500. With a median household income of $123,859, the average person saving 20% annually could afford a down payment in 9.83 years.

4. New York, NY

In the Big Apple, homeowners will need 9.81 years to make a 20% down payment on a home. The median home value is $680,800, which means a 20% down payment is $136,160. And for a comparison, a New Yorker saving 20% annually at a median household income of $69,407 will need 5.89 years to save for a 12% down payment of $81,696.

5. Long Beach, CA

Long Beach, California has a median home value of $614,400. To buy the median house with a 20% down payment, the average resident will need $122,880. If you earn the median income of $67,804 and save 20% of your income each year, then you will be able to afford a down payment in 9.06 years.

6. San Jose, CA

San Jose, California is in the heart of Silicon Valley, and as you might expect, the median home value is fairly high – at $999,990. A 20% payment on that home value is $199,980. The median household income in the city is $115,893, so if a resident saves 20% of his or her income each year, then the person could afford a down payment in 8.63 years.

7. Miami, FL

Miami, Florida is the only Southeastern city in the top 10 of our study. The median home value is $358,500, which means that a 20% down payment costs $71,700. The median income in Miami, however, is $42,966. So a resident saving 20% of that median household income ($8,593) each year could afford a 20% down payment in 8.34 years.

8. Boston, MA

It takes someone saving 20% of the median household income in Boston, Massachusetts 7.93 years of work to afford a 20% down payment on a home. The median home value is $627,000, with a 20% down payment coming to $125,400. The median household income in Boston is $79,018.

9. San Diego, CA

The median home value in San Diego, California is $658,400, which means that a 20% down payment is $131,680. Someone earning the median household income of $85,507 will need 7.70 years to afford that down payment. For comparison, a 12% down payment of $79,008 takes 4.62 years to save up for, with the caveat that paying a smaller down payment now means larger mortgage payments later.

10. Seattle, WA

Seattle, Washington rounds out the top 10 on our list, with a median home value of $767,000. This means that a 20% down payment is $153,400. So if you earn the median household income of $102,486, then it will take you 7.48 years – saving 20% of your income each year – to afford that payment.

Data and Methodology

To rank the cities where the average household would need to save the longest to afford a down payment, we analyzed data on the 50 largest U.S. cities. We specifically considered two pieces of data:

  • 2019 median home value.
  • 2019 median household income.

Data for both factors comes from the Census Bureau’s 2019 1-year American Community Survey.

We started by determining the annual savings for households by assuming they would save 20% of the median annual pre-tax income. Next, we determined how much a 20% down payment as well as a 12% down payment for the median home in each city would cost. Then, we divided each of the estimated down payments in each city by the estimated annual savings. The result was the estimated number of years of saving needed to afford each down payment, assuming zero savings to begin with. Finally, we created our final ranking by ordering the cities from the greatest number of years needed to the least number of years needed for each.

Tips for Hassle-Free Home Buying

  • Consider investing in expert advice. If you’re thinking of buying a home or starting to save, consider working with a financial advisor before you take the plunge. Finding the right financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in five minutes. If you’re ready to be matched with local advisors, get started now.
  • Prevent potential mortgage mishaps. The payments don’t stop after you’ve put money down; you’ll also need to make mortgage payments. Figure out what those might be before you move forward by using SmartAsset’s mortgage calculator.
  • It pays to read the fine print. When thinking about your home buying transaction, don’t forget closing costs. These may seem small compared to the down payment, but every dollar counts.

Questions about our study? Contact press@smartasset.com. 

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Ben Geier, CEPF® Ben Geier is an experienced financial writer currently serving as a retirement and investing expert at SmartAsset. His work has appeared on Fortune, Mic.com and CNNMoney. Ben is a graduate of Northwestern University and a part-time student at the City University of New York Graduate Center. He is a member of the Society for Advancing Business Editing and Writing and a Certified Educator in Personal Finance (CEPF®). When he isn’t helping people understand their finances, Ben likes watching hockey, listening to music and experimenting in the kitchen. Originally from Alexandria, VA, he now lives in Brooklyn with his wife.
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Texas freeze, rate jump drive a week of stalled mortgage app activity

As interest rates hit the highest levels since September, mortgage application activity dropped for the third week in a row, according to the Mortgage Bankers Association.

Overall loan application volume fell 11.4% for the week ending Feb. 19 on a seasonally-adjusted basis and 10% unadjusted from the week prior. The refinance share of loan activity continues to tumble in contrast with growing mortgage rates, falling to 68.5% from 69.3% week-over-week.

The refi index dropped 11.3% weekly but sat 50% higher than the same time a year ago. The purchase share increased to 31.5% from 30.7% and the index declined 7.8% from last week while rising 7% annually. The average purchase loan size climbed to yet another new record high of $418,000 from $412,200 the previous week.

Brutal weather also contributed to a regional drop in activity. “The severe winter weather in Texas affected many households and lenders, causing more than a 40% drop in both purchase and refinance applications in the state last week,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a press release.

The total application share of loans guaranteed by the Federal Housing Administration jumped to 11.2% from 9% from the week before, the Department of Veterans Affairs loans dipped to 11.9% from 13.2% and U.S. Department of Agriculture loans edged down to 0.3% from 0.4%. The share of adjustable-rate mortgages rose to 2.56% from 2.47%.

Source: nationalmortgagenews.com

Mortgage and refinance rates today, February 23, 2021

Today’s mortgage and refinance rates 

Average mortgage rates rose again yesterday. And the rise was sharper than looked likely first thing that morning. When we say that markets can turn on a dime, we’re not kidding.

As those markets opened, they looked set to take a breather, with less movement than we’ve grown used to recently. But that could be the quiet before the storm ahead of Federal Reserve Chair Jerome Powell’s testimony this morning before the Senate Finance Committee. Still, mortgage rates may hold steady or close to steady today, subject to what Powell says.

Find and lock a low rate (Feb 24th, 2021)

Current mortgage and refinance rates 

Program Mortgage Rate APR* Change
Conventional 30 year fixed 2.949% 2.952% Unchanged
Conventional 15 year fixed 2.51% 2.519% -0.01%
Conventional 20 year fixed 2.887% 2.894% Unchanged
Conventional 10 year fixed 2.569% 2.593% Unchanged
30 year fixed FHA 2.69% 3.366% Unchanged
15 year fixed FHA 2.481% 3.063% Unchanged
5 year ARM FHA 2.5% 3.213% Unchanged
30 year fixed VA 2.25% 2.421% Unchanged
15 year fixed VA 2.128% 2.448% Unchanged
5 year ARM VA 2.5% 2.392% Unchanged
Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions here.

Find and lock a low rate (Feb 24th, 2021)


COVID-19 mortgage updates: Mortgage lenders are changing rates and rules due to COVID-19. To see the latest on how coronavirus could impact your home loan, click here.

Should you lock a mortgage rate today?

A positive narrative has taken hold in markets as investors savor the prospect of a post-pandemic boom arriving sooner rather than later. As The New York Times’s Ben Casselman put it yesterday:

When the pandemic ends, cash could be unleashed like melting snow in the Rockies.

And it’s that brand of optimism that currently keeping mortgage rates high. Of course, there’s always a chance of some terrible news coming along and dragging those rates lower. But, absent that, it’s beginning to look as if we may be stuck with higher ones for some time to come.

So my personal rate lock recommendations remain:

  • LOCK if closing in 7 days
  • LOCK if closing in 15 days
  • LOCK if closing in 30 days
  • LOCK if closing in 45 days
  • LOCK if closing in 60 days

But, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So be guided by your gut and your personal tolerance for risk.

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Market data affecting today’s mortgage rates 

Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data, compared with roughly the same time yesterday, were:

  • The yield on 10-year Treasurys nudged up to 1.35% from 1.33%. (Bad for mortgage rates) More than any other market, mortgage rates normally tend to follow these particular Treasury bond yields, though less so recently
  • Major stock indexes were lower on opening. (Good for mortgage rates.) When investors are buying shares they’re often selling bonds, which pushes prices of those down and increases yields and mortgage rates. The opposite happens when indexes are lower
  • Oil prices rose to $60.82 from $60.62 a barrel. (Neutral for mortgage rates* because energy prices play a large role in creating inflation and also point to future economic activity.) 
  • Gold prices inched lower to $1,797 from $1,805 an ounce. (Neutral for mortgage rates*.) In general, it’s better for rates when gold rises, and worse when gold falls. Gold tends to rise when investors worry about the economy. And worried investors tend to push rates lower
  • CNN Business Fear & Greed index — Edged down to 53 from 56 out of 100. (Good for mortgage rates.) “Greedy” investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while “fearful” investors do the opposite. So lower readings are better than higher ones

*A change of less than $20 on gold prices or 40 cents on oil ones is a fraction of 1%. So we only count meaningful differences as good or bad for mortgage rates.

Caveats about markets and rates

Before the pandemic and the Federal Reserve’s interventions in the mortgage market, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. The Fed is now a huge player and some days can overwhelm investor sentiment.

So use markets only as a rough guide. Because they have to be exceptionally strong (rates are likely to rise) or weak (they could fall) to rely on them. But, with that caveat, so far mortgage rates today look likely to be unchanged or barely changed.

Find and lock a low rate (Feb 24th, 2021)

Important notes on today’s mortgage rates

Here are some things you need to know:

  1. The Fed’s ongoing interventions in the mortgage market (way over $1 trillion) should put continuing downward pressure on these rates. But it can’t work miracles all the time. And read “For once, the Fed DOES affect mortgage rates. Here’s why” if you want to understand this aspect of what’s happening
  2. Typically, mortgage rates go up when the economy’s doing well and down when it’s in trouble. But there are exceptions. Read How mortgage rates are determined and why you should care
  3. Only “top-tier” borrowers (with stellar credit scores, big down payments and very healthy finances) get the ultralow mortgage rates you’ll see advertised
  4. Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the wider trend over time
  5. When rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
  6. Refinance rates are typically close to those for purchases. But some types of refinances are higher following a regulatory change

So there’s a lot going on here. And nobody can claim to know with certainty what’s going to happen to mortgage rates in coming hours, days, weeks or months.

Are mortgage and refinance rates rising or falling?

Today and soon

I’m expecting mortgage rates to hold steady today or just inch either side of the neutral line. But, as always, that could change as the day progresses — as it did yesterday.

The same three factors continue to fuel optimism in markets:

  • A vaccination program that’s finally reaching serious numbers of Americans and that could herald brighter economic times ahead
  • Much lower COVID-19 numbers for infections, hospitalizations and deaths
  • The president’s $1.9 trillion pandemic relief measures, which so far remain on track to pass into law

Of course, there are corresponding threats that could bring mortgage rates crashing lower. Fears include a sharp stock market correction and the future emergence of a new strain of SARS-CoV-2 that could prove resistant to existing vaccines. But you’d have to be exceptionally brave to rely on one of those — or some other disaster — occurring before your closing date.

For more background on my wider thinking, read our latest weekend edition, which is published every Saturday soon after 10 a.m. (ET).

Recently

Over much of 2020, the overall trend for mortgage rates was clearly downward. And a new, weekly all-time low was set on 16 occasions last year, according to Freddie Mac.

The most recent weekly record low occurred on Jan. 7, when it stood at 2.65% for 30-year fixed-rate mortgages. But rates then rose. And Freddie’s Feb. 18 report puts that weekly average at 2.81%, up from the previous week’s 2.73%, and the highest it’s been since mid-November. But even that weekly average fails to take into account all the rises we saw that week, nor ones this week.

Expert mortgage rate forecasts

Looking further ahead, Fannie Mae, Freddie Mac and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.

And here are their current rates forecasts for each quarter of 2021 (Q1/21, Q2/21, Q3/21 and Q4/21).

The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s and the MBA’s were updated on Feb. 18 and 19 respectively. But Freddie now publishes forecasts quarterly and its figures are from mid-January:

Forecaster Q1/21 Q2/21 Q3/21 Q4/21
Fannie Mae 2.8% 2.8% 2.9% 2.9%
Freddie Mac 2.9% 2.9% 3.0% 3.0%
MBA 2.8% 3.1% 3.3% 3.4%

However, given so many unknowables, the current crop of forecasts may be even more speculative than usual. And there’s certainly a widening spread as the year progresses.

Find your lowest rate today

Some lenders have been spooked by the pandemic. And they’re restricting their offerings to just the most vanilla-flavored mortgages and refinances.

But others remain brave. And you can still probably find the cash-out refinance, investment mortgage or jumbo loan you want. You just have to shop around more widely.

But, of course, you should be comparison shopping widely, no matter what sort of mortgage you want. As federal regulator the Consumer Financial Protection Bureau says:

Shopping around for your mortgage has the potential to lead to real savings. It may not sound like much, but saving even a quarter of a point in interest on your mortgage saves you thousands of dollars over the life of your loan.

Verify your new rate (Feb 24th, 2021)

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Mortgage rate methodology

The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.

Source: themortgagereports.com