“The strong US dollar makes international travel cheaper for Americans but makes US homes much more expensive for foreigners,” NAR chief economist Lawrence Yun explained. “Therefore, it’s not surprising to see a pullback in US home sales from foreign buyers.” The report, which surveyed NAR members about transactions with international clients, revealed that foreign buyers … [Read more…]
“A national secondary market for construction financing could allow lenders, like state housing finance agencies and banks, to provide the investment capital needed to get multifamily housing projects built and keys in families’ hands.”
This is the conclusion of a new report published by the Center for Public Enterprise, a nonprofit organization that promotes the expansion of public sector projects.
Such lenders, the report states, could underwrite mezzanine construction loans under the assumption that a national housing construction fund would have the ability to buy these loans on the secondary market. This could make the overall cost to entry — which is already low — more digestible.
“The size of the investments needed to get typical multifamily housing projects moving is small: mezzanine loans covering less than 20% of project costs could bring average costs of capital down significantly, allowing shovels to get into the ground,” the report reads.
Due to the well-documented issues facing housing supply across the U.S., and coupled with high home prices and persistently high interest rates, multifamily housing starts have slowed despite low vacancy rates nationwide. But when demand comes back, new housing that “should have been built has not been, starting another price cycle,” the report explained.
Establishing a national housing construction fund has the potential to reduce burdens on builders and lenders caused by higher rates. It could also potentially create “an economic environment where housing production achieves a degree of insulation from the business cycle factors that are not indicative of housing demand,” the report said. This could lead to a situation where housing production becomes “smoother and more stable across time.”
Since policy proposals tailored to the needs of housing construction haven’t materialized to any meaningful degree, stakeholders are reliant on monetary policy — a “broadsword, not a scalpel” when it comes to the interests of the housing industry. Price pressures are addressed primarily by making it more difficult to conduct business operations as opposed to addressing the root issues specific to a particular industry.
“If monetary policy is successful in reducing demand — often by inducing a recession — then eventually, interest rates normalize and, theoretically, demand comes back,” the report states. “And herein lies the problem: housing stock, particularly multifamily housing, takes time to build — far more time than it takes to produce most other goods and services Americans use on a daily basis.
“When the economy comes back, the new units which should have been available for a resurgent consumer market are not available because construction did not occur during the trough of the cycle.”
These actions also serve to teach builders that should there be a monetary policy instrument used to impact the economy, it will also likely be bad for them, leading to a pullback in construction activity in preparation for a policy change. This necessitates federal tools that can help to more precisely alleviate these burdens on housing construction, the report suggests.
“National housing researchers, including Freddie Mac, estimate that the housing supply shortfall across the country is between 1 million and 5 million homes. There are many policy levers that must be pulled to get there,” the report reads.
“A financing lever with the ability to partially insulate housing investment from the volatility of the business cycle has been, until now, a missing piece among the array of tools and interventions. We hope that a housing construction fund, as outlined here, can fill that gap.”
The 15-year FRM also saw a decrease, averaging 6.17%, down from 6.25% last week and 6.30% a year ago. “Following June’s jobs report, which showed a cooling labor market, the 10-year Treasury yield decreased this week, and mortgage rates followed suit,” Sam Khater, Freddie Mac’s chief economist, said in the PMMS report. Khater also pointed … [Read more…]
For a 30-year fixed-rate mortgage, the average rate you’ll pay is 6.94% today, a decrease of -0.14% over the last week. The average rate for a 15-year fixed mortgage is 6.41%, which is a decrease of -0.13% since last week. For a look at mortgage rate movement, see the chart below.
The Federal Reserve has been postponing interest rate cuts because inflation has been slow to improve. While experts still expect mortgage rates to gradually move lower in the coming months, housing market predictions can always change in response to economic data, geopolitical events and more.
Today’s average mortgage rates
Today’s average mortgage rates on Jul. 15, 2024, compared with one week ago. We use rate data collected by Bankrate as reported by lenders across the US.
Mortgage rates are expected to slowly decline in 2024. You can take advantage by comparing loan offers from multiple lenders to get the lowest rate. Start by entering your information below to get a custom quote from one of CNET’s partner lenders.
About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool features partner rates from lenders that you can use when comparing multiple mortgage rates.
What are the different mortgage types?
Each mortgage has a loan term, or payment schedule. The most common mortgage terms are 15 and 30 years, although 10-, 20- and 40-year mortgages also exist. With a fixed-rate mortgage, the interest rate is set for the duration of the loan, offering stability. With an adjustable-rate mortgage, the interest rate is only fixed for a certain amount of time (commonly five, seven or 10 years), after which the rate adjusts annually based on the market. Fixed-rate mortgages are a better option if you plan to live in a home in the long term, but adjustable-rate mortgages may offer lower interest rates upfront.
30-year fixed-rate mortgages
The average interest rate for a standard 30-year fixed mortgage is 6.94% today. A 30-year fixed mortgage is the most common loan term. It will often have a higher interest rate than a 15-year mortgage, but you’ll have a lower monthly payment.
15-year fixed-rate mortgages
Today, the average rate for a 15-year, fixed mortgage is 6.41%. Though you’ll have a bigger monthly payment than a 30-year fixed mortgage, a 15-year loan usually comes with a lower interest rate, allowing you to pay less interest in the long run and pay off your mortgage sooner.
5/1 adjustable-rate mortgages
A 5/1 ARM has an average rate of 6.59% today. You’ll typically get a lower introductory interest rate with a 5/1 ARM in the first five years of the mortgage. But you could pay more after that period, depending on how the rate adjusts annually. If you plan to sell or refinance your house within five years, an ARM could be a good option.
What’s behind today’s high mortgage rates?
At the start of the pandemic, mortgage rates were near record lows, around 3%. That all changed as inflation began to surge and the Federal Reserve kicked off a series of aggressive interest rate hikes starting in March 2022 to slow the economy, which indirectly drove up mortgage rates.
Now, more than two years later, mortgage rates are still around 7%. Over the last several months, mortgage rates have fluctuated in response to economic data and investors’ expectations as to when the Fed will start to lower rates.
Today’s homebuyers have less room in their budget to afford the cost of a home due to elevated mortgage rates and steep home prices. Limited housing inventory and low wage growth are also contributing to the affordability crisis and keeping mortgage demand down.
Will we see lower mortgage rates in 2024?
Most experts predict mortgage rates will fall below 7% in the coming months. However, a sustained downward trend will depend on several factors, including upcoming inflation and labor data.
The Fed hasn’t hiked interest rates in almost a year, but an actual rate cut doesn’t appear imminent. Some experts say the first cut could come as early as July, though it’s more likely we see the Fed lower rates in September or November.
“If the Fed makes any moves later this year, the signal would be sufficient for the mortgage market, and mortgage rates would start falling,” said Selma Hepp, chief economist at CoreLogic. “In that case, we could see the mortgage rates around 6.5% at the year-end.”
One thing is for sure: Homebuyers won’t see lower mortgage overnight, and a return to the 2-3% mortgage rates from just a few years ago is unlikely.
Here’s a look at where some major housing authorities expect average mortgage rates to land.
Calculate your monthly mortgage payment
Getting a mortgage should always depend on your financial situation and long-term goals. The most important thing is to make a budget and try to stay within your means. CNET’s mortgage calculator below can help homebuyers prepare for monthly mortgage payments.
How can I get the lowest mortgage rates?
Though mortgage rates and home prices are high, the housing market won’t be unaffordable forever. It’s always a good time to save for a down payment and improve your credit score to help you secure a competitive mortgage rate when the time is right.
Save for a bigger down payment: Though a 20% down payment isn’t required, a larger upfront payment means taking out a smaller mortgage, which will help you save in interest.
Boost your credit score: You can qualify for a conventional mortgage with a 620 credit score, but a higher score of at least 740 will get you better rates.
Pay off debt: Experts recommend a debt-to-income ratio of 36% or less to help you qualify for the best rates. Not carrying other debt will put you in a better position to handle your monthly payments.
Research loans and assistance: Government-sponsored loans have more flexible borrowing requirements than conventional loans. Some government-sponsored or private programs can also help with your down payment and closing costs.
Shop around for lenders: Researching and comparing multiple loan offers from different lenders can help you secure the lowest mortgage rate for your situation.
If we took the worst levels of the spreads from 2023 and incorporated those today, mortgage rates would be 0.48% higher right now. While we are far from being average with the spreads, the fact that we have seen this improvement is a plus this year.
10-year yield and mortgage rates
Last week, inflation data and testimony from Federal Reserve President Jerome Powell were a plus for mortgage rates as the 10-year yield fell to the critical level of 4.20%. This has been a stubborn place to break lower, so the key for this week is to get follow-through bond buying after we close below 4.20%. If this doesn’t happen soon, we will need to wait for more economic data or a Fed talking point to push the 10-year yield lower.
Purchase application data
The last time we saw 12 weeks of positive trending purchase app growth was when mortgage rates reached 6%. Purchase apps have been positive for four out of the last five weeks and mortgage rates aren’t even near 6%. Now, context is critical because we are working from the lowest bar ever, so it doesn’t take much to move the needle higher with purchase apps, as the last five weeks have shown.
However, let’s keep an eye out on this story over the next six months because of what late 2022 and 2023 data has shown us: if the mortgage rates fall and we can get at least two to three months’ worth of positive data, it will show up in the future existing home sales report. Remember, purchase apps look out 30-90 days, so that data will hit the sales report later on.
Since mortgage rates started to fall in November 2023, we’ve seen 16 positive prints, 14 negative prints and two flat prints in the week-to-week data. However, as mortgage rates began to rise earlier this year, we observed a decline in demand. The year-to-date data for 2024 is still unfavorable, with 10 positive prints,14 negative prints and twoflat prints.
Weekly housing inventory data
This week’s data was hit with the July 4th bug. Especially if July 4th is on a Thursday or Friday, people tend to take a more extended vacation. So, I will not make any statements about the decline in inventory week to week, except that it’s been affected by the holiday and we should get back on trend next week.
Weekly inventory change (July 5-12): Inventory fell from 652,573 to 651,453
The same week last year (July 7-14): Inventory rose from 466,534 to 471,603
The all-time inventory bottom was in 2022 at 240,497
The yearly inventory peak for 2024 was 652,573
For some context, active listings for this week in 2015 were 1,197,439
New listings data
New listings data saw a much sharper decline than I had anticipated this week, but it was July 4th weekend so that I won’t make anything of it. However, I will keep an eye out here in the future weeks. The seasonal decline period is starting soon, so we should get accustomed to seeing a decline in new listing data as the year heads toward its end.
It is a bit shocking to me that new listings this week are lower than even last year: This is the lowest new listing week ever recorded. Here are the new listings for last week over the last several years:
2024: 56,638
2023: 57,304
2022: 71,790
Price-cut percentage
In an average year, one-third of all homes take a price cut — this is standard housing activity. As rates have stayed elevated, the price-cut percentage is higher than in the last two years, and certain pockets of the U.S. have higher inventory data than the national data.
A few weeks ago, on the HousingWire Daily podcast, I discussed that the price-growth data will cool down in the year’s second half. Here are the price-cut percentages for last week over the previous few years:
2024: 38%
2023: 33%
2022: 33%
Pending sales
Below is the Altos Research weekly pending contract data year-over-year to show real-time demand. With more sellers who are buyers, we have a tad more demand this year. These are live weekly contracts, compared to the purchase application data, which looks out to 30-90 days. And our weekly pending sales data accounts for contracts.
2024: 419,576
2023: 377,650
2022: 419,524
The week ahead: Powell talks again, plus retail sales and housing starts
Powell will speak again on Monday and a few Fed presidents will speak this week as well. I want to see if we get more dovish statements from other Fed presidents this week. Retail sales are on Tuesday and housing starts are on Wednesday. The big focus for housing starts data is if single-family permits keep falling, which isn’t bullish for construction labor going out. Also, we have the all-important jobless claims data on Thursday.
While inventory growth this week slowed to 6,803 —well below my weekly target level of 11,000 -17,000 with elevated mortgage rates — the fact that we hit this target level five times this year versus zero last year is a big reason why 2024 has been a much better year for housing than 2023. As we can see below, it’s a much healthier year in inventory growth data than in 2023.
Weekly inventory change (June 29-July 5): Inventory rose from 645,770 to 652,573
The same week last year (June 30-July 7), Inventory rose from 466,534 to 466,001
The all-time inventory bottom was in 2022 at 240,497
This week is the inventory peak for 2024 at 652,573
For some context, active listings for this week in 2015 were 1,183,882
New listings data
We are at the seasonal peak period for new listings. We will soon be getting into the weekly decline period of this data line, and while we have showed growth year over year, we never got to my minimum target level of 80,000. Here are the new listings for last week over the past few years:
2024 71,181
2023: 58,289
2022: 89,221
Price-cut percentage
In an average year, one-third of all homes take a price cut — this is standard housing activity. As rates have stayed elevated, the price-cut percentage is higher than in the last two years, and certain pockets of the U.S. have higher inventory data than the national data.
A few weeks ago, on the HousingWire Daily podcast, I discussed that the price-growth data will cool down in the second half of the year.
Here are the price-cut percentages for last week over the previous few years:
2024: 38%
2023: 33%
2022: 32%
Pending sales
Below is the Altos Research weekly pending contract data year-over-year to show real-time demand. With more sellers who are buyers, we have a tad more demand this year. This week showed very little year-over-year growth and there is also a holiday week effect here. For the entire year, we have shown a tiny bit of growth in the pending contracts; this data line can grow year over year when mortgage rates fall, but we haven’t had that happen so far in 2024 in any meaningful way with duration.
So far, our pending contract data is still showing growth:
2024: 381,057
2023: 381,036
2022: 420,816
10-year yield and mortgage rates
Two weeks ago, the 10-year yield had a crazy move higher, even with softer inflation data. Last week, we returned close to recent lows. Here is how the 10-year yield acted with jobs week, which once again is showing the labor market getting softer but not breaking yet.
Then we had Jobs Friday, in which the headline number looked fine, but the internal labor reports lately look softer, which is what the Federal Reserve has wanted all along. I wrote about the recent jobs week data here.
After the jobs report, bond yields headed lower and trended lower the entire day on Friday, July 5, which you can see in the chart below — dragging mortgage rates lower with them.
Mortgage spreads
The spread between the 30-year mortgage rate and the 10-year yield has been an issue since 2022, and things got worse after the March 2023 banking crisis. However, this year, spreads have improved.
If we took the worst levels of the spreads from 2023 and incorporated those today, mortgage rates would be 0.56% higher right now. While we are far from being average with the spreads, the fact that we have seen this improvement is a plus this year.
Purchase application data
The three-week winning streak of purchase application data ended last week as rates had risen in the previous weeks. This shows once again how even weekly moves up and down can flip this data line from positive to negative.
Since the onset of falling mortgage rates in November 2023, we’ve seen 15 positive prints, 14 negative prints and two flat prints in the week-to-week data. However, as mortgage rates began to rise earlier this year, we observed a decline in demand. The year-to-date data for 2024 is unfavorable, with 9 positive prints,14 negative prints and twoflat prints. If mortgage rates can head lower and stay lower with duration, we can grow application data purely based on the fact that we are working from the lowest levels ever once adjusting to our workforce growth.
The week ahead: Inflation, Powell testimony, auctions and fed speeches
It’s inflation week again. We have CPI inflation and PPI inflation reports coming up on Thursday and Friday. Fed Chairman Jerome Powell will give testimony before Congress on Tuesday and we will also have more Fed presidents speaking next week. The key is to see if any recent labor data softness changes their tune.
We will also have a few bond auctions. It’s hard to break under 4.20% on the 10-year yield, so we shall see if this week that happens or if we still stay in the range between 4.20% and 4.50%.
The average 30-year fixed mortgage interest rate is 7.00% today, down -0.02% compared to one week ago. The average rate for a 15-year fixed mortgage is 6.46%, which is an increase of 0.03% since last week. For a look at mortgage rate movement, see the chart below.
The Federal Reserve has been holding off on interest rate cuts because inflation has been slow to improve. While experts still expect mortgage rates to gradually move lower in the coming months, housing market predictions can always change in response to economic data, geopolitical events and more.
Today’s average mortgage rates
Today’s average mortgage rates on Jul. 04, 2024, compared with one week ago. We use rate data collected by Bankrate as reported by lenders across the US.
Lower mortgage rates make buying a home more affordable. Experts recommend shopping around with different mortgage lenders to find the best deal. Enter your information below to get a custom quote from one of CNET’s partner lenders.
About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool features partner rates from lenders that you can use when comparing multiple mortgage rates.
How can I choose a mortgage term?
Each mortgage has a loan term, or payment schedule. The most common mortgage terms are 15 and 30 years, although 10-, 20- and 40-year mortgages also exist. With a fixed-rate mortgage, the interest rate is set for the duration of the loan, offering stability. With an adjustable-rate mortgage, the interest rate is only fixed for a certain amount of time (commonly five, seven or 10 years), after which the rate adjusts annually based on the market. Fixed-rate mortgages are a better option if you plan to live in a home in the long term, but adjustable-rate mortgages may offer lower interest rates upfront.
30-year fixed-rate mortgages
The average 30-year fixed mortgage interest rate is 7.00% today. A 30-year fixed mortgage is the most common loan term. It will often have a higher interest rate than a 15-year mortgage, but you’ll have a lower monthly payment.
15-year fixed-rate mortgages
Today, the average rate for a 15-year, fixed mortgage is 6.46%. Though you’ll have a bigger monthly payment than a 30-year fixed mortgage, a 15-year loan usually comes with a lower interest rate, allowing you to pay less interest in the long run and pay off your mortgage sooner.
5/1 adjustable-rate mortgages
A 5/1 adjustable-rate mortgage has an average rate of 6.66% today. You’ll typically get a lower introductory interest rate with a 5/1 ARM in the first five years of the mortgage. But you could pay more after that period, depending on how the rate adjusts annually. If you plan to sell or refinance your house within five years, an ARM could be a good option.
Why are mortgage rates so high right now?
At the start of the pandemic, mortgage rates were near record lows, around 3%. That all changed as inflation began to surge and the Federal Reserve kicked off a series of aggressive interest rate hikes starting in March 2022 to slow the economy, which indirectly drove up mortgage rates.
Now, more than two years later, mortgage rates are still around 7%. Over the last several months, mortgage rates have fluctuated in response to economic data and investors’ expectations as to when the Fed will start to lower rates.
Today’s homebuyers have less room in their budget to afford the cost of a home due to elevated mortgage rates and steep home prices. Limited housing inventory and low wage growth are also contributing to the affordability crisis and keeping mortgage demand down.
Will mortgage rates drop this year?
Most experts predict mortgage rates will fall below 7% in the coming months. However, a sustained downward trend will depend on several factors, including upcoming inflation and labor data.
The Fed hasn’t hiked interest rates in almost a year, but an actual rate cut doesn’t appear imminent. Some experts say the first cut could come as early as July, though it’s more likely we see the Fed lower rates in September or November.
“If the Fed makes any moves later this year, the signal would be sufficient for the mortgage market, and mortgage rates would start falling,” said Selma Hepp, chief economist at CoreLogic. “In that case, we could see the mortgage rates around 6.5% at the year-end.”
One thing is for sure: Homebuyers won’t see lower mortgage overnight, and a return to the 2-3% mortgage rates from just a few years ago is unlikely.
Here’s a look at where some major housing authorities expect average mortgage rates to land.
Calculate your monthly mortgage payment
Getting a mortgage should always depend on your financial situation and long-term goals. The most important thing is to make a budget and try to stay within your means. CNET’s mortgage calculator below can help homebuyers prepare for monthly mortgage payments.
Where can I find the best mortgage rates?
Though mortgage rates and home prices are high, the housing market won’t be unaffordable forever. It’s always a good time to save for a down payment and improve your credit score to help you secure a competitive mortgage rate when the time is right.
Save for a bigger down payment: Though a 20% down payment isn’t required, a larger upfront payment means taking out a smaller mortgage, which will help you save in interest.
Boost your credit score: You can qualify for a conventional mortgage with a 620 credit score, but a higher score of at least 740 will get you better rates.
Pay off debt: Experts recommend a debt-to-income ratio of 36% or less to help you qualify for the best rates. Not carrying other debt will put you in a better position to handle your monthly payments.
Research loans and assistance: Government-sponsored loans have more flexible borrowing requirements than conventional loans. Some government-sponsored or private programs can also help with your down payment and closing costs.
Shop around for lenders: Researching and comparing multiple loan offers from different lenders can help you secure the lowest mortgage rate for your situation.
Enjoy complimentary access to top ideas and insights — selected by our editors.
Three years after a condominium building collapsed in Surfside, Florida, killing 98 people, policies have changed regarding the safety of condo buildings — as well as mortgage lending for residents within these buildings. Fannie Mae and Freddie Mac have both updated policies, especially as condo living is on the rise due to a recent lack of housing inventory.
The number of condominium and homeowner associations is set to increase from 365,000 in 2023 to as much as 370,000 in 2024, accounting for almost one-third of U.S. home inventory, according to a recent Foundation for Community Association Research study and forecast.
“Approximately 67% of the homes completed in 2023 were in a homeowner’s association, condominium or housing co-op. That’s a big number,” Dawn Bauman, executive director of the foundation and chief strategy officer at the Community Associations Institute, recently told National Mortgage News.
Read more: Congress must act to fix Fannie Mae and Freddie Mac, FHFA says
Community associations new and old now account for around 30% of overall housing stock. While the association component of new home construction is considerable, the sector does also include a significant number of older buildings more than 40 years old, Bauman said. Because of this, Freddie Mac and Fannie Mae established more rigorous guidelines for ensuring the safety and soundness of these residential buildings.
Lenders and associations haven’t argued with the need for some rule changes following the Surfside condo collapse, but have looked for improvement in communication regarding which buildings have issues that bar financing and processes available to remedy such concerns.
Both Freddie Mac and Fannie Mae have responded with plans to improve transparency for both associations and lenders.
In addition, Freddie is extending the use of attorney opinion of title letters to loans collateralized by condominiums and those with deed restrictions, such as properties that are part of a homeowners association.
While broader use of options like attorney opinion letters has gotten pushback from the title insurance industry, saying they’re insufficient given the risk, efforts to explore this are moving forward due to the potential to save borrowers hundreds of dollars upfront per loan.
However, American Land Title Association CEO Diane Tomb said the letters are likely to rarely, if ever, result in savings and “will expose additional consumers and lenders to unneeded risk and weaken protection of their property rights.”
One-third of title claims are for issues not found in routine searches conducted for an AOL, the cost of insurance has fallen almost 8% since 2004 “seller-pay” regimes in many states minimize buyer costs for insurance. Condos are considered particularly vulnerable to risks, according to ALTA.
Read more about the recent policy changes both Fannie Mae and Freddie Mac have made on condo buildings.
LOS ANGELES (AP) — Homebuilders who bucked the worst of last year’s housing slump may be seeing their luck run out.
After showing signs of strengthening early this year, sales of new U.S. homes fell in April and May from a year earlier by 7.7% and 16.5%, respectively.
Last month’s sales skidded to a seasonally adjusted annual rate of 619,000 units, the slowest pace since November, the U.S. Census Bureau reported Wednesday.
MORE Eye On Your Money:
The average rate on a 30-year mortgage has mostly hovered around 7% this year, according to mortgage buyer Freddie Mac. The elevated rates have discouraged many home shoppers. Sales of previously occupied U.S. homes, which make up by far the largest swath of the housing market, fell in May for the third month in a row.
The recent slowdown in new home sales marks a shift from last year, when sales rose nationally for the first time in two years, climbing 4.2% from a year earlier. By comparison, sales of previously occupied U.S. homes sank roughly 19% to a nearly 30-year low.
As last year, homebuilders have lowered prices and offered incentives like paying to lower the rate on home loans in hopes of mitigating the impact of elevated mortgage rates.
Homebuilders such as Miami-based Lennar and Los Angeles-based KB Home have increasingly relied on such financial incentives to woo buyers this year as mortgage rates have remained elevated. They helped drive a 19% year-over-year increase in Lennar’s new home orders rose in the March-May quarter. KB Home posted a 2% increase in the same period
“But for some homebuyers, those financial incentives are no longer enough to get them on the building lot,” said Lisa Sturtevant, chief economist at Bright MLS.
This spring’s ramp-up in mortgage rates, which limits homebuying budgets, and the lingering uncertainty over when rates may come down, have put off many home shoppers.
Still, these trends favor those who can afford to finance a home purchase at current mortgage rates or pay all cash.
For one, there are more new homes available. The available inventory at the end of last month amounted to a 9.3-month supply, going by the current sales pace. That’s the highest months’ supply of new homes for sale since October 2022.
Builders are also slowing the pace of new home construction. Single-family housing starts declined in May for the third straight month to the slowest pace since October.
Another plus for homebuyers: Easing home prices. The median sale price of a new home fell 0.9% in May from a year earlier to $417,400.
“With more housing inventory and softening demand, expect the third quarter of 2024 to be a slower new housing market than the second half of 2023,” Sturtevant said.
Bangor Savings Bank helped nearly 500 people buy their first home in the last fiscal year, but the bank’s leaders said low inventory is the biggest hurdle it faces in getting more people to achieve the milestone.
Bangor Savings provided $450 million in resident mortgage loans across Maine and New Hampshire between April 2023 and March 2024, a more than 40 percent plummet from the prior year’s residential mortgage loan total of $778 million.
By Kathleen O’Brien, Bangor Daily News Staff
Bangor Savings Bank helped nearly 500 people buy their first home in the last fiscal year, but the bank’s leaders said low inventory is the biggest hurdle it faces in getting more people to achieve the milestone.
Bangor Savings provided $450 million in resident mortgage loans across Maine and New Hampshire between April 2023 and March 2024, a more than 40 percent plummet from the prior year’s residential mortgage loan total of $778 million.
This sharp drop is due to high interest rates and low housing inventory, said Bob Montgomery-Rice, Bangor Savings Bank’s president and CEO, prior to Bangor Savings Banks’ Annual Meeting of Corporators on June 24. While homebuyers adjusted to the high interest rates in 2023, the lack of available homes remains.
“There have been a few developments in the greater Bangor area for new housing, but not enough to meet the demand,” Montgomery-Rice said. “We still do about five pre-approvals to every one mortgage that’s made. If there were more houses, we could do more loans.”
On average, people looking to buy a home in Maine make offers on 10 to 20 homes before one gets accepted, Montgomery-Rice said.
This lack of housing inventory ties back to the 2008 financial crisis when developers stopped building, he said. Despite minimal growth in a region’s housing stock, the population still increased.
The bank issued 57 new loans, totaling $69 million, to community developments this past fiscal year. Of that, $25 million was dedicated to 14 affordable housing projects, Montgomery-Rice said.
Bangor Savings earned a net income of $15.3 million, welcomed more than 22,500 new customers and created more than 33,000 deposit accounts in the last fiscal year, the meeting revealed
The 172-year-old bank opened two new branches — one in Bar Harbor and one in Kennebunk — since April 2023. The new locations bring the company’s branch total to 69 across Maine, New Hampshire and Massachusetts.
While inflation appears to be weaning slowly, Montgomery-Rice said the effects can still be seen in account holders’ decreased savings. Despite this, the bank is seeing very few people miss loan payments, which Montgomery-Rice said illustrates the state’s 3.1 percent unemployment rate.
“If people are employed or can find a job, even if they are tight, they can meet their needs,” he said.
However, Montgomery-Rice cautioned that uncontrollable factors like a presidential election year, conflict overseas and climate change can all influence the economy.
Outside of mortgage loans, Bangor Savings reported growth in its first credit card, Everblue, since it debuted last year.
Bangor Savings’ Maine ABLE Benefit Checking, a program that helps people with disabilities save money through checking accounts, finished the fiscal year with more than $5 million in deposits and 1,000-plus participants.
“Those people are on disability benefits and the tax law only lets them save a certain amount of money, but this vehicle lets them save more,” Montgomery-Rice said.
Bangor Savings launched the program in 2021 in partnership with the Maine State Treasurer, and Montgomery-Rice said Maine is the first state in the U.S. to offer such a program.