Uncommon Knowledge
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Mortgage rates ticked up last week after weeks of declines while applications for home loans dropped in a sign that the housing market continues to struggle despite some recent signs of optimism.
The 30-year fixed rate inched closer to 7 percent for the week ending December 29, according to the Mortgage Bankers Association (MBA). Meanwhile, mortgage applications tumbled by more than 9 percent from two weeks earlier, lenders said.
“Markets continued to digest the impact of slowing inflation and potential rate cuts from the Federal Reserve, helping mortgage rates to stay at levels close to the lowest since mid-2023,” Joel Kan, MBA’s deputy chief economist, said in a statement shared with Newsweek on Wednesday.
The 30-year fixed mortgage ended 2023 at 6.76 percent, more than a percentage point lower than the peak of nearly 8 percent in October, he said.
“The recent decline in rates has given the housing market some cause for optimism going into 2024, but purchase applications have not yet picked up in response, with the overall level of purchase activity 12 percent lower than a year ago,” Kan said.
Economists say that activity in the housing market will ramp up if prices decline, which at the moment are elevated partly due to low supply. The existing homes market is still in the doldrums as sellers are reluctant to give up their low rates for new home loans that could cost them close to 7 percent in interest.
“The housing market has been hampered by a limited supply of homes for sale, but the recent strength in new residential construction will continue to help ease inventory shortages in the months in come,” Kan said.
Recent data shows that private residential construction moved up, according to the U.S. Census Bureau, to nearly $900 billion in November—a jump of more than a percent from the previous month, helped by spending on single-family home building.
“November was the first month in over a year when single-family construction spending rose compared to the year prior,” Yelena Maleyev, KPMG’s senior economist, said in a note shared with Newsweek on Tuesday. “Builders have become more positive about the single-family market as mortgage rates have come down from recent peaks and revived buyers’ interests.”
In a sign that rates may be entering some level of uncertainty, as the market looks to see how many rate cuts the Fed will institute in 2024, the average contract interest rate for 15-year fixed-rate mortgages decreased to 6.26 percent from 6.41 percent in the week ending December 29.
Fed policymakers held rates at 5.25 to 5.5 percent last month for the third time in a row and have suggested that they may cut rates to a possible 4.6 percent in 2024. It’s unclear yet when such cuts could come.
But declining mortgage rates could give a boost to the housing market, with builders feeling optimistic in the new year.
“Construction activity remains robust as strong demand for housing and infrastructure remain a tailwind for builders,” Maleyev said, noting that elevated rates could be a challenge for the sector in 2024. “Spending is expected to end the year on a high, with lower mortgage rates helping revive activity in the housing market.”
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Source: newsweek.com
Mortgage demand fell over the holidays despite declining mortgage rates.
Mortgage applications decreased 9.4% for the week ending Dec. 29 compared to two weeks earlier, according to data from the Mortgage Bankers Association (MBA).
The 30-year fixed mortgage rate closed 2023 at 6.76%, more than one percentage point lower than its October peak of 7.9%, according to Joel Kan, MBA’s vice president and deputy chief economist.
“The recent decline in rates has given the housing market some cause for optimism going into 2024, but purchase applications have not yet picked up in response, with the overall level of purchase activity 12% lower than a year ago,” Kan said in a statement.
Purchase applications decreased by 5% week over week on an adjusted basis. Meanwhile, refinance applications remained at very low levels but were 15% higher than a year ago.
“The housing market has been hampered by a limited supply of homes for sale, but the recent strength in new residential construction will continue to help ease inventory shortages in the months to come,” Kan added.
The share of Federal Housing Administration (FHA) loan activity decreased to 14.5% from 15% the week prior. The share of Department of Veterans Affairs (VA) loan activity was 14.6%, down from 17.3% over the previous week, while the share of U.S. Department of Agriculture (USDA) loan activity increased to 0.5% compared to 0.4% the previous week.
Source: housingwire.com
Home lending slowed to close out 2023, as borrowers appeared to take the holidays off, and markets reacted to the expectation that lower interest rates are on their way, according to the Mortgage Bankers Association.
In the final release looking at 2023 volumes, the MBA’s Market Composite Index, which tracks weekly application activity based on surveys of the trade group’s members, fell a seasonally adjusted 9.4% from 14 days earlier for the period ending Dec. 29. Compared to the last full week of 2022, incoming applications dropped by 6%. Data included a holiday adjustment, with the trade group tracking, but not publishing, survey results over Christmas week.
The swift pullback in interest rates came to a halt as well, with the main conforming average among MBA lenders edging higher for the first time in seven weeks.
“Markets continued to digest the impact of slowing inflation and potential rate cuts from the Federal Reserve, helping mortgage rates to stay at levels close to the lowest since mid-2023,” said Joel Kan, MBA vice president and deputy chief economist, in a press release.
The 30-year fixed conforming rate for mortgages rose by 5 basis points last week to 6.76% from 6.71% seven days earlier. Borrower points also increased to 0.61 from 0.55 for 80% loan-to-value ratio transactions.
While moderating rates pushed application volumes higher during much of November and December, borrowers paused at the end of the year, leading to decreases in both purchases and refinances.
“The recent decline in rates has given the housing market some cause for optimism going into 2024, but purchase applications have not yet picked up in response,” Kan said.
The seasonally adjusted Purchase Index slid 5.4% from two weeks earlier and sat 12.2% below its level from a year ago. But slowly growing inventory points to potential opportunities for lenders if recent trends continue, as sellers list more homes in response to lower rates. Recent surveys also point to solid consumer demand, particularly among first-time buyers.
Meanwhile, the Refinance Index plummeted 18.2% over the final two weeks of 2024, but climbed up 15.2% year over year “still at very low levels,” according to Kan. The share of refinances relative to overall volumes fell to 36.3%, declining from 39.4% and 39.7% the prior two weeks. Some industry leaders, though, see some hopes for a small pick-up in refinances over the coming months should rates decline as hoped.
Government-backed activity, which saw some significant jumps in the fall, pulled back over the final two weeks of the year. The seasonally adjusted Government Index declined 13.4%, and the percentage of federally guaranteed loan activity also shrank. Applications coming through the Federal Housing Administration decreased to 14.5% from 15% week over week, and Department of Veterans Affairs-sponsored volumes contracted to 14.6% from 17.3% seven days earlier. U.S. Department of Agriculture-backed applications managed to nab an incrementally larger slice of 0.5%, rising from 0.4% a week earlier.
Other 30-year mortgage rates tracked by the MBA also edged higher to finish 2024. The average contract rate of the 30-year jumbo mortgage climbed up a single basis point to 6.86% from 6.85% seven days prior. Points used to bring down the rate increased to 0.41 from 0.34.
The 30-year fixed-contract FHA-backed mortgage ended the year at an average of 6.51, also rising one basis point from 6.5% week over week. Points came in at 0.86, rising from 0.73 for 80% LTV-ratio loans.
The contract 15-year fixed rate headed in the other direction, though, falling 15 basis points to 6.26% from 6.41%. Borrowers typically used 0.73 worth of points compared to 0.5 a week earlier.
The 5/1 adjustable-rate mortgage took an even larger weekly drop of 55 basis points, falling to an average of 5.71% from 6.26%. Points remained at 0.59 from one week prior. Despite the decline, the share of adjustable-rate mortgage applications decreased to 6% of total activity from 6.3%.
Source: nationalmortgagenews.com
Mortgage rates dropped again this week, according to Bankrate’s national survey.
The average rate on 30-year fixed mortgages plummeted to 6.88 percent this week, down from 7.21 percent the previous week, according to Bankrate’s weekly national survey of large lenders.
The average rate on 30-year home loans topped 8 percent as recently as October. The sharp drop in mortgage rates came after the Federal Reserve said last week that it expects three rate cuts in 2024. The Fed’s long-awaited pivot was spurred by a number of factors, including a slowing job market and signs that the central bank’s ongoing war on inflation is working.
Meanwhile, yields on 10-year Treasury bonds, an informal benchmark for 30-year mortgage rates, have dropped from 5 percent to less than 4 percent in recent weeks.
The Fed doesn’t directly control mortgage rates, but it plays a pivotal role. The central bank sets policy that affects the cost of home loans. At the conclusion of its latest meeting on Dec. 13, the Federal Open Markets Committee decided to leave rates unchanged. Now, economists say, it appears that the central bank is done raising rates.
“Slower inflation and financial markets anticipating the potential end of the Fed’s hiking cycle are both behind the recent decline in rates,” says Joel Kan, deputy chief economist at the Mortgage Bankers Association.
The sharp drop in mortgage rates eases the housing affordability squeeze. It also bodes well for a housing market that has been sluggish since 2022. “These lower rates will bring both active buyers and sellers into the market, eager to get out ahead of the traditionally busier spring market,” says Lisa Sturtevant, chief economist at Bright MLS, a listing service in the mid-Atlantic region.
The 30-year fixed mortgages in this week’s survey had an average total of 0.32 discount and origination points. (Discount points are a way for borrowers to reduce the mortgage rate, while origination points are fees a lender charges to create, review and process your loan.)
Over the past 52 weeks, the benchmark 30-year fixed-rate mortgage averaged 6.99 percent. A year ago, the 30-year fixed-rate mortgage was 6.63 percent. Four weeks ago, that rate was 7.66 percent. The 30-year fixed-rate average for this week is 0.61 percentage points higher than the 52-week low of 6.27 percent.
As for other types of loans:
The national median family income for 2023 is $96,300, according to the U.S. Department of Housing and Urban Development, and the median price of an existing home sold in November 2023 was $387,600, according to the National Association of Realtors. Based on a 20 percent down payment and a mortgage rate of 6.88 percent, the monthly payment of $2,038 amounts to 25 percent of the typical family’s monthly income.
The sharp rise in mortgage rates over the past two years has squeezed affordability and sparked a slowdown in home sales. First-time buyers are especially challenged by this market. Home prices haven’t fallen significantly, and values are unlikely to decline, given the shortage of homes for sale.
“Higher mortgage rates have a dual impact on the housing market: reducing affordability for buyers and strengthening the rate lock-in for sellers,” says Odeta Kushi, deputy chief economist at First American. “The combination of reduced affordability and increased strength of the rate lock-in effect is likely to continue to suppress home sales because you can’t buy what’s not for sale, even if you can afford it.”
Reflecting the affordability squeeze, the median household income for homebuyers jumped to $107,000 in 2023 from $88,000 last year, according to the National Association of Realtors’ 2023 Profile of Home Buyers and Sellers.
Economists expected to see mortgage rates decrease by the end of 2023, but the strength of the U.S. economy has thrown a wrinkle into those predictions. Now, though, things finally seem to be cooling, especially 10-year Treasury yields.
Mortgage rates are also chained to inflation, a metric the Fed has been moving to control. At its September and November meetings, the central bank opted to keep rates unchanged. While the Fed doesn’t directly set fixed mortgage rates, it does set the tone of the interest-rate environment — and as the central bank has boosted its policy rate from zero in early 2022 to a range of 5.25 percent to 5.5 percent now, mortgage rates have followed suit.
“There is room for mortgage rates to fall further,” Sturtevant says. “The gap between the 10-year Treasury yield and the 30-year fixed rate mortgage rate is historically around 180 basis points. While the gap has narrowed somewhat, the 30-year mortgage rate remains 280 basis points higher than the bond yield.”
Learn more about where rates could be headed in our December 2023 mortgage rate forecast.
Methodology
The Bankrate.com national survey of large lenders is conducted weekly. To conduct the National Average survey, Bankrate obtains rate information from the 10 largest banks and thrifts in 10 large U.S. markets. In the Bankrate.com national survey, our Market Analysis team gathers rates and/or yields on banking deposits, loans and mortgages. We’ve conducted this survey in the same manner for more than 30 years, and because it’s consistently done the way it is, it gives an accurate national apples-to-apples comparison. Our rates differ from other national surveys, in particular Freddie Mac’s weekly published rates. Each week Freddie Mac surveys lenders on the rates and points based on first-lien prime conventional conforming home purchase mortgages with a loan-to-value of 80 percent. “Lenders surveyed each week are a mix of lender types — thrifts, credit unions, commercial banks and mortgage lending companies — is roughly proportional to the level of mortgage business that each type commands nationwide,” according to Freddie Mac.
Source: finance.yahoo.com
Mortgage rates dropped again this week, according to Bankrate’s national survey.
The average rate on 30-year fixed mortgages plummeted to 6.88% this week, down from 7.21% the previous week, according to Bankrate’s weekly national survey of large lenders.
The average rate on 30-year home loans topped 8% as recently as October. The sharp drop in mortgage rates came after the Federal Reserve said last week that it expects three rate cuts in 2024. The Fed’s long-awaited pivot was spurred by a number of factors, including a slowing job market and signs that the central bank’s ongoing war on inflation is working.
Meanwhile, yields on 10-year Treasury bonds, an informal benchmark for 30-year mortgage rates, have dropped from 5% to less than 4% in recent weeks.
The Fed doesn’t directly control mortgage rates, but it plays a pivotal role. The central bank sets policy that affects the cost of home loans. At the conclusion of its latest meeting on Dec. 13, the Federal Open Markets Committee decided to leave rates unchanged. Now, economists say, it appears that the central bank is done raising rates.
“Slower inflation and financial markets anticipating the potential end of the Fed’s hiking cycle are both behind the recent decline in rates,” says Joel Kan, deputy chief economist at the Mortgage Bankers Association.
The sharp drop in mortgage rates eases the housing affordability squeeze. It also bodes well for a housing market that has been sluggish since 2022. “These lower rates will bring both active buyers and sellers into the market, eager to get out ahead of the traditionally busier spring market,” says Lisa Sturtevant, chief economist at Bright MLS, a listing service in the mid-Atlantic region.
What happened to mortgage rates this week
The 30-year fixed mortgages in this week’s survey had an average total of 0.32 discount and origination points. (Discount points are a way for borrowers to reduce the mortgage rate, while origination points are fees a lender charges to create, review and process your loan.)
Over the past 52 weeks, the benchmark 30-year fixed-rate mortgage averaged 6.99%. A year ago, the 30-year fixed-rate mortgage was 6.63%. Four weeks ago, that rate was 7.66%. The 30-year fixed-rate average for this week is 0.61 percentage points higher than the 52-week low of 6.27%.
As for other types of loans:
—The 15-year fixed-rate mortgage was 6.21%, down from 6.57% from a week ago.
—The 5/6 adjustable-rate mortgage (ARM) was 6.95%, down from 7.1% a week ago.
—The 30-year fixed-rate jumbo mortgage was 6.93%, down from 7.19% a week ago.
How mortgage rates affect home affordability
The national median family income for 2023 is $96,300, according to the U.S. Department of Housing and Urban Development, and the median price of an existing home sold in November 2023 was $387,600, according to the National Association of Realtors. Based on a 20% down payment and a mortgage rate of 6.88%, the monthly payment of $2,038 amounts to 25% of the typical family’s monthly income.
The sharp rise in mortgage rates over the past two years has squeezed affordability and sparked a slowdown in home sales. First-time buyers are especially challenged by this market. Home prices haven’t fallen significantly, and values are unlikely to decline, given the shortage of homes for sale.
“Higher mortgage rates have a dual impact on the housing market: reducing affordability for buyers and strengthening the rate lock-in for sellers,” says Odeta Kushi, deputy chief economist at First American. “The combination of reduced affordability and increased strength of the rate lock-in effect is likely to continue to suppress home sales because you can’t buy what’s not for sale, even if you can afford it.”
Reflecting the affordability squeeze, the median household income for homebuyers jumped to $107,000 in 2023 from $88,000 last year, according to the National Association of Realtors’ 2023 Profile of Home Buyers and Sellers.
Will mortgage rates go down?
Economists expected to see mortgage rates decrease by the end of 2023, but the strength of the U.S. economy has thrown a wrinkle into those predictions. Now, though, things finally seem to be cooling, especially 10-year Treasury yields.
Mortgage rates are also chained to inflation, a metric the Fed has been moving to control. At its September and November meetings, the central bank opted to keep rates unchanged. While the Fed doesn’t directly set fixed mortgage rates, it does set the tone of the interest-rate environment — and as the central bank has boosted its policy rate from zero in early 2022 to a range of 5.25% to 5.5% now, mortgage rates have followed suit.
“There is room for mortgage rates to fall further,” Sturtevant says. “The gap between the 10-year Treasury yield and the 30-year fixed rate mortgage rate is historically around 180 basis points. While the gap has narrowed somewhat, the 30-year mortgage rate remains 280 basis points higher than the bond yield.”
Methodology
The Bankrate.com national survey of large lenders is conducted weekly. To conduct the National Average survey, Bankrate obtains rate information from the 10 largest banks and thrifts in 10 large U.S. markets. In the Bankrate.com national survey, our Market Analysis team gathers rates and/or yields on banking deposits, loans and mortgages. We’ve conducted this survey in the same manner for more than 30 years, and because it’s consistently done the way it is, it gives an accurate national apples-to-apples comparison. Our rates differ from other national surveys, in particular Freddie Mac’s weekly published rates. Each week Freddie Mac surveys lenders on the rates and points based on first-lien prime conventional conforming home purchase mortgages with a loan-to-value of 80%. “Lenders surveyed each week are a mix of lender types — thrifts, credit unions, commercial banks and mortgage lending companies — is roughly proportional to the level of mortgage business that each type commands nationwide,” according to Freddie Mac.
Source: gmtoday.com
Mortgage demand increased last week as mortgage rates fell to their lowest levels since August 2023, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey.
For the week ending December 1, total mortgage applications increased 2.8% compared to the prior week, the survey showed. The results include an adjustment for the observance of the Thanksgiving holiday.
mortgage rates, the rates remain high and have kept conditions challenging for both prospective homebuyers and homeowners looking to sell. They have also continued to suppress refinance activity.
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“Mortgage rates declined last week, with the 30-year fixed-rate mortgage falling to 7.17 percent – the lowest level since August 2023,” said Joel Kan, MBA vice president and deputy chief economist. “Slower inflation, and financial markets anticipating the potential end of the Fed’s hiking cycle, are both behind the recent decline in rates.”
(Story continues below)
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The Market Composite Index, which measures mortgage loan application volume, increased 2.8% on a seasonally adjusted basis from the prior week, and decreased 43% on an unadjusted basis, MBA said.
The Purchase Index decreased 0.3% on a seasonally adjusted basis, compared to the prior week. On an unadjusted basis, the index increased 35% from the prior week and fell 17% from the same week a year ago.
The Refinance Index, which measures refinancing and prepayment activity, increased 14% from the prior week and was 10% higher than the same week a year ago. The refinance share of mortgage activity increased to 34.7% of total applications from 30.6% the previous week.
The FHA share of total applications increased to 15% from 13.5% the prior week. The VA share increased to 12.8%, from 12.6% in the week prior, and the USDA share remained unchanged at 0.5% from the week prior.
“Refinance applications saw the strongest week in two months, increasing on a year-over-year basis for the second consecutive week for the first time since late 2021,” Kan said. “The overall level of refinance applications is still very low, but recent increases could signal that 2023 was the low point in this cycle for refinance activity, consistent with our originations forecast. Purchase applications remained 17 percent lower than a year ago, held back by low inventory and still-challenging affordability conditions.”
Source: kiplinger.com
Falling mortgage rates last week brought increased demand.
Total home loan applications increased 2.8% for the week ending Dec. 1 compared to the previous week, according to data from the Mortgage Bankers Association (MBA). The 30-year fixed-rate mortgage averaged 7.17% last week.
Slower inflation and the confidence financial markets have that we are nearing the end of the Fed’s hiking cycle has brought mortgage rates to the lowest level since August.
Purchase applications rose by 35% week-over-week on an unadjusted basis, though they were 17% lower than a year ago. According to Joel Kan, MBA’s vice president and deputy chief economist, they were mostly held back by “low inventory and still-challenging affordability conditions.”
Meanwhile, refinance applications posted their strongest week in two months. The refinance index rose by 14% on a weekly basis and was 10% higher than a year ago. Refinance applications exceeded their 2022 levels for the second week in a row, a first since late 2021.
“The overall level of refinance applications is still very low, but recent increases could signal that 2023 was the low point in this cycle for refinance activity, consistent with our originations forecast,” Kan said in a statement.
The adjustable-rate mortgage (ARM) share of activity decreased to 7.4% of total applications, down from 8.1% last week.
The share of Federal Housing Administration (FHA) loan activity increased to 15%, down from 13.5% the week prior. The share of Department of Veterans Affairs (VA) loan activity was 12.8%, up from 12.6% over the previous week, while the share of U.S. Department of Agriculture (USDA) loan activity remained unchanged at 0.5%.
Source: housingwire.com
Mortgage rates dropped again this week, according to Bankrate’s national survey.
The average rate on 30-year fixed mortgages retreated to 7.23 percent this week, down from 7.41 percent the previous week, according to Bankrate’s weekly national survey of large lenders.
The recent reprieve could signal a prolonged drop in mortgage rates, housing economists say. The average rate on 30-year home loans in October topped 8 percent, but that’s changing because of a number of factors, including a slowing job market and signs that the Federal Reserve’s ongoing war on inflation is working.
“Part of it is the Federal Reserve is pausing on interest rate hikes,” says Lisa Sturtevant, chief economist at Bright MLS, a real estate listing service in the Mid-Atlantic region. “Of course, mortgage rates are affected by things other than what the Fed does. For example, mortgage applications are down, and lenders are competing for a shrinking pool of applicants.”
Meanwhile, yields on 10-year Treasury bonds, an informal benchmark for 30-year mortgage rates, have dropped from 5 percent to less than 4.2 percent in recent weeks.
The Fed doesn’t directly control mortgage rates, but it plays a pivotal role. The central bank sets policy that affects the cost of home loans. At the conclusion of its latest meeting on Nov. 1, the Federal Open Markets Committee decided to leave rates unchanged. Now, economists say, it appears that the central bank is done raising rates.
“Slower inflation and financial markets anticipating the potential end of the Fed’s hiking cycle are both behind the recent decline in rates,” says Joel Kan, deputy chief economist at the Mortgage Bankers Association.
The 30-year fixed mortgages in this week’s survey had an average total of 0.29 discount and origination points. (Discount points are a way for borrowers to reduce the mortgage rate, while origination points are fees a lender charges to create, review and process your loan.)
Over the past 52 weeks, the benchmark 30-year fixed-rate mortgage averaged 6.97 percent. A year ago, the 30-year fixed-rate mortgage was 6.62 percent. Four weeks ago, that rate was 7.69 percent. The 30-year fixed-rate average for this week is 0.96 percentage points higher than the 52-week low of 6.27 percent.
As for other types of loans:
The national median family income for 2023 is $96,300, according to the U.S. Department of Housing and Urban Development, and the median price of an existing home sold in October 2023 was $391,800, according to the National Association of Realtors. Based on a 20 percent down payment and a mortgage rate of 7.23 percent, the monthly payment of $2,134 amounts to 27 percent of the typical family’s monthly income.
The sharp rise in mortgage rates over the past two years has squeezed affordability and sparked a slowdown in home sales. First-time buyers are especially challenged by this market. Home prices haven’t fallen significantly, and values are unlikely to decline, given the shortage of homes for sale.
“Higher mortgage rates have a dual impact on the housing market: reducing affordability for buyers and strengthening the rate lock-in for sellers,” says Odeta Kushi, deputy chief economist at First American. “The combination of reduced affordability and increased strength of the rate lock-in effect is likely to continue to suppress home sales because you can’t buy what’s not for sale, even if you can afford it.”
Reflecting the affordability squeeze, the median household income for homebuyers jumped to $107,000 in 2023 from $88,000 last year, according to the National Association of Realtors’ 2023 Profile of Home Buyers and Sellers.
Economists expected to see mortgage rates decrease by the end of 2023, but the strength of the U.S. economy has thrown a wrinkle into those predictions. Now, though, things finally seem to be cooling, especially 10-year Treasury yields.
Lawrence Yun, chief economist at the National Association of Realtors, expects mortgage rates to fall below 7 percent during the winter months. “I believe consumer price inflation will be much lower, and that will allow the Federal Reserve to cut interest rates,” says Yun.
Mortgage rates are also chained to inflation, a metric the Fed has been moving to control. At its September and November meetings, the central bank opted to keep rates unchanged. While the Fed doesn’t directly set fixed mortgage rates, it does set the tone of the interest-rate environment — and as the central bank has boosted its policy rate from zero in early 2022 to a range of 5.25 percent to 5.5 percent now, mortgage rates have followed suit.
“There is room for mortgage rates to fall further,” Sturtevant says. “The gap between the 10-year Treasury yield and the 30-year fixed rate mortgage rate is historically around 180 basis points. While the gap has narrowed somewhat, the 30-year mortgage rate remains 280 basis points higher than the bond yield.”
Learn more about where rates could be headed in our December 2023 mortgage rate forecast.
The Bankrate.com national survey of large lenders is conducted weekly. To conduct the National Average survey, Bankrate obtains rate information from the 10 largest banks and thrifts in 10 large U.S. markets. In the Bankrate.com national survey, our Market Analysis team gathers rates and/or yields on banking deposits, loans and mortgages. We’ve conducted this survey in the same manner for more than 30 years, and because it’s consistently done the way it is, it gives an accurate national apples-to-apples comparison. Our rates differ from other national surveys, in particular Freddie Mac’s weekly published rates. Each week Freddie Mac surveys lenders on the rates and points based on first-lien prime conventional conforming home purchase mortgages with a loan-to-value of 80 percent. “Lenders surveyed each week are a mix of lender types — thrifts, credit unions, commercial banks and mortgage lending companies — is roughly proportional to the level of mortgage business that each type commands nationwide,” according to Freddie Mac.
Source: bankrate.com
As high interest rates and housing prices weigh down potential home buyers, the Neighborhood Homes Investment Act could be on the way to help.
The proposed federal initiative would enable better affordability for home buyers by injecting $16 billion for adding more housing stock to the market and $10.1 billion for down payment assistance.
While it still needs to pass all three branches of government, it’s helpful to understand the legislation if it gets signed into law. Here’s what you need to know.
Check your home buying eligibility. Start here
Introduced in 2023, the Neighborhood Homes Investment Act (NHIA) is a bipartisan bill aiming to boost housing affordability through increased development and down payment assistance.
As it currently stands, it would devote $16 billion toward the building and rehabilitation of an estimated 400,000 homes, according to a White House statement. The proposal would also allocate $10 billion in down payment assistance and a $100 million pilot program to supplement opportunities for first-generation and/or low wealth first-time homebuyers.
Verify your home buying eligibility. Start here
“Everyone deserves a safe and affordable place to call home. Our bipartisan tax credit will drive housing investments and revitalize neighborhoods … while keeping them affordable for low- and moderate-income families,” Senator Ben Cardin (D-Md.) said in a press release. “This credit will allow individuals in these communities to build equity and wealth for their families.”
The ongoing dearth of available for-sale properties has held back the entire housing market. Coupled with the rapid mortgage rate growth from 2023, fewer borrowers can afford homeownership and fewer homeowners want to sell.
“The number of homes that are available for sale is the lowest or close to the lowest it’s ever been,” said Mortgage Bankers Association Deputy Chief Economist Joel Kan. “A lot of that has been driven by the lock-in effect — many borrowers have lower mortgage rates than what’s being offered right now, so they’re just not willing to sell or list their homes.”
As of November 2023, the Biden Neighborhood Homes Investment Act has not been passed, so the funding is not yet available.
Congress still needs to approve the proposed legislation before the President signs it into law. There is no set timeline for the act to pass. It is possible that it could be passed in the near future, but it is also possible that it could be delayed or even defeated in the process.
Even more federal help for borrowers could potentially be on the way as well. Similar to the NHIA, two other notable bills intended to help home buyers hang in bureaucratic limbo.
The First-Time Home Buyer Tax Credit would provide up to $15,000 in refundable tax credit to first-time borrowers. As long as the house isn’t sold within four years, the credit won’t need to be repaid. The second is the Downpayment Toward Equity Act. If signed into law, this would give eligible first-time home buyers a $25,000 cash grant to put toward their purchase.
Buying property is a major milestone and often the largest financial decision people make.
Check your home buying options. Start here
While these proposed bills could potentially alleviate some affordability issues, plenty of helpful solutions already exist if you’re in the market to buy your first home. These come in the form of state assistance programs and special mortgages.
First-time home buyer loans are specifically designed with more favorable terms for the borrower, aimed to make homeownership more attainable.
Below is a quick rundown of these loans and their base qualifications:
Program | Minimum Credit Score | Down Payment Requirement | Other Requirements |
FHA Loans | 580 (with 3.5% down) | 3.5%-10% | Mortgage insurance is required. Property must meet certain standards |
Conventional 97 | 620 | 3% | At least one borrower must be a first-time home buyer. Private Mortgage Insurance may be required |
Home Possible | 660 | 3% | Income limits apply. Homeownership education required |
HomeReady | 620 | 3% | Income limits apply. Homeownership education required |
USDA Loans | 640 | 0% | Must be in a USDA-eligible rural area. Income limits apply |
VA Loans | Varies by lender | 0% | Available to veterans, active-duty service members, and certain members of the National Guard or Reserves |
Broken down on a more local level, every state offers its own first-time home buyer program. These programs are customized to their markets, fitting the needs of the buyers within them.
Verify your low-down-payment loan options. Start here
Additionally, down payment assistance (DPA) can provide a big hand in clearing the financial hurdles to homeownership. The best part is you don’t necessarily need to be a first-time buyer to qualify for some DPA programs.
Every state has its own DPA to potentially take advantage of, found through local housing agencies, lenders, and city and state websites.
The housing market would get a much needed inventory boost if the Neighborhood Homes Investment Act gets passed. It would also inject more capital into down payment assistance programs for first-time home buyers.
In the meantime, those looking to buy their first home can and should still explore their loan options and see what financial assistance they may qualify for. Following a step-by-step guide for first-time home buying can also help you set expectations and get everything you need in order.
If you’re ready to begin your path to homeownership, contact a local lender today.
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Source: themortgagereports.com
Lower mortgage rates have brought increased mortgage demand. Total home loan applications increased 0.3% for the week ending Nov. 24 compared to the previous week, according to data from the Mortgage Bankers Association (MBA).
Mortgage rates for the 30-year fixed loan averaged 7.29% as of Nov. 22, falling 15 basis points in one week, according to Freddie Mac‘s Primary Mortgage Market Survey. Over the past six weeks, mortgage rates have fallen by more than 50 basis points.
“The purchase market remains depressed because of the ongoing, low supply of existing homes on the market,” Joel Kan, MBA’s vice president and deputy chief economist, said in a statement. “Similarly, refinance activity will likely be muted for some time, even with the recent decline in rates, as many borrowers locked in much lower rates in 2020 and 2021.”
The decline in mortgage rates spurred a small increase in purchase applications last week; they ticked up 5% on a seasonally adjusted basis from the prior week. However, activity was 20% lower than a year ago on an unadjusted basis. Meanwhile, refinance activity slumped, decreasing 9% from the previous week. However, it was 1% higher than the same week a year ago. The refinance share of mortgage activity fell to 30.6% of total applications, down from 32.4% the previous week.
The adjustable-rate mortgage (ARM) share of activity decreased to 8.1% of total applications.
The share of Federal Housing Administration (FHA) loan activity decreased to 13.5%, down from 14.8% the week prior. The share of Department of Veterans Affairs (VA) loan activity was 12.6%, down from 11.3% over the previous week, while the share of U.S. Department of Agriculture (USDA) loan activity rose to 0.5%, up from 0.4% last week.
On Tuesday, the FHFA announced that its new baseline conforming loan limit for mortgages backed by Fannie Mae and Freddie Mac in 2024 will be $766,550, up 5.5% compared to the current limit of $726,200.
Source: housingwire.com