Lawrence Yun

Apache is functioning normally

The National Association of Realtors (NAR) releases two widely followed home sales reports.  Existing Home Sales measure transactions of homes other than new construction (i.e. previously owned and occupied homes).  The Pending Sales index is an advance indicator for Existing Homes.  It measures contract signings but not closed sales.

Through a combination of historically low affordability and inventory, both metrics have been operating at the lowest levels in more than a decade (not including the temporary drop in pending sales seen at the onset of pandemic lockdowns). Today’s pending sales update kept the index perfectly unchanged at those long term lows.

There were small regional variations as follows:

  • Northeast… +0.8% versus last month (down 6.4% from last year)
  • Midwest …. +0.5% versus last month (down 2.2% from last year)
  • South……… -2.3% versus last month (down 6.5% from last year)
  • West………. +4.2% versus last month (down 4.9% from last year)

As seen in the chart above, the sharpest deceleration in the pace of sales is likely behind us.  Recent changes have been much smaller by comparison.  NAR is hopeful for 2024, citing the recent decline in mortgage rates.

Additionally, NAR’s Chief Economist Lawrence Yun noted “although declining mortgage rates did not induce more homebuyers to submit formal contracts in November, it has sparked a surge in interest, as evidenced by a higher number of lockbox openings.”

Source: mortgagenewsdaily.com

Apache is functioning normally

If you spent your teenage years waiting anxiously for one of your siblings to get out of the shower, the idea of selling your spacious, multi-bathroom home and moving into a smaller house or condo may feel like a reversal of fortune.

Yet for many retirees, downsizing makes financial and practical sense. Younger baby boomers — those currently ranging in age from 57 to 66 — made up 17% of recent home buyers, while older boomers — ages 67 to 75 — accounted for 12%, according to a 2022 report from the National Association of Realtors Research Group. Boomers’ primary reasons for buying a home were to be closer to friends and family, as well as a desire to move into a smaller home, the report said. Both younger and older boomers were more likely than others to purchase a home in a small town, and younger boomers were the most likely to buy in a rural area.

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For retirees Fred and Shelby Bivins, selling their home in Green Valley, Ariz., will enable them to realize their dream of traveling in retirement. The Bivinses have put their 2,050-square-foot Arizona home on the market and plan to relocate to their 1,600-square-foot summer condo in Fish Creek, Wis., a small community about 50 miles from Green Bay. They plan to live in Wisconsin in the spring and summer and spend the winter months in a short-term rental in Arizona, where they have family.  

Fred, 65, says the decision to downsize was precipitated by a two-month stay in Portugal last year, one of several countries they hope to visit while they’re still healthy enough to travel. “We’ve had Australia and New Zealand on our list for many years, even when we were working,” says Shelby, 68. The Bivinses are also considering a return visit to Portugal. Eliminating the cost of maintaining their Arizona home will free up funds for those trips. 

With help from Chris Troseth, a certified financial planner based in Plano, Texas, the Bivinses plan to invest the proceeds from the sale of their home in a low-risk portfolio. Once they’re done traveling and are ready to settle down, they intend to use that money to buy a smaller home in Arizona. “Selling their primary home will generate significant funds that can be reinvested to support their lifestyle now and in the future,” Troseth says. “Downsizing for this couple will be a positive on all fronts.”

Challenges for downsizers 

For all of its appeal, downsizing in today’s market is more complicated than it was in the past. With 30-year fixed interest rates on mortgages recently approaching 8%, many younger homeowners who might otherwise upgrade to a larger home are unwilling to sell, particularly if it means giving up a mortgage with a fixed rate of 3% or less. More than 80% of consumers surveyed in September by housing finance giant Fannie Mae said they believe this is a bad time to buy a home and cited mortgage rates as the top reason for their pessimism. “This indicates to us that many homeowners are probably not eager to give up their ‘locked-in’ lower mortgage rates anytime soon,” Fannie Mae said in a statement. As a result, buyers are competing for limited stock of smaller homes, says Hannah Jones, senior economic research analyst for Realtor.com. 

Here, though, many retirees have an advantage, Jones says. Rising rates have priced many younger buyers out of the market and made it more difficult for others to obtain approval for a loan. That’s not an issue for retirees who can use proceeds from the sale of their primary home to make an all-cash offer, which is often more attractive to sellers. 

Retirees also have the ability to cast a wider net than younger buyers, whose choice of homes is often dictated by their jobs or a desire to live in a well-rated school district. While the U.S. median home price has soared more than 40% since the beginning of the pandemic, prices have risen more slowly in parts of the Northeast and Midwest, Jones says. “We have seen the popularity of Midwest markets grow over the last few months because out of all of the regions, the Midwest tends to be the most affordable,” she says. “You can still find affordable homes in areas that offer a lot of amenities.” 

Meanwhile, selling your home may be somewhat more challenging than it was during the height of the pandemic, when potential buyers made offers on homes that weren’t even on the market. The Mortgage Bankers Association reported in October that mortgage purchase applications slowed to the lowest level since 1995, as the rapid rise in mortgage rates has pushed many potential buyers out of the market. Sales of previously owned single-family homes fell a seasonably adjusted 2% in September from August and were down 15.4% from a year earlier, according to the National Association of Realtors. “As has been the case throughout this year, limited inventory and low housing affordability continue to hamper home sales,” NAR chief economist Lawrence Yun said in a statement. 

However, because of tight inventories, there’s still demand for homes of all sizes, Jones says, so if your home is well maintained and move-in ready, you shouldn’t have difficulty selling it. “The market isn’t as red-hot as it was during the pandemic, but there’s still a lot to be gained by selling now,” she says.

Other costs and considerations 

If you live in an area where real estate values have soared, moving to a less expensive part of the country may seem like a logical way to lower your costs in retirement. While the median home price in the U.S. was $394,300 in September, there’s wide variation in individual markets, from $1.5 million in Santa Clara, Calif., to $237,000 in Davenport, Iowa. But before you up and move to a lower-cost locale, make sure you take inventory of your short- and long-term expenses, which could be higher than you expect. 

Selling your current home, even at a significant profit, means you will incur costs, including those to update, repair and stage it, as well as a real estate agent’s commission (typically 5% to 6% of the sale price). In addition, ongoing costs for your new home will include homeowners insurance, property taxes, state and local taxes, and homeowners association or condo fees.

Nicholas Bunio, a certified financial planner in Berwyn, Pa., says one of his retired clients moved to Florida and purchased a home that was $100,000 less expensive than her home in New Jersey. Florida is also one of nine states without income tax, which makes it attractive to retirees looking to relocate. Once Bunio’s client got there, however, she discovered that she needed to spend $50,000 to install hurricane-proof windows. Worse, the only home-owners insurance she could find was through Citizens Property Insurance, the state-sponsored insurer of last resort, and she’ll pay about $8,000 a year for coverage. Her property taxes were higher than she expected, too. When it comes to lowering your cost of living after you downsize, “it’s not as simple as buying a cheaper house,” Bunio says 

Before moving across the country, or even across the state, you should also research the availability of medical care. “Oftentimes, those considerations are secondary to things like proximity to family or leisure activities,” says John McGlothlin, a CFP in Austin, Texas. McGlothlin says one of his clients moved to a less expensive rural area that’s nowhere near a sizable medical facility. Although that’s not a problem now, he says, it could become a problem when they’re older. 

If you use original Medicare, you won’t lose coverage if you move to another state. But if you’re enrolled in Medicare Advantage, which is offered by private insurers as an alternative to original Medicare, you may have to switch plans to avoid losing coverage. To research the availability of doctors, hospitals and nursing homes in a particular zip code, go to www.medicare.gov/care-compare.

At a time when many seniors suffer from loneliness and isolation, a sense of community matters, too. Bunio recounts the experience of a client who considered moving from Philadelphia to Phoenix after her daughter accepted a job there. The cost of living in Phoenix is lower, but the client changed her mind after visiting her daughter for a few months. “She has no friends in Phoenix,” he says. “She’s going on 61 and doesn’t want to restart life and make brand-new connections all over again.”

Time is on your side 

Unlike younger home buyers, who may be under pressure to buy a place before starting a new job or enrolling their kids in school, downsizers usually have plenty of time to consider their options and research potential downsizing destinations. Once you’ve settled on a community, consider renting for a few months to get a feel for the area and a better idea of how much it will cost to live there. Bunio says some of his clients who are behind on saving for retirement or have high health care costs have sold their homes, invested the proceeds and become permanent renters. This strategy frees them from property taxes, homeowners insurance, homeowners association fees and other expenses associated with homeownership 

The boom in housing values has boosted rental costs, as the shortage of affordable housing increased demand for rental properties. But thanks to the construction of new rental properties in several markets, the market has softened in recent months, according to Zumper, an online marketplace for renters and landlords. A Zumper survey conducted in October found that the median rent for a one-bedroom apartment fell 0.4% from September, the most significant monthly decline this year. 

In 75 of the 100 cities Zumper surveyed, the median rent for a one-bedroom apartment was flat or down from the previous month. (For more on the advantages of renting in retirement, see “8 Great Places to Retire—for Renters,” Aug.)

Aging in place

Even if you opt to age in place, you can tap your home equity by taking out a home equity line of credit, a home equity loan or a reverse mortgage. At a time when interest rates on home equity lines of credit and loans average around 9%, a reverse mortgage may be a more appealing option for retirees. With a reverse mortgage, you can convert your home equity into a lump sum, monthly payments or a line of credit. You don’t have to make principal or interest payments on the loan for as long as you remain in the home. 

To be eligible for a government-insured home equity conversion mortgage (HECM), you must be at least 62 years old and have at least 50% equity in your home, and the home must be your primary residence. The maximum payout for which you’ll qualify depends on your age (the older you are, the more you’ll be eligible to borrow), interest rates and the appraised value of your home. In 2024, the maximum you could borrow was $1,149,825.

There’s no restriction on how homeowners must spend funds from a reverse mortgage, so you can use the money for a variety of purposes, including making your home more accessible, generating additional retirement income or paying for long-term care. You can estimate the value of a reverse mortgage on your home at www.reversemortgage.org/about/reverse-mortgage-calculator.

Up-front costs for a reverse mortgage are high, including up to $6,000 in fees to the lender, 2% of the mortgage amount for mortgage insurance, and other fees. You can roll these costs into the loan, but that will reduce your proceeds. For that reason, if you’re considering a move within the next five years, it’s usually not a good idea to take out a reverse mortgage.

Another drawback: When interest rates rise, the amount of money available from a reverse mortgage declines. Unless you need the money now, it may make sense to postpone taking out a reverse mortgage until the Federal Reserve cuts short-term interest rates, which is unlikely to happen until late 2024 (unless the economy falls into recession before that). Even if interest rates decline, they aren’t expected to return to the rock-bottom levels seen over the past 15 years, according to a forecast by The Kiplinger Letter. And with inflation still a concern, big rate cuts such as those seen in response to recessions and financial crises over the past two decades are unlikely. 

Note: This item first appeared in Kiplinger’s Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Source: kiplinger.com

Apache is functioning normally

Last week’s DataDigest offered readers a host of housing forecasts from industry experts at banks, trade associations and more, the thrust of which was housing professionals should expect a modestly better year of sales thanks to retreating mortgage rates in the year to come.

A day after publication, Federal Reserve officials made several of their own forecasts – most importantly that the “appropriate policy path” for the Federal funds rate next year will be for it to decrease 0.75 percentage points, implying three cuts of 0.25 percentage points.

Those economic projections from the 19 members of the Federal Open Markets Committee show both a tighter consensus of opinions and a lower target Federal funds rate than the projections the FOMC made in September.

Following the Fed meeting last Thursday, mortgage rates dropped. Then they dropped. And then they dropped some more.

In fact, they dropped so much that they reached 6.69% on Dec. 15, just 0.07 percentage points above the average of four forecasts for the third quarter of 2024 and roughly 0.6 percentage points below the average forecast for the first quarter of the new year.

That drop – 0.3 percentage points from Dec. 11 to Dec. 15 – is hardly trivial for forecasters. In addition to predicting mortgage rates, they based their predictions for home sales and home starts largely on mortgage rates, as several experts have stated:

“The story this year and the story next year depend on two variables: mortgage rates and inventory.”

Lawrence Yun, chief economist for the National Association of Realtors

High mortgage rates depress not only homebuyer demand but home sellers’ willingness to put their homes on the market:

“High mortgage rates are the main reason for the low level of sales. Higher interest rates make it more expensive to purchase a home and more difficult to qualify for a mortgage. The sharp increase in the mortgage rate from its lowest level on record in 2021 to a 23-year high has caused the vast majority of homeowners to become ‘locked in’ to their existing mortgages.”

Cristian deRitis, deputy chief economist at Moody’s Analytics

So with mortgage rates so important to outcomes next year and mortgage rates now at levels that are far ahead of predicted levels, are forecasts for next year already off the rails?

What the Fed said

The Federal Reserve did not announce rate cuts or provide a schedule of future rate cuts.

Instead, the Fed kept the target Fed funds rate at 5.25-5.5% for the fourth consecutive time. It also provided committee members’ forecasts of what would be the appropriate rate in 2024, which was based on their forecasts of inflation, GDP growth and other economic indicators.

The median of these rate forecasts – 4.63% – is what implies three cuts next year, given that it is 0.75 percentage points below the current rate. But Fed Chair Jerome Powell stressed that “these projections are not a Committee decision or plan.”

Powell further noted that although the FOMC believes “we are likely at or near the peak rate for this cycle” of rate hikes, the possibility of another rate hike has not been taken off of the table if inflation does not continue to moderate.

“No one is declaring victory,” he said. “That would be premature, and we can’t be guaranteed of this progress.”

Yet what the market seems to be focusing on is not Powell’s cautionary comments, but his statement that the FOMC had begun discussing rate cuts in their meeting last week, which sparked a wave of optimism across several market sectors.

However, while Powell said, “We’re sort of just at the beginning of that discussion,” New York Fed President John Williams said on CNBC two days after Powell’s comments, “We aren’t really talking about rate cuts right now.”

Cuts were expected

Forecasters were certainly not blindsided by the possibility of the Fed cutting rates next year. Rather, their forecasts are predicated on the assumption that rates will fall.

The National Association of Realtors, for example, made their quarterly predictions for 2024 on October 30, long before last week’s Fed meeting, and predicted three cuts to the Fed funds rate in 2024 – with the rate reaching 4.4% by the end of the year.

In NAR’s outlook summit held the day before the FOMC released its forecasts, NAR predicted four cuts next year.

The Fed’s median forecast of 4.6% for 2024, then, is both fewer cuts and a higher funds rate than NAR predicted when it forecast mortgage rates of 7.5-6.9% in the first half of the year and a full-year average mortgage rate of 6.3%.

Similarly, Wells Fargo noted in its forecast made on Nov. 9 that “we look for the FOMC to cut its target range for the federal funds rate by 225 bps [2.25 percentage points] by early 2025, which is more than both Fed policymakers and market participants currently project.” Wells Fargo predicted mortgage rates of 7.2-6.7% in the first half of next year.

In other words, the forecasters expected rate cuts that are more aggressive than the Fed has so far forecasted for 2024 when they predicted mortgage rates of 6.6-7.6% in the first half of 2024.

Mortgage rate movements

For those who regularly watch mortgage rates, this winter’s decline may look familiar. Since October 26, the weekly average rate for a 30-year mortgage has fallen from about 7.8% to just under 7%.

The drop is reminiscent of a similar period a year ago when the weekly average rate fell from about 7.1% to 6.1% from early November through early February.

The decline in rates last year was motivated in part by a market consensus that a recession was imminent, which could in turn prompt rate cuts to stimulate the economy. When the recession proved elusive, mortgage rates about-faced.

The current market consensus seems to reflect optimistic prospects for a “soft landing,” an inflation-crushing economic slowdown that doesn’t prompt a job-loss recession. Lower mortgage rates are just one signal of this optimism; stock prices for tech, banking, real estate and other companies that went out of favor when interest rates were expected to rise have now soared.

Will this year’s favorite market theory fare better than last year’s? Wall Street Journal’s senior markets columnist James Mackintosh, for one, is skeptical.

“What’s surprising to me is that there seems to be so little investor concern that a slow-growing economy will turn into something worse, or that inflation proves stickier than expected,” he wrote.

So where do forecasts stand?

Housing professionals can take heart that forecasters generally believe 2023 was rock bottom for this economic cycle and expect 2024 to be better – but modestly better. Most forecasters don’t expect significant improvement in home sales until mortgage rates fall to 6% or lower.

Although mortgage rates are currently well ahead of forecasters’ outlooks, they are not near 6%, and only time will tell if they continue on their current path or return to recent highs and descend more inline with forecasters’ expectations.

Forecasts can be useful for businesses planning for the year ahead, but only time will tell what 2024 will bring.

Source: housingwire.com

Apache is functioning normally

From high prices to low inventory, potential home buyers know it’s gnarly out there. But if you’re ready for homeownership, the long-term benefit of buying often outweighs the pain of toughing out the search — even these days.

Think of it like your 5 a.m. spin class: You know it’s good for you, even if it takes grit (and leaves you feeling sore).

With some market savvy, you can make the most of today’s challenging conditions. Here’s your game plan for buying a house in 2024.

The challenge: Stubbornly high mortgage rates squeeze shoppers’ buying power

Buyers have been at the mercy of mortgage rates’ meteoric rise, holding on as the average 30-year fixed rate climbed from 3% to nearly 7% in 2022. In October 2023, rates topped 8% for the first time since 2000 — a surprise even many top economists didn’t predict. But throughout November, they dropped slightly, landing at an average of 7.03% for the week ending Dec. 7.

Higher interest rates make it more expensive to get a mortgage. To put that in perspective: Let’s say you can afford $1,800 per month in principal and interest. At a 3% interest rate, you could afford to borrow $426,900. But at a 7% interest rate, you could afford to borrow only $270,600. Why? Because you’d pay a full $156,300 more in mortgage interest with the higher rate.

For now, economic signals suggest more positive news for buyers in 2024. Dan Moralez, regional vice president at Dart Bank in Holland, Michigan, points to a cooling economy and the pause on Fed interest rate hikes. “All of that stuff really lends itself to mortgage rates getting better and the cost to borrow getting cheaper,” Moralez says.

Let’s set realistic expectations, though: No experts are forecasting a return to 3% rates anytime soon. More likely, we’ll see the 30-year mortgage rate decline modestly below 7% in the second half of 2024, according to forecasts from the Mortgage Bankers Association and the National Association of Realtors.

Your strategy: Do your research to find the best deal

Don’t let high rates keep you on the sidelines for too long. When rates go down, competition goes up — another reason there’s no time like the present to start house hunting.

And whichever way rates move in 2024, you’ll save money if you shop around. Aim to get an estimate from at least three mortgage lenders. The Consumer Financial Protection Bureau estimates borrowers can save $100 per month (or more) this way. And look at the annual percentage rate, or APR, to understand the total cost of the loan, which includes fees and other charges.

With buyers wincing at high rates, some lenders are advertising “buy now, refinance later” offers. Others are offering temporary buydowns, where the buyer’s effective monthly payment is reduced for a year (or a few). Before signing up for a discount, ask questions to understand how it works. Each option could potentially save money, but Moralez says it could also be “smoke and mirrors” if the flashy deal is offset by higher fees.

“It’s one of those things where I tell folks, ‘There’s no free lunch, OK?’” he says. “You know, somebody is paying for it somewhere.”

The challenge: Low inventory means slim pickings for buyers

The rate of existing home sales is the lowest it’s been in 13 years, according to October 2023 data from the National Association of Realtors (NAR). The current market has a 3.6-month supply of unsold home inventory, meaning it would take listed homes 3.6 months to sell at the current sales pace. A balanced market has a supply of five to six months.

So why aren’t sellers selling? Octavius Smiley-Humphries, a real estate agent with The Smiley Group in Apex, North Carolina, points to higher prices and the “rate lock-in effect.”

“At this point, you’d be paying either double your mortgage for the same price house that you have, or a similar mortgage if you’re trying to even downsize,” he says. “So I think the more intelligent buyer is kind of thinking, ‘What’s the benefit?’ unless you absolutely have to move.”

Some hope: Single-family construction permits are on the rise, with more issued in October 2023 than at any other time in the past year, according to the Federal Reserve Bank of St. Louis, so we’ll see more new houses boosting supply soon. And despite larger shortages, 92% of markets have seen modest inventory growth over the last three months, according to a November 2023 report from ICE Mortgage Technology.

Your strategy: Cast a wider net

You can’t control who puts their house on the market. So focus on what you can change: your expectations.

Let go of the fantasy of finding the perfect home when a “good enough” home can get your foot in the door sooner. That’s especially true for first-time home buyers who are eager to build equity.

“Real estate has always been a really solid investment,” Smiley-Humphries says. “So what you essentially lose by waiting six months or a year could mean tens of thousands of dollars.”

For now, maybe you expand your search to include condos or townhouses. Maybe you settle for fewer bathrooms or a dated interior. Keep your chin up — even if you have to tolerate less square footage or weird linoleum floors for a while, you’ll have equity to remodel or sell in a few years.

The challenge: High prices push affordability to the worst it’s been in almost 40 years

Housing is the least affordable it’s been since 1984, according to a November 2023 report from ICE Mortgage Technology. Why? Home prices are growing faster than income, and on top of that, higher mortgage rates increase the cost of borrowing.

In October 2023, the median existing home sales price climbed to a record high of $391,800, according to the NAR. To buy a median-priced home at that time, buyers would need to shell out $2,567 per month just in principal in interest, ICE estimates. That’s another all-time high since ICE has been keeping track — and nearly double the median monthly payment of $1,327 just two years ago.

Until supply catches up to demand, prices are unlikely to fall. Realtor.com estimates prices will fall less than 2% next year. That’s another reason to jump in now: A big drop in prices could trigger more competition.

Your strategy: Make a budget and stick to it

If you’re Zillow-stalking houses you can’t afford, stop. Instead, channel that energy toward your plan to shop for a house in real life — starting with setting a realistic budget.

First, talk to a financial advisor or use an online calculator to see how much house you can afford. Understand how mortgage lenders will determine your eligibility, including analyzing your credit score, cash savings and monthly debt payments.

Next, find a buyer’s agent who knows how far your budget can go in your local market. An experienced agent can advocate for you and help you snag a good deal.

One bargain-hunting tip: Start searching in the winter, suggests Ellie Kowalchik, a real estate agent who leads the Move2Team with Keller Williams Pinnacle Group in Cincinnati, Ohio.

“There are good houses on the market now that aren’t getting the attention they may get in the spring with more buyer activity,” she says. “Less competition is good for buyers.”

The challenge: Multiple offers are common, and first-time buyers have less cash

More than one in four homes are still selling for above list price, according to October 2023 data from the NAR: 28% of homes sold for above list price that month. Homes for sale spent a median of 23 days on the market and saw an average of 2.5 offers, a sign that competition remains tough.

“Limited housing inventory is significantly preventing housing demand from fully being satisfied,” Lawrence Yun, NAR chief economist, said in a press release. “Multiple offers, of course, yield only one winner, with the rest left to continue their search.”

In general, first-time buyers come to the negotiating table with less cash than repeat buyers, reports the NAR. First-time buyers make a median down payment of 8%, while repeat buyers put down a median 19%.

And nearly one in three (29%) of sales were made in cash, reports the NAR, up slightly from 26% in 2022.

Your strategy: Use leverage where you have it

A good real estate agent can help you craft a strong offer, even if other buyers flash more cash.

Aziz Alhees, a real estate agent with Compass in Pasadena, California, has seen his share of wealthy investors making cash offers. He notes that they tend to bid below asking price since cash sales close faster. The promise of a quick closing is enough to get some sellers to turn down higher offers that ask for more time.

So Alhees competes on speed: With a mortgage preapproval and all other paperwork in hand, he prepares his buyers to close in 14 days.

“We’re not afraid of cash offers anymore,” he says.

On the flip side, if the sellers need more time to move out, a flexible closing timeline can sweeten some deals, too. But don’t waive the home inspection when you’re negotiating. It can be tempting, but you’re only hurting yourself if you later discover expensive problems.

The bottom line: Set realistic expectations

It’s fair to feel bummed out about high costs and low inventory. That’s especially true for first-time buyers who have been putting off their search, only to see the market remaining rough.

The solution: Think long term. Holding out for lower rates likely means you’ll face steeper prices and more competition. So if you’re determined to buy, find a place that suits your needs and budget as-is. Expecting perfection often means setting yourself up for disappointment.

“Sometimes I have clients that think they’re going to hit a home run the very first house they buy,” Moralez says. “And a lot of times I tell clients, well, sometimes it’s OK to be happy just getting on base.”

Source: nerdwallet.com

Apache is functioning normally

National mortgage rates trended lower across all terms compared to a week ago, according to data collected by Bankrate. Rates for 30-year fixed, 15-year fixed, 5/1 ARMs and jumbo loans all declined.

After topping 8 percent in late October, mortgage rates have somewhat moved lower. One big driver: Inflation has cooled, which means the Federal Reserve might end its rate increases. The Fed last hiked its key interest rate in July, which increased borrowing costs on a variety of financial products, including mortgages.

The central bank held firm at its November meeting, indicating it expects rates to stay on the higher side for the foreseeable future.

“Expectations of slower economic growth, moderating inflation and no more Fed interest rate hikes have been a downward influence on mortgage rates,” says Greg McBride, CFA, chief financial analyst for Bankrate.

The slight decline in mortgage rates comes alongside appreciating home prices. Home values have now climbed for eight months in a row, according to the S&P CoreLogic Case-Shiller index for September 2023.

Rates accurate as of December 13, 2023.

The rates listed above are averages based on the assumptions indicated here. Actual rates available across the site may vary. This story has been reviewed by Suzanne De Vita. All rate data accurate as of Wednesday, December 13th, 2023 at 7:30 a.m.

30-year mortgage rate retreats, -0.12%

The average rate for a 30-year fixed mortgage for today is 7.31 percent, a decrease of 12 basis points over the last seven days. A month ago, the average rate on a 30-year fixed mortgage was higher, at 7.75 percent.

At the current average rate, you’ll pay $686.25 per month in principal and interest for every $100,000 you borrow. That’s $8.18 lower, compared with last week.

Standard lending practices defer to the 30-year, fixed-rate mortgage as the go-to for most borrowers buying a home as it allows the borrower to scatter payments out over 30 years, keeping their monthly payment lower.

15-year fixed mortgage rate drops, -0.03%

The average rate for the benchmark 15-year fixed mortgage is 6.70 percent, down 3 basis points over the last seven days.

Monthly payments on a 15-year fixed mortgage at that rate will cost $882 per $100,000 borrowed. That’s clearly much higher than the monthly payment would be on a 30-year mortgage at that rate, but it comes with some big advantages: You’ll come out several thousand dollars ahead over the life of the loan in total interest paid and build equity much faster.

5/1 ARM rate slides, -0.07%

The average rate on a 5/1 ARM is 6.66 percent, down 7 basis points over the last week.

Adjustable-rate mortgages, or ARMs, are home loans that come with a floating interest rate. In other words, the interest rate will change at regular intervals, unlike fixed-rate mortgages. These types of loans are best for those who expect to refinance or sell before the first or second adjustment. Rates could be substantially higher when the loan first adjusts, and thereafter.

While borrowers shunned ARMs during the pandemic days of super-low rates, this type of loan has made a comeback as mortgage rates have risen.

Monthly payments on a 5/1 ARM at 6.66 percent would cost about $643 for each $100,000 borrowed over the initial five years, but could ratchet higher by hundreds of dollars afterward, depending on the loan’s terms.

Jumbo mortgage declines, -0.11%

The average rate for the benchmark jumbo mortgage is 7.37 percent, down 11 basis points over the last seven days. A month ago, the average rate for jumbo mortgages was higher, at 7.77 percent.

At the current average rate, you’ll pay $690.33 per month in principal and interest for every $100,000 you borrow. That’s $7.52 lower, compared with last week.

Refinance rates

30-year mortgage refinance drops, –0.12%

The average 30-year fixed-refinance rate is 7.45 percent, down 12 basis points over the last seven days. A month ago, the average rate on a 30-year fixed refinance was higher, at 7.95 percent.

At the current average rate, you’ll pay $695.79 per month in principal and interest for every $100,000 you borrow. That’s $8.22 lower, compared with last week.

Where are mortgage rates going?

Mortgage rates have done a 180 as of late, dipping back under 8 percent. With inflation cooling and 10-year Treasury yields declining, the 30-year fixed mortgage could head into the 6 percent range by next year, said Lawrence Yun, chief economist of the National Association of Realtors, at the group’s conference in November.

“I believe we’ve already reached the peak in terms of interest rates,” said Yun.

The rates on 30-year mortgages mostly follow the 10-year Treasury, which shifts continuously as economic conditions dictate, while the cost of variable-rate home loans mirror the Fed’s moves. These broader factors influence overall rate movement. As a borrower, you could be quoted a higher or lower rate compared to the trend.

What today’s rates mean for you and your mortgage

While mortgage rates move up and down on a daily basis,, there is some consensus that we won’t see rates back at 3 percent for some time. If you’re shopping for a mortgage now, it might be wise to lock your rate when you find an affordable loan. If your house-hunt is taking longer than anticipated, revisit your budget so you’ll know exactly how much house you can afford at prevailing market rates.

You could save serious money on interest by getting at least three loan offers, according to Freddie Mac research. You don’t have to stick with your bank or credit union, either. There are many types of mortgage lenders, including online-only and local, smaller shops.

“All too often, some [homebuyers] take the path of least resistance when seeking a mortgage, in part because the process of buying a home can be stressful, complicated and time-consuming,” says Mark Hamrick, senior economic analyst for Bankrate. “But when we’re talking about the potential of saving a lot of money, seeking the best deal on a mortgage has an excellent return on investment. Why leave that money on the table when all it takes is a bit more effort to shop around for the best rate, or lowest cost, on a mortgage?”

More on current mortgage rates

Methodology

Bankrate displays two sets of rate averages that are produced from two surveys we conduct: one daily (“overnight averages”) and the other weekly (“Bankrate Monitor averages”).

The rates on this page represent our overnight averages. For these averages, APRs and rates are based on no existing relationship or automatic payments.

Learn more about Bankrate’s rate averages, editorial guidelines and how we make money.

Source: bankrate.com

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© Maria Korneeva – Moment/Getty Images

After two years of sharp declines, existing-home sales are poised for improvement in 2024. But first, this slice of the housing market must weather the rest of a rocky year in 2023, with existing-home sales expected to end up 18% lower than those of 2022, according to the National Association of REALTORS®. That puts these transactions on track for their worst year in more than a decade.

NAR Chief Economist Lawrence Yun joined other leading housing analysts Tuesday at NAR’s virtual Real Estate Forecast Summit to discuss sales projections heading into 2024—and the experts agreed that better days are ahead for the real estate market.

Mortgage rates likely have peaked and are now falling from their recent high of nearly 8%. NAR predicts the 30-year fixed-rate mortgage to average 6.3% in 2024; realtor.com® projects 6.5%. This likely will improve housing affordability and entice more home buyers to return to the market, Yun says. NAR’s data shows that rates near 6.6% enable the average American family to afford a median-priced home without devoting more than 30% of their income to housing, the threshold commonly used to measure affordability.

NAR is projecting that existing-home sales will rise 13.5% and new-home sales—which are up about 5% this year, defying market trends—could increase another 19% by the end of next year.

Markets to Watch in 2024

Some housing markets likely will experience higher sales upticks in 2024 than others. “Job growth will be a determinant for long-term housing demand,” Yun said. 

NAR evaluated 100 of the largest U.S. metro areas to identify the markets with the largest pool of potential home buyers, the greatest likelihood for home price appreciation and more. The following markets have the most pent-up housing demand for 2024, according to NAR:

  1. Austin-Round Rock-Georgetown, Texas
  2. Dallas-Fort Worth-Arlington, Texas
  3. Dayton-Kettering, Ohio
  4. Durham-Chapel Hill, N.C.
  5. Harrisburg-Carlisle, Pa.
  6. Houston-The Woodlands-Sugar Land, Texas
  7. Nashville-Davidson–Murfreesboro–Franklin, Tenn.
  8. Philadelphia-Camden-Wilmington, Pa.-N.J.-Del.-Md.
  9. Portland-South Portland, Maine
  10. Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.V.

Inflation Remains a Wild Card

Danielle Hale, chief economist at realtor.com®, said at Tuesday’s summit that while she’s optimistic the housing market will improve in 2024, inflation is the issue that could derail optimistic real estate forecasts. If inflation doesn’t continue to improve, she said, it could raise long-term interest rates, which then could discourage more homeowners from selling and prolong the inventory bottlenecks in the market. Younger generations of home buyers may continue to be sidelined by higher housing costs and remain as renters. “That could have huge ramifications for the housing market,” Hale said. “The inflation data is very important to watch.”

Overall inflation has been easing, although “shelter inflation” continues to rise. The latest reading of the Consumer Price Index showed that inflation decreased to 3.1% in November. (The Federal Reserve’s target for the inflation rate is 2%.) Yun said an “oversupply” of new apartment units will hit many housing markets in the coming months, which could bring rental rates down and help better control inflation. Hopefully, he added, that will disincentivize the Fed to continue raising its short-term rates.

Regardless of inflation and mortgage rates, the 2024 housing market likely will remain challenging, particularly for first-time buyers who are unable to leverage the proceeds from a previous home sale, summit panelists noted. Plus, amid record low inventory, finding a home to buy will be a top hurdle. Homeowners remain reluctant to sell and give up the low mortgage rates they locked in two years ago. Further, homebuilders have underproduced for decades, leading to a shortage of 5 million housing units nationwide, according to NAR research.

However, current homeowners are in an envious position: With rapid home appreciation in recent years, owners will grow their nest egg in 2024. Even those in markets that are expecting slight dips next year will be able to weather the drop. Home price appreciation has jumped by about 5% over the past year alone. The typical homeowner has accumulated more than $100,000 in housing wealth over the past three years, NAR’s data shows. Plus, the wealth comparison between homeowners and renters continues to be significant: The typical homeowner has $396,200 in wealth versus $10,400 for renters, according to Federal Reserve data. “Over the long term, homeowners build wealth over time,” Yun said.

Source: nar.realtor

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Mortgage interest rates were mixed this week, according to data compiled by Bankrate. See below for a breakdown of how each loan type moved.

After surpassing 8 percent in late October, mortgage rates have somewhat moved lower. One big driver: Inflation has cooled, which means the Federal Reserve might end its rate increases. The Fed last hiked its key interest rate in July, which brought up borrowing costs on a variety of financial products, including mortgages.

The central bank held firm at its November meeting, indicating it expects rates to stay on the higher side for the foreseeable future.

“Expectations of slower economic growth, moderating inflation and no more Fed interest rate hikes have been a downward influence on mortgage rates,” says Greg McBride, CFA, chief financial analyst for Bankrate.

After bottoming at the beginning of 2023, home prices have steadily risen this year, appreciating for eight consecutive months, according to the S&P CoreLogic Case-Shiller index for September 2023.

Rates accurate as of December 11, 2023.

The rates listed here are marketplace averages based on the assumptions shown here. Actual rates displayed within the site may vary. This story has been reviewed by Suzanne De Vita. All rate data accurate as of Monday, December 11th, 2023 at 7:30 a.m.

30-year fixed-rate mortgage moves down, -0.03%

The average rate you’ll pay for a 30-year fixed mortgage today is 7.45 percent, down 3 basis points since the same time last week. Last month on the 11th, the average rate on a 30-year fixed mortgage was higher, at 7.88 percent.

At the current average rate, you’ll pay principal and interest of $695.79 for every $100,000 you borrow. That represents a decline of $2.06 over what it would have been last week.

There are several advantages to choosing a fixed-rate mortgage when buying new house, including predictable mortgage payments.

Read more: What is a fixed-rate mortgage and how does it work?

15-year mortgage rate increases, +0.07%

The average rate for a 15-year fixed mortgage is 6.78 percent, up 7 basis points since the same time last week.

Monthly payments on a 15-year fixed mortgage at that rate will cost around $887 per $100,000 borrowed. The bigger payment may be a little harder to find room for in your monthly budget than a 30-year mortgage payment, but it comes with some big advantages: You’ll come out several thousand dollars ahead over the life of the loan in total interest paid and build equity much faster.

5/1 adjustable rate mortgage slides, -0.09%

The average rate on a 5/1 ARM is 6.70 percent, ticking down 9 basis points over the last 7 days.

Adjustable-rate mortgages, or ARMs, are mortgage loans that come with a floating interest rate. In other words, the interest rate will change at regular intervals, unlike fixed-rate mortgages. These loan types are best for people who expect to sell or refinance before the first or second adjustment. Rates could be considerably higher when the loan first adjusts, and thereafter.

While borrowers shunned ARMs during the pandemic days of super-low rates, this type of loan has made a comeback as mortgage rates have risen.

Monthly payments on a 5/1 ARM at 6.70 percent would cost about $645 for each $100,000 borrowed over the initial five years, but could increase by hundreds of dollars afterward, depending on the loan’s terms.

Jumbo mortgage rate flat for the week

The average rate for the benchmark jumbo mortgage is 7.53 percent, unchanged from a week ago. This time a month ago, jumbo mortgages’ average rate was greater than 7.53, at 7.92 percent.

At the current average rate, you’ll pay a combined $701.27 per month in principal and interest for every $100,000 you borrow.

Refinance rates

Today’s 30-year mortgage refinance rate eases, –0.01%

The average 30-year fixed-refinance rate is 7.57 percent, down 1 basis point over the last week. A month ago, the average rate on a 30-year fixed refinance was higher, at 8.01 percent.

At the current average rate, you’ll pay $704.01 per month in principal and interest for every $100,000 you borrow. That’s down $0.69 from what it would have been last week.

Where are mortgage rates heading?

Mortgage rates have done a 180 as of late, falling back under 8 percent. With inflation cooling and 10-year Treasury yields declining, the 30-year fixed mortgage could head into the 6 percent range by next year, said Lawrence Yun, chief economist of the National Association of Realtors, at the group’s conference in November.

“I believe we’ve already reached the peak in terms of interest rates,” said Yun.

The rates on 30-year mortgages mostly follow the 10-year Treasury, which shifts continuously as economic conditions dictate, while the cost of variable-rate home loans mirror the Fed’s moves. These broader factors influence overall rate movement. As a borrower, you could be quoted a higher or lower rate compared to the trend.

What these rates mean for your mortgage

While mortgage rates fluctuate considerably,, there is some consensus that we won’t see rates return to 3 percent for some time. If you’re shopping for a mortgage now, it might be wise to lock your rate when you find an affordable loan. If your house-hunt is taking longer than expected, revisit your budget so you’ll know exactly how much house you can afford at prevailing market rates.

Keep in mind: You could save thousands over the life of your mortgage by getting at least three loan offers, according to Freddie Mac research. You don’t have to stick with your bank or credit union, either. There are many types of mortgage lenders, including online-only and local, smaller shops.

“All too often, some [homebuyers] take the path of least resistance when seeking a mortgage, in part because the process of buying a home can be stressful, complicated and time-consuming,” says Mark Hamrick, senior economic analyst for Bankrate. “But when we’re talking about the potential of saving a lot of money, seeking the best deal on a mortgage has an excellent return on investment. Why leave that money on the table when all it takes is a bit more effort to shop around for the best rate, or lowest cost, on a mortgage?”

More on current mortgage rates

Methodology

Bankrate displays two sets of rate averages that are produced from two surveys we conduct: one daily (“overnight averages”) and the other weekly (“Bankrate Monitor averages”).

The rates on this page represent our overnight averages. For these averages, APRs and rates are based on no existing relationship or automatic payments.

Learn more about Bankrate’s rate averages, editorial guidelines and how we make money.

Source: bankrate.com

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LO Technology, Broker PPE Products; Training and Webinars This Week; 3.7% Unemployment

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LO Technology, Broker PPE Products; Training and Webinars This Week; 3.7% Unemployment

By:
Rob Chrisman

7 Hours, 19 Min ago

“What do you call James Bond having a bath? Bubble 07.” In different bond matters, mortgage rates will always be higher than Treasury rates, in part because of the prepayment risk in mortgages that doesn’t exist with Treasury bonds. With the drop in rates, sales management personnel at lenders are busy figuring out how best to remind the staff about EPO (early payoff) penalties levied by investors while at the same time working on ways to save money besides furloughing, cutting staff, outsourcing, and re-doing vendor contracts. The recent decline in rates and increase in applications is welcome: According to Curinos, November 2023 funded mortgage volume decreased 11 percent YoY and 10 percent MoM. In the Retail channel, funded volume was down 22 percent YoY and 10% MoM. The average 30-year conforming retail funded rate in November was 7.45 percent, 25bps higher than October and 85bps higher than the same month last year. (Curinos sources a statistically significant data set directly from lenders to produce these benchmark figures, and drills into this data further here.) Today’s podcast can be found here, and this week’s is sponsored by nCino, makers of the nCino Mortgage Suite for the modern mortgage lender. nCino Mortgage Suite’s three core products, nCino Mortgage, nCino Incentive Compensation, and nCino Mortgage Analytics, unite the people, systems, and stages of the mortgage process. Hear an Interview with nCino’s Ben Miller on incentive compensation data and origination cost reductions that are separating profitable from unprofitable companies in the mortgage industry.

Lender and Broker Products, Programs, and Services

Loan Vision exclusively serves the mortgage industry by providing software built by the mortgage industry for the mortgage industry. With Loan Vision, customers see improvements of 30%+ decrease in days to close the books, 20%+ reduction in accounting headcount, complete LOS to G/L automation, and improved reporting and visibility. Interested in learning how Loan Vision can help you run a more efficient and profitable company? Contact Carl Wooloff to schedule a call today.

When Encompass Lending Group set out to reimagine its borrower experience, it chose LiteSpeed by LenderLogix. “We understand every borrower is different. Our services are custom-tailored to every borrower, and we thought our technology should reflect that,” said Encompass Lending Group’s Paul Marsh, EVP of National Sales. Read more about their implementation here.

Seems like there is “AI” everything now. Washing machines, clothing, cookie dough? One place you should deploy AI is in helping your customers find their best opportunity. LoanCraft now offers its ViLO technology via an API (patent pending). ViLO is a virtual loan officer technology that asks your customers questions about their goals and needs, and provides offers along with tailored English-language recommendations. The API lets you easily incorporate this into your consumer facing technology, or LoanCraft will build your front end for you. Regents Financial is using ViLO, so you can see how it works here. Contact Jessica West at LoanCraft for more information.

In this market, hustle is everything. You can’t afford to waste a single deal, or a single minute. That’s why ReadyPrice has launched Shop, Lock, Deliver, an innovative platform designed to help independent mortgage brokers and their lenders save time and money. Now you can shop competitive loan offerings from multiple lenders, get rate lock guarantees in real time, receive underwriting findings, and deliver the borrower’s complete loan file to lenders, all on a single platform, at no cost to brokers. It’s already helping brokers around the country thrive and compete in the toughest market. Multiple lenders. One platform. Zero b.s. Come check us out today. ReadyPrice gives you the ability to manage your lenders, search loan product pricing across the wholesale channel, and deliver loans to the lender of your choice.

Events, Training, and Webinars

A good place for longer term conference planning is to start is here, and click on “events” for conferences in the future.

Today, December 8, is the next episode of The Mortgage Collaborative’s Rundown covering current events in the mortgage market for 30-45 minutes starting at noon PT, 3PM ET, in “The Rundown”. Listen to Rich Kuegler with Stewart Title!

Chief Sales Officer at Deephaven Tom Davis will join Rob Chrisman on a webinar you won’t want to miss. In today’s market, originators need Non-QM to fully serve borrowers and to stay competitive. Learning how to utilize and market Non-QM isn’t difficult when you partner with the right lender. Please find out how easy it is by joining the webinar on December 12th! Register now.

Tuesday, 12/12, is the next Mortgages with Millennials with Kristin Messerli and Robbie Chrisman. Tune in every Tuesday at 1PM ET to the weekly video show designed to empower mortgage professionals to tap into the millennial market. This show demystifies the psychology of first-time homebuyers and offers strategies to win more market share with a key segment of the market. Sign up for a weekly reminder with the link to join and a sneak peek into the next episode. Next week’s guest is Catalina Kaiyoorawongs, Founder and CEO of LoanSense.

Have you registered yet for LIRC23? Discover the newest developments in legal and regulatory compliance for residential lenders. Join California MBA at the Irvine Marriott Hotel on December 11 – 12 for the 2023 Legal Issues and Regulatory Compliance Conference. This is your opportunity to hear from some of the nation’s top industry experts and learn about the hottest topics. You’ll be informed and empowered, don’t miss out.

What are the forces that will shape the 2024 economy and real estate market? Find out at the Real Estate Forecast Summit: The Year Ahead on December 12, 1-2 p.m. ET. NAR’s Dr. Lawrence Yun and Dr. Jessica Lautz are teaming with expert economists and thought leaders to review 2023 and discuss their expectations for 2024. They will cover the residential and commercial markets, plus demographic and market outlook data. There is no cost to attend, but you must register in advance.

“As 2023 comes to a close, empower your financial strategy with insights tailored for lenders. Join CWDL for a webinar on Tuesday, December 12 as we recap the year in accounting and tax and identify what action you need to take before the year ends. Our mortgage banking experts will review tax legislation passed in 2023 and what’s coming for 2024, share tips to get year-end financials closed accurately and efficiently, discuss preparing for your audit, review HUD and GNMA reporting requirements, address going concern analysis, and more. Reach out to Kasey English to register for this free webinar, and emerge with actionable insights to take advantage of these last few weeks of 2023.”

Vince Furey, SVP of Sales for MeridianLink, has some valuable market insights and strategies that can help your credit union not only survive but also thrive in this changing landscape. Don’t miss the upcoming ACUMA Inside Track webinar on December 12th at 1 pm CST, where you can learn how to capture and serve this important market segment and take your mortgage loan program to new heights.

Wednesday the 13th, looking for more in-depth commentary on weekly mortgage news? Register here for “Mortgage Matters: The Weekly Roundup” presented by Lenders One. Every Wednesday at 2:00 PM EST/11:00 AM PT is a dive into a range of mortgage-related topics, including market trends, interest rate fluctuations, innovative mortgage products, and industry advancements. Listen to a unique mix of age perspective, expertise, and charisma to the screen, ensuring that the information is not only educational but also entertaining. Next week’s guest is.

Dec 13, at 12:00 PM PT, will be a webinar to learn about innovative approaches to recruiting loan officers in the mortgage industry. Heidi Iverson and NAMBA’s Tony Thompson will explore data-driven recruitment strategies with Mobility Market Intelligence (MMI), a powerful tool for Mortgage Lenders.

Join Curinos home equity experts Richard Martin, Ken Flaherty and Kinley Hicks on December 13th as they debut their new national home equity market forecast and discuss how home equity could impact growth initiatives and balance sheets in 2024. Register now.

Our very own MBA has some webinars, including California’s Corporate Climate Data Accountability Act, MBA on December 14.

For a deeper dive into Pennymac TPO’s new product and how to position it with your borrowers, contact your Account Executive, and register for their Power Your Business Webinar, “Home Equity Seconds Product Overview,” on December 14 at 10am PT/1 pm ET.

The Knowledge Coop’s new membership platform offers all state and federal Continuing Education courses in an engaging and exciting video format that you’re sure to actually enjoy. Want to give yourself a sharper competitive edge? They also offer in-depth training on specific topics like VA Loans and FHA within their Coop Academy. Get access to industry experts and connect with other mortgage professionals all in one space. Use Code Chrisman10 for 10 percent off your first year of membership here.

Join in for “Hot Topics” with the Single-Family Housing Guaranteed Loan Program. Free, Live, virtual training for all USDA lenders and real estate agents. Don’t pass up the opportunity to say YES to more potential clients. Embrace the GUS recommendation, Thursday, December 14, 2-3 PM ET.

National MI posted its upcoming December 2023 webinar sessions. December options include the following: Income Case Studies ​​​​​with Marianne Collins – December 12th at 1pm ET. 2024 Business Planning for Purchase Business with Bruce Lund – December 13th at 2pm ET. Maximize Your Relationships: The Art of Annual Mortgage Reviews with Rebecca Lorenz – December 14th at 1pm ET.

This month, catch up on the latest underwriting and processing trends at your convenience with Arch MI’s online videos and podcasts. Choose Arch MI’s wide range of course offerings that cover the essentials for mortgage professionals. On the 14th, the co-authors of HaMMR Digest, Arch Chief Economist Parker Ross, and Director of Real Estate Economics Leonidas Mourelatos, present their assessment of the market environment, where rates and home prices are heading, and the implications for mortgage professionals in the new year. Register for Arch MI Housing Update Webinar on December 14 at 1 p.m. ET.

Friday, December 15th, is next week’s episode of The Mortgage Collaborative’s Rundown covering current events in the mortgage market for 30-45 minutes starting at noon PT, 3PM ET, in “The Rundown”. Hear from MGIC’s Terry Aikin!

Capital Markets

As job markets loosen and employers are not as quick to hire, investors are betting on when central banks across the globe will begin rate cutting cycles. Yesterday’s private payrolls from ADP printed lower than analyst expectations ahead of today’s release of the November jobs report. Thoughts that the Fed is done tightening helped mortgage rates drop closer to 7 percent, the lowest level since August, according to this week’s Primary Mortgage Market Survey from Freddie Mac. 30-year fixed mortgage rates have fallen 76 basis points since the end of October.

Today brought the November payrolls report where forecasts didn’t see all that much variability from October. November nonfarm payrolls registered 199k versus 186k expectations. The unemployment rate came in at 3.7 percent when it was seen holding steady at 3.9 percent. Average hourly earnings were when the number was seen increasing 0.4 percent month-over-month and 4.1 percent year-over-year versus 0.2 percent and 4.1 percent previously. Later today brings preliminary December Michigan sentiment, which is expected to tick up modestly. We begin the day with Agency MBS prices and the 10-year yielding 4.25 after closing yesterday at 4.13 percent (the 2-year is up to 4.71) after the employment numbers.

Employment

“Freedom Mortgage is seeking the best Account Executives nationwide. We understand the best are not just product experts but, also relationship builders. We seek industry leaders. Freedom Mortgage Wholesale believes Account Executives are vital to our success. Freedom Mortgage has been creating success for 30 years. Our people and processes are time-tested giving us trusted stability, no matter market conditions. Our deep roots throughout the mortgage industry provide confidence for the future. Freedom Mortgage is 4EVER Wholesale. Join our strong group of Account Executives who average 15 years in industry and 10+ years at Freedom Mortgage. If you are the best and want to work with a financially stable company to build your future, contact us.”

Newrez Wholesale is thrilled to announce the appointment of Divisional Vice President John McElhone to the Inaugural Corporate Board of Directors for NAMB (National Association of Mortgage Brokers®). “For 50 years NAMB has been the leading voice for the mortgage industry, and I am proud of the organization for creating its corporate board of governors as it will increase NAMB’s impact on the industry,” said McElhone. “Thank you to NAMB for inviting me to join the board and I am eager to bring my decades of experience I’ve obtained in my professional career to each and every day.” Way to go, John! Learn more about the new corporate board.

“Are you a go-getter who embraces hustle and strives for growth? Are you passionate about helping others on the path to success? If you answered yes, we want you! Kind Lending is seeking knowledgeable Wholesale Account Executives with experience in the mortgage lending space. As one of the fastest growing mortgage lenders in the country, we’re building an upbeat and collaborative team that strives to put people first in everything we do, infusing happiness around every corner. Our people believe kindness matters and a client’s positive experience is everything. Join the #kindmovemovement and come grow your business with an expanded product offering and best in class operational experience! Contact: Delfino Aguilar, SVP TPO Production, 619.726.0377.”

JMAC Lending, an industry-leading TPO lender for more than 25 years, has hired Eric Yang as Executive Vice-President of TPO Sales. Formerly VP of TPO Sales at Pennymac, Yang will lead JMAC’s team of Account Executives for both wholesale and correspondent. “Eric’s business approach aligns with our company mission and values: trust, teamwork and integrity,” JMAC Lending’s President Christina Pham said. “We are excited to have Eric lead our growing sales team, where we will continue to provide excellent support to our lender partners, especially in this unique market environment.” “Eric can navigate complex market landscapes and deliver results,” Pham says. “He has a deep understanding of the industry, and we are confident that his expertise will elevate our sales operations.” Start lending with JMAC today! Click here join JMAC and sign up for marketing and rates, or contact sales. Let’s grow your business and fund more loans in 2024.

Thank you to Julie Cooper who reminded me that, in the Northwest, “State Departments of Commerce Housing Divisions or Housing Departments are hiring folks versed in mortgage, title, escrow and real estate. County and Municipal Departments of Community Development and non-profit housing developers in Washington State are hiring in record numbers, as well, developing affordable multifamily, single-family housing for ownership and rental. Julie observed, “I think one way forward for our industry is private/public partnership. These developments, acquisition and construction projects need mortgage companies to help with homeownership, especially those who can do community land trusts and every transaction needs a title insurance policy and escrow provider. Ultimately, we are all stakeholders in housing and it’s really cool to be part of these innovative programs.”

 Download our mobile app to get alerts for Rob Chrisman’s Commentary.

Source: mortgagenewsdaily.com

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Lower

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.

What happened to mortgage rates this week

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:

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 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.

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.

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

Apache is functioning normally

Mortgage rates moved higher for all types of loans compared to a week ago, according to data compiled by Bankrate. Rates for 30-year fixed, 15-year fixed, 5/1 ARMs and jumbo loans increased.

After surpassing 8 percent in late October, mortgage rates have somewhat retreated. One big driver: Inflation has cooled, which means the Federal Reserve might end its rate increases. The Fed last hiked its key interest rate in July, which increased borrowing costs on a variety of financial products, including mortgages.

The central bank decided to hold firm at its November meeting, indicating it expects rates to stay on the higher side for the foreseeable future.

“Expectations of slower economic growth, moderating inflation and no more Fed interest rate hikes have been a downward influence on mortgage rates,” says Greg McBride, CFA, chief financial analyst for Bankrate.

The slight decline in mortgage rates comes alongside appreciating home prices. Home values have now climbed for eight months in a row, according to the S&P CoreLogic Case-Shiller index for September 2023.

Rates last updated December 5, 2023.

These rates are Bankrate’s overnight average rates and are based on the assumptions indicated here. Actual rates displayed across the site may vary. This story has been reviewed by Suzanne De Vita. All rate data accurate as of Tuesday, December 5th, 2023 at 7:30 a.m.

30-year mortgage rate moves higher, +7.53%

The average rate for a 30-year fixed mortgage for today is 7.53 percent, up 753 basis points over the last week. A month ago, the average rate on a 30-year fixed mortgage was higher, at 7.83 percent.

At the current average rate, you’ll pay a combined $701.27 per month in principal and interest for every $100,000 you borrow. That’s an increase of $701.27 over what you would have paid last week.

The popular 30-year mortgage has a number of advantages:

  • Lower monthly payment: Compared to a shorter term, such as 15 years, the 30-year mortgage offers lower, more affordable payments spread over time.
  • Stability: With a 30-year fixed mortgage, you lock in a set principal and interest payment, making it easier to plan your housing expenses for the long term. Remember: Your monthly housing payment can still change if your homeowners insurance premiums and property taxes go up or, less likely, down.
  • Buying power: With lower payments, you might qualify for a larger loan amountor a more expensive home.
  • Flexibility: Lower monthly payments can free up some of your monthly budget for other goals, like building an emergency fund, contributing to retirement or college tuition, or saving for home repairs and maintenance.

Learn more: What is a fixed-rate mortgage and how does it work?

15-year mortgage rate moves up, +6.80%

The average 15-year fixed-mortgage rate is 6.80 percent, up 680 basis points over the last week.

Monthly payments on a 15-year fixed mortgage at that rate will cost around $888 per $100,000 borrowed. Yes, that payment is much bigger than it would be on a 30-year mortgage, but it comes with some big advantages: You’ll come out several thousand dollars ahead over the life of the loan in total interest paid and build equity much more rapidly.

5/1 adjustable rate mortgage rises, +6.78%

The average rate on a 5/1 ARM is 6.78 percent, ticking up 678 basis points over the last 7 days.

Adjustable-rate mortgages, or ARMs, are mortgage terms that come with a floating interest rate. In other words, the interest rate will change at regular intervals, unlike fixed-rate mortgages. These loan types are best for those who expect to sell or refinance before the first or second adjustment. Rates could be much higher when the loan first adjusts, and thereafter.

While borrowers shunned ARMs during the pandemic days of super-low rates, this type of loan has made a comeback as mortgage rates have risen.

Monthly payments on a 5/1 ARM at 6.78 percent would cost about $651 for each $100,000 borrowed over the initial five years, but could climb hundreds of dollars higher afterward, depending on the loan’s terms.

Jumbo mortgage interest rate trends higher, +7.59%

The average rate for a 30-year jumbo mortgage is 7.59 percent, up 759 basis points since the same time last week. Last month on the 5th, jumbo mortgages’ average rate was higher, at 7.82 percent.

At the current average rate, you’ll pay $705.39 per month in principal and interest for every $100,000 you borrow. That’s $705.39 higher compared with last week.

Mortgage refinance rates

Current 30 year mortgage refinance rate climbs, +7.63%

The average 30-year fixed-refinance rate is 7.63 percent, up 763 basis points compared with a week ago. A month ago, the average rate on a 30-year fixed refinance was higher, at 7.96 percent.

At the current average rate, you’ll pay $708.14 per month in principal and interest for every $100,000 you borrow. That’s an extra $708.14 compared with last week.

Where are mortgage rates heading?

Mortgage rates have done a 180 as of late, falling back under 8 percent. With inflation cooling and 10-year Treasury yields declining, the 30-year fixed mortgage could head into the 6 percent range by next year, said Lawrence Yun, chief economist of the National Association of Realtors, at the group’s conference in November.

“I believe we’ve already reached the peak in terms of interest rates,” said Yun.

The rates on 30-year mortgages mostly follow the 10-year Treasury, which shifts continuously as economic conditions dictate, while the cost of variable-rate home loans mirror the Fed’s moves. These broader factors influence overall rate movement. As a borrower, you could be quoted a higher or lower rate compared to the trend.

What today’s rates mean for your mortgage

While mortgage rates fluctuate considerably,, there is some consensus that we won’t see rates back at 3 percent for some time. If you’re shopping for a mortgage now, it might be wise to lock your rate when you find an affordable loan. If your house-hunt is taking longer than anticipated, revisit your budget so you’ll know exactly how much house you can afford at prevailing market rates.

You could save serious money on interest by getting at least three loan offers, according to Freddie Mac research. You don’t have to stick with your bank or credit union, either. There are many types of mortgage lenders, including online-only and local, smaller shops.

“All too often, some [homebuyers] take the path of least resistance when seeking a mortgage, in part because the process of buying a home can be stressful, complicated and time-consuming,” says Mark Hamrick, senior economic analyst for Bankrate. “But when we’re talking about the potential of saving a lot of money, seeking the best deal on a mortgage has an excellent return on investment. Why leave that money on the table when all it takes is a bit more effort to shop around for the best rate, or lowest cost, on a mortgage?”

More on current mortgage rates

Methodology

Bankrate displays two sets of rate averages that are produced from two surveys we conduct: one daily (“overnight averages”) and the other weekly (“Bankrate Monitor averages”).

The rates on this page represent our overnight averages. For these averages, APRs and rates are based on no existing relationship or automatic payments.

Learn more about Bankrate’s rate averages, editorial guidelines and how we make money.

Source: bankrate.com