Real Estate Roundup: Record weekly mortgage rate drop
Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious.
30-YEAR MORTGAGES SEE BIGGEST ONE-WEEK DROP IN A DECADE
Fixed-rate mortgages last week saw their biggest one-week drop in a decade, according to Freddie Mac’s weekly rate survey.
Thirty-year fixed-rate mortgages averaged 4.06 percent, down from 4.28 percent last week, and 15-year fixed-rate mortgages averaged 3.57 percent, down from 3.71 percent. Five-year adjustable-rate mortgages averaged 3.75 percent, down from 3.84 percent last week.
Last year at this time, 30-year mortgages averaged 4.40 percent, 15-year mortgages averaged 3.90 percent, and five-year ARMs averaged 3.66 percent.
“The Federal Reserve’s concern about the prospects for slowing economic growth caused investor jitters to drive down mortgage rates by the largest amount in over ten years,” Freddie Mac’s chief economist, Sam Khater, said in a statement accompanying the mortgage rate survey. “Despite negative outlooks by some, the economy continues to churn out jobs, which is great for housing demand. We have recently seen home sales start to recover, and with this week’s rate drop we expect a continued rise in purchase demand.”
SURVEY: 2019 IS A GOOD TIME TO BUY A HOME
Two out of three people say now is a good time to buy a home, and according to a survey by the National Association of Realtors conducted during the first quarter of 2019, and confidence in the U.S. economy remains strong.
The NAR’s quarterly Housing Opportunities and Market Experience survey found that 65 percent of respondent believe now is a good time to buy a home, with 37 percent saying they strongly believe now is a good time to buy — up from 34 percent in the last quarter of 2018 — and 28 percent expressing moderate confident.
The survey also found that 53 percent of those polled said that the economy is improving, down from 59 percent at the end of last year. Optimism in 2019 is the greatest among those who earn $100,000 or more and those who live in rural areas. Fifty percent of Generation X respondents said the economy is improving, while 42 percent of urban area residents reported the same.
Several factors are helping to improve the attitudes of potential homebuyers, said Lawrence Yun, the NAR’s chief economist. “First, inventory has been rising, so those buyers interested in making a purchase will not be limited in choices. Additionally, more stable home price trends are leading to more foot traffic at various open house gatherings.”
Mortgage affordability has also been more favorable for homebuyers than in recent quarters, Yun said.
“The Federal Reserve’s decision to refrain from any foreseeable rate hikes was beneficial to potential buyers,” he said. “That move directly contributed to mortgage rates declining in quarter one, which provided a second-chance opportunity to those looking to buy who were priced out last quarter.”
FHA SAYS IT WILL TIGHTENS MORTGAGE STANDARDS
The Wall Street Journal reports that the Federal Housing Administration is tightening its rules, amid a growing concern that mortgage lenders are increasingly making loans to borrowers who can’t repay them, leading to a spike in defaults.
The FHA, which insures mortgages for first-time buyers, told lenders in March that it would begin examining certain loans more closely, likely identifying more of them as high risk. Mortgages to borrowers with low credit scores and high loan payments relative to their incomes will now go through a more rigorous underwriting process, the agency said.
The Journal report noted that the FHA’s decision to tighten underwriting standards could mean fewer first-time home buyers are able to get mortgages.