Jumbo, FHA Mortgage Rates Fall to Record Lows

November 5, 2020

The rates for jumbo and FHA loans dropped to all-time lows last week. Jumbo loans are for borrowers taking out larger loans while FHA loans offer borrowers’ low-down-payment loans. Their new lows fueled mortgage demand last week, the Mortgage Bankers Association reports.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) dropped to 3.18% last week. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA fell to 3.08%. The 15-year fixed-rate mortgage also saw new lows last week, decreasing to an average contract rate of 2.55%, MBA reports.

“The drop in rates spurred an uptick in demand for refinances,” says Joel Kan, MBA’s chief economist.

Refinances overall increased 6% last week and are now up 88% compared to a year ago. The drive was essentially all driven by those “seeking conventionally and government loans,” Kan says.

Could Election Uncertainty Impact Mortgage Rates?

On the other hand, mortgage applications to purchase a home dropped 1% last week. Applications are still more than 25% higher than a year ago.

“After a solid stretch of purchase applications growth, activity decreased for the fifth time in six weeks, but has increased year-over-year for six straight months,” says Kan. “2020 continues to overall be a strong year for the housing market.”Source: Mortgage Bankers Association; “Jumbo and FHA Mortgage Rates Set Record Lows, Juicing Refinance Demand,” CNBC (Nov. 4, 2020); and “Mortgage Applications Jump 3.8 Percent as Refinance Activity Remains Strong,” Mortgageorb.com (Nov. 4, 2020)

Coronavirus-Related Forbearance Rates Drop to 7-Month Low

November 3, 2020

Fewer homeowners are taking forbearance to delay their mortgage payments due to the financial and economic impact of the COVID-19 pandemic. The national forbearance rate dropped 7 basis points between Oct. 19 and Oct. 25, the Mortgage Bankers Association reports. Forbearance rates dropped for every loan type.

Mortgages in forbearance make up 5.83% of all outstanding mortgages, which is the lowest point since April 5, when the rate stood at 3.74%. Still, about 2.9 million homeowners remain in forbearance, and lenders remain concerned whether homeowners will be able to resume their payments at the end of the year or their forbearance period, when much coronavirus housing assistance runs out.

But so far, most of the data is showing that many homeowners who take forbearance are still keeping up with their mortgage payments and using it more as a safety net.

“Almost half of forbearance exits to date have been from borrowers who remained current while in forbearance, or who were reinstated by paying back past-due amounts,” says Mike Fratantoni, chief economist of the Mortgage Bankers Association. “The share of loans in forbearance has returned to levels last seen in early April, but it still remains remarkably high. Further improvement will require ongoing recovery in the job market, as well additional fiscal stimulus.”

If your clients are struggling to make their payments, the National Association of REALTORS® has developed a brochure that outlines what homeowners should ask lenders about their options and the payback requirements when considering forbearance. The brochure, called “Protect Your Investment,” is available at realtorparty.realtor.Source: “Forbearance Rate Hits Seven-Month Low,” National Mortgage News (Nov. 2, 2020)

Generation Z, the oldest of whom are turning 24 this year, is a growing force in the rental market, but real estate experts are watching these consumers’ preferences closely for when they’re ready to buy. Sixty-two percent of Gen Z renters say smart-home technology is extremely or very important, according to a new RentCafe survey of about 2,500 respondents. High-speed internet was the most important feature respondents cited, coming in higher than parking, gym, or laundry. Further, smart-home features such as smart locks, thermostats, and energy-efficient appliances were ranked higher in importance than extra space.
“Embracing technology and social media as a way of living, these young adults seem to know exactly what they are looking for when it comes to renting an apartment, what they expect from their apartment communities, and how much they are willing to spend,” RentCafe notes in its study. “Although they are budget-conscious and still at the dawn of their earning years, Gen Z renters want the highest-quality apartments and rental communities that feature the most technologically advanced features.”
Continue… https://magazine.realtor/daily-news/2020/11/02/survey-gen-z-expects-homes-to-have-tech

The 30-year fixed-rate mortgage continued to hover near its all-time low this week, as economists predict that historically low rates will likely remain into 2021.
The 30-year fixed-rate mortgage averaged 2.81% this week, up slightly from last week’s 2.80%, which was the lowest ever in Freddie Mac’s records, dating back nearly 50 years.
“The record-low mortgage rate environment is providing tangible support to the economy at a critical time, as housing continues to propel growth,” says Sam Khater, Freddie Mac’s chief economist. “Strong purchase demand is helping to lift the construction, manufacturing, and transportation industries that build new homes and it is also leading to more consumer spending for owners, who are selling or improving their home.”
Continue… https://magazine.realtor/daily-news/2020/10/30/sweet-treat-for-buyers-super-low-mortgage-rates-sticking-around

Tech problems have taken on greater significance in 2020 as more people work from home. One of the biggest complaints is a bad internet connection.
Sometimes even the best internet connection can stall. What can you do?
As a first step, restart. Power down your router and modem. On your device, close any apps you don’t need to make sure other background systems aren’t draining your device.
Then run an internet speed test to check on your connection. Speedtest by Ookla can test in seconds your connection’s response, download, and upload speeds. Check the connection speed around the house to uncover any potential dead zones. Also, use the information from the speed test to ensure your connection speed is what you’re paying your servicer for.
Continue… https://magazine.realtor/daily-news/2020/10/27/how-to-troubleshoot-spotty-wi-fi

The pandemic has not dampened home appreciation. In fact, high buyer demand is prompting home prices to surge. In the third quarter, the average home sale generated a gain of $85,000, up from $66,000 a year ago, according to data from real estate research firm ATTOM Data Solutions. That $85,000 translates to a nearly 39% return on investment compared to the original purchase price.
“Home prices and seller profits across the nation continue racking up new highs as the housing market remains relatively immune from the economic havoc caused by the coronavirus pandemic,” says Todd Teta, chief product officer at ATTOM Data Solutions. “It’s almost as if the housing market and the overall economy are operating in different worlds.” Record-low mortgage rates and declining inventory are prompting strong home prices and returns for home sellers, Teta adds.
Continue… https://magazine.realtor/daily-news/2020/10/26/where-sellers-profits-are-the-highest

Mortgage Rates Hit Record Low—Again

October 23, 2020

The 30-year fixed-rate mortgage hit its 11th record of the year this week, averaging 2.80%—the lowest rate ever recorded by Freddie Mac.

“Mortgage rates remain very low, providing homeowners who have not already taken advantage of this environment ample opportunity to do so,” says Sam Khater, Freddie Mac’s chief economist. “Mortgage rates today are on average more than a full percentage point lower than rates over the last five years. This means that most low- and moderate-income borrowers who purchased during the last few years stand to benefit by exploring refinancing to lower their monthly payment.”

The low loan rates are fueling a hot housing market as buyers rush to lock in the rates. In September, existing-home sales jumped 21% compared to a year ago, the National Association of REALTORS® reported this week.

Freddie Mac reports the following national averages for mortgage rates for the week ending Oct. 22:

• 30-year fixed-rate mortgages: Averaged 2.80%, with an average 0.6 point, dropping from last week’s previous all-time low of 2.81%. Last year at this time, 30-year rates averaged 3.75%.
• 15-year fixed-rate mortgages: Averaged 2.33%, with an average 0.6 point, dropping from last week’s 2.35% average. A year ago, 15-year rates averaged 3.18%.
• 5-year hybrid adjustable-rate mortgages: Averaged 2.87%, with an average 0.3 point, falling from last week’s 2.90% average. A year ago, 5-year ARMs averaged 3.40%.

Freddie Mac reports average commitment rates along with average points to reflect the total upfront cost of obtaining a mortgage.Source: Freddie Mac and National Association of REALTORS®

The 30-year fixed-rate mortgage hit its 11th record of the year this week, averaging 2.80%—the lowest rate ever recorded by Freddie Mac.
“Mortgage rates remain very low, providing homeowners who have not already taken advantage of this environment ample opportunity to do so,” says Sam Khater, Freddie Mac’s chief economist. “Mortgage rates today are on average more than a full percentage point lower than rates over the last five years. This means that most low- and moderate-income borrowers who purchased during the last few years stand to benefit by exploring refinancing to lower their monthly payment.”
Continue… https://magazine.realtor/daily-news/2020/10/23/mortgage-rates-hit-record-low-again

Fall Home Sales Surge Ahead of Normal Patterns

October 22, 2020

Home sales and home prices are increasing by double digits, with homes flying off the market in record time. Existing-home sales increased for the fourth consecutive month in September, up nearly 21% compared to a year ago, the National Association of REALTORS® reported on Thursday. All major regions of the U.S. saw month-over-month and annual gains in September. The Northeast experienced the largest increase in home sales.

“Home sales traditionally taper off toward the end of the year, but in September they surged beyond what we normally see during this season,” says Lawrence Yun, NAR’s chief economist. “I would attribute this jump to record-low interest rates and an abundance of buyers in the marketplace, including buyers of vacation homes given the greater flexibility to work from home.”

Total existing-home sales—completed transactions that include single-family homes, townhomes, condos, and co-ops—increased 9.4% from August to a seasonally adjusted annual rate of 6.54 million in September, NAR’s index shows.

Home prices continued to surge amid strong buyer demand for housing. The median existing-home price for all housing types in September was $311,800—a 14.8% increase from a year ago ($271,500). Home prices in every region were up last month, NAR reports.

Homebuyers continue to face scant choices. Total housing inventory at the end of September was 1.47 million units, which is down 19.2% compared to a year ago. Unsold inventory sits at a 2.7-month supply at the current sales pace.

“There is no shortage of hopeful, potential buyers, but inventory is historically low,” Yun says. “To their credit, we have seen some homebuilders move to ramp up supply, but a need for even more production still exists.” (Read more: Homebuilding Is Booming, But Is It Enough?)

Vacation hotspots are garnering more attention and sales. Sales in vacation destination counties have accelerated since July—up 34% year over year in September, NAR reports.

“The uncertainty about when the pandemic will end, coupled with the ability to work from home, appears to have boosted sales in summer resort regions, including Lake Tahoe, Mid-Atlantic beaches (Rehoboth Beach, Myrtle Beach), and the Jersey shore areas,” Yun says.

Here are additional indicators from NAR’s latest housing report:

• Days on the market: Seventy-one percent of homes sold in September were on the market for less than a month. Properties typically stayed on the market for just 21 days last month—an all-time low. That is down from 32 days a year ago.
• First-time buyers: First-time homebuyers made up 31% of sales in September, down from 33% a year ago.
• All-cash sales: All-cash sales accounted for 18% of transactions in September, up from 17% in September 2019. Individual investors and second-home buyers tend to make up the biggest bulk of all-cash sales. They purchased 12% of homes in September.
• Distressed sales: Foreclosures and short sales represented less than 1% of sales in September, which is down from 2% a year ago.
• Mortgage rates: The 30-year fixed-rate mortgage continued to set records, decreasing to a 2.89% average in September. Last year, the average 30-year fixed-rate mortgage was 3.94%.

Regional Breakdown

Here’s how existing-home sales fared across the country in September:

• Northeast: Existing-home sales jumped 22.9% compared to a year ago. Median price: $354,600, up 17.8% from September 2019.
• Midwest: Existing-home sales climbed 19.8% compared to a year ago. Median price: $243,100, a 14.8% annual increase.
• South: Existing-home sales rose 22.3% from September 2019. Median price: $266,900, a 13% increase from a year ago.
• West: Existing-home sales surged 18.1% compared to a year ago. Median price: $470,800, up 17.1% from September 2019.

Source: National Association of REALTORS®

More companies are redesigning their workspaces amid the pandemic with an eye toward better air filtration systems and greater connection to the outdoors. That’s why biophilic design—a way to bring the health benefits of the outdoors inside through design—is trending.
“We’re blurring the line between work and home,” Asheshh Saheba, a managing partner at architecture firm Steinberg Hart in San Francisco, told CNBC. “Your office doesn’t have to be enclosed at your desk.”
Continue…https://magazine.realtor/daily-news/2020/10/19/office-trend-biophilic-design