Waiting for mortgage rates to drop

Green Escrow Services | American economy

While the housing market continues to improve incrementally, it’s generally agreed that things won’t really begin to get moving until mortgage rates drop. Rates have already dropped nearly 1 point since last fall, but there’s still quite a ways to go.

According to a recent survey, 22% of Americans said they could afford to buy a home if interest rates fell below 6%.

In the same survey, 32% said it would be possible if rates fell below 5%.

Homebuyers – now what?!

Green Escrow | buyer regrets

The news was discouraging for would-be homebuyers right in the heart of the prime spring season as jumped to 6.57%, a significant increase from 6.39% just the week before.

Meantime, listing prices ticked up 0.7% and many predict they will begin actually declining before the close of 2023.

Finally, listings wee down 26% from the same time in 2022, largely because existing homeowners are not interested in taking on mortage rates that are at least 2 percentage points higher than what they are currently paying.

Mortgage rates rise to over 7%

Green Escrow Services | American economy

For the first time since April 2002, mortgage rates have risen to over 7 percent, currently 7.08 percent compared to 6.94 percent last week. One year ago, mortgage rates were 3.19 percent.

This is a 56 percent increase in the monthly payment for the same amount borrowed in October 2021.

In 2002, a median single-family house in California cost $317,000; today it’s $822,000.

Mortgage rates continue to rise

Market News

As the U.S. Federal Reserve continues to raise short-term interest rates in an effort to get inflation under control, it is expected that mortgage rates will follow suit, as they typically do.

Using median list prices for September 2022 as compared with September 2021, buyers this year are paying almost 80 percent more for the same house!

Of course, this is pricing more and more would-be homebuyers out of the housing market.

The good news is that prices have come down slightly in many markets.

Mortgage rates expected to exceed 6% – what’s next?

Green Escrow | Real Estate News

As the U.S. Federal Reserve is expected to raise interest rates in response to continuing high inflation, most analysts believe mortgage rates will exceed 6 percent by the end of the year, if not sooner.

Just a year ago, mortgage rates stood at 2.88 percent and, as of the week of September 8, are now 5.89 percent. Many buyers are leaving the market, meaning sellers will have to make adjustments – primarily lowering their asking price.

Analysts also worry that continued rate hikes will push the country closer to a recession.

Mortgage rates to rise?

Green Escrow | Real Estate News

After their late September meeting, the Federal Reserve announced that “a moderation in the pace of asset purchases may soon be warranted.” During the pandemic, the Fed has been buying up billions of dollars in mortgage debt, thus keeping mortgage rates very low.

Analysts expect the Fed to gradually cut back on their purchases, possibly as early as November. Many predict rates will continue to rise into Spring 2022.

Growing Concern with Rising Mortgage Rates

Green Escrow | Real Estate online

According to Berkshire Hathaway HomeServices’ latest Homeowner Sentiment Survey 60 percent of those surveyed maintain confidence in the U.S. economy while 70 percent view the real estate market favorably.

On the other hand, a growing number of potential homebuyers – particularly millennials – are discouraged by rising mortgage rates and say that it may prevent them from buying a home.

Current rates are still low by historical standards – 4.02 percent for a 30-year fixed loan as of May 18, but 68 percent of millennials feel a growing sense of urgency to purchase a home as they believe that interest rates will continue to increase.

“Brexit” and Interest Rates

Green Escrow | Real Estate News

Now that “Brexit” is an historical fact, many analysts see the possibility for interest rates to sink to record lows in the coming weeks. Currently 30-year fixed-rates on home loans are near 3.7 percent. While there may be a brief dip soon, some experts predict rates will continue the upward trend to near 4 percent by the year’s end.

Other analysts argue that the Britain’s exit from the European Union may have a longer-term impact on Treasury rates.

Either way, homeowners interested in refinancing will see “Brexit” as beneficial to their efforts, at least in ther short-term.

You’re Only A s Good As Your Partner’s FICO Score

Green Escrow | Credit Score

In the “Did You Know?” department, when applying for a home loan, lenders are generally required to price applications based on the lower FICO score, not the higher. This “minimum FICO” rule is used by lenders and major investors such as Fannie Mae and Freddie Mac.

Research has shown that nearly 10 percent of prime borrowers who applied for loads jointly could have lowered their interest rate by one-eighth of one percentage point if the loan had been applied for by the applicant with the higher score, assuming, of course, that the income was high enough to qualify for the loan.

Experts agree that many couples feel a psychological need to have both names on the note, despite the fact that both could be on the legal title without both being on the loan. Also, the partner with the lower score should see an increase on that score as regular payments are made.

Interest Rates Continue to Fall – What Gives?

Green Escrow | Real Estate Market News

Seemingly defying economic logic – if there is such a thing – fixed rates on home loans continued to fall to lowest marks in almost two years. How can this be? Oil prices are very low but the economy appears relatively strong with almost three million jobs added in 2014, the most since 1999 and unemployment rates have dropped to 5.6 percent.

According to many experts (!), many of the factors holding rates down are international as the economies in many European countries and Russia remain weak.

Low oil prices, low mortgage rates, rising employment – enjoy it because the one certainty is that change will come.