Category: Real Estate

Mortgage Rates Edge Up, Still Near Record Lows | Realtor Magazine

Mortgage rates ticked up this week but still remain under a 3% average and near historical lows. Freddie Mac reported the 30-year fixed-rate mortgage averaged 2.90% this week. The all-time low for rates was set in mid-September, averaging 2.86%.

Home buyers are seeing how record-low rates can significantly decrease their borrowing costs. Compared to a year earlier, mortgage rates have dropped more than 70 basis points. That has brought monthly payments on a $400,000 loan down by nearly $160, according to the National Association of REALTORS®. “With these ultra-low mortgage rates, homebuying activity is expected to remain strong in the fall,” NAR reports.

Freddie Mac reports the following national averages for mortgage rates for the week ending Sept. 24:

• 30-year fixed-rate mortgages: Averaged 2.90%, with an average 0.8 point, rising from last week’s 2.87% average. A year ago, 30-year rates averaged 3.64%.
• 15-year fixed-rate mortgages: Averaged 2.40%, with an average 0.7 point, increasing from last week’s 2.35% average. A year ago, 15-year rates averaged 3.16%.
• 5-year hybrid adjustable-rate mortgages: Averaged 2.90%, with an average 0.2 point, falling from last week’s 2.96% average. A year ago, five-year ARMs averaged 3.38%.

Freddie Mac reports average points to reflect the total upfront cost of obtaining the mortgage.

Builders Ramp Up Construction to Meet High Demand | Realtor Magazine

Builders increased construction of single-family homes in August as buyers continued to swarm the new-home market. The pace of single-family starts last month reached its highest level since February, just before the COVID-19 pandemic ignited across the U.S.

Single-family starts rose 4.1% in August to a seasonally adjusted annual rate, of 1.02 million the Commerce Department reported Thursday. Meanwhile, homebuilder sentiment last month rose to an all-time high as builders felt upbeat about current and future sales.

However, rising lumber costs could threaten to price more home buyers out of the new-home market over the coming months. Lumber prices are now up more than 170% since mid-April, adding more than $16,000 to the price of a typical new single-family home, says Robert Dietz, chief economist of the National Association of Home Builders. Low mortgage rates are helping to offset the rising costs somewhat.

“Historic traffic numbers have builders seeing positive market conditions, but many in the industry are worried about rising costs and delays for building materials, especially lumber,” said NAHB Chairman Chuck Fowke. “More domestic lumber production or tariff relief is needed to avoid a slowdown in the market in the coming months.”

Overall, housing production in August dropped 5.1% due to a double-digit decrease in the multifamily sector. Construction of apartment buildings and condos plunged 22.7% to an annual pace of 395,000 units. “Total housing starts were down in August on a decline for multifamily construction, with multifamily 5+-unit permits now down 8.3% on a year-to-date basis,” Dietz explains. “But low interest rates and solid demand are spurring single-family construction growth, which makes up the bulk of the housing market. Single-family permits continue to rise as well and are now up almost 7% on a year-to-date basis.”

Regionally, combined single-family and multifamily housing starts were highest in the Midwest, increasing 13.6% on a year-to-date basis, followed by a 5.4% increase in the South and a 3.8% increase in the West. Housing production, meanwhile, was 4.5% lower in the Northeast last month.

First-Time Buyers Rush to Lock in Low Mortgage Rates | Realtor Magazine

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Record low mortgage rates are drawing a new wave of first-time home buyers to the market, Freddie Mac reports. “In August, activity among first-time home buyers rose 19% from July to the highest monthly level ever for Freddie Mac,” says the mortgage giant’s Chief Economist Sam Khater, adding that the rebound “has come at a critical time for the economy.”

Since the beginning of the year, mortgage rates have dropped more than 80 basis points, the National Association of REALTORS® reports. As such, the qualifying income to buy a starter home has dropped by 10% to nearly $43,000. Further, the monthly mortgage payment dropped by $100.

The lower borrowing costs are prompting homebuying activity to move higher than pre-pandemic levels, NAR notes. More home buyers may be able to jump into the housing market, with one in three renters able to afford to buy the typical home today, NAR reports.

Freddie Mac reports the following national averages with mortgage rates for the week ending Sept. 17:

• 30-year fixed-rate mortgages: averaged 2.87%, with an average 0.8 point, rising slightly from last week’s all-time low of 2.86%. Last year at this time, 30-year rates averaged 3.73%.
• 15-year fixed-rate mortgages: averaged 2.35%, with an average 0.8 point, falling from last week’s 2.37% average. A year ago, 15-year rates averaged 3.21%.
• 5-year hybrid adjustable-rate mortgages: averaged 2.96%, with an average 0.3 point, dropping from last week’s 3.11% average. Last year at this time, 5-year ARMs averaged 3.49%.

Freddie Mac reports average commitment rates, along with average fees and points, to reflect the total upfront cost of obtaining a mortgage.

Top 6 Eco-Friendly Home Features Buyers Want | Realtor Magazine

With climate risks rising, an increasing number of homeowners are trying to do their part to improve the environment. If they haven’t already, your customers likely will start asking to see green and sustainable homes. We’ve gathered the top six eco-friendly features buyers are looking for so you’re better prepared to help them with their search.

What Are Eco Homes?

Eco homes are designed to promote greener lifestyles by minimizing the greenhouse gases they emit into the atmosphere. These homes reduce their environmental impact by including sustainable materials and technologies that reduce homeowners’ energy and water needs.

Each of the following eco-friendly home features helps limit the waste produced by households. While some are common features in contemporary homes, others are highly specialized and challenging to find on the market.

1. Energy Star-rated appliances. Homes with high-efficiency appliances are in demand because they offer enhanced performance with reduced energy usage. Not only do Energy Star-rated appliances lower homeowners’ carbon footprint, but they also look good and reduce utility costs.
2. Programmable thermostats. Eighty-five percent of buyers consider heating and cooling costs to be a significant factor in their home search, according to the National Association of REALTORS®’ 2019 Profile of Home Buyers and Sellers. This desire to cut costs has led more buyers to seek out homes with programmable thermostats. Homes with older HVAC systems are wasteful and costly because they pump hot and cold air throughout the home without regard to when and where it’s needed. Conversely, programmable thermostats provide homeowners with increased control over their climates.
3. Radiant floor heating. With heat directly transferring from the ground to the individuals standing on it, radiant heating uses much less energy than traditional heating methods. Commonly found in luxury bathrooms, radiant heating requires electric coils or water tubing to be installed under the floors. It’s pricey to install, but this technology ultimately contributes to lower energy expenses.
4. Solar panels. Instead of relying on the utility company to provide electricity, buyers are interested in generating clean energy themselves. Now that capturing the sun’s power is far more affordable, buyers are on the lookout for homes decked out with solar panels.
5. Recycled materials. Building and finishing homes with recycled materials is a trend that’s on the rise. Producing new materials depletes many natural resources, so reusing them eliminates waste and diminishes the environmental impact. Reclaimed materials, like barn wood and recycled quartz, also are more affordable and can furnish homes with striking textures.
6. Geothermal systems. “Geothermal systems use the ground’s relatively cool temperature to cool a home in the summer and relatively warmer temperature to heat homes in the winter,” says Chris Fisher, manager of solar product development and marketing at CertainTeed. “They’re eco-friendly because they can displace heating loads, which currently rely on the burning of fossil fuels to produce heat.” While this method is more efficient than traditional HVAC systems, it’s also more expensive to install. Since it regulates temperatures by transferring heat from the earth into your home, installation requires extensive drilling.

The Benefits Of Eco Homes

With their environmental and financial advantages, it’s no wonder buyers are seeking eco homes. As an agent, you can provide higher-quality service by assisting your customers in finding and assessing these new technologies. Remember, homes with eco-friendly features are highly coveted, so they’re likely to sell faster and possess a higher resale value in the future.

1M Delinquent Homeowners Haven’t Asked for Forbearance | Realtor Magazine

Homeowners who have failed to take advantage of pandemic-related mortgage assistance may be at risk of losing their properties. A little more than a million owners nationwide are at least 30 days past due on their monthly payments and haven’t entered a forbearance program or engaged their lender about some other financial solution, according to an analysis from Black Knight, a mortgage data firm.

About 680,000 of those homeowners have federally guaranteed mortgages and are eligible for a forbearance program to put their monthly payments on hold for up to a year without facing a penalty. (They would have to pay back the funds at a later date.) Many lenders also are offering such help to borrowers who don’t have a federally guaranteed mortgage. But borrowers must initiate outreach for the help, for which they aren’t required to prove hardship under federal rules.

Homeowners may not be reaching out to lenders because they’re confused, surveys show. More than half of borrowers surveyed by the National Housing Resource Center in July say they were not aware of the forbearance program or didn’t know how it works. Of consumers confused about their options, nearly 70% say they fear being required to make a large lump-sum payment at the end of their forbearance period—which isn’t true. “Some borrowers are falling through the cracks that we’re not picking up,” Lisa Rice, president and CEO of the National Fair Housing Alliance, told The Wall Street Journal. “It’s just a really sad series of events.”

Further, housing groups warn that the number of homeowners with past-due mortgage payments could swell even more as people who are currently in forbearance reach the end of their program terms in October. Those homeowners will need to request an extension from their lender if they need more time. “Borrowers who are eligible to be in forbearance will preserve their options to avoid foreclosure versus those who became delinquent and have accumulated penalties and interest in a march toward foreclosure,” Faith Schwartz, president of advisory firm Housing Finance Strategies, told the Journal.

Affordability Dips as Home Prices Reach All-Time High | Realtor Magazine

From June to July, median sales price rose by 8.5%, more than double the 4.1% increase seen in family income levels, the National Association of REALTORS® reports. But mortgage rates that have fallen to all-time lows are helping to offset some of the rising costs.

As of July, all of the national and regional data in NAR’s affordability index was above 100, which means a family with a median income had more than the income required to afford a median-priced home. For the analysis, the income required to afford a mortgage is calculated as no more than 25% of a family’s income.

The most affordable region for housing in the U.S. in July was in the Midwest, with a median family income of $80,742, which is nearly more than double the qualifying income of $40,416. On the other hand, the least affordable region remained the West, which has a median family income of $88,022 and a qualifying income of $75,504, NAR’s index shows.

 

© National Association of REALTORS®

 

All four major regions of the U.S. saw housing affordability increase compared to a year ago. The Northeast saw the largest increase of 10%, followed by the Midwest with a 5.5% increase, the South at 4.2%, and the West at 2.3%.

Mortgage rates are down 74 basis points compared to a year ago. The median sales price for a single-family home sold in July was $307,800. Meanwhile, median family incomes increased by 4.1%.

Study: 3 in 4 Mortgage Holders Could Benefit From Refinancing | Realtor Magazine

The 30-year fixed-rate mortgage continues to hit new all-time lows practically on a monthly basis. That has dramatically increased the pool of homeowners who could benefit from refinancing and lowering their monthly mortgage payment. In fact, 75% of homeowners—or 19.3 million—could benefit from refinancing, according to data from Black Knight, a software and analytics firm for the mortgage and lending industry. That’s the largest number of potential refinance candidates ever on record, Black Knight says.

The savings could add up. According to Black Knight, the average homeowner could potentially reduce their mortgage payment by $299 a month. More than 7 million refinance candidates could save from $300 to $500 per month. Nearly 2.5 million homeowners could save $500 a month or more, the firm notes.

With savings so great, Bankrate asks: Why on Earth haven’t 19 million homeowners refinanced yet? “The same reason people don’t go to the dentist regularly enough even though they should—it’s no fun,” says Greg McBride, Bankrate’s chief financial analyst.

To refinance, borrowers will need to compile tax returns, bank statements, paychecks, and additional documents. But besides the tedious task of refinancing, many homeowners also may be leery due to interruptions in their incomes from disruptions to their job during the pandemic—or they may even have lost their job. Further, closing costs can add up. Costs range from 2% to 5% of the amount of the loan.

“Refinancing isn’t free, and sometimes it’s tough for people to look past the out-of-pocket costs incurred now for savings that will take years to accumulate,” McBride says.

For homeowners who are eligible and can afford it, the potential to lock in some of the lowest mortgage rates ever could be appealing. The 30-year fixed-rate mortgage reached a new all-time low, average 2.86%, for the week ending Sept. 10, Freddie Mac reported.

What the Fed’s Extended Low Rate Means for Mortgages | Realtor Magazine

The Federal Reserve voted Wednesday to leave its benchmark lending rate unchanged and near zero. It will likely stay in place for more than a year to help the economy recover from the COVID-19 pandemic.

The Fed’s benchmark rate is what banks charge one another for short-term borrowing. It is not the rate consumers pay, and it doesn’t often directly influence mortgage rates, although it does often have an impact.

The committee on Wednesday also announced that in order to keep credit flowing, it will continue to purchase mortgage-backed securities and Treasuries. That has helped bring mortgage rates to all-time lows in recent weeks, with the 30-year fixed-rate mortgage now below 3%.

Credit card borrowers and student loan borrowers may see some of the biggest benefits from the Fed’s action. Long-term loans, such as those for mortgages, may see a less direct benefit.

Mortgages have carried cheaper rates than ever before. Freddie Mac reported last week that the 30-year fixed-rate mortgage averaged 2.86%, a record low.

However, economists warn that the Fed’s new approach to inflation may limit the ability to benefit from lower mortgage rates for an extended time. The Fed said it will allow inflation to run “hotter than normal” before it decides to hike its benchmark rate again.

But it’s “low inflation [that] has helped suppress mortgage rates,” Tendayi Kapfidze, chief economist at LendingTree, an online loan marketplace, told CNBC. “If you let inflation go up, mortgage rates will also go higher.”

Home Prices Surge to Two-Year High, Disasters Slow New Listings | Realtor Magazine

Home shoppers may have an even tougher time finding a home to purchase in the weeks and months to come, as home prices continue to climb and even fewer new listings arrive on the market.

Home price growth has reached a two-year high, while natural disasters brought the number of homes for sale even lower, according to realtor.com®’s Weekly Housing Report, reflecting the week ending Sept. 12. Still-strong buyer demand but lack of supply prompted median listing prices to jump 11.1% year over year.

“Today’s home buyers face some daunting challenges,” says Danielle Hale, realtor.com®’s chief economist. “Home price growth just set a new high of 11% with no indication of a slowdown and there are nearly 40% fewer homes for sale than this time last year.

“Inventory is so low that any disruption, such as this week’s wildfires and hurricanes, feels even more stifling for would-be home buyers,” Hale continues. “Although this year is anything but typical, we expect inventory to follow the usual seasonal pattern of tapering off in the next few weeks, but we don’t expect buyer demand to drop off as much as usual. Buyers hoping to take advantage of less competition during the housing off-season will likely be disappointed and could find it even more difficult to find a home.”

The number of new listings for the week ending Sept. 12 fell 17% compared to a year ago. Meanwhile, the total number of homes available for sale has plunged 39% compared to this same time a year ago.

 

© realtor.com

Mortgage Help Available for Hurricane Sally, Wildfire Victims | Realtor Magazine

Mortgage financing giants Freddie Mac and Fannie Mae announced disaster relief policies for homeowners affected by Hurricane Sally, as the storm continues to dump rain at dangerous levels on the South. Homeowners affected by 2020’s natural disasters, including those impacted by the ongoing wildfires in western states, may be eligible to reduce or suspend mortgage payments for up to 12 months. Lenders are also willing to waive assessments of penalties or late fees against homeowners impacted by a disaster.

“The priority is for homeowners to get themselves and their loved ones safely out of harm’s way,” says Bill Maguire, Freddie Mac’s vice president of single-family servicing portfolio management. “Once out of harm’s way, homeowners whose homes or places of employment are impacted should contact their mortgage servicer—the company they send their monthly payments to—so they can learn about available relief options.”

Fannie Mae also announced that mortgage servicers are authorized to suspend or reduce a homeowner’s mortgage payment for up to 90 days, even without establishing contact if the servicer believes the owner is affected by the disaster. The mortgage financing giant says homeowners with Fannie Mae-owned mortgages and renters living in Fannie Mae-financed properties should contact them when it is safe to do so and they can assist in developing a personalized recovery plan as well as help request financial relief from FEMA, insurance, and other sources.

“We are monitoring these situations, and we urge those in the path of the storm and fires to focus on their safety,” says Malloy Evans, Fannie Mae’s senior vice president and single-family chief credit officer. “We encourage residents whose homes, employment, or income are impacted by this storm and fires to seek available assistance as soon as possible.”

Hurricane Sally victims add to a growing list of disasters in 2020 for which both Fannie Mae and Freddie Mac have announced disaster relief assistance. The mortgage financing giants are also providing mortgage and disaster relief options to homeowners affected by the COVID-19 pandemic, Hurricane Laura from late August, and the ongoing wildfires along the west coast. Homeowners already on a COVID-19 related forbearance or relief plan should contact their servicer to discuss additional options.

Hurricane Sally made landfall on Wednesday near Gulf Shores, Ala., as a Category 2 hurricane and is dumping torrential rain and causing catastrophic flooding along the Gulf Coast. On the other side of the country, wildfires have scorched millions of acres across the western U.S. and destroyed homes in California, Oregon, and Washington. In Oregon, more than 40,000 people have had to flee their homes due to the fires. Read more:‘I Feel Very Vulnerable’