Borrowing costs fell this week, with the 30-year fixed-rate mortgage setting a new record low for the third time in the last few months. The 30-year fixed-rate mortgage averaged 3.15% this week, the lowest average in Freddie Mac’s records dating back nearly 50 years.
“These unprecedented rates have certainly made an impact, as purchase demand rebounded from a 35% year-over-year decline in mid-April to an 8% increase of last week—a remarkable turnaround given the sharp contraction in economic activity,” says Sam Khater, Freddie Mac’s chief economist. “Additionally, refinance activity remains elevated, and low mortgage rates have been accompanied by a $70,000 decline in average loan size of refinance borrowers this year. This means a broader base of borrowers are taking advantage of the record-low rate environment, which will benefit the economy.”
Freddie Mac reported the following national averages with mortgage rates for the week ending May 28:
30-year fixed-rate mortgages: averaged 3.15%, with an average 0.8 point, falling from last week’s 3.24% average. Last year at this time, 30-year rates averaged 3.99%.
15-year fixed-rate mortgages: averaged 2.62%, with an average 0.7 point, falling from last week’s 2.70% average. A year ago, 15-year rates averaged 3.46%.
5-year hybrid adjustable-rate mortgages: averaged 3.13%, with an average 0.4 point, falling from last week’s 3.17% average. A year ago, 5-year ARMs average 3.60%.
Freddie Mac reports average commitment rates along with fees and points to reflect the total upfront cost of obtaining a mortgage.
The Consumer Financial Protection Bureau says it has received a record number of consumer complaints in March and April as consumers grew concerned over their finances at the onset of the global pandemic.
In March, CFPB says it received about 36,700 complaints from consumers about financial services providers. In April, they received 42,500 complaints. Both March and April made up the highest the agency has ever received in its history.
Complaints mostly centered on credit reporting, which jumped 29%. Complaints about title loans increased by 20%, and complaints about mortgages increased by 10%.
Many consumers expressed dissatisfaction with the wait times to get answers to questions. “Some consumers are reporting hold times of several hours,” CFPB noted in the report. “For those who are pursuing payment options, some described no methods other than phone to access potential options.”
With mortgages, forbearance rules and requirements were a hot topic of confusion. “Consumers raised concerns whether they will have to pay lump-sum payments at the completion of forbearance periods,” CFPB noted. “Many of these consumers reported that companies offering forbearance periods informed them that there would be a balloon payment equal to the entire amount placed in forbearance. Some consumers report that the 90-day forbearance period offered is insufficient and they will not be in a position to submit a lump sum payment in 90 days.”
The National Association of REALTORS® has been helping to provide brochures that real estate professionals can customize and use to help inform their clients and also help dispel myths about forbearance. One brochure—“Protect Your Investment”—is available atrealtorparty.realtorand outlines what homeowners should ask lenders about their options and payback when weighing forbearance.
A shift in the mix of home buyers has been occurring since the pandemic began. Investor numbers are shrinking, while the number of home shoppers purchasing their first home ever is on the rise. These buyers are freed from having to sell a home prior to purchasing, and they are valuing homeownership in a pandemic.
The share of first-time buyers rose to 36% in April 2020, up from 32% a year ago, the National Association of REALTORS®’’ April 2020 REALTORS® Confidence Index Survey shows.
“Home buyers are facing less competition from investors, and they are also benefiting from low mortgage rates,” notes Scholastica “Gay” Cororaton, an NAR researcher, on Economists’ Outlook blog. With fewer investors, cash sales dropped to 15% of existing-home sales in April, which is down from 20% a year prior.
Record low mortgage rates are enticing some first-time buyers. The estimated monthly mortgage payment on a home purchased at the median price of $286,800 with a 10% down payment on a 30-year fixed-rate mortgage was $1,131—which is $90 less than the median rent of $1,041 in the first quarter of 2020.
Meanwhile, as first-time buyers increase in the marketplace, investors are retreating. They may be perceiving greater financial risk associated with renters due to the COVID-19 pandemic. Also, Cororaton speculates that investors are unlikely to purchase single-family properties at the rate they did during the Great Recession, which had sparked a wave of discounted foreclosures. “In the current health and economic crisis, properties are not being foreclosed,” Cororaton notes. Also, so far, home prices are standing firm.
Buyers are reemerging in the housing market much faster than anticipated. Mortgage applications are often an indicator of future home buying activity, and applications for home purchases have increased for five consecutive weeks. After increasing 6% last week compared to the previous week, applications for home purchases are now just 1.5% lower than a year ago, the Mortgage Bankers Association’s seasonally adjusted index shows.
The rebound is significant considering purchase volume was down 35% annually just six weeks ago as the U.S. ramped up its battle against the COVID-19 pandemic.
“Applications for home purchases continue to recover from April’s sizable drop and have now increased for five consecutive weeks,” says Joel Kan, an MBA economist. “Government purchase applications, which include FHA, VA, and USDA loans, are now 5% higher than a year ago, which is an encouraging turnaround after the weakness seen over the past two months.”
Record low mortgage rates and strong pent-up demand are bringing home buyers back to the market as states begin to reopen. The average contract interest rate for the 30-year fixed-rate mortgage decreased from 3.43% to 3.41% last week (with 0.33 points on the loan).
Refinance applications, meanwhile, are falling. Applications for refinancings dropped 6% last week and reached the lowest level in activity in more than a month. However, refinance applications are still 160% higher than a year ago as homeowners continue to lock in lower rates.
The latest existing-home sales numbers show a housing market facing the headwinds of the COVID-19 pandemic in April. Existing-home sales fell 17.8% last month compared to March, marking a two-month decline in sales, the National Association of REALTORS® reported Thursday.
Still, home prices remain resilient in the face of the pandemic. The median existing-home price for all housing types in April jumped 7.4% compared to a year ago ($286,800). All four major regions of the U.S. saw annual gains in home prices, too.
But total existing-home sales—which are completed transactions that include single-family homes, townhomes, condos, and co-ops—fell to a seasonally adjusted annual rate of 4.33 million in April. Sales were down 17.2% compared to a year ago (5.23 million existing-home sales in April 2019). Existing-home sales are at the lowest level since July 2010
“The economic lockdowns—occurring from mid-March through April in most states—have temporarily disrupted home sales,” says Lawrence Yun, NAR’s chief economist. “But the listings that are on the market are still attracting buyers and boosting home prices.”
Record low mortgage rates likely will be a key factor in driving housing demand as state economies gradually reopen, Yun adds. “Still, more listings and increased home construction will be needed to tame price growth,” he notes.
Here is an overview of additional key indicators from NAR’s latest housing report:
Inventory: Total housing inventory at the end of April was 1.47 million units, down 19.7% from a year ago. Unsold inventory is currently at a 4.1-month supply at the current sales pace.
Days on the market: Properties typically stayed on the market for 27 days in April, up from 24 days a year ago. Fifty-six percent of homes sold in April were on the market for less than a month.
First-time home buyers: More sales last month were from buyers who were purchasing their first home. First-time buyers accounted for 36% of sales in April, up from 32% a year ago.
All-cash sales: All-cash sales comprised 15% of transactions in April, down from 20% a year ago. Individual investors and second-home buyers, who make up the biggest bulk of cash sales, purchased 10% of homes in April, down from 16% in April 2019.
Distressed sales: Foreclosures and short sales represented 3% of sales in April, which is about the same as a year ago.
Regional Breakdown
The following is a closer look at how existing-home sales fared across the country in April:
Northeast: Existing-home sales dropped 16.9% in April to an annual rate of 540,000—an 18.2% decrease compared to a year ago. Median price: $312,500, up 8.7% from April 2019.
Midwest: Existing-home sales fell 12% to an annual rate of 1.10 million—an 8.3% decrease compared to a year ago. Median price: $229,200, a 9.3% increase compared to April 2019.
South: Existing-home sales dropped 17.9% to an annual rate of 1.88 million in April, down 16.8% from the same time a year ago. Median price: $249,400, a 6.4% increase compared to April 2019.
West: Existing-home sales dropped 25% to an annual rate of 810,000 in April—a 27% decrease compared to April 2019. Median price: $419,300, up 6.1% from a year ago.
Borrowers who have taken forbearance can still take advantage of record low mortgage rates for purchasing a home or refinancing their existing home, the Federal Housing Finance Agency announced Tuesday. The FHFA made the announcement to try to clear up some confusion about what limits are placed on those who have taken forbearance during the COVID-19 pandemic, which now totals about 4.1 million homeowners.
Fannie Mae and Freddie Mac, which the FHFA oversees, will permit borrowers who went into forbearance due to the pandemic to refinance their loan or buy a new home as long as they’ve reinstated their mortgage and made three straight months of payments under their repayment plan, payment deferral option, or loan modification from their missed payments.
Also, there is no waiting period for borrowers who requested forbearance but ultimately were able to make their payment in full and on time, Fannie Mae notes.
“Homeowners who are in COVID-19 forbearance but continue to make their mortgage payment will not be penalized,” said FHFA Director Mark Calabria. “Today’s action allows homeowners to access record low mortgage rates and keeps the mortgage market functioning as effectively as possible.”
“NAR applauds the FHFA and Director Calabria for taking additional steps to secure the U.S. housing market and ensure mortgage and refinance options remain available to creditworthy Americans,” said NAR President Vince Malta, broker at Malta & Co Inc., in San Francisco. “Homeowners who have been forced into forbearance by no fault of their own but continue to make payments should not be penalized because of this pandemic. With the real estate industry driving nearly one-fifth of our national GDP, assurances that homebuyers can access credit and capitalize on record low mortgage rates remain critical to America’s economic recovery.”
Some borrowers who are in forbearance have been under the impression that they would be shut out from qualifying for another Fannie Mae- or Freddie Mac-backed mortgage for up to 12 months after they exit forbearance. The CARES Act requires that mortgage servicers report borrowers as “current” on any loan that goes into forbearance due to a COVID-19 financial hardship.
The 30-year fixed-rate mortgage continued to near its lowest average on record. The lowest average on Freddie Mac records dating back to 1971 is 3.23%, which was set the week ending April 30. This week, 30-year fixed-rate mortgages averaged close to that, at 3.24%.
“For the fourth consecutive week, the 30-year fixed-rate mortgage has been below 3.30 percent, giving potential buyers a good reason to continue shopping even amid the pandemic,” says Sam Khater, Freddie Mac’s chief economist. “As states reopen, we’re seeing purchase demand improve remarkably fast, now essentially flat relative to a year ago. Going forward, mortgage rates have room to decline as mortgage spreads remain elevated.”
Freddie Mac reports the following national averages with mortgage rates for the week ending May 21:
30-year fixed-rate mortgages: averaged 3.24%, with an average 0.7 point, falling from last week’s 3.28% average. Last year at this time, 30-year rates averaged 4.06%.
15-year fixed-rate mortgages: averaged 2.70%, with an average 0.7 point, falling from last week’s 2.72% average. A year ago, 15-year rates averaged 3.51%.
5-year hybrid adjustable-rate mortgages: averaged 3.17%, with an average 0.4 point, falling slightly from last week’s 3.18% average. A year ago, 5-year ARMs averaged 3.68%.
Freddie Mac reports average commitment rates along with average fees and points to reflect the total upfront cost of obtaining the mortgage.
Application fraud is growing in residential rental markets since the COVID-19 crisis, according to a new analysis from Snappt, a real estate tech and fraud detection company. Applicant fraud has risen 9% month-over-month since the pandemic, with some inflating their income to qualify for rental or disguising the source of their income. Snappt researchers say that it’s likely a response to the economic climate as well as recent changes to local and state eviction moratoriums.
“There are a number of factors that are fueling the increase in fraudulent rental applications,” says Daniel Berlind, CEO and co-founder of Snappt. “The increasing number of self-employed applicants, a move to online rental applications, and the increasing availability of tools to fraudulently alter financial documentation all make the problem more common.”
Two thirds—or 66%—of property managers surveyed by Snappt say they’ve fallen victim to fraudulent rental applications. Here are the top five problems property managers are reporting from fraudulent lease applications:
Costs associated with having to evict bad tenants
Physical damage to the property
Missing out on renting to good tenants
Criminal activity at the property
Loss of reputation
It costs property managers an average of $7,685 per eviction, according to the report.
Borrowers with top-notch credit are scoring mortgage rates lower than the record average lows being reported. Freddie Mac announced the 30-year fixed-rate mortgage averaged 3.28% for the week ending May 14, but home shoppers with stellar credit could snag one with a rate of about 2.5%, according to The Mortgage Reports.
The Mortgage Reports’ daily rate survey shows that rates for 30-year, fixed rates for FHA and VA loans have fallen to 2.75%, in some cases. Borrowers with high credit scores, little debt, solid equity, and who shop around tend to find the lowest deals, The Mortgage Reports notes.
United Wholesale Mortgage, a residential mortgage lender, announced a 2.5% “Conquest” loan program for the 30-year, fixed- rate mortgage. “Some people said we’d never see interest rates drop below 3 percent on a 30-year mortgage,” says Mat Ishbia, United Wholesale Mortgage’s president and CEO. “We believe that the housing market is going to be strong, and we want to do our part to help more people get into their dream homes as we get through this pandemic together as a nation.”
Chase Bank followed suit by also offering mortgage rates below 3% on 30-year fixed-rate loans. Its offering for 30-year rates is as low as 2.875% (with a 2.944% APR).
Rates below 3% appear to be mostly reserved for purchase contracts and not refinancings, The Mortgage Reports notes. Refinance rates, for comparison, are falling in the 3.5% to 4% range.
Most Bay Area counties are easing restrictions, but at different degrees. It’s hard to keep track of what’s happening where. So we broke it down for you here. Scroll down to find updates for your county.
Santa Clara County will join other Bay Area counties in entering Phase 2 of the reopening plan. The new order will take effect Friday, May 22.
A core group of Bay Area counties released a joint statement Monday reporting significant progress on COVID-19 and its plan to being the early stages of Phase 2. The counties include Alameda, Contra Costa, Marin, San Mateo, San Francisco and Santa Clara.
The North Bay counties of Napa, Solano and Sonoma are already in Phase 2.
Alameda
May 18 – County officials released a list of business types currently authorized to operate here. You can also view the latest health order issued in the county, which provides further details on what restrictions are being eased as Alameda County moves into Phase. View it here.
May 14 – Health officials say based on the progress of their indicators and barring any big spikes in cases over the next few days, the county anticipates to safely move into “Early Stage 2” activities next week. This would include:
curbside retail and associated manufacturing and warehouses;
eligible businesses would align with state’s guidance where possible;
every organization and business should be working on plans that include physical distancing, training for employees on limiting spread of COVID-19, and disinfection protocols.
May 18 – County officials provided further details on the new health order beginning on Tuesday, May 19. Retail stores in the county may offer curbside sales or other outdoor pickups as long as they follow certain safety measures to prevent the spread of COVID-19. In addition, businesses that manufacture retail goods and provide warehouse or logistical support to retail stores to operate, but must limit the number of employees in inclosed areas so workers can comply with social distancing requirements.
May 15 – Officials announced a new order allowing outdoor gatherings during which participants stay in their vehicles and organizers follow revised rules. The new order takes effect May 19. Officials said it also gives new options for religious organizations who have been unable to hold services during the pandemic and for schools planning graduation ceremonies.
May 14 – Contra Costa County’s health officer said if the county continues to make progress and hospitalizations steadily decline, they will consider opening up all retail for curbside pickup plus all associated logistics and manufacturing next week. Officials did not have a timeline at this point.
May 14 – The county announced earlier this week it will move into Phase 2, which means retail will be reopening for curbside pickup. Manufacturing will also resume with restrictions. The county will also examine how “dine-in” will work.
May 14 – Retail will be allowed to reopen for curbside pickup and some manufacturing will resume with restrictions. Like other counties heading into Phase 2, Napa will have to figure out how “dine-in” will work in the county.
May 14 – San Mateo County Health Officer Dr. Scott Morrow plans to lift some restrictions, effective Monday, that would be consistent with early Phase 2 guidelines of Gov. Gavin Newsom’s Resilience Roadmap. That would effectively allow for retail businesses to operate from the curb and deliver. Manufacturing, logistics and some other businesses will be able to open with some modifications, county officials said.
May 14 – The city and county has announced it will allow retailers and manufacturers to enter Phase 2 of reopening. View our latest report here. And here’s a look at San Francisco’s guidance for businesses reopening on Monday. Check it here.
May 18 – Santa Clara County is joining other Bay Area counties in entering Phase 2 of the reopening plan as outlined by the state of California, according to a statement Monday from Supervisor Dave Cortese. A new health order announced by Santa Clara County Public Health Officer Dr. Sara Cody will go into effect May 22.
Under the new order, retailers are allowed to open for curbside and or outdoor pickup, and the supply chain for those retail establishments will also be allowed to reopen. The amended order allows additional outdoor activities to resume, including car parades, outdoor museums, historical sites, and public gardens.
May 14 – Solano County is already in Phase 2 under Gov. Newsom’s multi-phased plan to reopen the state. Retail is already open for curbside pickup or delivery, limited manufacturing is also open, and the county is finalizing its dine-in option plans.
May 14 – Sonoma County, like the other North Bay counties, is already in Phase 2. Retail is open for curbside pickup, limited manufacturing is open, and the county is examining what it will do for dine-in services.
The county announced it will be pushing even deeper into the second phase. Car washes and workers who can’t telecommute will be allowed to go back to the office. The county will also allow childcare for nonessential employees.
