Yajnesh Rai

Mortgage Rates Ease This Week | Realtor Magazine

 

 

Borrowers found some relief for the second consecutive week with lower mortgage rates. 

“After dropping earlier this week on trade-related anxiety in financial markets, the benchmark 10-year Treasury stabilized on Wednesday, but at a level slightly lower than from the start of last week,” explains Len Kiefer, Freddie Mac’s deputy chief economist. “Mortgage rates followed and fell for the second consecutive week. … Though rates on the 30-year fixed mortgage are up 0.3 percentage points from the same week a year ago, a robust labor market is helping home purchase demand weather modestly higher rates.”

The Mortgage Bankers Association reported in its latest Weekly Mortgage Applications Survey that its index for home purchase applications is up 5 percent from a year ago “indicating that this spring is on track for a modest expansion in purchase mortgage activity,” Kiefer adds.

Freddie Mac reported the following national averages for the week ending April 5:

• 30-year fixed-rate mortgages: averaged 4.40 percent, with an average 0.5 point, dropping from last week’s 4.44 percent average. Last year at this time, 30-year rates averaged 4.10 percent. 
• 15-year fixed-rate mortgages: averaged 3.87 percent, with an average 0.4 point, dropping from last week’s 3.90 percent average. A year ago, 15-year rates averaged 3.36 percent.
• 5-year hybrid adjustable-rate mortgages: averaged 3.62 percent, with an average 0.4 point, falling from last week’s 3.66 percent average. A year ago, 5-year ARMs averaged 3.19 percent. 

Banks Help Qualify Self-Employed Buyers | Realtor Magazine

Self-employed borrowers have struggled to qualify for mortgages with tightened lending rules over the last few years. This has made a lot of people unable to qualify. As lenders face an overall decrease in refinancing originations due to higher interest rates, they are looking to make up the shortfall in business through purchase applications. Doing so may motivate more lenders to look for ways to increase their share of borrowers. 

The self-employed sector may be one major area of growth. The number of self-employed workers in the U.S. is on the rise, increasing to 40.8 million people in 2017. That equates to 31 percent of the private work force. The number of self-employed workers earning $100,000 or more rose nearly 5 percent last year. But their ability to get a mortgage is still challenged due to their nontraditional income status.

Citadel Servicing Corp. is offering multiple options for income qualifications to help more self-employed workers qualify for a loan. One of their areas of qualification includes a one-month bank statement program aimed at self-employed individuals.

“This program was designed for the self-employed borrower with excellent credit who simply doesn’t have time to gather two years’ worth of business and personal tax returns or 24 months of bank statements,” says Will Fisher, senior vice president, national sales and marketing director at Citadel Servicing Corp. “They are putting down a substantial down payment or have an exceptional equity position. Our historical data shows that this borrower can assess and manage their responsibilities.” 

Citadel Servicing Corp., which specializes in non-prime loan products, was the first lender to re-enter the subprime market in 2012, HousingWire reports. 

Homeowner Equity Is Hitting a Record High | Realtor Magazine

Homeowners are getting richer, thanks to rising home values. The amount of equity that homeowners can tap into is now at the highest level on record, according to Black Knight Financial Services, a mortgage and finance industry solution provider. 

The amount a borrower can take out of a home—while still leaving 20 percent in it—increased by a collective $735 billion during 2017. That is the largest annual increase by dollar value on record, according to Black Knight. The collective amount of tappable equity now stands at $5.4 trillion, 10 percent more than the prerecession peak in 2005. 

“There’s no question that a majority of homeowners have amassed considerable equity gains since the downturn,” says Lawrence Yun, chief economist of the National Association of REALTORS®. “Home prices have grown a cumulative 48 percent since 2011 and are up 5.9 percent through the first two months of this year.”

Homeowners are being more conservative, and lenders are much stricter when it comes to tapping into home equity. Homeowners took out $262 billion in cash-out refinances or home equity lines of credit last year, which is less than 1.25 percent of all available equity and is at a four-year low. 

“While rising rates tend to dampen utilization of equity in general, the market is poised for a strong shift toward HELOCs, as they allow borrowers to take advantage of growing equity while holding on to historically low first-lien interest rates,” says Ben Graboske, executive vice president of Black Knight Data & Analytics. “Over half of all tappable equity—approximately $2.8 trillion—is held by borrowers with credit scores of 760 or higher and first-lien interest rates below today’s prevailing rate, which creates a large pocket of low-risk HELOC candidates.”

The amount of homeowner equity varies depending on location. Thirty-nine percent of the nation’s total tappable equity is in California alone. Seattle and Las Vegas have also seen large increases in home equity, Black Knight notes. 

Spring Buyers Want This Type of House | Realtor Magazine

The typical spring home buyer this year is on the hunt for a three-bedroom, two-bathroom house with a garage and updated kitchen, according to a new realtor.com® survey of more than 1,000 home shoppers. Forty-four percent of respondents say they want a three-bedroom home, and 93 percent say they want a home with at least two bathrooms. But the garage is becoming increasingly important to home shoppers, too, with 27 percent rating it as one of the most important home features, even above an updated kitchen (24 percent) and open floor plan (20 percent). 

Privacy is driving the purchase decisions of many older buyers, with more than 20 percent of those 55 and older saying that having a space of their own is their main goal, followed by the physical comforts and stability of homeownership. On the other hand, 17 percent of millennial buyers placed the highest weight on family needs when house hunting, followed by stability (14 percent) and personal expression (13 percent). Only 12 percent of buyers younger than 55 cited privacy as their chief priority. 

Realtor.com®’s survey also shows that increasing rental costs are pushing more young adults toward homeownership, with 23 percent of buyers between the ages of 18 and 34 reporting rising rents as a trigger for their recent home purchase. “Although record-low inventory and high prices make this housing market unique, some classic features still top most shoppers’ wish lists,” says Danielle Hale, chief economist for realtor.com®. “At the same time, we found some clear differences in priorities. For instance, older buyers are concerned with privacy and being able to age comfortably, while millennials place more emphasis on family needs, stability, and personal expression.”

The survey also finds some differences among the generations when it comes to architecture preferences. Millennials desire contemporary and colonial homes, while older buyers prefer ranches. Only 6 percent of millennials favored ranch homes. 

Markets Where Prices Hit Record Highs Again | Realtor Magazine

Inventory shortages are helping home prices continue to break record highs, according to an analysis by realtor.com®. “Never in history have there been more eyes on fewer homes than today,” says Javier Vivas, director of economic research at realtor.com®. “The price gains observed in the last days of March tell us the market is on pace to see half of the homes listed above $300,000 this summer. This means buyers are not just having to pay more for the same home—they’re also seeing the mix of what’s available change more rapidly.”

Listing prices zoomed to a median of $280,000 in March, surpassing last summer’s high of $275,000 in July 2017. March’s listing prices also mark an 8 percent increase year over year. Of the 100 largest markets in the country, 36 are seeing homes sell at least a week faster than a year ago.

Realtor.com®’s “hot list” for March reflects the metros garnering the most listing views on the site, as well as those where homes spend the fewest days on the market. California continues to dominate the list. The hottest markets in March, according to realtor.com®, are:

1. San Francisco
2. Vallejo, Calif.
3. Colorado Springs, Colo.
4. San Jose, Calif.
5. Midland, Texas
6. Santa Cruz, Calif.
7. Boston
8. Stockton, Calif.
9. Columbus, Ohio
10. Sacramento, Calif.
11. Denver
12. Chico, Calif.
13. Boise City, Idaho
14. San Diego
15. Modesto, Calif.

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Mortgage Rates Ease Slightly This Week | Realtor Magazine

The 30-year fixed-rate mortgage fell 1 basis point to an average 4.44 percent this week, Freddie Mac reports.

“Treasury yields fell from a week ago, helping to drive mortgage rates modestly lower,” explains Len Kiefer, Freddie Mac’s deputy chief economist. “The yield on the 10-year Treasury dipped below 2.8 percent for the first time since early February of this year. The decline in Treasury yields comes as investors move into safer assets amid increased trade tensions. Following Treasury yields, mortgage rates fell slightly.”

Freddie Mac reports the following national averages with mortgage rates for the week ending March 29:

• 30-year fixed-rate mortgages: averaged 4.44 percent, with an average 0.5 point, dropping from last week’s 4.45 percent average. Last year at this time, the 30-year fixed-rate mortgage averaged 4.14 percent.
• 15-year fixed-rate mortgages: averaged 3.90 percent, with an average 0.5 point, dropping from last week’s 3.91 percent average. A year ago, 15-year rates averaged 3.39 percent.
• 5-year hybrid adjustable-rate mortgages: averaged 3.66 percent, with an average 0.4 point, dropping from last week’s 3.68 percent average. A year ago, 5-year ARMs averaged 3.18 percent.

How Unstaged Rooms Hamper a Home Sale | Realtor Magazine

Sellers may be shooting themselves in the foot when they leave an empty, dark, or cluttered room unstaged, according to a recent realtor.com® article. Empty rooms, for example, can “kill a home sale, especially if the other rooms are furnished,” says Allison Bethell of FitSmallBusiness.com. Imperfections stand out more in an empty room, and the absence of furnishings could make it more difficult for buyers to visualize how to use the space.

A poorly lit room also can give the entire house a darker vibe, adds Desare Kohn-Laski, broker-owner of Skye Louis Realty in Coconut Creek, Fla. Instead, open curtains, consider painting the walls a light color, and add plants or a mirror to brighten the look.

The cluttered playroom is another top offender, real estate agents say. “If a playroom looks like a cluttered mess, buyers get the impression that the current residents aren’t clean,” says Kohn-Laski. Sellers should erase crayon and other marks on walls, as well as wipe fingerprints off doors and windows. Also, ensure the room isn’t stuffed with toys; a room that is too full can appear smaller.

The “creepy basement” may also be giving off the wrong type of vibe. Sarah Pickens with RE/MAX Advantage Plus in Blaine, Minn., recalls showing a home to buyers where the basement was an empty, all-cement room with no windows. “The buyer was so creeped out that we left the property,” Pickens says. “And he said he would never purchase the house because of that room.” Realtor.com® suggests “de-creeping” a basement by staging and brightening any windowless rooms.

Also, make sure a cluttered closet isn’t making buyers want to bolt. Teri Connors, an associate broker at Coldwell Banker M&D Good Life in Patchogue, N.Y., says overstuffed closets can make buyers think there’s not enough storage space in a home. She recommends removing at least two-thirds of the clothes in the closets to give the illusion that there’s plenty of space.

With Higher Rates, Does Refinancing Pay Off? | Realtor Magazine

With rising mortgage rates, more homeowners are finding refinancing isn’t necessarily going to lower their mortgage bill anymore. Lenders are seeing loan volume drop drastically, and they are looking to the purchase market to help make up the shortfall.

In 2017, 37 percent of the mortgage origination volume was from refinancings, the smallest proportion since 1995, according to Inside Mortgage Finance, an industry research group. Analysts expect the number of refinancings to shrink further this year. For comparison, in 2012, refinancings made up 72 percent of originations.

The number of homeowners who stand to benefit from refinancing is smaller due to rising mortgage rates. The number of borrowers who could benefit from refinancing dropped about 37 percent from the end of last year, according to data from Black Knight Inc. That represents the smallest share since 2008.

On the purchase activity side, originations are up, but not enough to offset a $366 billion drop in refinancing activity, according to Inside Mortgage Finance.

Still, the Mortgage Bankers Association is predicting mortgage-purchase volume to grow about 5 percent this year, but they predict that refinancing volume will plunge 27 percent.

Some lenders are trying to get more business by either highlighting home-equity lines of credit or pushing adjustable-rate mortgages.

“I think we will see lenders focus on retaining their existing customers more fiercely,” Ben Graboske, an executive vice president at Black Knight, told The Wall Street Journal.

Loan Activity Gets a Boost, Despite Rising Rates | Realtor Magazine

An increase in mortgage rates didn’t suppress loan demand in the kickoff to the spring buying season. Loan applications for both refinancings and home purchases jumped 4.8 percent last week on a seasonally adjusted annual basis, the Mortgage Bankers Association reported Wednesday. Mortgage applications are now at the same level as a year ago.

Applications for home purchases, viewed as a gauge of homebuying activity, increased 3.1 percent from the previous week. This is the third consecutive week that purchase applications have been on the rise. Applications are now 8.2 percent higher than a year ago, the MBA reports.

“We remain cautiously optimistic that purchase activity will continue to pick up as we enter the spring homebuying season,” says MBA economist Joel Kan.

Refinance applications last week increased 7.3 percent, but are still down more than 10 percent from a year ago.

The increases in refinancing and home purchase applications came during a week when mortgage rates were back on the rise, too. The 30-year fixed-rate mortgage averaged 4.69 percent last week, up from 4.68 percent the week prior, the MBA reports.

So far, rising mortgage rates aren’t spooking potential buyers, according to a study recently released by Redfin, a real estate brokerage. The survey conducted last month found that even if interest rates increased above 5 percent, only 6 percent of prospective buyers would scrap their plans to then buy a home. 

“Mortgage rates are still really cheap compared to the historical average,” says Nela Richardson, Redfin’s chief economist. “Over the last 50 years or so, mortgage rates have averaged around 8 percent on the 30-year fixed-rate mortgage, and have been much higher, topping 18 percent in the 1980s. Rates now are still below 5 percent.”

How Much Renting Is Costing Millennials | Realtor Magazine

By the time millennials turn 30, they will have paid $92,600 in rent, according to a new study by RentCafe, a nationwide listing service for rentals. It’s more than previous generations paid when they were between the ages of 22 and 30. RentCafe researchers studied how much millennials, Generation X members, and baby boomers spent on rent during that eight-year time period of their life by using U.S. Census Bureau statistics dating back to 1974.

 

Millennials have been hit the hardest by rising rents, and Generation Z—the generation following millennials—may have it worse, according to the analysis. Researchers estimate that by the time Generation Z reaches age 30, its members will have paid more than $102,000 in rent.

 

Millennials may earn more compared with previous generations (earning $206,600 in the eight-year period), but they’ve had to spend more on rent, the study found. Millennials spent 45 percent of their income on rent between the ages of 22 and 30—more than the 30 percent that most financial advisers recommend. The two previous generations were not able to keep their rental costs under 30 percent of their income either, but they did fare better than millennials: Baby boomers spent 36 percent of their income on rent between the ages of 22 and 30 and Generation X spent 41 percent.