The 30-year fixed-rate mortgage averaged 2.98% this week, the lowest rate in Freddie Mac’s records dating back to 1971.
“The drop has led to increased home buyer demand and, these low rates have been capitalized into asset prices in support of the financial markets,” says Sam Khater, Freddie Mac’s chief economist. “However, the countervailing force for the economy has been the rise in new virus cases which has caused the economic recovery to stagnate, and this economic pause puts many temporary layoffs at risk of ossifying into permanent job losses.”
Freddie Mac reported the following national averages with mortgage rates for the week ending July 16:
30-year fixed-rate mortgages: averaged 2.98%, with an average 0.7 point, falling from a 3.03% average last week. A year ago, 30-year rates averaged 3.81%.
15-year fixed-rate mortgages: averaged 2.48%, with an average 0.7 point, falling from last week’s 2.51% average. A year ago, 15-year rates averaged 3.23%.
5-year hybrid adjustable-rate mortgages: averaged 3.06%, with an average 0.3 point, rising slightly from last week’s 3.02% average. A year ago, 5-year ARMs averaged 3.48%.
Freddie Mac reports average commitment rates along with average fees and points to reflect the total upfront cost of obtaining a mortgage.
Home buyers may face stricter credit score requirements and larger down payment or higher cash reserve requirements if trying to qualify for a supersized mortgage. Lenders reportedly are growing stricter about granting jumbo mortgages, CNBC reports.
Jumbo mortgages, also known as “nonconforming loans,” allow buyers to qualify for higher loans to purchase homes, typically in more expensive areas. In many areas, for 2020, the lending cap is $510,400, but in some pricier areas of the U.S. that can stretch up to $765,600.
But some borrowers are reportedly struggling to qualify as banks tighten up during the pandemic. “It is truly a problem in the real estate market,” Al Bingham, a mortgage loan officer with Momentum Loans in Sandy, Utah, told CNBC.
Prior to the pandemic, investors or banks mostly backed the jumbo mortgage market by purchasing loans they originated. But the secondary mortgage market has tightened as it faces a lot of unknowns as the pandemic continues.
“There are fewer investors interested in buying those loans,” Mike Fratantoni, chief economist at the Mortgage Bankers Association, told CNBC. That means lenders then will need to keep those jumbo mortgages within their own portfolios, which could carry higher risk.
For buyers needing a jumbo mortgage or a homeowner wanting one to refinance, they may face more hurdles and higher requirements to get one, mortgage experts warn.
For example, banking giant Wells Fargo has actually done the opposite, easing up on jumbo requirements for its existing customers only who want to refinance. However, Wells Fargo is requiring new customers to transfer $1 million or more in assets to the bank to be eligible. The bank notes this does not apply to jumbo mortgages for home purchases.
Mortgage experts advise home shoppers and refinancing customers alike to shop around, as the requirements can differ drastically for requirements for a jumbo mortgage from one lender to the next.
The 30-year fixed-rate mortgage averaged 2.98% this week, the lowest rate in Freddie Mac’s records dating back to 1971.
“The drop has led to increased home buyer demand and, these low rates have been capitalized into asset prices in support of the financial markets,” says Sam Khater, Freddie Mac’s chief economist. “However, the countervailing force for the economy has been the rise in new virus cases which has caused the economic recovery to stagnate, and this economic pause puts many temporary layoffs at risk of ossifying into permanent job losses.”
Freddie Mac reported the following national averages with mortgage rates for the week ending July 16:
30-year fixed-rate mortgages: averaged 2.98%, with an average 0.7 point, falling from a 3.03% average last week. A year ago, 30-year rates averaged 3.81%.
15-year fixed-rate mortgages: averaged 2.48%, with an average 0.7 point, falling from last week’s 2.51% average. A year ago, 15-year rates averaged 3.23%.
5-year hybrid adjustable-rate mortgages: averaged 3.06%, with an average 0.3 point, rising slightly from last week’s 3.02% average. A year ago, 5-year ARMs averaged 3.48%.
Freddie Mac reports average commitment rates along with average fees and points to reflect the total upfront cost of obtaining a mortgage.
As remote working grows more common, homeowners are trying to carve out more space, indoors and out, for a dedicated home office. When space is tight or household noise is too loud, some homeowners are taking their office outside. The backyard home office is a growing trend, The New York Timesreports.
Some homeowners are taking inspiration from the “man cave” and “she shed” phenomenon of the last few years and putting up shed-style home offices. For example, the company Studio Shed offers prefabricated panels that can be shipped, built, and assembled in a backyard to create a 100-square-foot home office. James Wilson in Oakland, Calif., who works in finance, and his wife Meg Wilson, a nurse practitioner who engages in telehealth, used one to create a private backyard office. From the time they ordered it until their backyard office was complete spanned a little over four weeks at a cost of $31,000.
Space-constrained homeowners are looking for solutions for a workspace. For some, it’s even been motivation to move.A recent survey of real estate agents conducted by HomeLight says that a designated home office will likely be the most desirable or important feature to home buyers in a post-pandemic era.
Homeowners who want to stay put are turning to their backyard to make space. Several companies are touting backyard solutions, like Kanga Room Systems (units start at about $5,000 for an 80-square-foot kit the buyer can assemble) and Modern Shed. These companies can ship standalone structures that can be assembled by homeowners to keep their home offices separated from their living spaces.
Studio Shed officials say they’ve doubled their sales over the last year. In April alone, their sales were four times it was a year prior. The company’s units start at $10,000.
The Modern Shed says they’ve noticed their orders drastically increasing as well. “We’ve always offered this very simple solution because you don’t need to tear up an existing house and you can just add it to your backyard,” Ryan Grey Smith, founder of Modern Shed, based in Seattle, toldThe New York Times. “It’s this little structure where you can feel like you’re working miles away, even though you’re only 30 feet away.”
The share of renters who say now is a good time to purchase a home is at its highest level in five years, according to the latest reading from Fannie Mae’s Home Purchase Sentiment Index. Homeowners are also starting to feel more optimistic about selling.
Four of six components that the index measures increased in June over May. But the index, which measures American sentiment about the housing market, still remains down by 15 points over the last few months. In April, the index had reached a record low as the COVID-19 pandemic ignited in the U.S.
“A second month of improvement in June allowed the HPSI to regain some of the sharp losses in optimism observed in March and April,” says Doug Duncan, Fannie Mae’s chief economist.
The index suggests more favorable conditions for first-time home buyers, which is consistent with a recent rebound in home purchase activity and applications, Duncan adds.
Homeowners sense opportunity as well. “Homeowners seem to have taken note of the resulting lack of housing supply, with an increased share saying it’s a good time to sell a home,” Duncan says. “However, this activity may cool again in the coming months, depending on the extent to which it can be attributed to consumers having chosen to delay or to accelerate home buying plans due to the pandemic.”
Fannie Mae surveyed about 1,000 Americans and found elevated concerns about job security. “We believe the continuing uncertainty regarding the coronavirus’ containment suggests an uneven and potentially volatile course toward economic recovery,” Duncan says.
Here are more results from June’s survey:
A good time to buy: Sixty-one percent of Americans surveyed said now is a good time to buy a home, up from 52% in May.
A good time to sell: Forty-one percent of respondents say it’s a good time to sell a home, rising from 32% in May.
Home price expectations: Thirty-four percent of respondents expect home prices will go up over the next 12 months, up from 26% in May. Thirty-one percent of Americans believe home prices will stay the same and 25% believe they will go down over the next year.
Job concerns: Twenty-six percent of respondents are concerned about losing their job in the next 12 months; 74% are feeling secure.
Household income: Twenty-five percent of respondents say their household income is “significantly” higher than it was 12 months ago, up from 18% in May. Sixteen percent say their household income is significantly lower, and 58% say their household income is about the same.
Mortgage rate expectations: Forty-two percent of consumers expect mortgage rates to stay near record lows. However, 32% expect rates to rise, up from 25% who believed they could rise in May, which could be creating some urgency among some buyers.
Millions of Americans have relocated this year due to the COVID-19 outbreak, according to the Pew Research Center. New data released this week shows that 22% of Americans either moved or know of someone who did.
The reasons vary, researchers say, such as college students moving out of dorms as schools closed abruptly, homeowners and renters leaving communities perceived as unsafe, and people moving from housing they could no longer afford. The findings are based on a survey conducted in early June of nearly 10,000 people.
Young adults have been the most likely to move. Thirty-seven percent of those ages 18 to 29 said they either moved, someone moved into their home, or they knew someone who moved because of the pandemic.
Overall, 28% of those who have moved during the pandemic say the most important reason was to reduce their risk of contracting the virus. An additional 23% say it was because their college campus closed, 20% said they wanted to be with family, and 18% said it was a financial decision driven by either a job loss or another money-related reason.
More home buyers are applying for loans, and they’re ready to close. Mortgage applications to purchase a home increased 5% last week and are now 33% higher than a year ago, the Mortgage Bankers Association reported Wednesday.
Record low mortgage rates last week prompted a spike in activity. Home buyer demand has proven strong since mid-May as some states started to reopen after sheltering in place to slow the COVID-19 outbreak. Buyers reemerged and are rushing to take advantage of low mortgage rates. The MBA reported the average contract interest rate for a 30-year-fixed-rate mortgage dropped to 3.26% last week.
“Mortgage rates declined to another record low as renewed fears of a coronavirus resurgence offset the impacts from a week of mostly positive economic data, such as June factory orders and payroll employment,” says Joel Kan, an MBA economist.
The average purchase loan size rose to a high of $365,700, as borrowers contend with limited supply and higher home prices, Kan says.
Meanwhile, refinance activity last week nudged up just 0.4% from the previous week. Refinance applications, however, are sill 111% higher than a year ago. The MBA notes that refinancings are likely more muted because mortgage rates have been low for so long that many borrowers may have already taken advantage and refinanced to lock in lower monthly mortgage payments.
The 30-year fixed-rate mortgage is edging closer each week to the 3% mark. Freddie Mac reported that the 30-year rate averaged 3.03% this week, the lowest since the government-sponsored enterprise began tracking such data in 1971. Last week, the 30-year rate hit 3.07%, a record at the time. “The summer is heating up as record low mortgage rates continue to spur homebuyer demand,” says Sam Khater, Freddie Mac’s chief economist. “However, it remains to be seen whether the demand will continue if COVID-19 cases rise to the point that it hinders economic growth.”
Freddie Mac reports the following national averages for the week ending July 9:
30-year fixed-rate mortgages: averaged 3.03%, with an average 0.8 point, falling from last week’s previous record low of 3.07%. Last year at this time, 30-year rates averaged 3.75%.
15-year fixed-rate mortgages: averaged 2.51%, with an average 0.8 point, falling from last week’s 2.56% average. A year ago, 15-year rates averaged 3.22%.
5-year hybrid adjustable-rate mortgages: averaged 3.02%, with an average 0.3 point, rising slightly from last week’s 3% average. A year ago, 5-year ARMs averaged 3.46%.
Freddie Mac reports average commitment rates, along with average fees and points, to reflect the total upfront cost of obtaining a mortgage.
Taylor Morrison, the fifth largest homebuilder in the country, reports a record monthly gain in orders for new-home construction—and a rise of 94% annually—in June. The builder also reports record sales across 22 major housing markets and 11 states. “To experience our best sales month in company history amid a pandemic, amid transitioning our business to a virtual environment seemingly overnight, and amid the economic and psychological impact on consumers, speaks volumes to not only Taylor Morrison’s resiliency but our customers’ resiliency, too,” Sheryl Palmer, chair and CEO of the company, told CNBC.
The Arizona-based builder says nearly all of its sales offices have reopened, but they are increasingly offering virtual tours for customers who prefer to shop from a distance. Palmer says new online tools and technology are allowing customers to do in-person, self-guided tours as well. The builder also launched a virtual appointment system, where home shoppers can maneuver through the homebuying process virtually. The technology has “forever changed the way we do business,” Palmer told CNBC in an earlier interview in June.
Low mortgage rates and a shortage of existing homes may be prompting more buyers to seek new construction. Taylor Morrison also conducted a buyer survey in May and found customers’ number one desire is better home technology to allow for remote working and home schooling. The second and third highest desires are the need for more space and more individual rooms, notably home offices.
Nationally, sales of new homes plummeted in March as the COVID-19 pandemic raged. But by May, new-home sales had rebounded 13% annually, Census Bureau data shows. Home buyers are showing patience and a desire to build homes from the ground up: Builders report the biggest increase in sales among homes that have not yet been started.
The U.S. Treasury Department’s Internal Revenue Service announced Monday that it was sticking with the July 15 tax-filing extension deadline for 2019 returns.
Those unable to meet that deadline are encouraged to file for an extension to Oct. 15. The form for filing for an extension is at IRS.gov.
Last week, Treasury Secretary Steven Mnuchin had hinted at extending the July 15 tax deadline to September. But Monday’s announcement confirmed that the date would not be changed and remain July 15.
As of June 12, the IRS says it has received 136.5 million individual income tax returns, down from more than 144 million a year ago.
About 93 million filers have received refunds, averaging $2,763, the IRS notes.
Nevertheless, “the IRS understands that those affected by the coronavirus may not be able to pay their balances in full by July 15, but we have many payment options to help taxpayers,” IRS Commissioner Chuck Rettig said in a statement. “These easy-to-use payment options are available on IRS.gov, and most can be done automatically without reaching out to an IRS representative.”
