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Mortgage Rates Climb For A Second Week
Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing the 30-year fixed-rate mortgage (FRM) averaged 7.22 percent for the week ending 05/02/2024.
“The 30-year fixed-rate mortgage increased for the fifth consecutive week as we enter the heart of Spring Homebuying Season,” said Sam Khater, Freddie Mac’s Chief Economist. “On average, more than one-third of home sales for the entire year occur between March and June. With two months left of this historically busy period, potential homebuyers will likely not see relief from rising rates anytime soon. However, many seem to have acclimated to these higher rates, as demonstrated by the recently released pending home sales data coming in at the highest level in a year.”
- The 30-year FRM averaged 7.22 percent as of May 2, 2024, up from last week when it averaged 7.17 percent. A year ago at this time, the 30-year FRM averaged 6.39 percent.
- The 15-year FRM averaged 6.47 percent, up from last week when it averaged 6.44 percent. A year ago at this time, the 15-year FRM averaged 5.76 percent.
The PMMS® is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20 percent down and have excellent credit.
Keeping an Eye On Mortgage Rate Moves
What Is Going on with Mortgage Rates?
You may have heard mortgage rates are going to stay a bit higher for longer than originally expected. And if you’re wondering why, the answer lies in the latest economic data. Here’s a quick overview of what’s happening with mortgage rates and what experts say is ahead.
Economic Factors That Impact Mortgage Rates
When it comes to mortgage rates, things like the job market, the pace of inflation, consumer spending, geopolitical uncertainty, and more all have an impact. Another factor at play is the Federal Reserve (the Fed) and its decisions on monetary policy. And that’s what you may be hearing a lot about right now. Here’s why.
The Fed decided to start raising the Federal Funds Rate to try to slow down the economy (and inflation) in early 2022. That rate impacts how much it costs banks to borrow money from each other. It doesn’t determine mortgage rates, but mortgage rates do respond when this happens. And that’s when mortgage rates started to really climb.
And while there’s been a ton of headway seeing inflation come down since then, it still isn’t back to where the Fed wants it to be (2%). The graph below shows inflation since the spike in early 2022, and where we are now compared to their target rate:
As the graph shows, we’re much closer to their goal of 2% inflation than we were in 2022 – but we’re not there yet. It’s even inched up a hair over the last 3 months – and that’s having an impact on the Fed’s plans. As Sam Khater, Chief Economist at Freddie Mac, explains:
“Strong incoming economic and inflation data has caused the market to re-evaluate the path of monetary policy, leading to higher mortgage rates.”
Basically, long story short, inflation and its impact on the broader economy are going to be key moving forward. As Greg McBride, Chief Financial Analyst at Bankrate, says:
“It’s the longer-term outlook for economic growth and inflation that have the greatest bearing on the level and direction of mortgage rates. Inflation, inflation, inflation — that’s really the hub on the wheel.”
When Will Mortgage Rates Come Down?
Based on current market data, experts think inflation will be more under control and we still may see the Fed lower the Federal Funds Rate this year. It’ll just be later than originally expected. As Mike Fratantoni, Chief Economist at the Mortgage Bankers Association (MBA), said in response to the Federal Open Market Committee (FOMC) decision yesterday:
“The FOMC did not change the federal funds target at its May meeting, as incoming data regarding the strength of the economy and stubbornly high inflation have resulted in a shift in the timing of a first rate cut. We expect mortgage rates to drop later this year, but not as far or as fast as we previously had predicted.”
In the simplest sense, what this says is that mortgage rates should still come down later this year. But timing can shift as new employment and economic data come in, geopolitical uncertainty remains, and more. This is one of the reasons it’s usually not a good strategy to try to time the market. An article in Bankrate gives buyers this advice:
“ . . . trying to time the market is generally a bad idea. If buying a house is the right move for you now, don’t stress about trends or economic outlooks.”
Bottom Line
If you have questions about what’s happening in the housing market and what that means for you, let’s connect.
The Perks of Buying over Renting
Thinking about buying a home? While today’s mortgage rates might seem a bit intimidating, here are two solid reasons why, if you’re ready and able, it could still be a smart move to get your own place.
1. Home Values Typically Go Up Over Time
There’s been some confusion over the past year or so about which way home prices are headed. Make no mistake, nationally they’re still going up. In fact, over the long-term, home prices almost always go up (see graph below):
Using data from the Federal Reserve (the Fed), you can see the overall trend is home prices have climbed steadily for the past 60 years. There was an exception during the 2008 housing crash when prices didn’t follow the normal pattern, but generally, home values kept rising.
This is a big reason why buying a home can be better than renting. As prices go up and you pay down your mortgage, you build equity. Over time, this growing equity can really increase your net worth. The Urban Institute says:
“Homeownership is critical for wealth building and financial stability.”
2. Rent Keeps Rising in the Long Run
Here’s another reason you may want to think about buying a home instead of renting – rent just keeps going up over the years. Sure, it might be cheaper to rent right now in some areas, but every time you renew your lease or sign a new one, you’re likely to feel the squeeze of your rent getting higher. According to data from iProperty Management, rent has been going up pretty consistently for the last 60 years, too (see graph below):
So how do you escape the cycle of rising rents? Buying a home with a fixed-rate mortgage helps you stabilize your housing costs and say goodbye to those annoying rent increases. That kind of stability is a big deal.
Your housing payments are like an investment, and you’ve got a decision to make. Do you want to invest in yourself or keep paying your landlord?
When you own your home, you’re investing in your own future. And even when renting is cheaper, that money you pay every month is gone for good.
As Dr. Jessica Lautz, Deputy Chief Economist and VP of Research at the National Association of Realtors (NAR), says:
“If a homebuyer is financially stable, able to manage monthly mortgage costs and can handle the associated household maintenance expenses, then it makes sense to purchase a home.”
Bottom Line
If you’re tired of your rent going up and want to explore the many benefits of homeownership, let’s talk to explore your options.
What More Listings Mean When You Sell Your House
The number of homes for sale is playing a big role in today’s housing market. And, if you’re considering whether or not to list your house, today’s limited supply is one of the biggest advantages you have right now. That’s because your house stands out more when the inventory is low, especially if it’s priced right.
But the supply of homes for sale is growing. According to the latest data from Realtor.com, new listings (homeowners who just put their house up for sale) are trending up (see graph below):
This graph shows more homeowners are putting that sale sign up in their yards compared to the same time last year. As Realtor.com says:
“. . . sellers turned out in higher numbers this March as newly listed homes were 15.5% above last year’s levels. This marked the fifth month of increasing listing activity after a 17-month streak of decline.”
What This Means for You
If you’ve been putting off selling your house, maybe it’s time to start thinking about it again – before your neighbors do. While we’re not going to suddenly have a surplus of homes for sale, each house that pops on the market in your area runs the risk of pulling buyer attention away from yours.
For example, if your neighbor gets in on the action and lists their house too, it means you’ll have competition right next door. You don’t want buyers to tour your house and fall in love with someone else’s. You want yours to be in the spotlight.
A great agent can make that happen. They’ll help you get your house ready to list, draw attention to everything today’s buyers are looking for, and help you price it right. That way buyers are really drawn to your listing and eager to make it their home.
If you’re ready and able to sell now, here’s your chance to get the best of both worlds. Since the supply of homes for sale is growing, you’ll have more options for your own move. But you’ll also be able to sell while your house will still stand out.
Bottom Line
Even though inventory is still low, you don’t want to wait for more competition to pop up in your neighborhood. Let’s connect to go over the perks of selling before more homes come to the market.
Is Now a Great Time To Sell Your House?
Thinking about selling your house? If you are, you might be weighing factors like today’s mortgage rates and your own changing needs to figure out your next move.
Here’s something else to consider. According to the latest Home Purchase Sentiment Index (HPSI) from Fannie Mae, the percent of respondents who say it’s a good time to sell is on the rise (see graph below):
Why Are Sellers Feeling so Optimistic?
One reason why is because right now is traditionally the best time of year to sell a house. A recent article from Bankrate says:
“Late spring and early summer are generally considered the best times to sell a house. . . . While today’s rates are relatively high, low inventory is still keeping sellers in the driver’s seat in most markets.”
These are the seasons when most people move. That means buyer demand grows. And because there still aren’t enough homes for sale to meet that demand, sellers see some serious perks. According to Rocket Mortgage:
“Homes that are listed at the end of spring and the beginning of summer typically sell faster at a higher sales price.”
What Does This Mean for You?
More sellers are coming to realize conditions are ripe for a move. And that’s one reason why we’re seeing more homeowners put their homes up for sale. If you think you might want to get in on the action, it’s a good idea to start preparing.
A local real estate agent can help you get your house ready by offering advice on how best to fix it up and make it appealing to buyers in your area.
They also know if you list during the peak buying seasons of spring and early summer, you might sell quickly and for a higher price.
Bottom Line
If you list during the spring and early summer, you might sell your house quickly and for a higher price. When you’re ready to make the most of today’s seller’s market, let’s get in touch.
How Much Equity Have You Built UP?
Did you know the equity you have in your current house can help make your move possible? Once you sell, you can use it for a larger down payment on your next home, so you’re borrowing less. Or, you may even have enough to be an all-cash buyer. The typical homeowner has $298,000 in equity. If you want to find out how much you have, let’s connect for a Professional Equity Assessment Report.
Mortgage Rates Continue Climb
Freddie Mac (OTCQB: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing the 30-year fixed-rate mortgage (FRM) averaged 7.17 percent.
“Mortgage rates continued rising this week,” said Sam Khater, Freddie Mac’s Chief Economist. “Despite rates increasing more than half a percent since the first week of the year, purchase demand remains steady. With rates staying higher for longer, many homebuyers are adjusting, as evidenced by this week’s report that sales of newly built homes saw the biggest increase since December 2022.”
- The 30-year FRM averaged 7.17 percent as of April 25, 2024, up from last week when it averaged 7.10 percent. A year ago at this time, the 30-year FRM averaged 6.43 percent.
- The 15-year FRM averaged 6.44 percent, up from last week when it averaged 6.39 percent. A year ago at this time, the 15-year FRM averaged 5.71 percent.
The PMMS® is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20 percent down and have excellent credit
Is a Multi-Generational House Right for You?
Have you ever thought about living in the same house with your grandparents, parents, or other loved ones? You’re not alone. A lot of people are choosing to buy multi-generational homes where everyone can live together. Let’s check out why they think it’s a good idea to see if it might be a good fit for you, too.
Why People Are Choosing Multi-Generational Living
According to the National Association of Realtors (NAR), here are just a few key reasons buyers opted for multi-generational homes over the past year (see graph below):
Two of the top reasons had to do with aging parents. 27% of buyers chose multi-generational homes so they could take care of their parents more easily. And 19% did it to spend more time with them. A lot of older adults want to age in place, and living in a home with loved ones can help them do just that. If your parents are hoping to do the same, but need a bit of help, a multi-generational home may be worth considering.
But buying a multi-generational home isn’t just about being close or taking care of the people you love—it can save you money, too. 22% of buyers say they picked a multi-generational home to cut down on costs, and 11% needed a bigger house multiple incomes could afford together.
Sharing costs like the mortgage and utilities can make owning a home more affordable. This is especially helpful for first-time homebuyers who might find it challenging to buy a place on their own in today’s market.
As Axios explains:
“Financial concerns and caregiving needs are two of the major reasons people live with their parents (and parents’ parents).”
How an Agent Is Key in Finding the Right Home for You
Looking for the perfect multi-generational home is a bit trickier than finding a regular house. You’ve got more people, which means more opinions and needs to think about. It’s kind of like putting together a puzzle where all the pieces need to fit perfectly.
If you’re into the idea of living with loved ones and want all the benefits that come with it, team up with a local real estate agent who can help you out.
Bottom Line
Whether you’re looking to save money or want to take care of your loved ones, buying a multi-generational home might be a good idea for you. If you want to find out more, let’s talk.
Foreclosure Numbers Are Nothing Like 2008
You’ve been keeping up with the news lately and have probably come across some articles saying the number of foreclosures in today’s housing market is going up. And that may leave you feeling a bit worried about what’s ahead, especially if you owned a home during the housing crash in 2008.
The reality is, while increasing, the data shows a foreclosure crisis is not where the market is headed.
Here’s the latest information stacked against the historical data to put your mind at ease.
The Headlines Make the Increase Sound Dramatic – But It’s Not
The increase the media is calling attention to is a little bit misleading. That’s because it’s comparing the most recent numbers to a time when foreclosures were at historic lows. And that lopsided comparison is making it sound like a much bigger deal than it actually is.
Back in 2020 and 2021, there was a moratorium and forbearance program that helped millions of homeowners avoid foreclosure during challenging times. That’s why numbers for just a few years ago were so low.
Now that the moratorium has come to an end, foreclosures are resuming and that means numbers are rising. But it’s an expected increase, not a surprise, and not a cause for alarm. Just because foreclosure filings are up doesn’t mean the housing market is in trouble.
To prove that to you, let’s expand the comparison out a bit more. Specifically, we’ll go all the way back to the housing crash in 2008 – since that’s what people worry may happen again.
The graph below uses research from ATTOM, a property data provider, to show foreclosure activity has been consistently lower since the crash in 2008:
What the data shows is that things now aren’t anything like they were surrounding the housing crash. The bars in red are when there were over 1 million foreclosure filings a year. In 2023, there were roughly 357,000. That’s a big difference.
A recent article from Bankrate explains one of the reasons things aren’t like they were back then:
“In the years after the housing crash, millions of foreclosures flooded the housing market, depressing prices. That’s not the case now. Most homeowners have a comfortable equity cushion in their homes.”
Basically, foreclosure activity is nothing like it was during the crash. That’s because most homeowners today have enough equity to keep them from going into foreclosure. And that’s a really good thing for homeowners and for the market.
The reality is, the data shows a foreclosure crisis is not where the market is today, or where it’s headed.
Bottom Line
Right now, putting the data into context is more important than ever. While the housing market is experiencing an expected rise in foreclosures, it’s nowhere near the crisis levels seen when the housing bubble burst, and that won’t lead to a crash in home prices.
