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Fed on Rate Hike: Not Yet

The Federal Reserve voted Wednesday to continue to leave short-term rates alone, but hinted that a raise is still likely before the end of the year.

Fed Chair Janet Yellen offered an upbeat report about a strengthening economy, while still acknowledging the sluggish first half of the year. Employment is increasing and household incomes are too, she said. While the case for raising rates has strengthened, Yellen said there was no need to raise rates quite yet because inflation remains below the Fed’s 2 percent target.

“We judged that the case for an increase had strengthened but decided for the time being to wait for continued progress toward our objectives,” Yellen said at a press conference following the Fed’s policy meeting.

The Fed has kept the short-term interest rate near zero since 2008. It moved the rate up a quarter percentage point late last year but has kept them flat ever since. Economists largely predict the Fed will make a move to push rates higher at its mid-December policy meeting.

What’s this mean for housing? Mortgage rates don’t exactly follow the federal funds rate, but are loosely tied to it. Mortgage rates follow mortgage bond yields and the U.S. 10-year Treasury. Treasury yields fluctuate based on several factors.

“As for the Fed moves, mortgage lenders like to price in all these expectations before the actual event happens,” CNBC reports in an article called “Why Housing Doesn’t Care About the Fed.” “That’s why mortgage rates rose last December in anticipation of the first rate hike and then fell after that due to other global economic issues.”

Will mortgage rates keep rising then regardless of what the Fed does? Economists weigh in.

“I think rates are going to stay low, not as low as now, but lower than we are used to,” Jeremy Siegel with the Wharton School told CNBC. “We may get another half-point, three-quarter point in the next two years, on the mortgage rate that’s not going to kill the housing market.”

The 30-year fixed-rate mortgage is around a 3.75 percent national average currently.

Source: “Fed Stands Pat, But Says Case for Rate Increase Has Strengthened,” The Wall Street Journal (Sept. 22, 2016)

Posted in: Mortgage and Financing Related News

The Salary Needed to Buy a Home in 27 Metro Areas

Can you afford to buy a home? It’s a common question among potential home buyers. HSH.com recently identified exactly how much is needed to earn in order to afford the mortgage (including principal, interest, taxes, and insurance payments) on a median-priced home in 27 metro areas.

 

HSH.com used National Association of REALTORS® 2015 data from the fourth quarter on median-home prices and the fourth quarter interest rate for the 30-year fixed-rate mortgage to help determine the salary needed.

For buyers with a 10 percent down payment instead of a 20 percent down payment, the salary for the metro areas studied rose anywhere from $4,200 to $31,000, according to HSH.com.

The following is a breakdown of the salary needed for each of the 27 metros studied:

Pittsburgh

Cleveland

Cincinnati

St. Louis

Detroit

Atlanta

Tampa, Fla.

Phoenix

San Antonio

Orlando, Fla.

Minneapolis

Philadelphia

Dallas

Houston

Baltimore

Chicago

Sacramento, Calif.

Miami

Portland

Denver

Seattle

Washington

Boston

New York

Los Angeles

San Diego

San Francisco

$31,134.50

$32,523.47

$33,967.01

$34,777.53

$36,914.56

$37,551.08

$41,922.58

$43,937.76

$46,974.78

$47,810.81

$50,250.68

$51,622.40

$51,806.01

$52,163.93

$52,864.57

$57,982.85

$62,143.45

$63,048.07

$65,917.47

$68,436.22

$78,424.93

$78,625.71

$83,151.43

$86,770.19

$95,040.20

$103,164.96

$147,996.19

 

Source: “The Salary You Must Earn to Buy a Home in 27 Metros,” HSH.com

Posted in: Mortgage and Financing Related News

Mortgage Rates Reverse Course This Week, Inch Higher

For the first time in two months, mortgage rates edged higher this week.

“Treasury yields approached their highest level in a month, boosting the 30-year mortgage 2 basis points this week to 3.64 percent,” says Sean Becketti, Freddie Mac’s chief economist. “Despite this welcome breather, Fed officials have been highlighting the downside risks to the economic outlook, and the market expects the Fed to refrain from any further short-term rate increases for now.”

Freddie Mac reports the following national mortgage rate averages for the week ending March 3:

  • 30-year fixed-rate mortgages: averaged 3.64 percent, with an average 0.5 point, rising from last week’s 3.62 percent average. Last year at this time, 30-year rates averaged 3.75 percent.
  • 15-year fixed-rate mortgages: averaged 2.94 percent, with an average 0.5 point, increasing from last week’s 2.93 percent average. A year ago, 15-year rates averaged 3.03 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 2.84 percent, with an average 0.5 point, increasing from last week’s 2.79 percent average. Last year at this time, 5-year ARMs averaged 2.96 percent.

Source: Freddie Mac

Posted in: Mortgage and Financing Related News

Mortgage Rates Retreat for 4th Week

Mortgage rates continue to fall, with the 30-year fixed-rate mortgage now averaging well below 4 percent.

“The yield on the 10-year Treasury stabilized around 2 percent this week, and the 30-year mortgage rate dipped 2 basis points to 3.79 percent,” says Sean Becketti, Freddie Mac’s chief economist. “The recent market turmoil has given the Fed pause. As was universally expected, the Fed stood pat this week but kept its options open for a rate increase in March. … A hesitant Fed, sub-4-percent mortgage rates, at least for a little while longer, and strong housing fundamentals should generate a three percent increase in home sales this year.”

Freddie Mac reports the following national averages with mortgage rates for the week ending Jan. 28:

Source: Freddie Mac

Posted in: Mortgage and Financing Related News

Mortgage Rates Still on a Downward Trend

Mortgage rates continue to defy forecasts, as the 30-year fixed-rate mortgage falls even lower this week (week of 1/15/16). This marks the second consecutive week where 30-year fixed-rate mortgages declined.

“Long-term Treasury yields continue to drop, dragging mortgage rates down with them,” says Sean Becketti, Freddie Mac’s chief economist. “Turbulence in overseas financial markets is generating a flight-to-quality which benefits U.S. Treasury securities. In addition, sagging oil prices are capping inflation expectations. The net effect on the 30-year mortgage rate was a 5 basis point drop to 3.92 percent.”

Freddie Mac reports the following national averages with mortgage rates for the week ending Jan. 14:

  • 30-year fixed-rate mortgages: averaged 3.92 percent, with an average 0.6 point, dropping from last week’s 3.97 percent average. Last year at this time, 30-year rates averaged 3.66 percent.
  • 15-year fixed-rate mortgages: averaged 3.19 percent, with an average 0.5 point, falling from 3.26 percent the prior week. A year ago, 15-year rates averaged 2.98 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.01 percent, with an average 0.4 point, falling from 3.09 percent last week. Last year at this time, 5-year ARMs averaged 2.90 percent.

Source: Freddie Mac

Posted in: Mortgage and Financing Related News

Mortgage Rates Fall Even Lower This Week

Fixed-rate mortgages continue their free fall, with the 30-year fixed rate mortgage averaging 3.63 percent this week and the 15-year fixed-rate mortgage staying below 3 percent, Freddie Mac reports. The 30-year fixed-rate mortgage is at its lowest level since the week ending May 23, 2013, when it averaged 3.59 percent.

“Mortgage rates continued to fall, albeit at a slower pace,” says Frank Nothaft, Freddie Mac’s chief economist. Mortgage rates are falling amid declining bond yields and oil prices, Freddie Mac notes.

Freddie Mac reports the following national averages with mortgage rates for the week ending Jan. 22:

  • 30-year fixed-rate mortgages: averaged 3.63 percent, with an average 0.7 point, dropping from last week’s 3.66 percent average. Last year at this time, 30-year rates averaged 4.39 percent.
  • 15-year fixed-rate mortgages: averaged 2.93 percent, with an average 0.6 point, dropping from last week’s 2.98 percent average. A year ago, 15-year rates averaged 3.44 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 2.83 percent, with an average 0.4 point, dropping from last week’s 2.90 percent average. Last year at this time, 5-year ARMs averaged 3.15 percent.
  • 1-year ARMs: averaged 2.37 percent, with an average 0.4 point, holding the same from last week. A year ago, the 1-year ARM averaged 2.54 percent.

Source: Freddie Mac

Posted in: Mortgage and Financing Related News

Mortgage Rates Kick Off 2015 at 20-Month Low

Borrowing costs moved even lower this week, with the 30-year fixed-rate mortgage averaging 3.73 percent, its lowest average since May 2013.

“Mortgage rates fell to begin the year as 10-year Treasury yields slid beneath 2 percent for the first time in three months,” says Frank Nothaft, Freddie Mac’s chief economist. “Meanwhile, the Fed minutes indicated ongoing discussion regarding the timing of the first rate hike.” Many housing economists have predicted that mortgage rates will rise sometime this year, with the 30-year fixed-rate mortgage likely reaching the upper 4 percent or 5 percent range by the end of the year.

Freddie Mac reports the following national averages with mortgage rates for the week ending Jan. 8:

  • 30-year fixed-rate mortgages: averaged 3.73 percent this week, with an average 0.6 point, dropping from last week’s 3.87 percent average. The 30-year rate has not averaged this low since May 23, 2013, when it was 3.59 percent. A year ago at this time, 30-year rates averaged 4.51 percent.
  • 15-year fixed-rate mortgages: averaged 3.05 percent, with an average 0.5 point, dropping from last week’s 3.15 percent average. Last year at this time, 15-year rates averaged 3.56 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 2.98 percent, with an average 0.5 point, dropping from last week’s 3.01 percent average. A year ago, 5-year ARMs averaged 3.15 percent.
  • 1-year ARMs: averaged 2.39 percent, with an average 0.4 point, falling from a 2.40 percent average the previous week. Last year at this time, 1-year ARMs averaged 2.56 percent.

Source: Freddie Mac

Posted in: Mortgage and Financing Related News

Senate Approves Mortgage Debt Forgiveness

The Senate approved an extension of the Mortgage Debt Forgiveness Act by a wide margin this week, bringing home owners who did a short sale this year one step closer to tax relief. The bill, which passed the House of Representatives two weeks ago, is expected to be signed by President Barack Obama.

The Senate approved the bill in a 76-16 vote.

The Mortgage Debt Forgiveness Act expired at the end of 2013, making distressed home owners responsible for paying taxes on “phantom income” from the forgiven debt once their properties are sold. The tax on a 2014 short sale or workout would have been due this coming April 15 had Congress not extended the measure.

The average short sale has a mortgage forgiveness of about $75,000.

The National Association of REALTORS® issued a call to action earlier this month, urging REALTORS® to submit letters to their Congressional representatives in support of extending the Mortgage Debt Forgiveness Act.

“NAR applauds Congressional leaders in both chambers for their effort to pass this legislation before adjournment,” NAR President Chris Polychron said in a statement. “REALTORS® strongly supported the bipartisan Mortgage Forgiveness Tax Relief Act, which was included in the package to prevent underwater borrowers from paying taxes on any mortgage debt forgiven or canceled by a lender in a workout, or after their home was sold for less money than was owed.”

The extension will only apply to short sales conducted in 2014. Any further extensions will have to be considered by the new Congress, which begins its 2015 session in January.

Source: “Senate Approves Short Sale Tax Breaks,” HousingWire (Dec. 17, 2014)

Posted in: Mortgage and Financing Related News

Mortgage Rates at Lowest Point Since May 2013

The 30-year fixed-rate mortgage sunk to a 3.89 percent average this week, its lowest level since May 30, 2013. That translates to more mortgage savings for home buyers and refinancers.

Freddie Mac reports the following national averages with mortgage rates for the week ending Dec. 4:

  • 30-year fixed-rate mortgages: averaged 3.89 percent, with an average 0.5 point, dropping from last week’s 3.97 percent average. Last year at this time, 30-year rates averaged 4.46 percent.
  • 15-year fixed-rate mortgages: averaged 3.10 percent, with an average 0.5 point, dropping from last week’s 3.17 percent average. A year ago, 15-year rates averaged 3.47 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 2.94 percent, with an average 0.5 point, dropping from last week’s 3.01 percent average. Last year at this time, 5-year ARMs averaged 2.99 percent.
  • 1-year ARMs: averaged 2.41 percent, with an average 0.4 point, dropping from last week’s 2.44 percent average. A year ago, 1-year ARMs averaged 2.59 percent.

Source: Freddie Mac

Posted in: Mortgage and Financing Related News

70% Unaware of Down-Payment Assistance

Seventy percent of adults in the U.S. say they’re unfamiliar with down-payment assistance programs for middle-income home buyers in their community, according to a NeighborWorks America survey of 1,000 people. But plenty of help is available.

NeighborWorks organizations provided 6,000 buyers with more than $100 million in down-payment assistance last year. NeighborWorks expects to increase its assistance this year, too. Many local and state organizations offer down-payment assistance as well, and there are specialized programs for military vets through the Veterans Affairs loan program, for first-time buyers through the Federal Housing Administration, and for rural home buyers through the U.S. Department of Agriculture. 

“Down-payment assistance programs make home purchasing more accessible for first-time buyers,” says Marietta Rodriguez, vice president of Homeownership Programs and Lending at NeighborWorks America. “In addition, because many down-payment assistance programs require home-buyer education, these purchasers tend to be more successful in the long-term. Research has shown pre-purchase counseling helps reduce mortgage default and equips home owners with the information they need to budget for other expenses and maintain their property.”

Source: NeighborWorks America

Posted in: Mortgage and Financing Related News

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