During the first quarter of 2014, 65.5 percent of new and existing homes sold were affordable to a family earning the U.S. median income of $63,900, according to the National Association of Home Builders Opportunity Index. The improvement over the previous quarter was largely due to a dip in the national median home price and the fact that average mortgage rates remained steady during this period. But the slight increase in the number of affordable homes – up from 64.7 percent at the end of last year – is also an encouraging sign for the housing market going into the spring and summer season. David Crowe, NAHB’s chief economist, said the first-quarter results are another indicator that this is an opportune time to buy a home, as home prices and mortgage rates are expected to rise through the end of this year and into next. Also in the release, the national median home price fell from $205,000 in the fourth quarter of 2013 to $195,000 in the first quarter of this year. More here.
Tag Archive for mortgage rates
According to the Mortgage Bankers Association’s Weekly Applications Survey, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances fell to its lowest level since November 2013 last week. Interest rates were down for FHA-backed loans and 15-year fixed-rate mortgages as well, while rates for jumbo loans remained unchanged from the week before. Falling mortgage rates led to an increase in refinance activity, with the Refinance Index increasing 7 percent from the previous week. The surge in refinance demand also brought the refinance share of total mortgage activity back up to 50 percent. The seasonally adjusted Purchase Index, on the other hand, fell 1 percent from the week before. The drop in mortgage rates marks the third consecutive week rates have fallen. The MBA’s survey has been conducted weekly since 1990 and covers 75 percent of all retail residential mortgage applications. More here.
Demand for loans to purchase homes surged last week, according to the Mortgage Bankers Association’s Weekly Applications Survey. The seasonally adjusted Purchase Index gained 9 percent from one week earlier, contributing to a 5.3 percent increase in overall mortgage loan application volume. Mike Fratantoni, MBA’s chief economist, said the spike in demand for purchase applications likely reflects the impact of continued growth in the job market and lower mortgage rates. In fact, average mortgage rates fell across all loan categories last week, including 30-year fixed-rate loans with conforming and jumbo balances, FHA loans, and 15-year fixed-rate loans. The drop brought average rates on conforming and jumbo balances to their lowest level all year. Also, the Refinance Index gained 2 percent from the week before. The MBA’s survey has been conducted weekly since 1990 and covers more than 75 percent of all U.S. retail residential mortgage applications. More here.
New research shows the costs associated with buying and owning a home are less expensive than monthly rent after just two years living in a house. The study, from Zillow’s economics team, looked at a comprehensive list of costs and benefits for both buying and renting a home, including a 20 percent down payment, property tax, owner’s insurance, maintenance, rent payments and rental insurance. The results found buying a home to be a better deal in half of the nation’s metropolitan areas. This is due primarily to the fact that rent has been rising across the country and, despite recent increases in home prices and mortgage rates, buying a house remains very affordable based on historical averages. Among the factors to watch in order to determine whether it’s more costly to buy or rent, home values are one of the most significant. The faster home prices rise, the quicker a homeowner’s equity will offset the costs of owning a home. On the other hand, as rental costs increase, the cost of renting becomes more expensive than buying that much quicker. More here.
Analysts from Fannie Mae’s Economic & Strategic Research Group are forecasting gains for the spring and summer season. After a slow start to the year, economic growth is expected to pick up in the second quarter and continue to build through the end of the year. Doug Duncan, Fannie Mae’s chief economist, said economic and housing growth will emerge from the tough winter weather and gain momentum into the spring and summer seasons. According to Duncan, fiscal and monetary policy jitters have waned and recent employment numbers came in at reasonable levels. Those improvements should help economic activity and boost the housing market. In fact, Fannie Mae expects a nearly 20 percent increase in housing starts this year and an improved market for newly built homes. The new home market faces less competition from foreclosures and distressed properties, Duncan said. And, with supply low, new home sales should continue to perform well. Generally, Fannie Mae expects the rise in home prices and mortgage rates to take a toll on sales and homebuilding, though they are forecasting modest gains for housing overall this year. More here.
Though mortgage rates rose in 2013, they are still well below historical norms. And, according to a new report from Trulia, historically low rates mean buying a home is still cheaper than renting in the 100 largest housing markets across the country. Even with last year’s price increases, mortgage rates would have to hit 10.6 percent before renting a home was more affordable than buying one. Jed Kolko, Trulia’s chief economist, said today’s mortgage rates would be the envy of buyers from the 1980s, ’90s, and 2000s. But Kolko also warns buyers that, in many markets, the rent-vs-buy decision depends on what happens to prices after you buy. Sharp price appreciation could make homeownership essentially free, Kolko said. But, on the other hand, price decreases could mean renting, in retrospect, would’ve been the better deal. Still, when Trulia calculated the cost of renting vs. buying assuming that prices will rise or fall as they did during each market’s worst seven-year period, buying remained more affordable than rent in all but 37 of 100 metro areas. More here.
Freddie Mac’s quarterly refinance analysis for the fourth quarter of 2013 shows borrowers continuing to take advantage of historically low mortgage rates to reduce their monthly mortgage payment and shorten their loan terms. According to the report, borrowers who refinanced in 2013 will save on net approximately $21 billion in interest over the next year. Frank Nothaft, Freddie Mac’s vice president and chief economist, said the refinance boom began to wind down as the pool of potential borrowers declined and mortgage rates increased during the second half of the year. According to Nothaft, the refinance share of total mortgage activity will fall further this year, as refinance demand drops and the emerging purchase market consumes a bigger piece of the pie. Also in the report, the average interest rate reduction in the fourth quarter was about 1.5 percentage points. On a $200,000 loan, that’s a $3,000 savings over the next 12 months. More here.