Mortgage Rates Near Highest Averages of Year

Mortgage Rates Near Highest Averages of Year
Freddie Mac article by Daily Real Estate News | June 15, 2018

Mortgage rates were back on the rise this week, increasing to their second highest level this year. The move follows the Federal Reserve’s vote on Wednesday to raise its federal fund rate by 25 basis points.


The 30-year fixed-rate mortgage followed suit, rising eight basis points to average 4.62 percent during the week, Freddie Mac reports.

“The good news is that the impact on consumer budgets will be smaller than past rate hike cycles,” says Freddie Mac’s Chief Economist Sam Khater. “That is because a much smaller segment of mortgage loans in today’s market are pegged to short-term rate movements. The adjustable rate mortgage share of outstanding loans is a lot smaller now—8 percent versus 31 percent—than during the Fed’s last round of tightening between 2004 and 2006. Still, inflation continues to firm and borrowing costs are inching higher. Although wages are slowly growing, stronger gains would certainly go a long way in helping consumers offset these increases in prices and rates.”

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

  • 30-year fixed-rate mortgages: averaged 4.62 percent, with an average 0.4 point, up from last week’s 4.54 percent average. Last year at this time, 30-year rates averaged 3.91 percent.
  • 15-year fixed-rate mortgages: averaged 4.07 percent, with an average 0.4 point, rising from last week’s 4.01 percent average. A year ago, 15-year rates averaged 3.18 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.83 percent, with an average 0.3 point, rising from last week’s 3.74 percent average. A year ago, 5-year ARMs averaged 3.15 percent.

Source: Freddie Mac; REALTOR® Magazine Online, Daily Real Estate News 061518

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Does Consolidating and Refinancing Student Loans Help First-Time Homebuyers?

Does Consolidating and Refinancing Student Loans Help First-Time Homebuyers?
Guest Writer:; Jeff Gitlen

LendEDUcroppedlogoProspective first-time homebuyers today are struggling with a burden not typically experienced by their parents’ generation: overwhelming student debt.

According to a recent survey, 80 percent of people between the ages of 22 and 35 point to their student loans are the direct reason why they haven’t bought a house yet. Only a generation ago, this was never an issue.

There are currently 45 million people in the United States with student loan debt and recent graduates have an average balance of over $27,000.

Monthly student loan payments eat up a substantial amount of income which make banks wary of issuing mortgages to student loan borrowers. Yet, this hasn’t stopped millennials, who carry the most student loan burden, from purchasing homes.

Just how are they convincing banks to approve a mortgage if they also have quite high student loan balances?

Increasingly, first-time homebuyers with student loans are taking advantage of student loan consolidation and refinancing to improve their chances and reduce the associated risks of more debt.

How Your Student Loans Affect Your Home Buying Power

There are a number of factors which influence your eligibility for a mortgage. These include credit score, down payment, and debt-to-income ratio. Your debt-to-income ratio is an indicator of your debt burden on a monthly basis. Essentially, it shows what percentage of your monthly income does it take to pay down your debt.

The allowable debt-to-income ratio for first time home buyers varies from region to region. There are very likely different debt-to-income requirements for someone buying a home in rural Montana than someone looking to purchase in Manhattan. Under most circumstances, mortgage brokers will expect less than a 43 percent ratio. For example, a monthly income of $4,000, and debt repayments of less than $1,720.

If you’ve done a quick mental calculation, and believe you have a higher debt-to-income ratio, there are two options on the table which might help reduce your monthly payments. If paying down your debt isn’t an immediate option, consider one of the following.

Should You Do a Federal Loan Consolidation?

If you have federal loans, consider exploring what federal loan consolidation options are on the table for you. If you carry multiple federal student loans, you may be eligible for federal consolidation.

When you consolidate your federal student loans together with a Direct Consolidation Loan, you will only be responsible for paying one federal loan with an interest rate that is a weighted average of the other loans rounded up to the nearest eighth of a percent. Many borrowers also opt to extend their repayment terms when consolidating their loan with the government – lowering their monthly payments. With lower monthly payments, your debt-to-income ratio will also be reduced which would be a more positive signal to a mortgage lender, so it could help you.

You should be aware that by extending your repayment term, however, you will end up paying more over the life of the loan.

Should You Refinance Your Student Loans?

Student loan refinancing is similar to consolidation in the sense that it pays off multiple loans with one lump sum, except in this case you are consolidating with a private lender.

In most cases, the borrower also benefits from lower interest rates and – depending on the selected term length – lower monthly payments. Just like with a loan consolidation through the federal government, lower monthly payments and longer repayment terms could reduce your debt-to-income ratio. If this can reduce your monthly debt ratio, then it could be a good sign on a mortgage application.

Refinancing is available for both federal and private student loans, but refinancing is only offered by private lenders. As soon as you refinance federal student loans through a private lender you lose eligibility for all the protections and repayment plans that federal student loans come with.

If you think you will need income-driven repayment plans, student loan forgiveness, or deferment and forbearance protections in the future, you should avoid refinancing. You will end up relinquishing these benefits if you decide to refinance. You should also remember that extending your repayment term may cost more in the long run.

Timing Your Student Loan Refinance

If you’ve decided to apply student loan refinancing with a private lender and are also in the market for a mortgage, timing is of utmost importance. Applying for refinancing often requires a hard credit check which your credit score will be temporarily lowered.

As mentioned earlier, credit score is one of the deciding factors for mortgage applications and – although often not as important as the debt-to-income ratio – it still plays a vital role. If you want to refinance your student loans before applying for a mortgage, you may want to do it at least six month in advance so that the hard inquiry does not affect your eligibility or interest rate.

To sum it up, refinancing can help you apply for a mortgage, but it will only be worth it if you can it puts you in a position to more quickly reduce your debt balance. This can be especially handy if you have a high income which would allow you to reduce your debt-to-income ratio sooner rather than later – helping you become buyer-ready.

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Consumer Sentiment Breaks Record—Again

Consumer Sentiment Breaks Record—Again
Fannie Mae   article by Daily Real Estate News | June 11, 2018

House 1049For the second consecutive month, Fannie Mae’s Home Purchase Sentiment Index reached an all-time survey high in May. But as home prices rise, consumer attitudes about buying and selling a home are diverging even more.

The net share of survey respondents who say now is a good to sell rose to 46 percent and is now up 14 percentage points year over year. Meanwhile, the net share who say now is a good time to buy fell to 28 percent and has shown little improvement over the past year, Fannie Mae notes.

The Home Purchase Sentiment Index “edged up to another survey high in May, bolstered in part by a fresh record high in the net share of consumers who say it’s a good time to sell a home,” says Doug Duncan, Fannie Mae’s chief economist. “However, the perception of high home prices that underlies this optimism cuts both ways, boosting not only the good-time-to-sell sentiment but also the view that it’s a bad time to buy, and presents a potential dilemma to repeat buyers.”

Fannie’s Home Purchase Sentiment Index is up 6.1 points compared to last year. In May, it posted a reading of 92.3.

Here’s a closer look at other results in the May survey (based on 1,000 respondents):

  • 49 percent: The net share of Americans who say home prices will rise in the next 12 months, unchanged from the month prior.
  • 78 percent: The net share of Americans who say they are not concerned about losing their job, rising 2 percentage points month over month to reach a new survey high.
  • 21 percent: The net share of Americans who say their household income is significantly higher than it was 12 months ago, up 3 percentage points month over month to reach a new survey high.

Source: Fannie Mae; REALTOR® Magazine Online, Daily Real Estate News 061118

Inventory Increases Across Middle Tennessee Housing Market

Inventory Increases Across Middle Tennessee Housing Market
Press Release by Greater Nashville REALTORS® | June 7, 2018

House 1048NASHVILLE, Tenn. (June 7, 2018) – There were 3,767 closings reported for the month of May, according to figures provided by Greater Nashville REALTORS®. This represents a 4.5 percent decrease from the 3,943 closings reported for May 2017.

Year-to-date closings total 15,396, a 1 percent decrease compared to the 15,606 closings reported through May 2017.

“Greater Nashville had a record setting month last year in May 2017 with the highest number of closings in one month in the history of the region. It is not surprising to see a normalization of the sales in May 2018,” said Greater Nashville REALTORS® President Sher Powers. “The higher number of homes under contract at the end of May 2018, compared to last year, sets the stage for what could be a very strong month of June.”

“Even with rising interest rates we see a healthy and vibrant market with continued strong sales numbers.”

There were 3,575 properties under contract at the end of the month, compared to the 3,540 properties under contract at this time last year. The average number of days on the market for a single-family home was 28 days.

“The increase in residential and condominium inventory is very healthy for the market. We saw a substantial inventory increase in both residential single-family homes and condominiums. This helps balance out a market that has seen a much lower inventory supply.”

The median residential price for a single-family home during May was $299,900 and for a condominium it was $226,000. This compares with last year’s median residential and condominium prices of $279,142 and $205,000, respectively.

Active inventory at the end of May was 9,511 which increased from 8,557 in 2017.

About Us: Greater Nashville REALTORS® is one of Middle Tennessee’s largest professional trade associations and serves as the primary voice for Nashville-area property owners. REALTOR® is a registered trademark that may be used only by real estate professionals who are members of the National Association of REALTORS® and subscribe to its strict code of ethics.

View the May 2018 Market Data Infographic

Source: Greater Nashville REALTORS® Press Release June 7, 2018


Amazon HQ2 Finalists Ranked on Housing

Amazon HQ2 Finalists Ranked on Housing
ATTOM Data Solutions   article by Daily Real Estate News | May 31, 2018

Amazon plans to announce its second headquarters location later this summer, and a handful of finalist cities are eagerly awaiting the decision. Amazon declared 20 finalists in the running for its HQ2 site. Cities are making their best offers to the online retail giant. Amazon promises to add up to 50,000 new high-paying jobs and invest $5 billion in the local economy to the chosen host city. Amazon will continue to maintain its headquarters in Seattle as well.

Ahead of the announcement, ATTOM Data Solutions, a real estate research firm, ranked 19 of the U.S. finalists (excluding Toronto). The finalists were ranked on the following seven factors: median home prices, five-year home price appreciation, affordability, average school test scores, crime rates, property tax rate, and environmental hazard risk.

The HQ2 finalist that emerged on top of ATTOM Data Solutions’ rankings: Raleigh, N.C. The area got a boost from its relatively affordable homes, above-average school scores, and below-average crime rates and property taxes.

“It’s striking that 16 out of the 19 markets have median home prices that are lower than the city of Seattle, which our data shows was $585,000 at the end of Q4 2017,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “The only exceptions are Boston, Los Angeles, and New York, indicating that Amazon is interested in markets that have relatively affordable housing for employees. At the end of the day, two of the most important factors for the decision will be finding a market with an ample supply of workers with the skills Amazon is looking for along with an ample supply of relatively affordable housing for those workers to live in. A market like Raleigh certainly has the affordable housing, and it also has an ample supply of skilled workers thanks to the several top-notch universities in the vicinity.”


Source: “Amazon HQ2 Finalists Ranked by Housing Market Health,” ATTOM Data Solutions (May 30, 2018); REALTOR® Magazine Online, Daily Real Estate News 053118

Nationally: Sales Struggle to Overcome Housing Shortages

Nationally: Sales Struggle to Overcome Housing Shortages
National Association of REALTORS®
article by Daily Real Estate News | May 24, 2018

Blame it on the low inventory of available property: Total existing-home sales failed to gain traction in April, according to the National Association of REALTORS® latest housing report, released Thursday.

Total existing-home sales—which are completed transactions that include single-family homes, townhomes, condos, and co-ops—decreased 2.5 percent to a seasonally adjusted annual rate of 5.46 million in April. Sales are now 1.4 percent below a year ago. This also marks the second consecutive month sales have fallen on an annual basis.

Regional Breakdown  The following is a breakdown of existing-home sales across the country in April:

  • Northeast: existing-home sales dropped 4.4 percent to an annual rate of 650,000, and are now 11 percent below a year ago. Median price: $257,200—2.8 percent higher than a year ago.
  • Midwest: existing-home sales were unchanged month-over-month at an annual rate of 1.29 million in April, and are 3 percent below a year ago. Median price: $202,100—up 4.6 percent from a year ago.
  • South: existing-home sales dropped 2.9 percent to an annual rate of 2.33 million in April, but are still 2.2 percent above a year ago. Median price: $227,600—up 3.9 percent from a year ago.
  • West: existing-home sales dropped 3.3 percent to an annual rate of 1.19 million in April and are 0.8 percent below a year ago. Median price: $382,100—up 6.2 percent from a year ago.

“The root cause of the underperforming sales activity in much of the country so far this year continues to be the utter lack of available listings on the market to meet the strong demand for buying a home,” says Lawrence Yun, NAR’s chief economist. “REALTORS® say the healthy economy and job market are keeping buyers in the market for now even as they face rising mortgage rates. However, inventory shortages are even worse than in recent years, and home prices keep climbing above what many home shoppers are able to afford.”

For the inventory that is out there, homes are selling fast. Strong buyer demand mixed with low inventory levels are prompting homes to sell at a record pace.

Here’s a closer look at some of the key indicators from NAR’s latest housing report:

Home prices: The median existing-home price for all housing types in April was $257,900, up 5.3 percent from a year ago.

Inventories: Total housing inventory at the end of April rose 9.8 percent to 1.80 million existing homes available for sale. Inventories are still 6.3 percent lower than a year ago. Unsold inventory is at a four-month supply at the current sales pace.

Days on the market: Properties stayed on the market an average of 26 days in April, down from 29 days a year ago. Fifty-seven percent of homes sold in April were on the market for less than a month.

“What is available for sale is going under contract at a rapid price,” Yun says. “Since NAR began tracking this data in May 2011, the median days a listing was on the market was at an all-time low in April, and the share of homes sold in less than a month was at an all-time high.”

All-cash sales: All-cash transactions comprised 21 percent of sales in April, unchanged from a year ago. Individual investors account for the biggest bulk of cash sales. Investors purchased 15 percent of homes in April, also unchanged from a year ago.

Distressed sales: Foreclosures and short sales made up just 3.5 percent of sales in April, the lowest since NAR began tracking such data in October 2008. That is also down from 5 percent a year ago. Broken out, 3 percent of April sales were foreclosures and 0.5 percent were short sales.


Source: National Association of REALTORS®; REALTOR® Magazine Online, Daily Real Estate News 052418