Mortgage News in the Carolinas
Posts tagged Home Affordability
Home Affordability Still Soaring; New Records Reached
0359 days
by Geoff Brown
in Housing Analysis
Home affordability moved higher last quarter, buoyed by stable mortgage rates and falling home prices in Charlotte area and nationwide. The National Association of Home Builders reports that Q1 2011 Home Opportunity Index reached an all-time high for the second straight quarter last quarter.
Nearly 3 of 4 homes sold between January-March 2011 were affordable to households earning the national median income of $64,400. It’s the 9th straight quarter in which home affordability surpassed 70 percent, and the highest reading in more than 20 years of record-keeping.
From metropolitan area-to-metropolitan area, though, affordability varied.
In the Midwest, for example, affordability was high. 7 of the 10 most affordable markets were in the Midwest, including Kokomo, Indiana, in which 98.6% of homes were affordable to median income-earning families. Indianapolis, Indiana placed second for “big city” affordability.
The most affordable “big city” last quarter was Syracuse, New York. With a 94.5% affordability rate, Syracuse ranks 8th nationally in the Home Opportunity Index. It’s the second time that Syracuse placed first in the last 4 quarters.
Meanwhile, on the opposite end of home affordability, the “Least Affordable Major City” title went to the New York-White Plains, NY-Wayne, NJ area for the 12th consecutive quarter. Just 24.1 percent of homes were affordable to households earning the area median income, down more than 1 percent from the last reading.
Regardless of where you live, remember that rising mortgage rates can levy more pain on your household budget than can rising home values. And mortgage rates are expected to rise long before home prices do.
The rankings for all 225 metro areas are available for download on the NAHB website.
Mortgage Rates Return To April 2010 Levels
0464 days
by Geoff Brown
in Mortgage Rates
Mortgage rates are surging.
Over the last 7 days, conventional, 30-year fixed rate mortgage rates have jumped 24 basis points, or 0.24%, according to Freddie Mac’s weekly Primary Mortgage Market Survey.
It’s the largest 1-week spike in mortgage rates in recent history.
The 30-year fixed rate mortgage now averages 5.05% nationally. This is much, much higher than what we saw last November when mortgage rates were 4.17% and looked headed to the 3s.
That’s not the case today. In fact, it’s the opposite.
Mortgage rates have risen quickly and fiercely this year. As of this morning, mortgage rates are higher over 9 consecutive days, marking the longest mortgage rate losing streak in the last 6 years, at least.
Note, however, that when you call your loan officer or bank, you may not be quoted the same 5.05% rate as shown by Freddie Mac. This is because Freddie Mac-reported rates are national averages. Any given mortgage rate may be higher or lower depending on its region.
As an illustration, look how this week’s rates breaks down by area:
- Northeast : 5.07 with 0.7 points
- Southeast : 4.99 with 0.9 points
- North Central : 5.09 with 0.6 points
- Southeast : 5.06 with 0.6 points
- West : 5.02 with 0.8 points
In other words, the rate-and-fee combination you’d be offered in your home town of Charlotte is different from what you’d be offered if you lived somewhere else. In the Southeast, rates tend to be low and fees tend to be high; in the North Central U.S., it’s the opposite.
The good news is that, as a mortgage applicant, you can have your pricing whichever way you prefer. If getting the absolute lowest mortgage rate is what’s most important to you, have your loan officer structure your loan as in the “Southeast Style”. Or, if you prefer to have as few closing costs as possible and don’t mind slightly higher rates, ask for that type of set-up instead.
Either way, consider locking your rate as soon as possible. If rates keep rising, it won’t be long before they touch 6 percent.
Home Affordability Gets A Boost From Weak Back-to-School Retail Receipts
0613 days
by Geoff Brown
in Retail Sales
The recent rise in mortgage rates was slowed this week after the government released its Retail Sales report for August.
Prior to Tuesday, mortgage rates had been spiking across Carolinas on the resurgent hope for U.S. economic recovery. The sentiment shift was rooted in reports including the Pending Home Sales Index and Initial Jobless Claims, both of which showed surprising strength last week.
August’s Retail Sales, though, after removing motor vehicles, auto parts and gasoline sales, failed to maintain the momentum. Its figures were actually in-line with expectations — it’s just that expectations weren’t all that high.
Wall Street now wonders whether the weak Back-to-School shopping season will trend forward into the holidays.
The doubt spells good news for mortgage rates and home affordability.
Because Retail Sales is tied to consumer spending and consumer spending accounts for two-thirds of the economy, a weak reading tends to drag down stock markets and pump up bonds, and when bonds are in demand, mortgage rates fall.
This is exactly what happened Tuesday. The soft Retail Sales data eased stock markets down, and generated new demand for mortgage bonds. This demand caused bond prices to rise, which, in turn, caused mortgage rates to fall.
Mortgage rates did not cut new lows this week, but they’re very, very close.
With mortgage rates at historical lows, it’s an excellent time to look at a refinance, or gauge what financing a new home would cost. Low rates like this can’t last forever.
For Clues About The Future Of Mortgage Rates, Watch For Inflation
0793 days
by Geoff Brown
in Mortgage Rates
Homes are more affordable across the nation as the housing market emerges from a slow winter season with mortgage rates still near 5 percent.
Soft housing and low rates are an excellent combination for home buyers but whereas home values rise with a gradual pace, mortgage rates change in an instant. It’s something worth watching.
Each 0.25% increase to conventional or FHA rates adds approximately $16 per month for each $100,000 borrowed. Mortgage rate volatility can change your household budget.
If you’re trying to gauge whether rates will be rising or falling, one keyword for which to listen is “inflation”. Mortgage rates are highly responsive to inflation.
By definition, inflation is when a currency loses its value; when what used to cost $2.00 now costs $2.15. As consumers, we perceive inflation as goods becoming more expensive. However, it’s not that goods are more expensive, per se. It’s that the dollars used to buy them are worth less.
This is a big deal to mortgage rates because mortgage bonds are denominated, bought, and sold in U.S. dollars. As the dollar loses value to inflation, therefore, so does the value of every mortgage bond in existence. When bonds lose their value, investors don’t want them and bond prices fall. Mortgage rates move opposite of bond prices.
Prices down, rates up.
In today’s market, the relationship between inflation and mortgage rates is helping home buyers. The Cost of Living made its smallest annual gain in 6 years last month and the Fed has repeatedly said that inflation will stay low for some time. The combination is driving investors to buy mortgage bonds which, in turn, is suppresses rates.
So long as it lasts, the cost of homeownership will remain relatively low. Combined with the expiring tax credit, the timing to buy a Charlotte home may be as good as it gets.
