30-Year Mortgage Rate Charges Above 4 Percent

2018 has started in a similar fashion to how 2017 finished.

The average 30-year, fixed mortgage rate charged to 4.04 percent this week, up from 3.99 percent the week prior, according to Freddie Mac’s Primary Mortgage Market Survey® (PMMS®). The 15-year, fixed rate averaged 3.49 percent, up from 3.44 percent the week prior, while the five-year, Treasury-indexed hybrid adjustable rate averaged 3.46 percent, the same as the week prior.

“The U.S. weekly average for the 30-year fixed mortgage rate rose above 4 percent for the first time since last summer to 4.04 percent in this week’s survey,” says Len Kiefer, deputy chief economist at Freddie Mac. “This is the highest weekly average for the 30-year fixed rate mortgage since May of 2017. Some may be wondering if this is the last time we’ll see a three handle on the 30-year mortgage rate. Never say never, but inflation is firming, the Federal Reserve’s Beige Book indicates broad-based economic growth, and labor markets are tightening. This means upward pressure on long-term rates, like the 30-year fixed-rate mortgage, is building.”

If rates continue as indicated, the home buying season may come early as potential homebuyers look to jump on the last set of historically low rates. From our perspective; all charts point to several Fed' increases in 2018 and 5% mortgage rates on the horizon.

Why Fall Is the Best Time of Year to Buy a Home

Few people know Fall is arguably the best time of year to buy a new home. The weather becomes cooler, the leaves begin to change, football season begins, and pumpkin-flavored everything is in abundant supply. But there's another great reason to love fall that might be less obvious...it's the best time of year to purchase a home.

Prices Are Typically Lower
The concept that buyers can get a better bang for their buck in the fall has been a popular notion for some time, but two recent reports validated that line of thought with data from actual home sales. According to a report by RealtyTrac, sales prices are typically 2.6% below fair market value during October — a steeper discount than any other month of the year. Another report by NerdWallet found that sales prices drop about 2.96% from summer to fall, which is roughly an $8,300 discount for the median home. It's also worth noting that while listing prices don't decrease much, sales prices do, and that's the price that counts for potential buyers.

There's Less Competition
The majority of people buy a home in spring or summer, when inventory is traditionally high. This gives families time to make their move before the school year starts, but the tradeoff is that buyers are faced with strong competition and often pay higher than asking price during that time. People who buy in fall, however, have less competition, and sellers are more motivated. This means more negotiating power for the buyer, which often results in a better deal.

There's Still Inventory
It's true that the inventory of homes for sale is at its peak during spring and summer, but when you buy in the fall, there's still a decent supply of homes left to choose from. Buying a home in the fall gives you the best of both worlds — lower prices and less competition but still enough inventory to find the home you want.

If you're serious about buying a home, doing so this fall may save you money or help you afford more than you expect. Plus, with interest rates on the rise, the longer you wait, the less buying power you may have. Click here to learn more about the impact that rising interest rates have on affordability. NMLS#1043983

Considering Buying or Refinancing a Home? Read This....

According to a survey conducted by J.D. Power, 27% of new homeowners ultimately came to regret their choice of lender. Twenty seven percent. The major reason for the dissatisfaction was overall poor customer experience. That's pretty vague so let's dive further. A lack of communication or unmet expectations (again back to communication) topped the "poor customer experience" sub list. Other regrets listed included pressure from the lender to choose a particular product/loan and not closing on time. Communication is a two way street. As a homeowner or potential homebuyer, you can remove some of the tension and turmoil of home loan process by carefully vetting potential lenders. Here are 5 questions to ask potential lenders before you make a commitment.

1. What mortgage programs do you offer? In many cases, choosing the best loan for your specific financial situation requires working with a lender who offers a wide array of loans. You don’t want to work with a lender who tries to push you into one loan simply because that’s the only option from their limited selection. Ask them if they regularly handle the type of loan you are looking for. If the type of loan you are looking for is more specific than say, a conventional fixed-rate mortgage, a little more expertise is useful — and in some cases, it might be necessary. An uncommon home loan like a United States Department of Agriculture loan, for instance, must go through an approved lender.

2. Inquire about the qualifications for the home loan you are seeking. There may be two lenders who offer the same type of loan, but their minimum requirements could differ. For instance, Department of Veterans Affairs loans require a minimum credit score of 620, but a lender might require a minimum score of 640. Comparison-shop. Don’t assume the same type of loan means the same terms.

3. Ask your lender to provide an estimate of the rates and fees expected to pay. Important note here; If you have taxes and insurance tied to your mortgage payment, an initial estimate will never guarantee your final, out-of-pocket expense. Numbers will change as things like title are received or surveys are approved or ordered. That said, it can be a solid jumping-off point for evaluating lenders. If the loan programs are the same, a helpful starting point is to compare the interest rate and total origination costs. It is important to know rates fluctuate, so try comparing lenders on the same day to get the most accurate mortgage rate comparisons. Speaking of rates....

4. Ask when you may be able to do a rate lock. As we mentioned above, mortgage rates can change multiple times a day. They can be as fluid as the stock market. Be sure to ask about the associated fees, including how much it costs to extend the lock should it expire before closing.

5. What is the time estimate for processing my home loan? This is critically important if you are selling a home or coordinating the end of a current lease with a new home purchase. Under the TRID guidelines, it's vitally important you receive your initial closing disclosure four business days before your closing date. In short, get the key dates of the appraisal and underwriting approval. Of course, it’s always a good idea to build in a small buffer if you can — and not just because loan preparation can take longer than expected. Along these lines, make sure you explain that you expect communication in a straightforward and timely manner.

Low Interest Rate Train is Leaving the Station

If you currently are or have been considering refinancing your home loan but have put if off because life happens, your opportunity may be coming to a close. Trump's victory speech in the early hours of Wednesday included a pledge to spend on rebuilding America's infrastructure — a plan that should stir economic growth and mean substantial new debt. These comments might be what the US economy needs to get moving again after 4+ years of relatively flat growth. They are also inflationary in nature. Which is bad for borrowing rates.

This new exacerbates the fact, mortgage application volume fell 1.2 percent last week from the previous week, according to the Mortgage Bankers Association and was down nearly 11 percent in the past four weeks, as rates have already climbed from historic lows.

As of this morning (November 10, 2016), the 10-year note was yielding 2.07 percent, the highest level since Jan. 14, and the 30-year was at 2.86, also a January high in afternoon trading. It was the biggest one day jump in the 10-year yield since Aug. 11, 2011.

"Globally, rates have begun to creep upwards as investors anticipate less aggressive monetary policies from central banks, and U.S. rates are being pushed upwards in response," said Michael Fratantoni, the MBA's chief economist. "Additionally, new data shows continued positive signals regarding the job market and rising inflation, indicating that the Fed is likely to hike in December and will continue increasing rates next year."

In closing, the interest rates in the mid-3’s for government loan programs, such as FHA & VA, could be gone as quickly as months end as upward pressure on the 10yr gains momentum. If, as many expect, President-Elect Trump rolls out the trillion dollar infrastructure plan, we may very well be looking at interest rates in the upper 5% range by this time next year.