National Home Prices Set New All-Time High
According to the S&P CoreLogic Case-Shiller National Index the national housing market set a new all-time high in 2016. The previous peak was reached in July of 2006.
Mortgage Bankers Association Cuts Forecast
The Mortgage Bankers Association cut their forecast for new loan origination volumes in the first quarter of 2017 by 3.5%. They are citing higher interest rates as the key cog in the forecast cut.
Are Mortgage Interest Rates High?
Mortgage interest rates have earned their way into the hottest topics of discussion lately, and since the recent presidential election, mortgage interest rates seem to have a mind of their own. In the months leading up to the election, mortgage interest rates were near an all-time low. In fact, the 30-year mortgage interest rate during that time was the second lowest point on record for the country, hovering around 3.44%. This was just outside the lowest recorded point in the country’s history, which was right around 3.350% – recorded approximately 3 years earlier.
Since the presidential election, mortgage interest rates have been nothing short of volatile. In fact, on many days shortly following the election, rates were changing so frequently that many lenders temporarily restricted access to their pricing engines and stopped publishing rates until the volatility settled. For the month of November, the 30-year mortgage interest rate shot up to 3.77 from 3.47 in October; this was the single largest increase in the 30-year monthly average in over three years. Per Freddie Mac’s most recent market study effective 12/1/16, the current average 30-year mortgage interest rate is just shy of 4.10%.
So, are mortgage interest rates high? Well taking into perspective historical mortgage interest rates, not at all. In all reality, a 4.10% interest rate is still extremely low. Imagine having a mortgage interest rate at 18%… Well that’s what they were around in the early 80’s. Yes, an 18% interest rate was uncommon, but double digit rates weren’t. In fact, from late 1978 until 1991, the average 30-year mortgage rate over that time was right around 12.30%. The return of the single digit interest rate came in 1991 and we haven’t seen double digit rates since. In addition, we haven’t seen the 30-year monthly average above 6% since September 2008 – above 7% since January, 2002 – or above 8% since August 1996.
So are rates going up? They have over the last couple months. How long will they continue to go up or how high will they go? People may have their opinions, but no one knows. What we do know though, is that rates are still historically extremely low and housing affordability remains high – now is still a good time to buy!
Source of historic interest rates: http://www.freddiemac.com/pmms/pmms30.htm
Loan Limits Increase for 2017
The largest financing agencies of the United States government have decided to increase loan limits in 2017. Below are the highlights of the increase:
– FHA loan limit “floor” will increase to $275,665 from $271,050. (These are the limits observed in Lee County)
-FHA loan limit “ceiling” will rise to $636,150 from $625,500.
-Conforming Fannie Mae and Freddie Mac loan limit will increase to $424,100.
FHA states that maximum loan limits increased in 2,948 counties and remained the same in 286 counties.
Studies have estimated that these increases could have a billion dollar effect on the loan market.
First-Time Homeownership Driven By Millennials
According to the National Association of Realtors, first-time home buyers are getting off the sidelines and purchasing homes. The share of home purchases by first-time buyers rose to 35% this year from 32% last year.
This is a great sign that the job market is finally getting better for those who have less experience in the workforce. The low mortgage interest rates are also helping with affordability.
Published Interest Rates Misleading
There has been a lot of buzz lately regarding the difference between the published interest rate and the rate that is actually offered to borrowers. The interest rate published as the “average rate” by Fannie Mae and Freddie Mac is always lower than the actual interest rate offered by mortgage lenders or brokers. The reason for this discrepancy are loan level pricing adjustments “LLPA”. The published rate is the rate offered to borrowers with no negative loan level pricing adjustments. These can include credit score, loan to value, property type, and many other factors.
When you are shopping for your next home loan keep in mind that you probably will not qualify for the “average rate” published on websites.
Fannie Mae Day 1 Certainty
Day 1 Certainty is a new offering Fannie Mae is giving their lender partners.
This should mean greater speed and simplicity when lenders deliver loans to Fannie Mae. This will increase efficiency for lenders when verifying income, assets, and employment.
There will also be additional improvements for customers eligible for a property inspection waiver (PIW).
This efficiency should mean the an easier and more hassle-free loan process.
Are you eligible for a VA loan?
A VA loan is a mortgage loan guaranteed by the U.S. Department of Veterans Affairs (VA). The VA loan was designed to help eligible veterans purchase a primary residence with long-term financing by offering more flexible credit terms. Veterans can qualify for a VA mortgage loan with up to a 103.3% loan-to-value ratio without paying private mortgage insurance and interest rates are lower than conventional loans. There is an up-front funding fee for a VA loan which ranges from 0 to 3.3% of the loan amount and is paid to the Veterans Administration. The up-front-funding fee for the VA loan can be financed into the loan amount, resulting in a higher loan to value ration than 100%; this fee is waived for veterans who are receiving 10% disability or more for their time in the service. In addition to the low down payment, debt-to-income ratios on a VA loan can go higher than a conventional loan. This means that a buyer can qualify for a higher monthly mortgage payment in relation to their monthly income than they could for a conventional loan. The maximum VA loan guarantee varies by county. Currently, in Lee County, Collier County and Charlotte County the maximum guarantee is $417,000 at a 100% loan to value. VA loans are the most lax when it comes to credit history: no foreclosures or short sales within the last 2 years (opposed to 7 and 4 for a conventional loan respectively) and bankruptcies must be 2 years from discharge of chapter 7 (opposed to 4 years for a conventional loan). Credit scores can go below conventional loan, but most lenders require a minimum credit score of 620.
Veterans who are looking to purchase a condo must make sure the condo is approved for financing by the VA. A list of approved condos can be found at: https://entp.hud.gov/idapp/html/condlook.cfm.
D&V Home Mortgage offers VA home loans, FHA home loans, conventional home loans and jumbo home loans in Lee, Collier and Charlotte counties. If you are looking to get a mortgage loan in the Southwest Florida market, give us a call today to see if you qualify!
Mortgage Rates Plunge to Three Year Low
Mortgage rates plummeted to their lowest levels in three years this week.
According to the Washington Post, weak first-quarter economic growth, persistent global economic worries and last week’s anemic jobs report all contributed to pushing down bond yields. Because mortgage rates tend to follow the yield on the 10-year Treasury, home loan rates retreated.
D&V Home Mortgage offers VA home loans, FHA home loans, conventional home loans and jumbo home loans in Lee, Collier and Charlotte counties. If you are looking to get a mortgage loan in the Southwest Florida market, give us a call today to see if you qualify!