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Tag: Interest Rates

Mortgage Rates Lower Today, But Volatility Remains a Risk

Mortgage rates moved lower today after starting the week by jumping noticeably higher yesterday.  Today’s gains came courtesy of global growth concerns early in the trading session and a strong 10yr Treasury auction during domestic market hours.  This morning’s mortgage rates weren’t too much better than yesterday’s, but several lenders offered mid-day improvements after the Treasury auction.  Lenders who held firm would likely improve tomorrow morning unless overnight market drama undoes today’s gains.

Why do Treasury auctions matter to mortgage rates?  Treasuries and MBS (mortgage-backed securities–the bonds that most directly affect mortgage rates) are both part of the bond market.  They correlate quite well for a variety of reasons (not the least of which being that Treasuries are the risk-free starting point against which every dollar-denominated bond investment is measured).  As such, when Treasuries have a good day, MBS (and thus, mortgage rates) tend to have at least a decent day.  Today was no exception.

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Fidelity Home Group | Mortgage News | Mortgage Rates

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Mortgage Rates Begin The Week Slightly Higher

Mortgage rates moved slightly higher to begin the holiday-shortened week.  With Labor day being a bank holiday, mortgage lenders were closed yesterday despite much of the world remaining open.  Futures and overseas markets thus had some extra time to distance themselves from Friday’s latest levels.  In today’s case, that distance was in an unfriendly direction for rates.

The damage is minimal in the bigger picture.  On average, lenders are quoting the same rates seen last week, but with slightly higher closing costs today.  Most of the weakness in the underlying bond market is centered on US Treasuries as opposed to the mortgage-backed securities (MBS) that serve as the foundation for mortgage rates.  The Treasury-specific weakness is likely due to the presence of several big Treasury auctions this week in addition to heavy corporate bond issuance (which tends to hurt Treasuries more than MBS).

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Reasons You Should Consider Selling This Fall

Reasons You Should Consider Selling This Fall | Simplifying The Market

If you’re trying to decide when to sell your house, there may not be a better time to list than right now. The ultimate sellers’ market we’re in today won’t last forever. If you’re thinking of making a move, here are four reasons to put your house up for sale sooner rather than later.

1. Your House Will Likely Sell Quickly

According to the Realtors Confidence Index released by the National Association of Realtors (NAR), homes continue to sell quickly – on average, they’re selling in just 17 days. As a seller, that’s great news for you.

Average days on market is a strong indicator of buyer demand. And if homes are selling quickly, buyers have to be more decisive and act fast to submit their offer before other buyers swoop in.

2. Buyers Are Willing To Compete for Your House

In addition to selling quickly, homes are receiving multiple offers. That same survey shows sellers are seeing an average of 4.5 offers, and they’re competitive ones. The graph below shows how the average number of offers right now compares to previous years:Reasons You Should Consider Selling This Fall | Simplifying The MarketBuyers today know bidding wars are a likely outcome, and they’re coming prepared with their best offer in hand. Receiving several offers on your house means you can select the one that makes the most sense for your situation and financial well-being.

3. When Supply Is Low, Your House Is in the Spotlight

One of the most significant challenges for motivated buyers is the current inventory of homes for sale. Though it’s improving, it remains at near-record lows. The chart below shows how today’s low inventory stacks up against recent years. The lighter the blue is in the chart, the lower the housing supply.
Reasons You Should Consider Selling This Fall | Simplifying The MarketIf you’re looking to take advantage of buyer demand and get the most attention for your house, selling now before more listings come to the market might be your best option.

4. If You’re Thinking of Moving Up, Now May Be the Time

If your current home no longer meets your needs, it may be the perfect time to make a move. Today, homeowners are gaining a significant amount of wealth through growing equity. You can leverage that equity, plus current low mortgage rates, to power your move now. But these near-historic low rates won’t last forever.

Experts forecast interest rates will rise. In their forecast, Freddie Mac says:

“While we forecast rates to increase gradually later in the year, we don’t expect to see a rapid increase. At the end of the year, we forecast 30-year rates will be around 3.4%, rising to 3.8% by the fourth quarter of 2022.”

When rates rise, even modestly, it’ll impact your monthly payment and by extension your purchasing power.

Bottom Line

Don’t delay. The combination of housing supply challenges, low mortgage rates, and extremely motivated buyers gives sellers a unique opportunity this season. If you’re thinking about making a move, let’s chat about why it makes sense to list your house now.

Content previously posted on Keeping Current Matters Fidelity Home Group | Home Buyer Experts | Mortgage Rates

#fidelityhomegroup, #homebuyerexperts, For Sellers, Interest Rates, Move-Up Buyers

Mortgage Rates Relatively Unharmed, Despite Unexpected Moves in Bonds

It was a busy week for economic data with several reports that were pertinent to the housing market. In addition to being the perennial top dog among economic reports, this Friday’s jobs report was especially important due to its role in the Federal Reserve’s decision-making process.

The Fed is widely expected to announce a forthcoming reduction (aka “tapering) of its bond buying program by the end of the year.  If the jobs report had been strong enough, investors thought the Fed might make the announcement a few weeks from now at the September policy meeting.  

 

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Mortgage Rates Barely Changed Ahead of Important Jobs Report

Mortgage rates are based primarily on bonds.  Bonds take cues from economic data (among other things).  And tomorrow’s big jobs report is the most consistently important piece of economic data each month as far as the bond market is concerned.  This logically means that there is an increased risk of volatility tomorrow.

Compounding the issue is the fact that the Fed is also paying careful attention to labor market data as they wait for evidence of enough progress to begin tapering their monthly bond purchases.  The Fed’s bond buying program is a key reason that rates are as low as they are.  Although the market is widely expecting a tapering announcement by the end of the year, the timing of the announcement would have a noticeable incremental effect on rates.

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5 Reasons Today’s Housing Market Is Anything but Normal

5 Reasons Today's Housing Market Is Anything but Normal | Simplifying The Market

There are many headlines out there that claim we’re reverting to a more normal real estate market. That would indicate the housing market is returning to the pre-pandemic numbers we saw from 2015-2019. But that’s not happening. The market is still extremely vibrant as demand is still strong even while housing supply is slowly returning.

Here’s the definition of normal from the Merriam-Webster Dictionary:

“conforming to a type, standard, or regular pattern: characterized by that which is considered usual, typical, or routine.

Using this definition, here are five housing industry metrics that prove we’re nowhere near normal.

1. Mortgage Rates

If we look at the 30-year mortgage rate chronicled by Freddie Mac, we can see the average rates by decade:

  • 1970s: 8.86%
  • 1980s: 12.7%
  • 1990s: 8.12%
  • 2000s: 6.29%
  • 2010s: 4.09%

Today, the average mortgage rate stands at 2.87%, which is very close to the historic low.

Currently, mortgage rates are anything but usual, typical, or routine.

2. Home Price Appreciation

According to Black Knight, a housing data and analytics company, the average annual appreciation on residential real estate prices since 1995 has been 4.14%.

According to the latest forecast from the National Association of Realtors (NAR), home price appreciation will hit 14.1% this year, which will be greater than any year since Black Knight began collecting this data.

Currently, home price appreciation is anything but usual, typical, or routine.

3. Months’ Supply of Inventory (Homes for Sale)

According to NAR:

“Months’ supply refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace. Historically, six months of supply is associated with moderate price appreciation, and a lower level of months’ supply tends to push prices up more rapidly.”

As of the latest Existing Homes Sales Report from NAR, the current months’ supply of inventory stands at 2.6. That’s less than half of a normal supply.

Currently, the supply of homes for sale is anything but usual, typical, or routine.

4. Days It Takes To Sell a Home

The days-on-market metric gives an indication of how hot a market is and how quickly homes are selling. In 2019, prior to the pandemic, the average days on market stood at 35, according to NAR. Today, that number is cut in half and is now at 17 days.

Currently, the days-on-market metric is anything but usual, typical, or routine.

5. Number of Offers per Listing

According to NAR, the number of offers per listing stood at 2.2 in 2019. Today, that number is double at 4.5.

Currently, the number of offers per listing is anything but usual, typical, or routine.

Bottom Line

When…

  1. Mortgage rates are near historic lows
  2. Price appreciation is at historic highs
  3. Housing inventory is less than half of the normal amount
  4. The time it takes to sell a home is cut in half, and
  5. There are twice as many offers on each house

…it’s hard to say we’re in a normal market.

Content previously posted on Keeping Current Matters Fidelity Home Group | Home Buyer Experts | Mortgage Rates

#fidelityhomegroup, #homebuyerexperts, For Buyers, For Sellers, Housing Market Updates, Interest Rates, Pricing

Mortgage Rates Unchanged to Slightly Higher

Much like yesterday, mortgage rates were unchanged to slightly higher, depending on the lender.  And once again, the differences in pricing strategies depend on timing in conjunction with yesterday’s pricing decisions.  

Lenders who reacted to yesterday afternoon’s bond market losses by raising rates were able to offer flat to slightly lower rates today.  Every other lender was either flat to slightly higher.

As is often the case, we’re talking about incredibly small movements in the bigger picture (because mortgage rates don’t reliably move enough to be worth measuring in day-over-day terms).  Prospective borrowers are likely to see the exact same rate quotes as yesterday.  The only differences would be modestly higher or lower upfront costs.

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Mortgage Rates Drift Up From Recent Lows

Mortgage rates were unchanged to slightly higher today, depending on the lender.  The differences in pricing strategies stem from the timing of changes in the bond market. 

Mortgage lenders set their rates based on the prices of mortgage-backed securities (MBS), which change constantly throughout the day.  Despite those changes, there’s often enough stability for lenders to “set it and forget it.”  On days where MBS move more than normal, lenders can change their mortgage rate offerings in the middle of the day.

In today’s case, those changes were just getting to be too big to overlook right at the end of the trading day.  As such, only a handful of lenders opted to make any changes and even then, those changes were fairly small.

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Mortgage Rates Fall Back to 3 week Lows

Mortgage rates drifted lower again today, with the average lender getting back down to the lowest levels since the first week of August.  In a general sense, today’s friendly rate momentum represented follow-through momentum after Fed Chair Powell soothed the market on Friday morning.

Both stocks and bonds improved as Powell said that he had been considering tapering the Fed’s asset purchase program this year, but the surge in covid cases due to the delta variant complicated the outlook.  The Fed’s asset purchases help rates stay lower than they otherwise might be and rates are expected to rise a bit when the Fed finally pulls the trigger on tapering.

All that having been said, the Fed’s decisions are ultimately dependent on economic data.  Specifically, the labor market needs to show that it can weather the various storm cycles of the pandemic.  To that end, there are several upcoming reports that can offer some clarity with this Friday’s jobs report being the most important.  In other words, even if the Fed doesn’t have anything new to say this week, an exceptionally strong jobs report could easily push rates back up. 

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Mortgage Rates Higher This Week, But Stabilized Today

Mortgage rates stabilized today after moving higher at a moderately quick pace over the past 2 days.  To be sure, today’s rates are definitely higher than those seen at the end of last week, despite numerous headlines to the contrary. The headlines in question are based on Freddie Mac’s weekly rate survey which is published on Thursday morning, but tends to capture week-over-week rate movement between Monday and the previous Monday.  That ended up being a very favorable comparison this time around.  The rising rates of the past 2 days conclusively changed the game.

Why are rates rising though?  Rates are dictated by the bond market.  As bond prices fall, yields rise, and higher yields coincide with higher rates (indeed, “yield” is simply market jargon for “rate”).  

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