30-Year Mortgage Rate Hits New Record Low – Industry Outlook

By June 5, 2020Industry Outlook

30-Year Mortgage Rate Hits New Record Low – Based on Freddie Mac reports, borrowing costs fell recently with the 30-year fixed-rate mortgage setting a new record low for the third time in the last few months. The 30-year fixed-rate mortgage averaged 3.15% recently, the lowest average in Freddie Mac’s records dating back nearly 50 years. “These unprecedented rates have certainly made an impact, as purchase demand rebounded from a 35% year-over-year decline in mid-April to an 8% increase most recently, a remarkable turnaround given the sharp contraction in economic activity,” says Sam Khater, Freddie Mac’s chief economist. “Additionally, refinance activity remains elevated, and low mortgage rates have been accompanied by a $70,000 decline in average loan size of refinance borrowers this year. This means a broader base of borrowers are taking advantage of the record-low rate environment, which will benefit the economy.”


Source and link to the full article: Freddie Mac

Home Prices Still Rising, but at a Slower Pace – According to realtor.com® housing data, the COVID-19 pandemic may be hitting the economy hard, bringing the highest national unemployment rate since the Great Depression, but median home prices defied the odds and jumped 3.1% year over year recently. The National Association of REALTORS® recently reported that prices for existing homes jumped 7.4% in April compared to a year earlier. All four major regions of the U.S. posted annual price gains. “There are still buyers in the market,” says realtor.com® Senior Economist George Ratiu. “But given the very limited number of properties available, buyers are willing to pay more.”

Source and link to the full article: “Forget About the Recessionary Real Estate Bargains: Home Prices Are Still Rising,” realtor.com(R) (May 28, 2020)

More First-Time Home Buyers Are Entering the Market – Based on the National Association of REALTORS® April 2020 REALTORS® Confidence Index Survey, shows the shift in the mix of home buyers has been occurring since the pandemic began. Investor numbers are shrinking, while the number of home shoppers purchasing their first home ever is on the rise. These buyers are freed from having to sell a home prior to purchasing, and they are valuing homeownership in a pandemic. The share of first-time buyers rose to 36% in April 2020, up from 32% a year ago. “Home buyers are facing less competition from investors, and they are also benefiting from low mortgage rates,” notes Scholastica “Gay” Cororaton, an NAR researcher on Economists’ Outlook blog. With fewer investors, cash sales dropped to 15% of existing-home sales in April, which is down from 20% a year prior.

Source and link to the full article: “5 Housing Market Trends as Of April 2020,” National Association of REALTORS® Economists’ Outlook blog (May 22, 2020)

Mortgage Applications Defy Forecasts, Up 54% Since April – According to the Mortgage Bankers Association reports, home buyers are entering the market at a much brisker pace than many economists forecasted. Mortgage applications for home purchases continue their upward streak, rising 9% recently. This marks the sixth consecutive gain for home purchase applications and a 54% increase since early April. “The home purchase market continued its path to recovery as various states reopen, leading more home buyers resuming their home search,” says Joel Kan, the MBA’s economist. “Additionally, the purchase loan amount has increased steadily in recent weeks and is now at its highest level since mid-March.” Housing demand was strong at the start of the year but significantly declined as the COVID-19 pandemic set in. Economists are noticing the sudden uptick as buyers reenter the market. The Commerce Department reported that newly built single-family homes saw an increase of nearly 1% in April. Inventory shortages in the existing-home market are prompting more buyers to new homes, analysts speculate.

Source and link to the full article: “Mortgage Demand From Homebuyers Shows Unexpectedly Strong and Quick Recovery, as Applications Spike 9% From a Year Ago,” CNBC (May 27, 2020) and “The Summer Home-Buying Season May Be Much Hotter Than Expected—Here’s Why,” realtor.com(R) (May 27, 2020)

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