A Steadily Growing Housing Market – Industry Outlook

By June 4, 2019Industry Outlook

A Steadily Growing Housing Market  According to Freddie Mac, borrowing costs this year likely will be lower than originally predicted. Freddie Mac recently downgraded its forecast for the 30-year fixed-rate mortgage, projecting it will average 4.3% this year, below last year’s average of 4.5%. Further, Freddie Mac economists predict only a small increase in rates in 2020, with the 30-year fixed-rate mortgage averaging 4.5% next year. The lower mortgage rates likely will be a boon for housing, Freddie Mac notes in its May 2019 Forecast. “The combined positive impact of low mortgage rates, a strong labor market, low unemployment, and modest wage growth supports our forecast for a steadily growing housing market in 2019,” Freddie Mac says in its report.

Mortgage Rates Drop for Fourth Straight Week – Based on Freddie Mac reports, mortgage rates continue to decline while lowering borrowing costs for home buyers this spring. “Mortgage rates fell for the fourth consecutive week and continued the medium-term trend of lower rates since late 2018,” says Sam Khater, Freddie Mac’s chief economist. “The drop in mortgage rates is causing purchase demand to rise, and the mix of demand is skewing to the higher end as more affluent consumers are typically more responsive to declines in rates.”

Mortgage rates for 30, 15, ARM. Full information at http://www.freddiemac.com/pmms/

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FHA Clarifies Rules to Help Banks Issue More Loans – According to a recent report in Housing Wire, the number of traditional banks that participate in the Federal Housing Administration’s single-family mortgage insurance program has declined since the housing crisis. Banks have contributed to just 13% of the FHA’s origination volume, down from 44% in 2010. Banks have feared strict penalties and that even a minor error could expose them to fines. To drive more bank originations, the agency says it’s clarifying lender certification requirements to open up more competition and financing choices for borrowers, particularly first-time and minority home buyers. On Thursday, the FHA released proposed rules seeking to clarify its loan-level and annual lender-level certifications on compliance documents from lenders, which it hoped would ease some banks’ compliance concerns. Among the proposed changes, the FHA clarified what constitutes a defective loan and how problems can be remedied. “It has become clear that our lending partners are seeking clarity and greater certainty when documenting compliance with FHA requirements,” says Brian Montgomery, acting deputy secretary of the U.S. Department of Housing & Urban Development and FHA commissioner. “We are proposing a new, more transparent set of requirements that will preserve our enforcement authority. We anticipate that this will encourage more lender participation in FHA business, thus increasing competition in the market and resulting in greater choices for borrowers.” “Successfully addressing these issues will give lenders more confidence in participating in the FHA program and enable participating lenders to better serve homebuyers seeking an FHA loan,” Ed DeMarco, president of the Housing Policy Council, told HousingWire. 

Consumers Say Housing Is a Strong Financial Investment – Based on Federal Reserve Bank of New York’s 2019 Survey of Consumer Housing Expectations, sixty-five percent of households nationwide view buying a home as a good financial investment. Nearly 72 percent of renters say they would prefer to own instead of rent, if they had the financial resources to do so, the survey found. Renters ages 50 and older were more likely than younger renters to say they prefer to be homeowners. Renters have the perception that access to mortgage credit is loosening, with 21 percent saying obtaining a mortgage is “easy” or “very easy” which is the highest percentage since 2014. However, nearly 58 percent perceive obtaining a mortgage as “somewhat difficult” or “very difficult.” As for existing homeowners, they’re eager to invest more in their homes. The percentage of homeowners who expect to invest at least $5,000 in their homes over the next one to three years continues to be elevated, according to the study.

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