Mortgage Rates Dip Below 3% – Based on Freddie Mac reports, the 30-year fixed-rate mortgage averaged 2.98% recently, the lowest rate in Freddie Mac’s records dating back to 1971. “The drop has led to increased home buyer demand and these low rates have been capitalized into asset prices in support of the financial markets,” says Sam Khater, Freddie Mac’s chief economist. “However, the countervailing force for the economy has been the rise in new virus cases which has caused the economic recovery to stagnate, and this economic pause puts many temporary layoffs at risk of ossifying into permanent job losses.”
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Source and link to the full article: Freddie Mac
Lenders Tighten Up on Jumbo Mortgages – According to CNBC reports, home buyers may face stricter credit score requirements and larger down payment or higher cash reserve requirements if trying to qualify for a supersized mortgage. Lenders reportedly are growing stricter about granting jumbo mortgages. Jumbo mortgages, also known as “nonconforming loans,” allow buyers to qualify for higher loans to purchase homes, typically in more expensive areas. In many areas, for 2020, the lending cap is $510,400, but in some pricier areas of the U.S. that can stretch up to $765,600. But some borrowers are reportedly struggling to qualify as banks tighten up during the pandemic. “It is truly a problem in the real estate market,” Al Bingham, a mortgage loan officer with Momentum Loans in Sandy, Utah, told CNBC. Prior to the pandemic, investors or banks mostly backed the jumbo mortgage market by purchasing loans they originated. But the secondary mortgage market has tightened as it faces a lot of unknowns as the pandemic continues. “There are fewer investors interested in buying those loans,” Mike Fratantoni, chief economist at the Mortgage Bankers Association, told CNBC. That means lenders then will need to keep those jumbo mortgages within their own portfolios, which could carry higher risk. For buyers needing a jumbo mortgage or a homeowner wanting one to refinance, they may face more hurdles and higher requirements to get one, mortgage experts warn.
Source and link to the full article: “You Might Have a Tough Time Getting a ‘Jumbo Mortgage’ During Pandemic. Here’s What to Expect,” CNBC (July 13, 2020)
Homebuilders See Surge in Sales – Based on new data from John Burns Real Estate Consulting, sales of newly built homes surged 55% year-over-year in June, the highest pace of sales growth in homebuilding since the housing boom back in 2005 and 2006. The firm’s data tends to mirror U.S. Census Bureau reports. With a limited number of existing homes for sale, homebuilders are finding more buyers turning to them for options. This latest housing boom is being entirely driven by the coronavirus pandemic, CNBC reports. “The anecdotal evidence is overwhelming,” John Burns, founder and CEO of John Burns Real Estate Consulting, told CNBC. “Sales in the distance commuter areas are the most robust. I believe a lot of computer-oriented people have proven to their co-workers that they can be productive from home, and have sensed, or officially been given the green light to work from home at least a significant portion of the time after a vaccine has been found.” Homebuilder Taylor Morrison reported recently a 94% annual jump in its June sales, a record high.
Source and link to the full article: “Homebuilders Just Saw the Strongest June Sales Since the Last Housing Boom, as Pandemic Pushes More Buyers to the Suburbs,” CNBC (July 13, 2020)
61% of Americans Say Now Is a Good Time to Buy – According to Fannie Mae’s Home Purchase Sentiment Index, the share of renters who say now is a good time to purchase a home is at its highest level in five years. Four of six components that the index measures increased in June over May. But the index, which measures American sentiment about the housing market, still remains down by 15 points over the last few months. In April, the index had reached a record low as the COVID-19 pandemic ignited in the U.S. “A second month of improvement in June allowed the HPSI to regain some of the sharp losses in optimism observed in March and April,” says Doug Duncan, Fannie Mae’s chief economist. The index suggests more favorable conditions for first-time home buyers, which is consistent with a recent rebound in home purchase activity and applications, Duncan adds. Homeowners sense opportunity as well. “Homeowners seem to have taken note of the resulting lack of housing supply, with an increased share saying it’s a good time to sell a home,” Duncan says. “However, this activity may cool again in the coming months, depending on the extent to which it can be attributed to consumers having chosen to delay or to accelerate home buying plans due to the pandemic.”