Mortgage Rates Rise Modestly
According to Freddie Mac, mortgage rates inched closer to 6% recently. Borrowing costs are mounting higher and higher for potential home buyers, who now find themselves squeezed both financially and by low inventory. “Since the beginning of the year, home buying has cost about $800 more every month,” Nadia Evangelou, senior economist, and director of forecasting for the National Association of REALTORS®, writes on the Economists’ Outlook blog. “These higher mortgage rates hurt affordability, and middle-income home buyers can afford to buy fewer homes. Even though inventory has increased 13% since January, not all home buyers can afford to buy these additional homes. In fact, to be able to afford those homes, it appears that buyers need to earn more than $150,000 per year.”
Source and link to the full article: Mortgage Rates Rise Modestly to 5.81% | Realtor Magazine
Fed’s Aggressive Rate Hike May Influence ‘Shrinking Buyer Pool’
Based on the Federal Reserve’s most recent rate hike, which was its largest since 1994, likely will impact the housing market, economists say. The Fed’s key rate often influences mortgage rates, though it doesn’t directly affect them. Rates are moving at a much faster clip than most housing analysts forecast. Recently, the central bank’s Federal Open Market Committee voted to increase its benchmark funds rate by three-quarters of a percentage point to help tame inflation, which is at a 40-year high. Banks use the Fed’s rate as a benchmark for what they charge one another for short-term borrowing. The Fed’s latest hike sets a “big increase in interest rates and means several more rounds of rate hikes are on the way in upcoming months,” says Lawrence Yun, chief economist of the National Association of REALTORS®. So far this year, the short-term Fed funds rate has jumped by 175 basis points. The 30-year fixed-rate mortgage has jumped even more, by nearly 300 basis points. For a $300,000 mortgage, the monthly payment has increased from $1,265 in December to $1,800 today, Yun says.
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Home Sales Retreat to Pre-Pandemic Levels
According to NAR’s latest home sales report, home sales are falling from their pandemic-fueled highs as home buyers tighten up their budgets. “Home sales have essentially returned to the levels seen in 2019 prior to the pandemic, after two years of gangbuster performance,” says Lawrence Yun, chief economist for the National Association of REALTORS®. Movement in both single-family and condo sales are nearly equal, Yun adds, “possibly implying that the preference toward suburban living over city life that had been present over the past two years is fading, with a return to pre-pandemic conditions.” Total existing-home sales – which accounts for completed transactions for single-family homes, townhomes, condos, and co-ops – have dropped 3.4% month over month in May, reaching a seasonally adjusted annual rate of 5.41 million. Existing-home sales are down 8.6% compared to a year ago.
Source and link to the full article: Home Sales Retreat to Pre-Pandemic Levels | Realtor Magazine
Speaking Up About VA Loans
Based on a recent VA Loans report commissioned by Navy Federal Credit Union and Operation Homefront, many service members know little about the benefits of VA mortgages or may even hold negative views about them. The survey was based on responses from about 1,000 active-duty service members and veterans nationwide. Nearly half of active-duty respondents believe VA loans have higher interest rates than conventional loans, which they don’t, the survey notes. Seventeen percent of veterans and 45% of active-duty soldiers believe a down payment of more than 20% is necessary for a VA loan. In reality, VA loans offer vets and military service members a chance to buy with 0% down.
Source and link to the full article: Why You Need to Speak Up About VA Loans | Realtor Magazine