New Appraisal Exemption Rule Takes Effect – Industry Outlook

By October 11, 2019Industry Outlook

Mortgage Rates Hold Firm, Boost Demand – Based on Freddie Mac reports, home buyers looking for a purchase loan and homeowners who want to refinance are responding well to low mortgage rates. “While mortgage rates are generally holding steady, overall mortgage demand remains very strong, rising over 50% from a year ago thanks to increases in both refinance and purchase mortgage applications,” says Sam Khater, Freddie Mac’s chief economist. “As economic growth decelerates, it is clear that low mortgage rates will continue to support the mortgage market, and we expect that to persist for the remainder of the year.”


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Source and link to the full article:  Freddie Mac

First-Time, Move-Up Buyers Face Rising Competition – According to a new report from realtor.com®, lower mortgage rates have drawn out more buyers this fall, but the rapidly shrinking inventory of lower-cost homes are making it difficult for them to find a home to buy. This has created more competition between first-time buyers and move-up buyers. Nationwide, inventory levels continue to shrink. In September, inventory levels were 2.5% lower than a year ago, marking a faster rate of decline compared to August, realtor.com® reports. Mid-market homes, those priced between $200,000 to $750,000, which make up the largest segment of housing inventory, showed zero percent growth in September. That price point is likely poised for its first decline next month, researchers warn.

Source and link to the full article:  realtor.com®

New Appraisal Exemption Rule Takes Effect – Based on federal regulators proposal approval, certain home sales of $400,000 and below will no longer require an appraisal, under a new rule that took effect on October 9th. Homes that qualify for the appraisal exemption can receive an evaluation instead. This is the first time in 25 years that federal regulators have increased the property value limit of the homes that require an appraisal as part of the selling process. Federal regulators cited price appreciation in residential real estate transactions for the change. The new rules likely apply to about 40% of home sales, regulators estimate. For properties that do qualify for the exemption, the agencies require institutions to obtain an evaluation that provides an estimate of the market value of the real estate property. The new exemption does not apply to loans sold or guaranteed by the Federal Housing Administration, Department of Housing and Urban Development, Department of Veterans Affairs, Fannie Mae, or Freddie Mac; all will still require an appraisal.

Source and link to the full article:  “It’s Official: Appraisals Are No Longer Required on Some Home Sales of $400,00 and Under,” HousingWire (Oct. 8, 2019)

Homeowners Have Never Been Richer – According to CoreLogic’s Home Equity Report, homeowners with a mortgage have seen their equity rise by 4.8% year over year. The average homeowner has gained $4,900 in home equity between the second quarter of 2018 and the second quarter of this year. “Borrower equity rose to an all-time high in the first half of 2019 and has more than doubled since the housing recovery started,” says Frank Nothaft, chief economist for CoreLogic. “Combined with low mortgage rates, this rise in home equity supports spending on home improvements and may help improve balance sheets of households who could take out home equity loans to consolidate their debt.”

Source and link to the full article:  “Homeowner Equity Report,” CoreLogic (September 2019)

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