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Posted 09/15/2016

Just 1-In-20 Consumers Predicted Today’s Mortgage Rates

Fannie Mae Housing Survey August 2016

More U.S. Households Accepting Reality Of Low Rates

More U.S. consumers expect current mortgage rates to be available over the long term.

According to Fannie Mae's most recent National Housing Survey, 56 percent of consumers think mortgage rates will stay the same or drop in the next twelve months.

The survey, which covers 1,000 households, measures changing consumer attitudes toward mortgages and housing nationwide.

Attitudes have shifted surprisingly since one year ago.

In August 2015, just 41 percent of respondents said low rates would hold, and five percent said mortgage rates would fall.

Just 1-in-20 consumers got it right.

Since the start of the year, 30-year mortgage rates have dropped 47 basis points (0.47%), representing nearly $100-per-month savings on a $300,000 mortgage.

The nationwide average 30-year mortgage rate now stands at 3.50%, marking a winning streak of twelve weeks at or below 3.5%.

According to Fannie Mae, only one of the past 45 surveys showed a higher number of consumers who said rates won't rise. U.S. households might be coming around to the reality of a "new normal" for mortgage rates.

Continued rate-favorable news, both domestic and international, is putting a lid on higher home costs.

More than 8 million homeowners are potentially eligible to refinance, and households that choose to do so will save more than $5 billion collectively between now and next year, and those numbers are rising.

Click to see today's rates (Sep 26th, 2016)

30-Year Mortgage Rates Extend Winning Streak

Twelve weeks.

That's how long 30-year mortgage rates have been at or below 3.5%

It has happened only once before: from September 2012 to May 2013. That 19-week winning streak marked the longest, lowest stretch in history for mortgage rates.

And we're not far from matching that record.

Currently, the 30-year fixed rate stands at the 3.5% threshold, stubborn to move upward. Can anything send rates higher?

Yes. The Federal Reserve will meet September 20-21 and decide to hold or raise its benchmark rate. While the Fed funds rate does not directly affect mortgage rates, Fed action certainly influences the wider interest rate market.

An unexpected decision could drive rates up in a matter of hours after the meeting adjourns on September 21 at 2:00 PM ET.

Should home buying and refinancing consumers lock now? It could prove wise. Rates are low, and an unknown variable is on the horizon.

Click to see today's rates (Sep 26th, 2016)

Consumers Expect Rent Hikes To Outstrip Home Prices

Low mortgage rates are not the only thing spurring renters to become homeowners.

Rising rental prices are making the relative cost of owning a home lower each day.

According to Fannie Mae, 92 percent of consumers think home prices will rise or hold steady this year.

But rising home prices are not distinguishing renters' desire to buy. Quite the opposite. Consumers expect home prices to rise at least 2% over the next twelve months. A $300,000 home will be worth six thousand dollars more one year from now, say survey respondents.

That's one incentive to buy now. The other is the amount consumers expect rent to increase: 4.1% over the next year.

Renters can either be on the winning or losing side of rising costs. According to Fannie Mae's survey, they are choosing to win.

Sixty-five percent of consumers say they would buy instead of rent, if they had to move today.

That would be a wise choice. Home sales remain near their strongest levels in eight years and home supply is scarce. Mortgage rates are touching all-time lows, and demand is expected to remain strong.

Click to see today's rates (Sep 26th, 2016)

Mortgage Programs Help Buyers Secure Affordable Housing

Existing homeowners aren't the only ones benefiting from low rates.

Home buyers are getting into homes for less money per month than they pay for rent. Near-record-low rates are increasing home affordability for first-time home buyers.

Maybe you've been thinking about buying a home, too. After all, the market looks ripe.

Mortgage rates are low, rents are rising nationwide, and mortgage lenders are approving more loans. Furthermore, there's an abundance of low- and no-down payment mortgage loans for first-time home buyers and repeat buyers alike.

Among the most common low-downpayment mortgage options is the Conventional 97, which has a three percent downpayment requirement, and which allows downpayment funds to come from a gift.

Mortgage rates for the Conventional 97 are best for borrowers with strong credit. For buyers with lower credit scores, the FHA program is a low-cost and flexible option.

But FHA is not only for buyers with lower credit scores. Nearly 40 percent of all home buyers under the age of 37 -- within any credit tier -- select FHA.

The FHA home loan requires just 3.5 percent down, and that downpayment can come from a gift, or even an approved downpayment assistance program.

FHA allows homes with up to four units (e.g. a duplex, triplex, or four-plex) and the program allows a buyer to have its closing costs paid by the seller.

The¬†HomeReady‚ĄĘ mortgage is another low-down payment option, allowing a down payment of just three percent for qualified buyers.¬†HomeReady‚ĄĘ is generally reserved for low-to-moderate income households, but the program can be used by anyone.

Learn about the HomeReady‚ĄĘ mortgage program here.

Today's home buyers have several no-money-down options, too.

The VA loan is one such loan, available to military borrowers and surviving spouses. The advantages of a VA loan are many, including the lack of mortgage insurance, and the fact that VA loans are assumable, which means that future home buyers may be eligible to "assume" your home's existing mortgage rate.

In a rising mortgage rate world, assumable loans can be a giant sales benefit.

Another zero down payment loan is the USDA loan.

Available in less-densely populated neighborhoods, the USDA loan allows for 100% financing and very low rates of mortgage insurance. USDA mortgages are available as 30-year, fixed-rate home loans only.

Lastly, via down payment assistance programs, home buyers can receive a cash grant to cover their traditional home downpayment. Such programs don't always require repayment, either. In many cases, you're only required to maintain your residence for a period of up to 5 years.

This flowchart can help you decide which mortgage is best for your needs.

What Are Today's Mortgage Rates?

Many consumers think mortgage rates will stay the same, or even drop in 2017. But many predict rising rates, too. Who's right? What's clear is that mortgage rates have defied expectations this year, and it seems almost nothing can lift them from recent depths.

Get today's live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.

Click to see today's rates (Sep 26th, 2016)

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

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2016 Conforming, FHA, & VA Loan Limits

Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)