Consumer Predictions Follow Mortgage Rates Downward
Consumers are having yet another change of heart about where mortgage rates are headed in the year ahead, according to a new consumer survey.
In its monthly National Housing Survey, Fannie Mae reports that 56% of consumers surveyed in May believe that mortgage rates will go up in the next 12 months.
That’s a notable dip from the 62% of consumers in April who thought rates would rise in the year ahead.
Those sentiments are echoed by movements in 30-year fixed mortgage rates, which averaged 3.89% for the week ending June 8. That’s down from 3.94% in the previous week, according to Freddie Mac’s weekly survey. Investor uncertainty and tepid economic growth continue to push rates further below 4%.
It begs the question of just how low will rates go.
If you’ve been in the market for a home purchase or refinance mortgage, it could be a wise time to strike.Verify your new rate
Seller’s Market Persists
The question most buyers would love to get an answer to: How long will this sellers’ market last?
Consumers generally seem convinced the ball is firmly in the court of sellers — at least for the foreseeable future. In May, 61% of consumers said that now is a good time to sell, a new survey high that’s up by 4 percentage points over last month, Fannie Mae reported.
On the other hand, the net share of consumers who think now is a good time to buy a home fell to a new survey low of 27% — an 8 percentage-point drop.
Mortgage Rates Might Spur More Home Sales
Consumer perceptions might be destined to come true. Typically, we’d expect to see lower rates spur more buyers and homeowners looking to refinance into action. But this isn’t a typical market, and today’s borrowers are facing several challenges.
Soaring home prices and severe shortages of homes for sale (especially starter homes) are undoubtedly challenging obstacles.
That said, it’s not impossible with many low down payment programs out there through individual banks and special buyer assistance programs through Fannie Mae and Freddie Mac. Low mortgage rates also help offset sticker-price shock by making your loan costs less expensive over the lifetime of the mortgage.
It remains to be seen how a continued slide in mortgage rates might impact future sales activity for the last half of the year and into 2018.
Summer and early fall are busy times for home sales. It’s possible the drop off in existing-home sales will turn around as buyers rush to get deals completed before summer ends — and certainly before the holidays arrive.
To make that happen, more inventory and more new homes need to be built to meet buyer demand.Verify your new rate
Will Qualifying Get Easier If Dodd-Frank Is Repealed?
One of the chief issues buyers face in making the leap to homeownership is qualifying for a mortgage loan.
In fact, the share of Americans who say it would be hard to obtain a mortgage rose 3 percentage points to 42%. Meanwhile, 55% of Americans say getting a mortgage would be easy — a dip of 2 percentage points, according to the Fannie Mae survey.
Banks point to the stricter portions of a hallmark Obama-era law, the Dodd-Frank Act, as a key reason they’ve pulled back on consumer lending.
The law mandated more stringent regulations on financial institutions and how they do business with consumers to safeguard Americans against illegal and predatory financial practices.
This week, House Republicans passed a bill to repeal the strictest portions of the law, including the gutting of the powerful Consumer Financial Protection Bureau, or the CFPB.
The CFPB enforces financial regulations on behalf of consumers. It has provided $11.8 billion in financial relief to nearly 30 million Americans, according to its website.
But if Dodd-Frank is repealed, the consumer agency would be scrapped. Along with it, other provisions viewed as lender-unfriendly would go too.
The Republican-backed bill to repeal Dodd-Frank faces an uphill battle in the Senate, where Democrats are expected to oppose it en masse.
Potential borrowers would gain more access to credit if banks ramp up their lending efforts. Whether those buyers can find an affordable home in their market and make a winning offer, well, that’s another matter entirely.
It’s a bit like the “Hunger Games” out there right now for home buyers, but there’s still opportunities to find the right home. Don’t give up, and may the odds be ever in your favor.
Eight Programs With Sub-20% Down Payment Requirements
Home buyers are getting into homes for less money per month than they pay for rent. 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.
Low- and no-down-payment home loans fill the lending landscape. Astonishingly, the 20%-down myth still prevails among consumers. That belief stems from a single loan program — the conventional loan — and a single option for that program.
But even conventional lending allows down payments well below the twenty percent mark.
In all, there are no less than eight major loan types that require less than twenty percent down (review them here), plus many more via smaller programs from banks and credit unions across the U.S.
One widely available favorite for younger home buyers is the FHA loan. The mortgage gets a lot of bad press because it requires mortgage insurance for life. But what other program offers homeowners to buyers with little money, dinged credit, and student loans?
Plus, FHA mortgage insurance can be canceled at a later date using a conventional loan. Often, in just a few years, the owner reaches 20% equity in the property. At that point, a no-PMI conventional refinance is available.
Not to be outdone, Fannie Mae — purveyor of conventional/conforming loans — offers HomeReady™. This 3% down loan allows all sorts of “outside-the-box” income types. Rental income from a mother-in-law unit is allowed, as is non-borrowing household member income, and even boarder (roommate) income.
Talk about flexibility.
There are many more home loans out there, and, down payment assistance is available for many of them. It’s a new day for the home buyer who wants to escape rising rent, and get on the winning side of home appreciation.
What Are Today’s Mortgage Rates?
At least half of consumers think mortgage rates will rise in 2018. No one can predict what will actually happen, but today’s mortgage rate market is still ripe with deals.
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