Market Outlook Archives – Mike Pfefferman

29

Aug

Mortgage Rates

What You Need to Know About Mortgage Rates This Week – August 28, 2023

Understanding the dynamics of mortgage rates is crucial in assessing the affordability of a home. These rates aren’t isolated figures; they pivot on a variety of economic and market stimuli, and they can exhibit volatility from one week to another. Let’s delve into the current scenario of mortgage rates and what it signifies for potential and existing homeowners:

Current data indicates that while mortgage rates are elevated, there’s potential for stabilization or a dip later this year if inflation undergoes moderation.¹.
As of August 25, a 30-year fixed mortgage stood at 7.57%. This is a marginal reduction from the prior week, yet it hovers close to a 22-year peak.² ³.
To regulate inflation, the Federal Reserve heightened its primary interest rate by 0.25% in July. A similar action might be on the horizon for September.⁴.
The median value of an existing house in July escalated to $410,200, marking it as the second most elevated record ever. This price indicates an 8.5% increase from the last quarter.
In July, sales of existing homes dipped by 3.3%. This slump was ubiquitous across all major U.S regions when juxtaposed with sales data from the previous year.¹.
The present housing market exudes an aura of competition and tightness, courtesy of the high demand and insufficient supply dynamics.

Decoding the Mortgage Situation: Questions Homeowners Should Ask
How these trends impact you is contingent on your specific objectives and situation. Consider the following:

Duration of Stay: Are you eyeing your home as a prolonged investment? Locking in a fixed-rate mortgage might be judicious as dramatic rate reductions seem improbable soon. Conversely, those seeking short-term flexibility might find adjustable-rate mortgages appealing, though one should brace for potential hikes in rates.
Monthly Payment Affordability: Elevated mortgage rates translate to steeper monthly outflows. It’s essential to reevaluate your financial strategy or explore homes that don’t strain your finances.
Equity Positioning: When considering refinancing, substantial equity can pave the way for qualifying at a competitive rate and trimming closing expenses. This equity can also be leveraged for cash withdrawals to serve diverse needs, including home enhancements or consolidating debt.
Credit Metrics: Your credit rating and the ratio of your debt to income are pivotal in securing a mortgage at an attractive rate. Superior credit scores and minimized debt ratios amplify the prospects of a beneficial contract. Regularly monitor your credit score, and if required, embark on enhancement strategies.

In Conclusion

Despite the current elevated mortgage rates in comparison to past norms, this scenario may not be perpetual. For those contemplating buying or refinancing, acting promptly might be judicious before any further rate surge. However, it’s paramount to undertake thorough research and solicit multiple lender proposals to secure a mortgage tailored to your fiscal requirements and goals.

Sources:

¹: Current Mortgage Rates: August 28, 2023 | Rates Stabilize

²: Current Mortgage Rates for Aug. 25, 2023: An Important Rate Eases

⁴: Mortgage Rate Forecast August 2023 | Bankrate

³: Mortgage Rates Surge to a 22-Year High, but We See a ‘Glimmer of Optimism’ Ahead

: Housing Market Predictions For 2023: When Will Home Prices Be Affordable Again? – Forbes

24

Jul

By First Rate Financial Group

Market Outlook

What’s Ahead For Mortgage Rates This Week – July 24th, 2023

What's Ahead For Mortgage Rates This Week - July 24 2023 Last week’s economic reports included readings on U.S. housing markets, housing starts, and building permits issued. Sales data for previously-owned homes were also released along with weekly readings on mortgage rates and jobless claims

Home Builder Confidence Ticks Up in July

The National Association of Home Builders reported a one-point gain in home builder confidence with an index reading of 56 for July. Analysts predicted a reading of 57 and June’s reading was 55. Readings over 50 indicate that most home builders are confident about current U.S. housing market conditions. Overall homebuilder confidence rose for the seventh consecutive month in July.

Component readings of the Home Builder Confidence Index were mixed as builder confidence in current housing market conditions rose by one point and builder confidence in housing market conditions over the next six months fell by two points. Buyer traffic in new home developments rose by three points. The lack of previously-owned homes for sale boosted buyer interest in new homes. Homebuilders surveyed indicated that they are not offering as many buyer incentives as they did during the pandemic.

While home builder confidence remained positive, issues including shortages of buildable lots and slim supplies of electrical transformer equipment presented potential obstacles to builders’ positive outlook. Mortgage rates near 7 percent also presented concerns for home builders, but most prospective buyers appear to have accepted higher rates. In related news, the Commerce Department reported 1.43 million housing starts in June as compared t the expected reading of 1.48 million starts and May’s reading of 1.56 million housing starts.

Fewer building permits were issued in June with 1.43 million permits issued as compared to expectations of 1.48 million permits issued and May’s reading of 1.50 million building permits issued.

Mortgage Rates and Jobless Claims Fall

Freddie Mac reported lower average mortgage rates last week. The average rate for 30-year fixed-rate mortgages fell by 18 basis points to 6.78 percent, The average rate for 15-year fixed-rate mortgages dropped by 24 basis points to 6.06 percent.

Jobless claims fell with 228,000 first-time claims filed as compared to the previous week’s reading of 237,000 initial jobless claims filed.

What’s Ahead

This week’s economic reporting includes readings on U.S. home prices, sales of new homes, and pending home sales. The Federal Reserve will publish its decision on raising its key interest rate range. Fed Chair Jerome Powell is expected to give a press conference after the interest rate announcement. Weekly reports on mortgage rates and jobless claims will also be published.

31

Oct

By First Rate Financial Group

Financial Reports

What’s Ahead For Mortgage Rates This Week – October 31, 2022

What's Ahead For Mortgage Rates This Week - October 31, 2022

Last week’s economic news included readings on home prices from S&P Case-Shiller home price indices along with sales of new homes and federal government data on inflation. Weekly readings on mortgage rates and jobless claims were also released.

S&P Case-Shiller Home Price Indices: Home Price Growth Slows in August

U.S home prices fell by 9.8 percent year-over-year in August according to S&P Case-Shiller’s National Home Price Index. National home prices fell by -5.3 percent in July. The 20-City Home Price Index rose 13.1 percent year-over-year but reflected readings from markets that were stronger in 2021. Miami. Florida, Tampa, Florida, and Charlotte, North Carolina held the top three spots for home price gains.

The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, reported that home prices for homes owned or financed by the two government-sponsored mortgage organizations fell by -7.6 percent in August as compared to July’s reading of -7.3 percent.

The Commerce Department reported that new home sales fell by -10.9 percent to a seasonally-adjusted annual pace of 603,000 sales from August’s revised reading of 677,000 sales. High home prices and rising mortgage rates sidelined prospective buyers concerned about affordability and mortgage qualification requirements. Homebuilders have repeatedly cited rising materials costs and rising mortgage rates as reasons for scaling back new home construction. The good news is that September’s reading surpassed analysts’ expected reading of 593,000 new home sales. Sales of previously owned homes fell to 4.71 million sales on a seasonally-adjusted annual basis as compared to the expected reading of 4.70 million sales and 4.78 million sales of previously-owned homes in August.

Mortgage Rates Top 7 Percent as New Jobless Claims Fall

Freddie Mac reported higher average mortgage rates last week as the rate for 30-year fixed-rate mortgages rose 14 basis points to 7.08 percent. Rates for 15-year fixed-rate mortgages averaged 6.36 percent and were 13 basis points higher. Rates for 5/1 adjustable rate mortgages averaged 5.96 percent and rose 25 basis points. Discount points averaged 0.80 percent for 30-year fixed-rate mortgages and 1.40 percent for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable rate mortgages averaged 0.30 percent.

New jobless claims fell to 214,000 initial claims filed as compared to the previous week’s reading of 226,000 first-time claims filed and the expected reading of 230,000 first-time claims filed.

What’s Ahead

This week’s scheduled economic news includes readings on construction spending, sales of previously-owned homes, and a statement from the Federal Reserve’s Federal Open Market Committee. Fed Chair Jerome Powell is also scheduled to give a post-meeting press conference.