ABBA First Mortgage News
Short of cash and unsettled in their careers, young Americans are waiting longer than ever to buy their first homes. The typical first-timer now rents for six years before buying a home, up from 2.6 years in the early 1970s, according to a new analysis by the real estate data firm Zillow. The median first-time buyer is age 33, in the upper range of the millennial generation, which roughly spans ages 18 to 34. A generation ago, the median first-timer was about three years younger. The delay reflects a trend that cuts to the heart of the financial challenges facing millennials; renters are struggling to save for down payments. These shifts help explain why homeownership, long a source of middle class identity and economic opportunity, has started to decline. The share of the U.S. population who own homes has slid to 63.4 percent, a 48-year low. And when young adults do sign the title deed, their purchase price is now substantially more, relative to their income, than it was decades ago. First-time buyers are paying a median price of $140,238, nearly 2.6 times their income. In the early 1970s, the starter home was just 1.7 times income. However, there was some good news coming out from the housing sector as ABBA First Mortgage offers First time homebuyers choices to make the switch to home ownership with great rates and beneficial programs to meet their needs.
A string of strong reports on the U.S. housing market supports the view that the U.S. economy is building up steam. U.S. Home Resales rose more than expected in July to their highest level since 2007. A gauge of homebuilder sentiment rose to its highest level since November 2005, reflecting growing confidence in a steadily improving U.S. housing market. An index of builder confidence in the market for new single-family homes rose one point to a seasonally adjusted level of 61 in August. A reading over 50 means most builders generally see conditions as positive. The Mortgage Bankers Association released its report on mortgage applications last Wednesday morning, noting a week-over-week increase of 3.6 percent in the group’s seasonally adjusted composite index for the week ending August 14. That followed an increase of 0.1 percent for the week ending August 7. Mortgage loan rates fell on all types of loans over the course of the last two weeks, with most types posting their lowest levels since May. The 30-Year Fixed Rate average edged down to 3.93 percent from 3.94 percent the previous week. The 15-year rate dropped to 3.15 percent from 3.23 percent the week prior. Contrary to this positive data, young Americans are finding it tough to purchase their first home.
U.S. stocks slumped as the S&P broke below the 2,000 level and the Dow slipped closer toward correction territory as fears of a China-led global slowdown continued to rattle investors. A market correction refers to a price decline of at least 10 percent following a temporary upswing in market prices. A report last Thursday showed China’s manufacturing sector shrank at the fastest pace since 2009, exacerbating worries about the health of its economy and whether the government would take further steps to stem its slowdown. The Shanghai Composite plunged 4.3 percent last Friday, ending the week down 11 percent. All 10 major S&P sectors were in the red, with the energy sector one of the worst performers as U.S. crude oil dipped below $40 a barrel for the first time since the 2009 financial crisis. Uncertainty with the Fed has also led to market turmoil.
Conditions for a rate increase are “approaching” though not at hand, according to the minutes from the most recent Federal Reserve meeting. Policymakers at the U.S. Central Bank’s Open Market Committee said conditions hadn’t been achieved yet for the first interest rate increase in nearly 10 years, due primarily to inflation that is not yet moving toward the necessary target conditions. The Fed has set a 2 percent inflation rate as one of the earmarks for a rate increase, which has not been breached, along with a 6 percent unemployment rate that, conversely, has long since been eclipsed. The Fed last raised rates more than nine years ago and has kept the key funds rate near zero since a series of moves to stem the financial crisis in late 2008. If things could not get any worse, are you ready for the end of the quick summer season?
The homeownership rate in the United States in the second quarter declined to 63.4%, the lowest it has been since 1967, according to data from the Department of Commerce’s Census Bureau. Further, the steady decline since 2009 continues. On a quarterly basis, the rate was 1.3 percentage points lower than the second quarter 2014 rate (64.7%) and 0.4 percentage points lower than the rate last quarter (63.7%). National vacancy rates in the second quarter 2015 were 6.8% for rental housing and 1.8% for homeowner housing. “The flipside of such strong rental demand is that the homeownership rate fell once again in the second quarter,” said Ed Stansfield, chief property economist at Capital Economics. “This suggests that homeownership has not kept pace with the cyclical rebound in household formation which is now underway, and gives weight to the idea that first-time buyers in particular are still struggling to gain a foothold in the market. “However, foreclosure rates are declining steadily, employment and incomes are growing at a healthy pace and credit conditions are gradually loosening,” Stansfield said. “What’s more, there is no evidence of a fundamental shift in homeownership aspirations. Accordingly, we expect that the homeownership rate will soon find a floor.” Source: National Mortgage Professional
An eight-year low for home loans in the foreclosure process helped drag down the non-current rate on home loans. The number of residential loans that were either 30-days past due or in the foreclosure pre-sale inventory was 3.183 million in June. June’s non-current total included 2.444 million residential loans that were a month delinquent but not in the foreclosure process. Another 0.739 million were in the foreclosure pre-sale inventory — the fewest loans in foreclosure since 2007. But the foreclosure number — which was reported by Black Knight Financial Services — is “still three times [the] ‘normal’ rate.” The report indicated that 79,000 foreclosures were started last month — the second-lowest post-crisis figure. June’s total worked out to a 6.28 percent non-current rate, declining from 6.45 percent the previous month. The rate has significantly improved compared to June 2014, when it stood at 7.58 percent. The U.S. 30-day rate, excluding foreclosures, was 4.82 percent. That was better than 4.96 percent in May 2015 and 5.70 percent in June 2014. Black Knight reported the foreclosure pre-sale inventory rate at 1.46 percent, also better than a month earlier, when the rate was 1.49 percent. The foreclosure rate was 1.88 percent a year earlier. Source: Mortgage Daily
Just as we were enjoying another month of mixed economic news and the markets were “hoping” for a little reprieve from the Federal Reserve Board, one of the Fed Governors shocked the markets with this statement reported by the Wall Street Journal — “It will take a significant deterioration in the economic picture for me to be disinclined to move ahead,” Federal Reserve Bank of Atlanta President Dennis Lockhart said in an interview with the Journal. The Wall Street Journal article went on to report that Lockhart’s comments followed those of James Bullard, President of the St. Louis Fed — “we are in good shape” for a rate increase in September.
These comments by Fed officials shocked the markets somewhat because long-term rates had been falling in late July and early August. Upon release, rates reversed course. The good news is that more bad economic news overseas helped mitigate the increases rather quickly, but it just tells us how jumpy the markets are with regard to the threat of the Fed raising rates in September. As we have continuously pointed out, the greatest effect of the Fed raising rates is likely to be on shorter-term rates. These short-term rates also have risen in anticipation of the Fed making a move.
Look to ABBA First for your mortgage needs now! As we follow the market on your behalf, we seek to find the lowest rate and closing costs for your needs.
Today saw an early morning improving market which allowed rates to start off much better than expected. Although this was exciting, it did not last as the market gave back much of the improvement and closed the day on a downward trend.
Key data releases for the remainder of the week include – Tuesday’s Housing Starts, Wednesday’s Consumer Price Index and Thursday’s Existing Home Sales. These reports may dictate the direction of the market coupled with the reports from oversees; specifically from China and Greece. Consider setting the table for your next mortgage with ABBA First as we work with you and for you to capture the best rate and terms for your needs!
Mortgage rates moved slightly higher in the last week according to the Freddie Mac mortgage market survey. 30-year fixed rate mortgages were up to 3.94 per cent from 3.91 per cent a week earlier (ABBA First is at 3.875%); 15-year FRM’s increased to 3.17 per cent from 3.13 per cent (ABBA First is quoting 3.0%); 5-year ARM’s were slightly lower at 2.93 per cent from 2.95 per cent.
Whether you are refinancing or buying a home, please call ABBA First Mortgage (toll free) to offer you the BEST rate and terms for your needs. Call 866-676-3349 and ask for the owner Rich Sr. (All quoted rates are jubject to change based upon market and loan conditions).
Wednesday was very volatile with rates vascilating all over the place today. As the market improved, rates were published for the newspapers for this upcoming weekend. Unfortunately, we experienced a deterioration of the market this afternoon and ended up with less favorable pricing than we had started the day with and worse than what we had seen earlier in the day.
The best advice someone can get, is to not take the advice of someone who thinks they can predict the direction of the mortgage market. There is not a person alive today that can safely say what the future holds for mortgage interest rates. No one is able to predict the direction of rates in the months to come as there are so many variables at play. They are affected by economic events taking place globally as well as our nationally reportted data. It’s an intra-day, daily trading game and it should be played as such. With each turn of events, the market goes up and comes back down as likened unto a see saw. ABBA First follows the ups and downs and works with clients to catch it at the bottom of the pendulum. Allow us to work with you as you seek the best rate and terms for your needs.