July 5th, 2018 11:58 AM by Jackie A. Graves, President
will remain competitive from July through September, with the edge going to
buyers who act fast. And as mortgage rates rise, some homeowners will feel
compelled to tap their equity rather than refinance or sell. Here are three housing
and mortgage trends to watch for as summer 2018 slides into fall:
Home sales will slacken in the
third quarter, creating an opening for assertive home buyers.
After rising through the first
half of the year, mortgage rates could keep pushing upward — or plateau.
The rise in mortgage rates will
keep some homes off the market, fueling demand for home equity lines of credit.
In a typical
year, home sales peak in June and then decline in the third quarter. But plenty
of homes remain on the market from July through September. Competition among
buyers is about the same and maybe even ratcheted down a little.
prioritize homebuying over vacationing this summer, Terri Robinson’s advice is
to move fast. Robinson, a real estate agent in Ashburn, Virginia, says the
competitive edge goes to buyers who don’t put things off. If a desirable
property goes up for sale at the beginning of the week, don’t expect it to
still be on the market Saturday.
ready to dash and go and see it,” Robinson says.
And it helps to
know how much home you
an agent in the hot Denver-area market, describes how buyers can improve their
Get preapproved for a
Make the biggest down payment
possible, even if it’s not 20%.
Hire an experienced agent who’s
plugged in to the network with other local agents, which is important when
looking for suitable homes and when negotiating.
Use a mortgage broker who takes
time to answer questions.
can educate themselves about state first-time
home buyer programs designed for them. On top of specialized
state programs, the Federal Housing Administration and the Department of Veterans
Affairs offer FHA loans and VA loans, which are popular among first-time home
buyers for their flexible terms and competitive rates.
rates have gone up this year, and some observers predict that they’ll keep
rising in the third quarter.
rate on the 30-year fixed-rate mortgage climbed more than half a percentage
point in the first six months of 2018, finishing June at 4.72%. Few, if any,
people in the industry expect mortgage rates to fall, but they’re split about
whether rates will keep rising or stay where they are.
Bankers Association and the National Association of Realtors both expect
mortgage rates to rise about two-tenths of a percentage point more by the end
of September, as job creation remains strong and the Federal Reserve raises
Not everyone is
convinced that mortgage rates will keep going up. Fannie Mae, the
government-sponsored enterprise that buys mortgages from lenders, expects rates
to remain near the current level for the rest of 2018.
Moskowitz, president of Equity Now, a mortgage lender in New York City,
believes that mortgages will stay about the same because of weakness in
European and Chinese economies, which could lead investors there to seek the
safety of buying American debt, keeping a lid on interest rates.
agent in Virginia, says her advice to home buyers is “don’t be concerned about
rising interest rates, OK? Because at this time, incomes are also climbing too,
and interest rates are still historically low.”
buyer or housing economist would tell you there aren’t enough homes for sale.
You can point the finger at many causes for the housing shortage, and one
of them is rising mortgage rates.
rate lock-in: Homeowners are reluctant to sell their homes and abandon their
sweet mortgage rates.
goes like this, says Mark Fleming, chief economist for First American, a title
insurance, mortgage settlement services and real estate data company: “I’m
sitting on a 3.5%, 30-year fixed-rate mortgage, and if I go and sell my home,
I’ll have to get a new mortgage on a new home at 4.5%. Even if I bought a home
exactly the same price as the one I just sold, it would cost me more per month
to live there. Why move?”
To satisfy the
desire to move up to nicer or bigger homes, locked-in homeowners can renovate
or build additions.
One popular way to pay for improvements is with a home equity line of
credit, or HELOC. It’s a second mortgage that lets you borrow
against the home’s equity, which is the difference between the home’s value and
the amount owed on the mortgages.
market “is poised for a strong shift toward HELOC utilization, as they allow
borrowers to take advantage of growing equity while holding on to historically
low first-lien interest rates,” according to a report by mortgage technology
company Black Knight.
on HELOCs are variable and go up when the Federal Reserve raises short-term
rates. Although the lock-in effect discourages homeowners from refinancing
their primary mortgages, the number of new HELOC accounts grew 14%
year-over-year in the first quarter of this year, the most recent data
available, according to ATTOM Data Solutions.
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