April 26th, 2017 4:34 AM by Jackie Graves, President
rates dropped below 4% for the first time since November, providing more
kindling to an already hot housing market as the crucial spring selling season
gets under way.
The average rate on a 30-year fixed-rate mortgage dropped to 3.97% for the week
ended April 20, from 4.08% a week earlier and 4.3% in mid-March, according to
data released Thursday by mortgage company Freddie Mac.
drop could help encourage buyers who had been put off by rising mortgage rates
to dive into the market and prompt others to rush to buy homes before rates
are in the spring, and people are out looking to buy homes," said Len
Kiefer, deputy chief economist at Freddie Mac. "These low rates are really
going to help out with affordability."
most of 2016, mortgage rates, which generally move together with yields on the
benchmark 10-year U.S. Treasury note, hovered just above 3.5% for the 30-year
the November election, optimism that the U.S. economy would get a boost from
Republican plans for a tax overhaul, increased infrastructure spending and
reduced regulations helped drive interest rates sharply higher as investors bet
on faster growth.
the tide is turning. Treasury yields, which move in the opposite direction of
prices, approached a five-month low last week as many investors worried that
turmoil in Syria and North Korea, as well as election uncertainty in France and
the lack of progress on tax and spending policy under President Donald Trump,
would lead to slower economic growth in the months ahead.
the entirety of the Trump bump [to mortgage rates] has been washed away,"
said Keith Gumbinger, a vice president at HSH.com, a mortgage-information
in turn, could spur the housing market, economists said. A decline in mortgage
rates can reduce monthly mortgage payments or allow buyers to purchase more
expensive homes than they otherwise could afford.
said a surge of additional buyers this spring wouldn't be entirely welcome.
"It's driving more demand into a market that doesn't have much in the way
of supply," Mr. Gumbinger said.
home prices rose 5.9% in the 12 months ended in January, the fastest rate since
mid-2014, according to the S&P CoreLogic Case-Shiller Indices. Data for
February are due Tuesday.
impact of a decline in mortgage rates of about a third of a percentage point
would be relatively small in many areas of the U.S. The monthly mortgage
payment for a home at the median price of $236,400, assuming a down payment of
20%, would be about $50 less today than a month ago.
effect would be much more pronounced, however, in high-cost markets, such as
California. Monthly mortgage payments would decline by about $100 for buyers
purchasing homes of about $600,000. At the same time, the size of a mortgage
that such buyers could qualify for could swell by about $25,000, according to
Black Knight Financial Services, a mortgage and real-estate technology and data
mortgage rates also could provide a small boost to refinancing activity. The
number of U.S. homeowners who could save enough to make refinancing worthwhile
has jumped 46% to 4.1 million, from 2.8 million last month, according to Black
analysts expect the impact on refinancing to be relatively small. The vast
majority of homeowners have had ample opportunity already to refinance at rates
of less than 4%, given the roughly 3.5% rate for most of 2016.
said the 30-year fixed-rate mortgage would need to drop below 3.5% to have a
significant impact on refinancing and purchase activity.
of them say that is unlikely given that the Federal Reserve is likely to raise
short-term interest rates twice more this year, which in turn could fuel an
uptick in mortgage rates, economists said.
the other hand, continued uncertainty in Syria, North Korea and France or a
failure by Republicans to deliver on promised tax overhaul and economic growth
could help keep rates lower.
as volatile as it's ever been. There are a lot of serious crosswinds happening.
It's a very political market," said Steve Udelson, president of
Owners.com, an online real-estate brokerage.
By Laura Kusisto - To view the original article click here