The markets were on the quiet side Friday with little volatility. Low inflation from the PPI supported Bond Prices and kept Mortgage Rates tame throughout the session. The 4% Mortgage Bond rose by 9bp to end the session at 103.31. Stocks were essentially unchanged today – S&P at 1,775.32, the Dow gained 15.93 points to end at 15,775.36 while the Nasdaq was up a meager 2.57 points. Oil was last seen at $96.44/barrel down $1.06. A packed economic calendar next week. We recommend floating mortgage rates at this time.
Weekly Survey of Rates from the Mortgage Bankers Association
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.61 percent, the highest rate since September, from 4.51 percent, with points decreasing to 0.26 from 0.38 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 4.59 percent, the highest rate since September, from 4.49 percent, with points decreasing to 0.15 from 0.24 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for 15-year fixed-rate mortgages increased to 3.66 percent, the highest rate since September, from 3.56 percent, with points decreasing to 0.31 from 0.32 (including the origination fee) for 80 percent LTV loans.
Fannie Mae: Americans Worried Economy is on Wrong Track
Nearly two thirds of American’s believe the economy is on “the wrong track,” as concerns over personal finances and the state of the economy heighten, the latest Fannie Mae November Housing Survey revealed. However, this is still low compared to a year earlier. Meanwhile, the share of people expecting their personal finances to worsen during the next year has increased during the past few months to 22%.
The survey polled 1,002 Americans to assess their attitude towards owning and renting a home. “We continue to see caution as the defining feature of Americans’ attitudes toward the economy and their personal financial situation. In this environment, the housing recovery is likely to improve, but only at a gradual pace,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. Read more
Housing
Zillow Predicts Home Values to Rise 3% in 2014; Mortgages Will Be Easier to Get
Zillow is making four, bold housing predictions for 2014, and has determined which housing markets will be the hottest this coming year.
2014 Predictions
- U.S. home values will increase by 3 percent.
- Mortgage rates will reach 5 percent by the end of the year.
- It will be easier for borrowers to get a mortgage in 2014.
- Homeownership rates will fall to their lowest point in nearly two decades.
2014’s Hottest Housing Markets
To determine which markets will be the hottest in 2014, Zillow combined data on unemployment rates, population growth and the Zillow® Home Value Forecast.1 The list is intended to give an early view into housing markets that are likely to experience heavy demand for homes, as well as increasing home values.
| 2014’s Hottest Housing Markets | |||
| 1. | Salt Lake City | 6. | Raleigh, N.C. |
| 2. | Seattle | 7. | Jacksonville, Fla. |
| 3. | Austin, Texas | 8. | San Diego |
| 4. | San Jose, Calif. | 9. | Portland, Ore. |
| 5. | Miami | 10. | Boston |
“In 2013, home values rose rapidly – about 5 percent nationwide and more than 20 percent in some local markets. These gains, while beneficial in many ways, were also unsustainable and well above historic norms for healthy, balanced markets. This year, home value gains will slow down significantly because of higher mortgage rates, more expensive home prices, and more supply created by fewer underwater homeowners and more new construction. For buyers, this is welcome news, especially for those in markets where bidding wars were becoming the norm and bubble-like conditions were starting to emerge.”
– Dr. Stan Humphries, Zillow chief economist
“As the economy improves and Federal Reserve policies change, mortgage interest rates will rise throughout 2014, likely hitting 5 percent for the first time since early 2010. While this will make homes more expensive to finance – the monthly payment on a $200,000 loan will rise by roughly $160 – it’s important to remember that mortgage rates in the 5 percent range are still very low. Because affordability is still high in most areas relative to historical norms, rising rates won’t derail the housing recovery. Unfortunately, this isn’t true in all areas – affordability is starting to become an issue for some markets, particularly some of the booming California markets.”
– Erin Lantz, Zillow director of mortgages
It will be easier for borrowers to get a mortgage than it was in 2013. “The silver lining to rising interest rates is that getting a loan will be easier. Rising rates means lenders’ refinance business will dwindle, forcing them to compete for buyers by potentially loosening their lending standards.” – Erin Lantz, Zillow director of mortgages
Homeownership rates will fall below 65 percent for the first time since 1995. “The housing bubble was fueled by easy lending standards and irrational expectations of home value appreciation, but it put a historically high number of American households – seven out of ten – in a home, if only temporarily. That homeownership level proved unsustainable and during the housing recession and recovery the homeownership rate has floated back down to a more normal level, and we expect it to break 65% for the first time since the mid-1990s.” – Dr. Stan Humphries, Zillow chief economist.