This ARTICLE On Cheap Mortgage Rates Are Improving Home Affordability For Buyers Was PUBLISHED On September 12th, 2020
Cheap mortgage rates are one of the many factors of a booming housing market in the nation:
Mortgage Rates hit a 36-month low. Home values have been increasing in the past few years.
- Due to the rising home prices, both HUD and the Federal Housing Finance Agency (FHFA) has increased the FHA Loan and Conventional Loan Limits for three years in a row
- FHA Loan Limits for 2019 is capped at $314,827
- Conforming Loan Limits is now at $484,350 for 2019
- The Department of Veterans Affairs (The VA) no longer has a maximum VA Loan Limit
- A new law was recently passed to eliminate the VA Loan Limit and signed by President Donald Trump
- Mortgage Rates have hit an all-time high since the 2008 Great Recession in 2018 due to the Federal Reserve Board increasing interest rates four times
- The high mortgage rates did not slow down the housing market
- However, due to high mortgage rates, many homebuyers could not afford the homes in the marketplace
- With cheap mortgage rates, homes are becoming more affordable for homebuyers
- This holds especially true to first-time homebuyers
Home affordability for homebuyers in July spiked 12% from a year earlier. The main reason for this is due to cheap mortgage rates and lower closing fees and costs. In this article, we will cover and discuss how Cheap Mortgage Rates Are Improving Home Affordability For Buyers.
Cheap Mortgage Rates Sparking The Mortgage And Real Estate Markets
Cheap mortgage rates are adding fuel to the fire in both the mortgage and real estate markets.
- Many home buyers who decided to stay in the sidelines due to high home prices are getting back into the home shopping market due to cheap mortgage rates
- Not only is the cheap mortgage rates benefiting homebuyers but also homeowners
- Any homeowner with mortgage rates higher than 5.0% can benefit from refinancing today
- Mortgage rates are averaging 3.75% nationwide
- Most experts are expecting rates to fall further. Mortgage rates have been steadily declining since the beginning of the year
- Fed Chairman Jerome Powell recently announced the Federal Reserve Board has cut interest rates by 25 basis points
Industry experts expect another 50 basis interest rate cut in the coming weeks. Interest rate cuts by the Feds generally mean lower mortgage rates.
What Experts Are Saying And Predicting
According to Alex Carlucci, a Senior Vice President for Gustan Cho Associates, he said the following:
The Housing Affordability Index from the National Association of Realtors increased to 151.9 in June from 137.7 a year earlier in June. That’s a jump of 10 percent. A higher reading means homes are getting more affordable, per NAR’s magic sauce that measures prices, incomes and financing costs. Americans trying to buy homes have been challenged with a shortage of available properties and prices that have increased at a faster pace than incomes. The U.S. median price of an existing single-family home was $288,900 in June, up 4.5% from $276,500, according to the data behind NAR’s affordability index. The median family income was $78,916, up 3.5% from $76,217 a year ago.
The bottom line is that the major change between June 2019 and June 2018 is that we have much lower mortgage rates.
Mortgage Rate Comparison And Housing Outlook
Any homeowner with a rate of 5.0% or higher can benefit from refinancing their home loans and get a net tangible benefit.
- FHA and VA allow streamline refinances. FHA and VA Streamline Refinances are a fast track refinance loan program where there is no income required and no appraisal requirements
- Most streamlines can be done is two to three weeks. Borrowers get to skip up to two months in mortgage payments
- Credit scores are used to determining mortgage rates
- Many borrowers who closed their home loans with Non-QM Loans should explore refinancing to traditional government and/or conventional mortgages
Piotr Bieda, the Chief Marketing Officer at Gustan Cho Associates and a mortgage industry analyst and expert, he stated the following:
The average 30-year fixed rate was 3.84% compared to 4.74% last year. That meant the average monthly mortgage payment, measuring principal and interest, was $1,082 in June, compared with $1,153 a year ago. The payment as a percentage of income was 16% in June, down from 18% a year earlier. Rates have dropped since June. The average U.S. rate for a 30-year fixed mortgage is 3.6% this week, matching last week per data from Freddie Mac. That’s the lowest mortgage rate since November 2016. A year ago, the rate was 4.53%.
For more information about this article and/or other mortgage-related topics, please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at firstname.lastname@example.org. The Team at Gustan Cho Associates Mortgage Group is available 7 days a week, evenings, weekends, and holidays.