Mortgage Rates Steady As FEDS Announces It Will Not Raise Rates

This article cover mortgage rates steady as FEDS announces it will not raise rates

There is no sign of a housing correction in today’s housing market. Mortgage rates remain steady at historic lows. Many homebuyers are pushing plans on buying homes sooner than later. This is because many feel rates will not remain low. This holds true despite Fed Chairman Jerome Powell assuring the public rates will remain at zero for the next few years. Inflation is being downplayed by the Feds. However, the public is seeing prices of goods skyrocket. Lumber and many home improvement prices have doubled in the past year.

Will Mortgage Rates Remain Low?

Will Mortgage Rates Remain Low?

In this article we will cover the following topics:

  • State of the economy since the coronavirus outbreak
  • The announcement by the Federal Reserve is not to raise rates
  • Demand for homes far exceed inventory

Low Rates and the Booming Housing Market

Mortgage Rates have been the lowest since the Great Recession of 2008. The economy has long recovered from the coronavirus outbreak in 2020. Home values have been rising over the past several years. Home prices keep on rising despite the highest mortgage rates in recent years. Rising interest rates have not slowed down housing demand. Rising home prices have been a major issue. FHFA has increased conventional loan limits for the past 3 years due to rising home prices.

HUD and the FHFA Increase Loan Limits for 2021

2021 Conforming Limits is capped at $549,250. HUD, the parent of FHA, followed FHFA and raised FHA Loan Limits for the past three years. 2021 FHA Loan Limits in most parts of the United States are at $356,362. The Federal Reserve Board raised interest rates four times in 2018. It was not until 2019 where rates started sliding downwards.

The good news is that after the announcement by Fed Chairman Jerome Powell has Mortgage Rates Steady.  It is the first time since Mortgage Rates Steady. Rates have dropped since the news by FED Chairman Jerome Powell last week.

How Mortgage Rates Steady After FED Announcement Not To Raise Interest Rates

How Mortgage Rates Steady After FED Announcement Not To Raise Interest Rates

Mortgage interest rates for 30 year fixed rate mortgages closed at 2.90% last Friday, May 28th,2021. 15 year fixed mortgages closed 3 basis points higher at 2.625% the week ending May 28th, 2021. 2.875% was adjustable-rate mortgages on the week ending May 28th, 2021. That is 2 basis points higher.

Applications for purchases slipped 2 percent from the previous week while refinance applications, which tend to be even more sensitive to rate changes, dropped 6 percent.

What Experts Say About Rates

Joel Kan, Associate Vice President of the Mortgage Bankers Association, stated the following:

“After two weeks of decreases, the purchase index still remained roughly 6 percent above its long-run average, which is good news with the spring buying and selling season almost underway. Despite ongoing supply and affordability constraints, the healthy job market and underlying demographic fundamentals both point to gradual purchase growth in the coming months. Refinance activity had seen a small resurgence in the past few weeks, but there still remains only a small share of borrowers left to gain from rates at the current levels.”

Home Prices Hot Housing Market Seems To Stabilize

Gustan Cho Associates has countless pre-approved home buyers shopping for homes. Some have been shopping for almost a year. Our home buyers were expecting a slowdown in the housing market. However, housing demand still remains strong. Due to low inventory housing prices remain strong. Many home buyers have canceled plans in buying a home now due to home prices increasing. They are either going to wait and save so they can put more money down or wait for a housing correction. Housing correction does not seem imminent.

Growth Of Home Prices In The United States

How much house prices in the United States have risen

According to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, the growth of housing prices slowed to a 5.2% yearly gain in November 2020. This is down from the 5.3% in the month before. This accounts for the 9 divisions of the U.S. Census.

David Blitzer who is the Chairman of the Index Committee at S & P Dow Jones Indices stated:

“Home prices are still rising, but more slowly than in recent months. The pace of price increases are being dampened by declining sales of existing homes and weaker affordability. Sales peaked in November 2017 and drifted down through 2018.”

Mortgage Rates Steady Going Into Week of June 1st, 2021

Mortgage Rates Steady going into the week of June 1st, 2021 at 2.90% compared to 3.38% same period last year.

  • Past average 30 year fixed-rate mortgages in the past 52 weeks averaged 3.54%
  • This week’s 30 year fixed rate mortgages had 0.35 average discount points
  • This is 125 basis points lower than the average 52-week average
  • Please note these are bank rates for prime borrowers

Need to add mortgage rates pricing adjustments due to credit, property type, and loan-to-value.

The 30-year fixed mortgages in this week’s survey had an average total of 0.35 discount and origination points.

  • The 15-year fixed-rate mortgages are 2.625% from 2.50%
  • The 5/1 ARMS dropped to 2.875% from 2,95%
Breakdown 30 Year 15 Year 5/1 ARM
Mortgage Rates 2.90% 2.625% 2.875%
Change from last week: N/C -0.03 -0.02
Monthly payment: $847.84 $1,217.18 $813.63
Change from last week: N/C -$2.48 -$1.94

Builders are expected to have a stellar 2021. With more home buyers than inventory, they are scooping up vacant land nearby apartments, railroad tracks, and commercial properties. There is no sign of any market correction despite high mortgage rates and rising home prices.

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