This BLOG On Mortgage Rates Steady As FEDS Announces It Will Not Raise Rates Was PUBLISHED On February 4th, 2019
Mortgage Rates have been the highest since the Great Recession of 2008.
- However, the economy has long recovered
- Home values has been rising the past several years
- Home prices keeps on rising despite the highest mortgage rates in recent years
- Rising interest rates has not slowed down housing demand
- Rising home prices has been a major issue
- FHFA has increased conventional loan limits for the past 3 years due to rising home prices
- 2019 Conforming Limits is capped $484,350
- HUD, the parent of FHA, followed FHFA and raised FHA Loan Limits for the past three years
- 2019 FHA Loan Limits in most parts of the United States are at $314,827
- The Federal Reserve Board raised interest rates four times in 2018
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
Mortgage interest rates for 30 year fixed rate mortgages closed at 4.62% last Friday February 1st, 2019. 15 year fixed mortgages closed 3 basis points higher at 3.96% the week ending February 1st, 2019. 4.27% was what adjustable rate mortgages on the week ending February 1st, 2019. 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.
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.”
Hot Housing Market Seems To Stabilize
Gustan Cho Associates at Loan Cabin Inc. has countless of 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
According to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index the growth of housing prices slowed to 5.2% yearly gain in November 2019. 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 February 4th
Mortgage Rates Steady going into the week of February 4th 2019 at 4.62% compared to 4.38% same period last year.
- Past average 30 year fixed rate mortgages in past 52 weeks averaged 4.74%
- 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 3.96% from 3.99%
- The 5/1 ARMS dropped to 4.27% from 4.29%
|Breakdown||30 Year||15 Year||5/1 ARM|
|Change from last week:||N/C||-0.03||-0.02|
|Change from last week:||N/C||-$2.48||-$1.94|
Builders are expected to have a stellar 2019. With more home buyers than inventory, they are scooping up vacant land nearby apartments, railroad tracks, and near commercial properties. There is no sign of any market correction despite high mortgage rates and rising home prices.