Homeowners Are Not Taking Advantage of Historically Low Rates

MoneyJust when the industry thought mortgage interest rates could not get any lower, they dropped further for the fifth consecutive week to unexpected lows.
This might seem to provide existing homeowners with a perfect chance to refinance; however, the data suggests that they are not taking advantage of this opportunity.
Freddie Mac’s Primary Mortgage Market Survey (PMMS) showed that mortgage rates deceased “amid ongoing market volatility” and troubled Treasury yields. The report showed that the 30-year fixed mortgage rate is at its lowest point since April 30, 2015 when it averaged 3.68 percent.
For the week ending February 4, 2016, the 30-year fixed-rate mortgage (FRM) averaged 3.72 percent with an average 0.6 point, according to the survey. Last week it averaged 3.79 percent and a year ago at this time, the 30-year FRM averaged 3.59 percent.
Freddie Mac said that the 15-year FRM this week averaged 3.01 percent with an average 0.5 point, down from 3.07 percent last week. One year ago, the 15-year FRM averaged 2.92 percent.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.85 percent this week with an average 0.4 point, down from last week when it averaged 2.90 percent, the report noted. A year ago, the 5-year ARM averaged 2.82 percent.
pmms_chart (1)”These declines are not what the market anticipated when the Fed raised the Federal funds rate in December,” said Sean Becketti, Chief Economist at Freddie Mac. “For now, though, sub-4-percent mortgage rates are providing a longer-than-expected opportunity for mortgage borrowers to refinance.”
Becketti continued, “Market volatility—and the associated flight to quality—continued unabated this week. The yield on the 10-year Treasury dropped another 15 basis points, and the 30-year mortgage rate fell 7 basis points as well, to 3.72 percent. Both the Treasury yield and the mortgage rate now are in the neighborhood of early-2015 lows.”

Although mortgage interest rates continue remain at historical lows, however, potential buyers and refinancers are steering clear of the housing market.
For the week ending January 29, 2016, mortgage applications decreased 2.6 percent from one week earlier, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey.
Matthew Pointon, Property Economist at Capital Economics, noted that the low interest rates “might seem counterintuitive given that the Fed hiked interest rates in December. But the flight to safety triggered by the turmoil in the oil and equity markets has pushed down Treasury yields and therefore mortgage rates. And although we think rates will increase this year, a strong labor market and easing in lending standards will ensure applications for home purchase see further gains.” http://www.dsnews.com

Help buyers to commit by helping them

NEW YORK – Feb. 2, 2016 – What states are the top picks for Americans looking to move? Florida, California, Hawaii, Colorado and New York, according to a new survey by Harris Poll of more than 2,200 U.S. adults.

Besides looking at the most desired moving locations, the survey asked respondents to name their top reasons for wanting to move, with “better climate” at the top of their list. The survey found that more than six in 10 residents who live on the East Coast – 64 percent – and 61 percent of Midwesterners say they’d consider moving in order to live in an area with a better climate and weather.

Top moving motivations for survey respondents

52% said they’d consider moving to another state for a better climate or better weather
41% said they’d consider moving for a job opportunity
35% said they’d factor in proximity to family
25% said they’d consider a move for health reasons
18% said they’d move to be closer to friends
16% said they’d relocate to be closer to a significant other
14% said they’d move for greater educational opportunities
13% wanted to live in an area with a more accepting lifestyle
11% said they wanted to move to a place with political views that are more accepting
11% wanted to move to an area where recreational marijuana is legal
7% said they’d consider moving to a place where their religious views are more accepted
Source: “Moving Motivations: What Would Make Americans Consider Uprooting?” RISMedia (Jan. 7, 2016)

© Copyright 2016 INFORMATION, INC. Bethesda, MD (301) 215-4688

Getting out of the game

Many Borrowers
Getting Out of the Game: Many Borrowers are Exiting HARP
refinance approximately  3.4 million homeowners have received mortgage modifications through the government’s Home Affordable Refinance Program (HARP) since the program’s inception in 2009.
Now that many of those homeowners have built up sufficient equity and mortgage rates are low, however, many HARP refinancers are leaving the program behind in favor of more conventional mortgage modifications, according to Freddie Mac’s January 2016 Insights & Outlook report released on Friday. Aggregate home equity in the United States has grown by $6 trillion since the middle of 2011.
As part of a trend Freddie Mac has dubbed “unHARPing,” an estimated 10 percent of the 3.4 million HARP borrowers have refinanced into a non-HARP loan. Many of the borrowers who refinanced through HARP from 2009 to 2012 likely have a mortgage rate of higher than 5 percent, and many of them have taken advantage of the low mortgage rates. Since there are more than 2 million current active HARP loans in the United States, there remains significant potential for those borrowers to refinance using a conventional loan.
1-29 HARP graph“The HARP program allowed millions of underwater borrowers with good payment history to refinance without paying down the balance of their current mortgage,” Freddie Mac Chief Economist Sean Becketti said. “Many borrowers who took advantage of HARP over the past five years now have built sufficient equity so they can UnHARP to a conventional refinance with little or no cash brought to closing. This is yet another indicator of the effectiveness of the HARP program. And yet there remains many thousands more who can still take advantage of the HARP program that are currently underwater on their mortgage that should be utilizing this highly successful program.”
Some trends among borrowers who have “unHARPed,” according to Freddie Mac:
The majority of unHARPed borrowers have chosen 30-year fixed-rate mortgages, though 43 percent did choose a 20- or 15-year term—which is higher than the 25 percent of HARP loans who did the same.
The unHARPed borrower’s home appreciated by an average of 24.6 percent in Q3 2015 compared to 9.5 percent in 2011.
UnHARPed borrowers lowered their interest rates by an average of between 0.6 and 1.5 percentage points.
Early in Freddie Mac’s sample, about one-fourth of unHARPed borrowers were required to bring cash to closing in order to refinance; now the number is less than 5 percent.
HARP was launched in March 2009 in response to the housing crisis as a way for underwater borrowers with good payment records and little or no equity to refinance their mortgages and lower their monthly payments. While originally scheduled to last one year, the program has since been extended several times and is now scheduled to expire at the end of 2016. FHFA Director Mel Watt has stated that the program will not be extended beyond the end of this year.

Source DSNEWS
Click here to view the entire Freddie Mac January 2016 Insights & Outlook report.

How Often Should My Score Change?

Above all, Credit Karma is an educational tool. To help you get a grasp on any credit-related confusion you might have, we’re always on the look-out for questions that come up a lot.

 

Credit scores can change once a week for some and not at all for months for others. 

 

Due to this fact, the best way to track your credit score is over longer periods of time. While the fact that your credit score hasn’t moved in a few months might seem concerning, it will likely seem less so in the context of a sixty point total improvement over an entire year.

How your credit score reacts when you open a new account is a great example of how scores can change in the short term versus the long term. When you open a brand new line of credit, a few immediate changes are usually made to your credit report. Most instantly, a new hard inquiry can be added and your average age of credit history could drop. Due to these factors, opening a brand new account is likely to drop your credit score in the short term. However, as you begin to diligently pay off your bills, the additional on-time payments, the higher number of total accounts and your now-growing age of credit history will likely outweigh the initial downsides and your score can benefit in the long term.

A similar example is the member who has made prior credit mistakes and is now slowly but surely working on repairing their credit score. If you’re in this situation, you may experience an initial bout of frustration, as you loyally pay your bills off and rack up on-time payments only to see little or no change in your overall score. When in this situation, keep your long-term credit health in mind. While you might not see instant benefits with each paid-off bill, it is likely that you’ll reap the benefits of your efforts over a longer period of time.

Despite a lack of short-term movement, tracking your general direction over the course of a longer period of time is key to greater awareness about your credit health. Since it might take months or years to see substantial growth, it’s natural to wonder how often you should check your score. While any short-term changes should be taken with a grain of salt, it’s still wise to check your credit on a weekly basis. Check your credit score and report information to make sure no large changes have occurred that you’re unaware of, to ensure the security and accuracy of your financial information and to keep an eye out for long-term trends. And if your score drops a few points in the meanwhile, you may want to wait a few weeks before you jump to any conclusions. Keep making good moves and your score could bounce back before you know it.

Editorial Note: We’re here to provide tools and educational materials to help you take control of your credit. Even though compensation may affect which companies we write about and products we review, our marketing partners do not review, approve or endorse our editorial content. In other words, the opinions you read here are our own.

Advertiser Disclosure: We think it’s important for you to understand how we make money. It’s pretty simple, actually. The offers for financial products you see on our platform come from companies who pay us. The money we make helps us give you access to free credit scores and reports and helps us create our other great tools and educational materials.

Compensation may factor into how and where products appear on our platform (and in what order). But since we generally make money when you find an offer you like and get, we try to show you offers we think are a good match for you. That’s why we provide features like your Approval Odds and savings estimates.

Of course, the offers on our platform don’t represent all financial products out there, but our goal is to show you as many great options as we can.

 

Did we get something wrong? Our editorial team loves research, so the information on our platform is fact-checked and accurate (to the best of our knowledge) when we initially post it. We do our best to keep the content up to date. We may not catch everything, though, so we don’t make any guarantees about the accuracy or completeness of the information provided. If we did miss something, let us know by emailing us at corrections@creditkarma.com. To get complete details about a product, we suggest visiting the company’s website.

About the Author:  is a Content Writer at Credit Karma. Since joining the team in June 2013, he’s been delivering the financial know-how on the daily. When away from work, you can find Mike watching hockey, Twittering for hours and frequenting trivia nights.

One frequent topic of confusion is the question of how often a credit score will normally change. Because Credit Karma offers free updates of both credit scores and report information every week, many Credit Karma members expect to see their score constantly changing. However, this will not be the case. Credit scores can change once a week for some members, and not at all for a couple months or even more for others. It usually takes specific changes to your credit information in order to move your credit score, and even once these changes occur, it could take some time for your credit report to reflect your new status.

More Americans say this is the best time to sell

WASHINGTON – Jan. 17, 2016 – An improving financial picture prompted more consumers to say it’s a good time to sell a home, according to Fannie Mae’s latest Home Purchase Sentiment Index, which capped off its strongest year so far. The share of consumers who said their income was significantly higher than it was 12 months ago rose nine percentage points on net in December.

“Consumers ended the year on an improved note with regard to their income, job security and overall economic outlook,” says Doug Duncan, Fannie Mae’s chief economist. “Brightening economic prospects, if sustained, should stimulate demand for homeownership. However, continuing upward pressure on rental prices and constrained housing supply, particularly for starter homes, may mean prospective first-time homebuyers could face affordability constraints.”

Fannie Mae says that that 40 percent of 1,000 respondents surveyed said they are confident home prices will rise this year.

Also, respondent’s personal financial picture is improving. Eighty-five percent said they’re not concerned about losing their job, which ties an all-time survey high. And the number of respondents who said their household income is significantly higher than it was 12 months ago increased 9 percentage points to 15 percent.

© 2016 Glen Rock Gazette, North Jersey Media Group, Inc. All Rights Reserved.

30 Year Mortgage Rates Fell

WASHINGTON (AP) – Jan. 13, 2016 – Average long-term U.S. mortgage rates fell this week amid continued turbulence in global stock markets.

It was the second straight weekly decline for the rate on the key 30-year loan. Mortgage buyer Freddie Mac said Thursday the average rate on a 30-year fixed-rate mortgage dipped to 3.92 percent from 3.97 percent a week earlier. That rate has increased from its 3.66 percent average a year ago but remains well below its historic average of 6 percent.

The average rate on 15-year fixed-rate mortgages eased to 3.19 percent from 3.26 percent.

The tumult in stock markets around the world that started off the year, triggered by economic stability in China, continued in the latest week. That has pushed up prices of U.S. government bonds, depressing their yields, which mortgage rates track.

The yield on the 10-year Treasury bond fell to 2.09 percent Wednesday from 2.17 percent a week earlier. The yield slipped further to 2.06 percent Thursday morning.

The declining mortgage rates have spurred more prospective homebuyers to apply for loans. Mortgage applications, including refinancings, jumped 21.3 percent in the week ended Jan. 8 from one week earlier, according to data from the Mortgage Bankers Association.

The association’s seasonally adjusted mortgage purchase index – which rose 18 percent in the latest week – reached its second-highest level since May 2010.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was unchanged from last week at 0.6 point. The fee for a 15-year loan remained at 0.5 point.

The average rate on five-year adjustable-rate mortgages fell to 3.01 percent from 3.09 percent; the fee slipped to 0.4 point from 0.5 point.

AP Logo Copyright © 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

30 Year Mortgage Rates Fell

WASHINGTON (AP) – Jan. 13, 2016 – Average long-term U.S. mortgage rates fell this week amid continued turbulence in global stock markets.

It was the second straight weekly decline for the rate on the key 30-year loan. Mortgage buyer Freddie Mac said Thursday the average rate on a 30-year fixed-rate mortgage dipped to 3.92 percent from 3.97 percent a week earlier. That rate has increased from its 3.66 percent average a year ago but remains well below its historic average of 6 percent.

The average rate on 15-year fixed-rate mortgages eased to 3.19 percent from 3.26 percent.

The tumult in stock markets around the world that started off the year, triggered by economic stability in China, continued in the latest week. That has pushed up prices of U.S. government bonds, depressing their yields, which mortgage rates track.

The yield on the 10-year Treasury bond fell to 2.09 percent Wednesday from 2.17 percent a week earlier. The yield slipped further to 2.06 percent Thursday morning.

The declining mortgage rates have spurred more prospective homebuyers to apply for loans. Mortgage applications, including refinancings, jumped 21.3 percent in the week ended Jan. 8 from one week earlier, according to data from the Mortgage Bankers Association.

The association’s seasonally adjusted mortgage purchase index – which rose 18 percent in the latest week – reached its second-highest level since May 2010.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was unchanged from last week at 0.6 point. The fee for a 15-year loan remained at 0.5 point.

The average rate on five-year adjustable-rate mortgages fell to 3.01 percent from 3.09 percent; the fee slipped to 0.4 point from 0.5 point.

AP Logo Copyright © 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.