While rates remain elevated, the Fed recently signaled that it will begin to cut rates in 2024, indicating a further downward shift in mortgage rates may soon come.

Bright MLS chief economist Dr. Lisa Sturtevant. “The Federal Reserve has indicated that there will likely be cuts to the short-term federal funds rate in 2024, which will put downward pressure on mortgage rates. Overall, though, rates are expected to remain above 6% throughout [2024].”

William Raveis Mortgage regional vice president Melissa Cohn. “The peak in mortgage rates is behind us, but mortgage rates are not going to decline as fast as everyone would like them to. … The Fed and the markets will now closely analyze all data, and when there is a consistent flow of weaker data, the door will be opened for the Fed to initiate their first rate cut, hopefully, at the end of the second quarter.”

First American deputy chief economist Odeta Kushi. “The ongoing deceleration in inflation, coupled with the Federal Reserve’s recent indication of potential rate cuts [in 2024], suggests an environment supportive of modest declines in mortgage rates. Barring any unforeseen circumstances and resurgence in inflation, lower mortgage rates could be on the horizon, but the journey towards them might be slow and bumpy.”

Hometap Equity Partners head of investor product Dan Burnett. “While softening economic data and indications from the Fed hint that the rate cut cycle could begin sooner than expected, it is worth proceeding with caution as it pertains to mortgage rates. Fed policy will be contingent on continued progress on inflation. If current trends continue, consumers can expect to see Treasury yields decline and mortgage rates come down along with them.”

Zillow chief economist Skylar Olsen. “I’m expecting mortgage rates to be a bit less volatile in 2024 and, data surprises aside, continue to slowly ease down over the course of the year.”

https://www.forbes.com/advisor/mortgages/mortgage-rates/

The rising cost of property taxes and homeowners insurance are an unwelcome surprise

Among homeowners who have a mortgage escrow account, only 52% fully understand how the account works, according to survey results released Thursday by property tax services provider LERETA.

More than 80% of survey respondents said they know what an escrow account is and its primary purpose — to pay property taxes and other expenses, such as homeowners insurance, flood insurance and mortgage insurance premiums.

But at a time when mortgage escrow expenses across the nation are likely to experience substantial increases due to higher home prices, as well as higher property tax and insurance rates, only half of respondents indicated they “completely understand how their escrow account works.”

The survey, conducted in February, included the responses of more than 1,000 people who have purchased or refinanced a home in the past four years and have an escrow account.

“The findings reinforce what our associates are hearing every day at our tax service call centers,” John Walsh, CEO of LERETA, said in a statement. “In 2023, 60% of the calls were related to escrow accounts, specifically shortages due to rising property taxes or insurance costs.”

Property taxes across the country are expected to rise due to surging home-price appreciation over the past few years. The average U.S. home price has jumped 29% since the start of the COVID-19 pandemic in 2020, according to Zillow data, which suggests the likelihood of double-digit tax increases for many homeowners.

In addition, homeowners insurance premiums at the national level jumped 21% during the year ending in May 2023, according to insurance marketplace Policygenius.

These findings are supported by the LERETA survey, which found that 57% of respondents have experienced an increase in property taxes, while 38% have seen costs for homeowners insurance rise.

Escrow accounts also frequently handle mortgage insurance payments as conventional loan borrowers with less than 20% equity in their homes are required to have mortgage insurance. Federal Housing Administration (FHA) borrowers must pay mortgage insurance for the life of their loan regardless of equity levels. About 80% of all U.S. mortgage holders have an escrow account, LERETA reported.

The LERETA survey also found 36% of respondents with a fixed-rate mortgage believe their monthly payment cannot change, even though it can. And 28% are either “somewhat aware” or “not aware” that changes in escrow accounts can affect monthly payments.

At the national level, homeowners insurance costs jumped by 35% in the two years ending in May 2023, according to Policygenius, led by Florida with a hike of 68%. Large insurance carriers are pulling out of some states entirely and the growing lack of competition is expected to increase the cost of coverage.

“Many will be financially challenged, and some homeowners will need help to make these payments and keep their homes,” Walsh said. “Our goal is to help mortgage companies increase communications and educational outreach to customers about escrow accounts to help address this looming problem.”

February 15, 2024, 5:47 pm By Neil Pierson

Many homeowners don’t understand how their escrow account works

Congratulations to Sylvie Guerin for receiving the 2024 LO award from Five Star Experience! We are excited to have her on the team and looking forward to more great accomplishments from this amazing woman.

“With a background in business, construction and a keen understanding of the lending industry, I thrive to make the loan process smooth and transparent for my clients. Whether you’re looking to buy a new home, refinance an existing loan, or secure financing for a major purchase, I am committed to guiding you through every step of the loan process and finding the best possible solution for the unique situation”.

Mortgage rates jumped to a two-month high following a release of government data this week that showed producer and consumer prices surpassed expectations in January, further dimming prospects of Federal Reserve interest rate cuts in the near future.

The average 30-year fixed mortgage rate hit 7.14 percent Friday, according to Mortgage News Daily. Mortgage rates jumped to 7.13 percent on Tuesday after the new consumer price index (CPI) came in hotter than expected.

Inflation fell to 3.1 percent in January, according to the latest data from the Bureau of Labor Statistics, down significantly from its 9 percent peak in June 2022 but far from the Fed’s goal of 2-percent inflation.

The producer price index (PPI), which measures fluctuations in prices paid to U.S. producers, rose 0.3 percent from December to January, outstripping expectations of a 0.1 percent bump.

“Recent elevated inflationary data, including today’s Producer Price Index report, is likely to push yields and therefore mortgages higher, which could prove an additional headwind to the housing market in the near term,” said Eugenio Aleman, chief economist at Raymond James.

“The PPI for final demand was higher than expected in January, following a CPI report that also disappointed earlier in the week,” he added. “The report is still showing very strong price pressures on the service side of the economy while goods prices remain under pressure.”

The central bank has raised interest rates 11 times since March 2022 in an attempt to bring down inflation, fueling the surge in mortgage rates to their highest level in more than two decades.

Mortgage rates topped 8 percent at their peak in October, according to the daily mortgage index. Rates dropped below 7 percent in December after the central bank signaled it planned to cut interest rates this year, but they’ve ticked up again amid new data showing sticky inflation.

High rates have depressed the average homebuyer. So far this year, mortgage applications are down in more than half of states compared to the same period in 2023, according to Freddie Mac data.

Meanwhile, investors bought a record 26.1 percent of low-priced housing in the fourth quarter of 2024, according to a recent report by the real estate company Redfin.

“Elevated home prices and mortgage rates, along with sluggish rents, have made low-priced homes increasingly attractive to investors,” the company said in a statement.

Taylor Giorno
Fri, February 16, 2024 at 12:36 PM PST·2 min read

By Alain Sherter
Edited By Aimee Picchi
January 8, 2024 / 4:36 PM EST / CBS News

A growing number of American expect mortgage rates to fall this year.

According to a new survey from Fannie Mae, as of December some 31% of consumers think that borrowing costs for home loans will decline over the next 12 months, a more optimistic outlook than the previous month. The same percentage of respondents expect mortgage rates to rise, while 36% believe they’ll hover around their current level.

“Notably, homeowners and higher-income groups reported greater rate optimism than renters,” Mark Palim, deputy chief economist at Fannie Mae, said in a statement. “In fact, for the first time in our National Housing Survey’s history, more homeowners, on net, believe mortgage rates will go down than go up.”

The rate on a conventional 30-year fixed-rate mortgage is 6.62%, down from nearly 8% in November, according to Fannie Mae.

See Managing Your Money for more on how mortgage rates are likely to fare in 2024.

For aspiring homeowners, as well as sellers and those looking to refinance, the big question for 2024 is how low mortgage costs could go. Federal Reserve officials indicated in December they could cut their benchmark rate three times this year. Most real estate experts think rates will remain in the 6% range, according to Realtor.com.

Although mortgage rates don’t necessarily mirror the so-called federal funds rate, they tend to track the yield on the 10-year U.S. Treasury note, which is affected by the Fed’s monetary policy moves. Investor expectations for future inflation and global demand for Treasury’s also influence rates on home loans.

If more Americans are optimistic about falling mortgage rates, they remain distinctly sour on the prospects of buying a home. Only 17% of consumers polled by Fannie Mae think it’s a good time to buy a house. As of November, the median price of a home in the U.S. topped $408,000, up 3.6% from the previous year, according to Redfin.

Still, even modestly higher expectations for lower rates could encourage sellers to put their homes on the market, Palm said.

“Homeowners have told us repeatedly of late that high mortgage rates are the top reason why it’s both a bad time to buy and sell a home, and so a more positive mortgage rate outlook may incent some to list their homes for sale, helping increase the supply of existing homes in the new year,” he said.

https://www.cbsnews.com/news/interest-rate-mortgage-fannie-mae-2024/ https://realtor.com

Mortgage Predictions: Could 2024 Be a Better Year for Homebuyers?

Experts say mortgage interest rates are on a slow path down to 6%.

Written by Katherine Watt
Edited by Laura Michelle Davis
Updated Jan. 08, 2024
5 min read

New year, new housing market? Not exactly, but with mortgage rates expected to fall, homebuyers should have an easier time in 2024 than they had last year.

2023 was the least affordable housing market on record, according to a report from mortgage brokerage Redfin. So when mortgage rates went on a falling streak in November, it gave market watchers a much-needed boost of optimism.

Even though the housing market tends to be seasonal, mortgage interest rates are not. Rates move around on a daily, and even hourly, basis in response to a range of factors, including monetary policy, economic data, 10-year Treasury yields and investor expectations. Some fluctuation in mortgage rates is to be expected. That’s why mortgage experts warn against too much optimism.

Right now, the average rate for a 30-year fixed mortgage is hovering just below 7%, and forecasts show rates inching down to the low-6% range by the end of the year. Let’s take a deeper look at how we might get there.

Read more: Mortgage Rates Will Fall in 2024, but When? Here’s What Experts Think

Mortgage rates should decline gradually
Mortgage rates aren’t going to plummet back to pandemic-era record lows. The more likely scenario is a gradual decline of a percentage or more over the year as markets wait for inflation to improve and for the Federal Reserve to make its first interest rate cut.

Here’s a look at where some of the major mortgage forecasters expect mortgage rates to go:

Fed rate cuts could help the mortgage market
For nearly two years, the Fed has been locked in a battle against inflation. After raising interest rates 11 times — increasing the cost of borrowing money across the economy — inflation has cooled significantly and experts say the wind is finally at our backs.

Having kept its benchmark rate steady since July 2023, the Fed has projected three rate cuts this year. That news, combined with other economic data, is what helped mortgage rates fall significantly in the last two months of 2023. Yet after dropping more than a full percentage point in nine weeks, mortgage rates started ticking back up around the new year.

“Mortgage rates frequently start moving slightly higher from January to February as the spring homebuying season picks up,” said Selma Hepp, chief economist at CoreLogic.

That’s why all eyes are on monthly inflation and jobs data, which will influence the central bank’s next policy move. As inflation improves toward the Fed’s 2% annual target, mortgage rates should float lower. “Unless there are serious surprises with inflation, we could see the Fed suggesting more clearly an intent to cut rates and that would result in further decline in mortgage rates,” said Hepp.

But for now, it’s a waiting game.

The Fed’s first policy meeting of the year is at the end of January, with another scheduled in March and a third meeting at the start of May. Most experts say that a rate cut before May would be premature.

“Fed members may want to see a bit more evidence that the retreat in price pressure is durable,” said Keith Gumbinger, vice president of the mortgage site HSH.com.

And it’s not necessarily the cuts themselves that will result in lower mortgage rates, according to Mark Zandi, chief economist at Moody’s Analytics. It’s more about the message that rate cuts (even the potential for them) send to financial markets.

Home prices and housing supply could improve
2024 won’t bring housing affordability, but there will be baby steps in that direction, especially if existing home prices soften, according to Hannah Jones, senior economic research analyst at Realtor.com. “With slightly lower mortgage rates and home prices, prospective buyers will see the cost of purchasing a home start to creep down in some areas,” said Jones.

Still, there aren’t enough homes on the market. Current homeowners with mortgage rates significantly lower than today’s rates are unwilling to sell their homes, which in turn drags down existing housing inventory. But that could change if home loan rates decline.

“While mortgage rate shock may have kept some households in place the past couple of years, major life events – like a growing family – may cause many to take advantage of lower interest rates to move into a home that better fits their needs,” said Orphe Divounguy, senior macroeconomist at Zillow Home Loans.

Lower mortgage rates should lead to more people interested in trading up or down to put their homes on the market, said Greg Heym, chief economist at Brown Harris Stevens. “That would help increase existing home supply in certain segments of the market.”

Limited inventory and growing demand for homes could continue to push prices up, however, unless there’s a significant boost in the new construction of single-family homes. “Substantially more units are needed to meet the demand, especially as new buyers — who were previously priced out due to the rise in mortgage interest rates — come into the market,” said Jessica Lautz, deputy chief economist at the National Association of Realtors.

Some advice on mortgage rates
Mortgage rates are determined by an array of macroeconomic conditions, but the one you qualify for will depend on personal factors, such as your credit score. If you want to buy a home in 2024, make sure you’re saving for your down payment, building your credit score, researching loan options and shopping around for lenders will put you in a better position to buy a home when it’s right for you. https://hsh.com

Mortgage Rates End 2023 Not Too Terribly Far From Where They Started
By: Matthew Graham
Fri, Dec 29 2023, 3:10 PM

Looking back at October when 30yr fixed mortgage rates were over 8%, a return to the roughly unchanged levels by the end of the year may have seemed like too much to hope for. While we might not have made it quite back to rates seen on the last day of 2022, we got surprisingly close.

Today’s movement didn’t contribute to this conclusion in any meaningful way. The average lender quoted modestly higher rates compared to yesterday afternoon, but still right in line with the flat trend that’s been intact since December 14th.

Next week could easily bring more volatility with several important economic reports on tap, starting on Wednesday.

https://www.mortgagenewsdaily.com/markets/mortgage-rates-12292023

If you were recently denied for a mortgage application, it doesn’t mean you can’t get approved somewhere else. There are some application issues that are fixable. The first thing you’ll want to know is why you were denied. We can take a look and shop for other loans options.
Credit issues are a common reason for getting denied. The first thing to do is to examine your credit report to see if there are any errors that can be fixed. There are also other loan programs if your score doesn’t fit conventional loans.
Debt to income ration or DTI that is too high is another common reason to be denied. The first thing if possible, would be to pay down debt. Another common source of debt is student loans – you may want to look into applying for the new student loan forgiveness program.
Simply being denied once does not mean the end of the road, we can consider multiple loan options. A co-signer is another option to consider, although this will make the application process less streamlined. Complete our quick qualifier and we can schedule a consultation to see what you can qualify for and for how much.

If you thought you missed the opportunity to refinance and lock in low rates, you didn’t!
We’ve seen a wave of refinance activity in the last week as rates dropped to an average of 2.78% for 30 year fixed mortgages according to a survey from Freddie Mac, which is not far from the all-time record low of 2.65%.
Fannie Mae estimates that there are millions of home owners that can benefit from refinancing in today’s rates, with either lower monthly, cash-out or both. Getting the best rates, will depend on a number of factors, including credit scores, debt to income and how much is currently owed on your house. Call us or fill out a quick refi analysis on our website and we can see how much savings you are eligible for!

If you’re in the market for a new house, you’ve probably heard that you want to get pre… qualified or pre-approved? What’s the difference anyways?
There’s actually a big difference. Pre-qualified is more of a preliminary step. It gives you a general idea of much home you can afford. We will examine your credit, income, assets, and debts and you’ll have a general idea of the price range you’re looking for. You may also see that you need to increase your savings or lower debts before you buy.
While pre-qualifying is an initial step, pre-approval is a deeper dive and being pre-approved carries more weight with sellers. To get pre-approved we will verify you income, assets, etc. and you will be more official (of course you still have to apply for a mortgage). Being pre-approved is almost a necessity in competitive housing markets, as realtors do not want to waste time and you will have a better chance of having your bid accepted.
Now that we know the difference you may wonder what’s the point of getting pre-qualified – why not just get pre-approved? Good question – basically its much faster and it gives you a good starting point to start your home search. Pre-qualify or pre-approve we can help you with both – apply on our website or call us to get started.