Purchase volume should be positively affected by higher house inventory in 2020. Inventory which has been a concern for some time now is expected to be tackled by construction initiatives that are on the way now. One point of note is the question of housing affordability which may become a malaise in the interior areas, too (at this point affordability issues are more of a coastal phenomenon). Here is hoping affordable houses in the FHB vertical pick up and soon.

Mortgage Rates: rates increase with exception of 15 Y Fixed

This week’s Mortgage Banking Associations’ (MBA) weekly rate survey reveals an increase across the board with one exception.

According to the MBA Weekly Survey: “The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) increased to 3.99 percent from 3.98 percent, with points remaining unchanged at 0.33 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.”

1 point in cost = 1% of the loan amount

“The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350) increased to 3.97 percent from 3.96 percent, with points decreasing to 0.25 from 0.26
(including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.”

“The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.39 percent from 3.40 percent, with points remaining unchanged at 0.26 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.” 

“The average contract interest rate for 5/1 ARMs increased to 3.38 percent from 3.28 percent, with points decreasing to 0.21 from 0.23 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.”

Mortgage Rate Activity and Predictions

Freddie Mac’s weekly mortgage survey has reported that the conforming rates for the week- 19th December to 25th December- have remained unchanged for 15 Y Fixed and moved up by 0.01% 30 Y Fixed.

Freddie Mac’s weekly mortgage survey noted, “The 30-year fixed-rate mortgage rate saw little change again this week and averaged just 3.9% during 2019, the fourth lowest annual average since 1971 when Freddie Mac started its weekly survey. Heading into 2020, low mortgage rates and the improving economy will be the major drivers of the housing market with steady increases in home sales, construction and home prices. While the outlook for the housing market is bright, worsening housing affordability is no longer a coastal phenomenon and is spreading to many interior markets and it is a threat to the continued recovery in housing and the economy.”

Mortgage Rate Lock Advice

I would recommend you to Lock if you are closing within the next 3 weeks and Float if you are closing any time beyond that.

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