Based on the chart provided, the Purchase Index, which tracks mortgage applications for home purchases, has shown slight fluctuations over the past year. Notably, the trend reflects a stabilization in demand despite the persistent upward trajectory of mortgage rates, which now hover near 7%. This indicates resilience among homebuyers, who continue to pursue purchases despite rising costs.
Higher interest rates typically discourage borrowing, but this data suggests that the housing market is finding ways to adapt. If you’re navigating today’s market, working with an experienced brokerage like MORE, REALTORS® can help you identify opportunities that fit your goals.
The full chart is available below for further insights. Let me know if you’d like further assistance or adjustments!
Purchase and Refinance Index vs 30 Year Fixed Mortgage Interest Rates
Click the image below for chart with current, live data
The Risks of HELOC Wire Fraud: A Case Study for St. Louis Homeowners
A recent lawsuit, Skertich vs. Shellpoint Mortgage Servicing and Alliant Credit Union, highlights alarming vulnerabilities in Home Equity Lines of Credit (HELOCs) when it comes to wire fraud. According to the complaint, a fraudulent wire transfer amounting to $425,650 was authorized using counterfeit documents and improper verification processes. Despite clear red flags, such as mismatched signatures and suspicious IP addresses, the financial institutions involved processed the transaction. This serves as a stark reminder for homeowners in St. Louis and beyond to exercise caution with HELOC accounts.
The case emphasizes the importance of robust security protocols. The plaintiffs allege that the defendants failed to have commercially reasonable systems in place to detect and prevent fraudulent activity. This situation escalated further when the victims were held liable for the unauthorized transaction, leading to increased balances and potential foreclosure actions. Homeowners utilizing HELOCs must regularly monitor account activity and promptly report any discrepancies.
For St. Louis area homeowners, this case is a reminder to protect your equity by using secure communication channels with your lender, reviewing monthly statements thoroughly, and inquiring about the security measures your provider has in place. The full complaint, detailing the allegations and implications, can be reviewed below.
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If you’re navigating the complexities of homeownership in St. Louis, MORE, REALTORS® is here to guide you with expert advice tailored to your needs. Contact us today to stay informed and secure in your real estate journey.
On October 15, 2024, the Department of Justice (DOJ) and the Consumer Financial Protection Bureau (CFPB) announced a settlement with Fairway Independent Mortgage Corporation following allegations of discriminatory lending practices, or redlining, in predominantly Black neighborhoods in Birmingham, Alabama. As part of the resolution, Fairway agreed to pay $8 million in relief and a $1.9 million civil penalty to address claims that it avoided providing credit services in these communities due to residents’ race and national origin.
The settlement contributes to the DOJ’s broader efforts through the Combating Redlining Initiative, which has secured over $150 million in relief since its inception. According to the DOJ’s findings, Fairway concentrated its retail loan offices in majority-white areas and allocated less than 3% of its direct mail advertising to Black neighborhoods. Fairway’s lending rates in these areas were significantly lower than peer lenders, prompting the DOJ and CFPB to act.
In addition to financial penalties, the settlement requires Fairway to establish a $7 million loan subsidy program aimed at providing affordable loans for home purchases, refinances, and improvements in Black communities. Fairway will also invest $1 million in programs to support consumer education, outreach, and partnerships with local organizations. The enforcement action underscores the government’s commitment to rooting out lending discrimination nationwide.
The initial complaint filed by the CFPB against Fairway Mortgage, is below.
The Federal Reserve made an important announcement today that could have a ripple effect on the real estate market in St. Louis and beyond. In their latest meeting, the Federal Open Market Committee (FOMC) decided to lower the federal funds rate by half a percentage point, bringing the target range down to 4.75% to 5%. This move comes as the Fed notes continued solid economic activity but acknowledges that job gains have slowed, and inflation, while improving, still remains above their 2% target.
For homebuyers and real estate investors, this rate cut could lead to a slight reduction in borrowing costs, making mortgages a bit more affordable. However, the broader economic outlook remains uncertain, as the Fed continues to carefully monitor inflation and employment levels. As always, real estate professionals and buyers alike should keep a close eye on these developments, as any future shifts in rates could further impact the housing market.
During times of economic uncertainty, working with a trusted local real estate professional is more important than ever. At MORE, REALTORS®, we pride ourselves on staying ahead of market trends and providing expert guidance to our clients. Whether you’re a first-time buyer or a seasoned investor, our team is here to help you navigate these shifting conditions and make smart, informed decisions.
Stay tuned for more updates, as this decision could have further implications for our local St. Louis market in the coming months.
The interest rate on a 30-year fixed-rate conventional mortgage fell to 6.22% yesterday, according to the MND rate index as shown in the chart below. This marks the lowest rate in nearly a year and a half! The last time rates were this low was back on April 6, 2023 when they dropped to 6.18% for the day. This drop in rates comes in advance of the anticipated rate reduction when the Federal Open Market Committee (FOMC) meetings next week.
Mortgage Interest Rates – 30-Year Fixed Rate Loan
(click below for live, interactive chart with tons more data!)
The Consumer Financial Protection Bureau (CFPB) has released a comprehensive report highlighting the risks and challenges associated with “contracts for deed,” a form of seller financing often used as an alternative to traditional mortgages. While these contracts can provide a pathway to homeownership for some, the report underscores the significant dangers they pose, particularly to vulnerable populations, including low-income, Black, Hispanic, and immigrant communities.
Contracts for deed are often characterized by substandard housing, inflated prices, and a lack of consumer protections. Buyers assume all responsibilities of homeownership, yet they do not gain legal title until all payments are completed, which can span decades. The CFPB’s findings reveal that many of these contracts are structured to fail, with sellers retaining all equity and payments in the event of a buyer’s default. This practice perpetuates a cycle of exploitation, where homes are repeatedly sold without necessary repairs, trapping buyers in a never-ending loop of financial insecurity.
Because of these risks, it’s more important than ever to work with a trusted real estate professional who understands the local market and is committed to protecting your interests. At MORE, REALTORS®, we pride ourselves on guiding our clients through every step of the home-buying process, ensuring they avoid predatory practices like those associated with some contracts for deed. Our agents are dedicated to providing transparent, fair, and informed advice to help you achieve your homeownership goals safely and successfully.
According to a recent study by LendingTree, Missouri ranks 9th in the nation for the lowest monthly mortgage payment. The report reveals that while the average monthly payment on a new mortgage in the U.S. is $2,317, Missouri’s average monthly payment is $1,792. This makes Missouri’s payments approximately 23% less than the national average, positioning it favorably among states with more affordable housing costs. This is particularly notable considering the current economic climate, where mortgage rates remain relatively high, and home prices continue to be steep.
The LendingTree analysis, which examined mortgages offered across the nation from January 1 through March 31, 2023, highlights that borrowers in Missouri benefit from more manageable mortgage payments compared to many other states. Interestingly, the Midwest shows a strong presence in the top 10 list of states with the lowest mortgage payments, with states like Kentucky, Ohio, and Indiana also making the cut. This regional trend underscores the Midwest’s overall affordability, making it an attractive option for homebuyers looking to invest in property without the burden of excessively high monthly payments. The full report by LendingTree provides further insights and comparisons across all 50 states, underscoring the variability in mortgage costs.
UPDATE: Friday, August 2, 2024…Today, after the jobs report and other economic data was released, mortgage interest rates fell to 6.40% on a 30-year fixed rate mortgage, the lowest level in nearly 16 months…the last time rates were this low was in early April 2023.
The interest rate on a 30-year fixed-rate conventional mortgage fell to 6.80% today, according to the MND rate index as shown in the chart below. This marks the lowest rate in over six months, since January 9th of this year when rates were at 6.80% as well. This drop in rates comes as the Federal Open Market Committee (FOMC) is meeting today and tomorrow.
The expectation for the Federal Reserve’s meeting is that they will likely keep interest rates unchanged at their current level of 5.25% to 5.50%, which is a 23-year high. This expectation is supported by the CME Group’s FedWatch Tool, which assigns a 97% probability to rates remaining steady during this meeting.
Mortgage interest rates for a 30-year fixed-rate mortgage dipped to 6.81% this week, the lowest level since February 1 when the rate fell to 6.63%. The rate for a 30-year fixed-rate FHA loan fell to 6.26%. This has a significant impact on the cost of a home. For example, a change of just 0.5% in the interest rate can alter the house payment on a typical median-priced home in St. Louis by nearly $100.
The Department of Veterans Affairs (VA) has introduced a temporary variance allowing veterans to pay certain buyer-broker charges when using their VA-guaranteed home loan benefits. This change comes in response to the recent National Association of Realtors (NAR) settlement, which now prohibits the publication of buyer-agent compensation in Multiple Listing Services (MLS). The concern is that many sellers may no longer offer a commission to buyer agents, potentially making it challenging for veterans to secure representation. By allowing veterans to pay these charges directly, the VA aims to ensure they remain competitive in the current real estate market.
At MORE, REALTORS®, we are committed to staying ahead of industry changes to provide our clients with the best possible guidance. This new variance is a significant development for veterans, and we are here to help you navigate these changes effectively. Whether you are a veteran or a civilian, our team at MORE is ready to assist you with all your real estate needs. Contact us today to learn how we can support you in achieving your real estate goals.
The Consumer Financial Protection Bureau (CFPB) has issued a Request for Information (RFI) regarding fees imposed in residential mortgage transactions. This initiative aims to gather insights and comments from the public about the escalating costs associated with obtaining a mortgage. As homeowners and prospective buyers, this is an opportunity for you to voice your experiences and concerns regarding these fees.
From 2021 to 2023, the median total loan costs for home purchase loans surged by over 36%, with the median dollar amount paid by borrowers in 2022 nearing $6,000. These rising costs, coupled with increased home prices and interest rates, have significantly strained household budgets. The CFPB’s focus is on understanding the impact of these fees on home affordability and access to credit, particularly for first-time and lower-income buyers who are disproportionately affected.
The CFPB has launched a public inquiry into what they term “junk fees” in mortgage closing costs. According to CFPB Director Rohit Chopra, these excessive fees can drain down payments and push up monthly mortgage costs, making homeownership less accessible. The Bureau is seeking to uncover why these costs are rising, who benefits from them, and how they might be reduced to alleviate the financial burden on both borrowers and lenders.
Mortgage lenders are also affected by these rising costs. Increased expenses for services like credit reports and title insurance can limit lenders’ ability to offer competitive mortgages, as they either pass these costs onto borrowers or absorb them, affecting their bottom line. The CFPB is particularly interested in understanding the competitive pressures and market barriers affecting these fees, as well as gathering data on the broader impacts on housing affordability and home equity.
The CFPB is calling on homeowners, homebuyers, and industry participants to share their stories, data, and insights on mortgage closing costs. Comments can be submitted electronically via the Federal eRulemaking Portal or by email. Your feedback will help shape future regulations and policies aimed at ensuring fair and transparent mortgage practices. For more details, including submission instructions, refer to the full notice from the CFPB below.
Interest rates for a 30-year fixed-rate conventional mortgage declined to 7.28% today, down from their five-month high of 7.52%, reached just over a week ago. Today’s rate marks the lowest since April 9, when the interest rate on a 30-year fixed-rate mortgage stood at 7.06%.
Although the accompanying chart traces the trajectory of interest rates over the past 40 years, extending back to 1980, it does not predict their future movements. The direction of mortgage rates is influenced by a myriad of factors including, but not limited to, Federal Reserve policies, inflation expectations, and global economic conditions. Currently, experts are closely monitoring the Fed’s monetary policy adjustments in response to inflation rates. Historical data suggests that significant shifts in policy can lead to rapid changes in mortgage rates. Therefore, potential homebuyers and investors should stay informed through reliable financial news sources and consult with seasoned real estate professionals, such as those at my company, MORE, REALTORS®, to navigate the complexities of the mortgage market effectively.
Mortgage Interest Rates – 1980 – Present
(click on chart for entire live, interactive chart)
Interest rates for a 30-year fixed rate conventional mortgage hit 7.52% yesterday, the highest rate in five months, since November 13, 2023 when they were 7.58%. Today, however, they eased and the 30 year fixed rate mortgage interest rate dropped slightly to 7.45% and the interest rate for a 30-year FHA loan slipped below 7% to 6.95%.
The chart below shows interest rates for over 40 years, back to 1980 and shows about as much change as we’ve seen in fashion and technology during the period — from an astronomical high of 18.29% in October 1981 to an unbelievable low of 2.80% in November 2020. Don’t you wish you had a Time Machine and could travel back 4 years and snag a loan?
Mortgage Interest Rates – 1980 – Present
(click on chart for entire live, interactive chart)
According to the latest report from Intercontinental Exchange, the U.S. mortgage market showed promising signs of stability in March 2024. The national delinquency rate decreased to 3.20%, marking a modest drop from February but remaining slightly higher than the record low observed in March 2023. Notably, serious delinquencies, which track loans 90+ days past due but not in active foreclosure, decreased significantly. These serious delinquencies fell by 24,000 cases—a 5.2% reduction from February, reaching their lowest level since mid-2006. This improvement is particularly significant as it occurred during a month that historically sees fluctuations due to its conclusion on a Sunday, a pattern observed only thrice in the last two decades.
In addition to a decrease in serious delinquencies, March saw a downturn in the number of loans in active foreclosure, dropping to 205,000—the fewest since January 2022 and 28% below pre-pandemic levels. Moreover, prepayment activity, often a sign of a healthy housing market, reached its highest point in seven months, encouraged by lower interest rates and the onset of the spring homebuying season. The attached chart below this article provides a visual depiction of these positive trends in delinquency and foreclosure data.
The Consumer Financial Protection Bureau’s (CFPB) Spring 2024 report on mortgage servicing reveals critical issues that prospective and current homeowners should be aware of. The report highlights a troubling trend of unauthorized charges and deceptive practices in mortgage servicing, which could impact a homeowner’s financial stability and property rights. For instance, some services were found to be charging illegal property inspection fees, particularly on Fannie Mae loans, despite guidelines clearly prohibiting such fees when certain conditions are met. These unjust fees, ranging from $10 to $50, were imposed even when borrowers were actively engaging with their servicers, highlighting a significant breach of trust and a potential drain on homeowner resources .
Moreover, the report exposes servicers for levying unauthorized late fees, violating both consumer trust and regulatory requirements. These overcharges, which occurred due to flawed administrative processes or oversight, are especially egregious as they can unfairly increase the financial burden on homeowners. The CFPB’s commitment to scrutinizing such practices is a reminder of the need for vigilance among consumers. The report’s findings underscore the importance of homeowners staying informed and proactive in managing their mortgage accounts to avoid falling victim to these predatory practices. For a deeper understanding and additional details, consider reviewing the complete report below .
CFPB Supervisory Highlights – Mortgage Servicing Edition – Spring 2024
Last week, the interest rates for 30-year fixed-rate mortgages climbed past the 7 percent mark. Despite this increase, as the chart below illustrates, there was a significant 10 percent increase in refinancing applications. This is in sharp contrast to a 5 percent decline in purchase applications. The growth in the refinancing segment is notable, representing 33.3 percent of the total application volume, up from 30.3 percent the previous week. This surge in refinancing interest is particularly intriguing, given the highest reported 30-year mortgage rates in over a month, at 7.01 percent.
Joel Kan, MBA’s Vice President and Deputy Chief Economist, attributed the rising rates to the Federal Reserve’s cautious stance on adjusting policy amidst persistent inflation and resilient economic indicators, including strong employment data. Despite the unfavorable rate environment, the demand for refinancing, especially VA refinancing, remained robust.
Other notable trends include a decrease in average loan sizes, with purchase loan sizes—often viewed as a proxy for home prices—dropping to $449,400 from $453,000. Additionally, there was a shift in the composition of mortgage applications, with increases in FHA and VA loan shares.
So, what explains the rising number of homeowners refinancing their mortgages even with rising mortgage interest rates? There are numerous reports indicating that many homeowners across the country are becoming cash-strapped and having a difficult time paying bills, thus resorting to pulling out equity from their homes, even if it means accepting a higher interest rate. I’ve also observed reports indicating that consumer credit card debt is at historically high levels, with interest rates on this debt being astronomical. This situation is prompting people to refinance their home loans again, even at higher rates, because even though their mortgage may be at a higher rate, it still appears to be a bargain compared to the 27 or 28% on a credit card. I haven’t seen enough verifiable data to confirm if either of these situations is true, but both are plausible.
The ebb and flow of St. Louis’s real estate market are linked to the broader economic currents, and recent weeks have witnessed a significant uptick in mortgage interest rates. In the video below, Traci Everman, Senior Mortgage Banker with Flat Branch Home Loans, does a fantastic job of explaining what is happening and why. Below the video are some highlights and a recap.
Here are are few highlights of what Traci’s covers in the video:
Recent Economic Impacts on Mortgage Rates:
Economic reports released over the past day have precipitated a downturn in the bond market and a subsequent rise in interest rates. This movement stems from inflationary pressures, which erode the value of long-term investments like mortgage-backed securities.
Analyzing PCE Inflation and Jobs Reports:
Key economic indicators such as the PCE report, which reflects inflation sans food and energy costs, revealed a 0.3% increase, signaling a direction contrary to the market’s desires. Furthermore, the employment data, despite being a bearer of good tidings on job creations, did not spell out positive news for the bond market.
Current State of Mortgage-Backed Securities:
Currently, the mortgage-backed securities market is taking a hit, down 88 basis points, leading to a predicted quarter percent increase in interest rates between yesterday and today. This fluctuation reminds us of the volatility that peaked in October 2023.
How Recent Trends May Affect Future Rates:
The Federal Reserve’s stance and upcoming meetings are pivotal. While rate cuts were anticipated, the outcome was status quo, leaving predictions for future rate cuts in 2024 uncertain. Inflation, driven by rising oil prices and other factors such as soaring auto insurance premiums, continues to play a crucial role.
Conclusion: Staying Informed on Market Changes:
As Traci Everman sums up the market update, it’s clear that keeping a close eye on inflation and Fed decisions is crucial for anyone involved in real estate. With potential rate cuts on the horizon, the coming quarters could be crucial for buyers and sellers in St. Louis.
For a more detailed dive into what this means for your home buying or selling decisions, stay connected with St. Louis Real Estate News. Stay informed.
One of the issues receiving significant attention following the announcement of the REALTOR® commission suit settlement is the topic of buyer commissions, specifically regarding whether a buyer has to pay them and how lenders will treat the commissions.
In a recent letter to the Federal Housing Finance Agency (FHFA), Federal Housing Administration (FHA), Fannie Mae, and Freddie Mac, NAR and MBA sought confirmation on the treatment of buyer agent commissions following a proposed settlement agreement in the Burnett et al and Moehrl et al cases.
What does this mean for homebuyers? Under the settlement, cooperative commissions will no longer be displayed on Multiple Listing Services (MLS), but listing brokers and sellers will still be able to offer compensation for buyer broker services through other means. Additionally, the settlement does not prohibit home sellers from paying buyer agent commissions directly.
NAR and MBA believe that FHA and Government-Sponsored Enterprise (GSE) policies should continue to exclude seller or listing agent payments of buyer agents’ commissions from Interested Party Contributions (IPCs). IPCs are concessions from the seller to the buyer for items traditionally paid by the buyer, such as loan closing costs or rate buy-downs. Maintaining this practice is essential to ensure that the flow of mortgage capital to homebuyers remains uninterrupted.
As a homeowner or potential buyer, it’s important to stay informed about these developments and how they may impact your buying or selling process. NAR and MBA have requested confirmation from the FHFA, FHA, Fannie Mae, and Freddie Mac as soon as possible to prevent any confusion and potential disruptions that may cost you money or even jeopardize your home purchase.
Whether you’re looking to buy or rent a home, your credit score is more than just a number—it’s a gateway to your future residence. A recent survey by LendingTree has shed light on the significant role credit scores play in Americans’ access to financial products, including those crucial for securing a home. Here’s a recap of the findings and their implications for the St. Louis real estate market.
Key Findings:
High Denial Rates: 42% of Americans reported their credit scores prevented them from obtaining a financial product in the past year, with this figure soaring to 74% among those with poor credit. For St. Louis residents, this could mean increased challenges in securing mortgages or rental agreements.
Credit Cards and Personal Loans: The top products consumers were denied due to their credit scores were credit cards (25%) and personal loans (12%). While not directly related to real estate, these denials can impact one’s ability to consolidate debt or cover moving expenses, indirectly affecting home buying or renting capabilities.
Perception of Financial Responsibility: 40% of Americans believe their credit scores do not accurately reflect their financial responsibility. This sentiment is even higher among those with poor credit (60%), millennials (47%), and women (44%). For potential homebuyers or renters in St. Louis, this discrepancy could lead to frustration and barriers in the housing market.
Payment History’s Importance: Despite being the most crucial factor in credit score calculations, 50% of Americans are unaware that payment history holds the most weight. This lack of knowledge can lead to missed opportunities for improving credit scores and, by extension, securing better terms for mortgages or leases.
Improving Credit Scores: The survey revealed that paying off debt was the primary method for improving credit scores over the past year. For St. Louis residents, understanding and applying this knowledge can be a strategic move towards enhancing eligibility for home buying or renting.
Implications for St. Louis Real Estate:
The survey’s insights highlight a critical barrier to homeownership and renting: the impact of credit scores on financial product accessibility. For St. Louis real estate professionals and potential homebuyers or renters, this underscores the importance of credit education and management as foundational steps towards achieving housing goals.
Educational Opportunities: Real estate professionals, such as the Masters of Real Estate at MORE, REALTORS®, can provide valuable guidance to clients on improving credit scores, emphasizing the role of payment history and debt management.
Strategic Planning: Understanding the weight of credit scores in financial decisions can help potential buyers or renters in St. Louis develop strategies to improve their scores before applying for mortgages or leases.
Market Accessibility: For those with poor credit, exploring alternative financing options or seeking professional credit counseling could open doors to the real estate market that might otherwise remain closed.
In St. Louis, as in the rest of the country, a strong credit score is more than just a number—it’s a key that unlocks the door to future housing opportunities. The recent LendingTree survey provides a basis for understanding the challenges and strategies related to credit scores in the real estate market. By focusing on credit education and management, St. Louis residents can navigate these challenges more effectively, making the dream of buying or renting a home more attainable.
The latest release from Fannie Mae on the Home Purchase Sentiment Index® (HPSI) is particularly illuminating, showing a notable uptick in consumer optimism towards mortgage rates. For the first time since March 2022, the HPSI has climbed to 70.7, a 3.5-point increase driven largely by heightened confidence in job security and an unprecedented share of consumers expecting mortgage rates to dip in the coming year. This optimism isn’t just numbers on a page; it’s a palpable shift in the air, with 82% of respondents now feeling secure in their employment prospects, and an all-time survey high of 36% predicting lower mortgage rates ahead. Yet, despite this optimism, the stark reality remains that only 17% believe it’s a good time to buy a home, underscoring a persistent pessimism around purchasing conditions.
Fannie Mae Home Purchase Sentiment Index Chart
(click on chart for current, live-interactive chart)
In a recent interview with CNBC, Traci Casper, the President of the National Association of Realtors (NAR), shared her views on the current state of the housing market and the implications of recent commission lawsuits. Her remarks provide an insight into the challenges and changes shaping the real estate industry, particularly relevant for the St. Louis market.
Casper highlighted the impact of fluctuating mortgage rates on the housing market, mentioning, “We do have still such a pent-up buyer pool that’s just been waiting on the sidelines… we are starting to feel them come back in.” This observation reflects the interconnectedness of mortgage rates and buyer activity, a significant factor in real estate market dynamics.
Regarding the commission lawsuits, Casper spoke about the potential effects on buyers and sellers. She explained, “Our buyers are already struggling to come up with a down payment… We don’t want to see is the marginalization of those buyers.” This statement is in line with the NAR’s consistent message suggesting that lower-income buyers might be negatively impacted if sellers stop paying buyer agent commissions. I counter Casper’s position, highlighting the disagreement within the industry. Many argue that buyers are indirectly paying the commission since it is generally factored into the home’s selling price. If the payment structure shifts to where buyers directly pay the commission, this could lead to a decrease in the seller’s price, as they would no longer bear this cost. This change might not increase the overall cost to the buyer, but it could affect sellers’ pricing strategies. Additionally, I believe that lenders will adapt to these changes. Institutions like Fannie Mae, Freddie Mac, FHA, and VA are likely to revise their policies to allow commissions paid by buyers to be included in closing costs, counted as part of the down payment, or financed.
As we observed yesterday, there’s been a significant shift in the mortgage landscape. The interest rate for a 30-year fixed-rate conventional mortgage fell to 6.62%, the lowest since May 12, 2023, when it stood at 6.55%. This decrease might signal a turning point in the housing market, especially considering the erratic rate movements we’ve seen over the past several months.
More encouraging news comes from the FHA sector, where the 30-year fixed-rate dropped to 6.13%, marking its lowest since May 11, 2023, when it was 6.12%. These recent figures hint at a trend that could reignite buyer interest and energize market activity, a positive shift from the higher rates experienced recently.
This change in mortgage rates is particularly significant! For prospective buyers, this dip in rates opens a more favorable door, potentially making homeownership more attainable than in the recent past. Sellers have reasons to be optimistic too, as lower rates could lead to increased market interest and activity.
Below is a chart illustrating the history of mortgage interest rates. This visual representation provides a clearer perspective on the recent changes and what they mean for our market.
Federal Reserve Chair Jerome Powell’s press conference yesterday, along with the Federal Open Market Committee (FOMC) statement, provide crucial insights into the Fed’s economic outlook and monetary policy. These insights are pivotal for understanding the trajectory of mortgage rates and the St. Louis real estate market.
Powell’s Press Conference Highlights
Economic Activity and Rate Adjustments: Powell noted, “We have raised our policy interest rate by 5-1/4 percentage points… Our actions have moved our policy rate well into restrictive territory.”
Housing Sector Observations: He remarked, “After picking up somewhat over the summer, activity in the housing sector has flattened out… largely reflecting higher mortgage rates.”
Key Takeaways from the FOMC Statement
Economic and Inflation Outlook: The FOMC stated, “Recent indicators suggest that growth of economic activity has slowed… Inflation has eased over the past year but remains elevated.”
Banking System Resilience: The statement highlighted, “The U.S. banking system is sound and resilient. Tighter financial and credit conditions… are likely to weigh on economic activity.”
Anticipated Interest Rate Movements
Future Rate Decisions: The FOMC announced, “The Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent.”
Monetary Policy Considerations: “In determining the extent of any additional policy firming… the Committee will take into account the cumulative tightening of monetary policy,” indicating a measured approach to future rate changes.
Implications for Mortgage Rates and St. Louis Real Estate
Mortgage Rate Trends: Combining Powell’s remarks with the FOMC statement suggests a period of careful assessment in rate adjustments. This could lead to stabilization or moderate fluctuation in mortgage rates.
Market Dynamics in St. Louis: Stable or gradually adjusting mortgage rates, alongside ongoing economic and inflation monitoring, could result in a balanced real estate market. Buyers and sellers in St. Louis may experience a period of relative predictability and sustained market activity.
Conclusion
The integrated perspectives from Jerome Powell’s press conference and the FOMC statement offer a detailed view of the Federal Reserve’s stance on economic conditions and monetary policy. For the St. Louis real estate market, these developments suggest a period of cautious optimism, with potential stability in mortgage rates and a balanced market environment. Real estate stakeholders should consider these insights in their market strategies and decision-making processes.
As of yesterday, the mortgage landscape has seen a notable shift, with the interest rate for a 30-year fixed-rate conventional mortgage dropping to 7.13%, marking the lowest point since September 1, 2023, when it was 7.08%. This recent decrease offers a glimmer of hope in the housing market, especially considering the turbulent fluctuations witnessed over the past months.
Equally promising is the rate for 30-year fixed-rate FHA loans, which as of yesterday stood at 6.5%, again the lowest since September 1, 2023, when it recorded a rate of 6.45%. These latest figures suggest a trend that could lead to revitalizing buyer interest and market activity, a welcome change from the higher rates experienced in the recent past.
This positive turn in mortgage rates is particularly significant for markets like St. Louis, where the real estate dynamics are closely tied to these financial trends. For buyers, the dip in rates presents a more favorable scenario, potentially making home ownership more accessible than it has been in recent times. Sellers, too, might find reasons to be optimistic, as lower rates could translate to increased market interest and activity.
The chart below illustrates the history of mortgage interest rates, offering a clearer perspective on the recent changes and their implications.
Mortgage Interest Rates (interactive chart)
(click on chart for live, interactive chart)
The real estate market has always been sensitive to interest rate changes, and the current shift could be the beginning of a more encouraging phase. Whether this trend will continue remains to be seen, but for now, it offers a much-needed respite and a reason for cautious optimism in the housing market.
The 30-year fixed mortgage interest rate has experienced a significant drop, reaching 7.4% – the lowest since September 20th, nearly two months ago. This shift provides a much-needed reprieve in the housing market, particularly following the rate’s surge to 8.03% on October 19th, a peak unseen since August 7, 2000, 23 years ago.
The October high had introduced uncertainty and slowed down the real estate market, impacting buyer affordability and seller activity. The recent decline to 7.4%, though still high historically, is a positive sign, potentially reinvigorating interest and activity in the housing market.
This change in rates is key for real estate professionals and buyers in areas like St. Louis. It presents an opportunity for buyers to reconsider their purchasing plans and for sellers to anticipate increased market interest. The future trajectory of interest rates remains a point of keen observation for the real estate market.
In the world of real estate, down payments have emerged as a significant financial factor for homebuyers across the United States, and St. Louis is no exception. A recent report from LendingTree sheds light on the dynamics of down payments, and it’s essential for prospective buyers and sellers in St. Louis to understand how the local market fares in this regard.
St. Louis Down Payment Statistics:
St. Louis ranks 42nd out of the nation’s 50 largest metropolitan areas in terms of average down payments. This ranking places it 9th in terms of the lowest down payment amount in the 50 largest metros.
The average down payment in St. Louis comes in at $56,251. While this figure may not reach the heights seen in some of the more expensive coastal cities, it’s still a substantial amount.
Down Payment as a Percentage of Income:
One critical metric to assess affordability is the down payment as a percentage of the average annual household income. In St. Louis, the average down payment represents approximately 54.87% of the area’s average annual household income.
Challenges and Opportunities:
For many homebuyers in St. Louis, coming up with a down payment that accounts for over half of their annual household income can present challenges. It may require careful financial planning and discipline to accumulate the necessary funds.
On the positive side, St. Louis fares better than several major metros where down payments exceed 100% of the average household income.
Tips for St. Louis Homebuyers:
Prospective buyers in St. Louis should explore various options for coming up with a down payment, such as saving over time or investigating loan programs that require lower upfront cash.
Additionally, buyers should stay informed about down payment assistance programs available in the St. Louis area that can help make homeownership more accessible.
In summary, while St. Louis may not have the highest average down payments in the nation, it’s essential for local homebuyers to be aware of the financial aspects of purchasing a home. Understanding how down payments align with income and local market conditions is key to making informed decisions in the St. Louis real estate market. Stay tuned to StLouisRealEstateNews.com for more insights into the St. Louis real estate landscape.
In the ever-evolving landscape of the housing market, prospective homeowners and investors alike keep a close eye on mortgage interest rates. Today, there was a modest decrease in the 30-year fixed-rate mortgage interest rate, now hovering between 7.5% and 7.6%. This shift comes in the wake of the Federal Reserve’s recent decision to maintain the Overnight Federal Funds Rate at a range of 5.25% to 5.50%.
This current rate represents a slight relief from the recent peak in , yet it remains a figure that echoes the rates of over two decades ago. To put this into perspective, the last time mortgage interest rates soared to such heights was in late 2000, a reality that today’s borrowers may find daunting.
The first chart below illustrates the trajectory of mortgage rates over the last several years while the chart below it is a long-term look at rates going all the back t0 1971.
Despite the Federal Reserve’s pause in rate hikes, as noted in their latest meeting, the market has responded with a cautious optimism that is reflected in today’s slight rate reduction. Federal Reserve Chairman Jerome Powell has been clear that this holding pattern does not signal an end to the tightening cycle, but rather a strategic pause, with the central bank retaining the option to adjust rates if inflation trends shift.
For homebuyers, this dip presents a nuanced opportunity. While rates are not at the historic lows seen in recent years, any decrease can translate to significant savings over the life of a mortgage. It’s a reminder that in the world of real estate financing, timing, and vigilance are everything.
As we continue to navigate through these turbulent economic waters, stay tuned for updates on interest rate trends and their implications for the real estate market. Whether you’re looking to buy, sell, or simply stay informed, understanding the dynamics of mortgage rates is key to making empowered decisions.
Mortgage Interest Rates (MND Chart)
(click on chart for live, interactive chart)
Mortgage Interest Rates – 1971-Present – 30 Year Fixed-Rate
Every month, Fannie Mae surveys consumers to gauge their sentiment on whether it’s a good time to buy or sell a home. The results are published in their Home Purchase Sentiment Index® (HPSI). In the most recent HPSI report, 84% of respondents said they felt now was a bad time to buy a home. This is the highest percentage holding this view since the survey’s inception in 2012.
On the flip side, 63% of those surveyed believed now was a good time to sell a home. This is a slight dip from last month’s 66%.
As for interest rates, a mere 17% of consumers expect mortgage rates to decrease in the next 12 months
Interest rates for a 30 year fixed-rate mortgage hit 7.49% today as reported by Mortgage News Daily, marking the highest rate we’ve seen on this type of mortgage in over 20 years. The MND chart below only goes back to 2009 but the bottom chart, from the St Louis Fed Reserve goes all the way back to 1971. As the charts show, the last time mortgage interest rates were at these levels was over 20 years ago in late 2000.
Mortgage Interest Rates (MND Chart)
(click on chart for live, interactive chart)
Mortgage Interest Rates – 1971-Present – 30 Year Fixed-Rate
As the chart below illustrates, mortgage interest rates on a 30-year fixed rate mortgage hit 7.125% yesterday, the highest rate since April 5, 2002 when the rates were at 7.13%.
If you go back far enough in history, you’ll feel better about todays’ rates…
There is probably very little comfort in this for current home buyers but while we are experiencing the highest mortgage rates in over two decades, if we go back a couple of more decades or so in history we’ll see the current rates aren’t so bad. As the bottom chart below illustrates, over the 52-year period depicted on the chart, about 55% of the time mortgage interest rates were higher than they are now. If you’re in your 20’s or 30’s you likely don’t care and still think the rates suck since they are about double what they have been since you have paid attention to them. If you’re a baby-boomer like me, it’s a walk down memory lane LOL.
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