Last week, the Federal Housing Finance Agency (FHFA)announced that effective January 1s, 2021, the maximum loan amounts for Fannie Mae and Freddie Mac conforming loans will be increased from $510,400 to $548,250. Once a home buyers loan amount exceeds the Fannie and Freddie limits, their loan is considered a “jumbo” loan and typically less attractive terms, so an increase in the Fannie and Freddie limits is definitely helpful to home buyers in higher price ranges.
Fannie Mae and Freddie Mac are also increasing the loan limits for loans to purchase multi-family properties as well. The multi-family property limits for 2021 are:
- Two Units – $702,000
- Three Units – $848,500
- Four Units – $1,054,500
Fannie Mae issued their monthly housing forecast for April which includes, among other data, a forecast of what mortgage interest rates will be in the coming months. Last months forecast had projected that mortgage rates would continue to decline moving forward but only to a low of 3.1% before the end of 2021 while the April forecast predicted the interest rate on a 30-year fixed-rate mortgage would fall to 2.9% in the 2nd quarter of 2021 and stay there through the balance of the year.
If you’re able, now’s the time to buy!
While the effects of the COVID-19 pandemic, such as job loss, is going to take some would-be home buyers out of the market, for those that are still able to buy, now is a great time to buy a home. There are many factors that play in favor of buyers today, such as the fact that there are about 1/3 fewer of them (buyers in the market) now than this time last year, sellers that want to have fewer people coming through their homes and interest rates. As our chart below shows, not only are rates low now, they are projected to go much lower even.
Why not wait until next year when the rates hit their lowest?
Good question, but there are several reasons not to wait. First off, the rates shown on my chart are “projections”, or to put it another way “an educated guess”, so there is no guarantee rates will actually come down as predicted. In addition, once the stay at home orders go away and we start moving back to something closer to normal, I anticipate there will be a flood of buyers to the market which, along with lower interest rates (if that happens) will likely drive home prices up. So, for buyers that are able, they may get a better buy today, with less competition, still get a good interest rate and then if rates do fall as predicted can easily refinance to take advantage of lower rates.
As a result of the COVID-19 National Emergency Servicing and Loss Mitigation Program declared by President Trump, the U.S. Department of Housing and Urban Development (HUD) sent a letter yesterday to its loan servicers making them aware of new COVID-19 National Emergency Loss Mitigation Options. HUD told the lenders that the new options for borrowers go into effect immediately but the lender must implement them no later than April 30, 2020.
Highlights of the new forbearance plan:
- The Mortgagee (lender) must not deny COVID-19 National Emergency Home Retention Options to Borrowers that experience an adverse impact on their ability to make on-time Mortgage Payments due to the COVID-19 National Emergency and satisfy the loss mitigation criteria set forth in this section.
- (A) Forbearance for Borrowers Affected by the COVID-19
National Emergency If a Borrower is experiencing a financial hardship negatively impacting their ability to make on-time Mortgage Payments due to the COVID-19 National Emergency and makes a request for a forbearance, the Mortgagee must offer the Borrower a forbearance, which allows for one or more periods of reduced or suspended payments without specific terms of repayment. - The initial forbearance period may be up to 6 months. If needed, an
additional forbearance period of up to 6 months may be requested by
the Borrower and must be approved by the Mortgagee.
The term of either the initial or the extended forbearance may be
shortened at the Borrower’s request
.
(B) COVID-19 National Emergency Standalone Partial Claim
The Mortgagee must waive all Late Charges, fees, and penalties, if
any, as long as the Borrower is on a Forbearance Plan.
- (A) Forbearance for Borrowers Affected by the COVID-19
For any homeowners with an FHA loan that are struggling to make their house payments, they should contact their loan servicer to see if they are eligible for relief under this plan.
The typical median-priced existing home sold for $233,000 in February 2019 and a year later, as the chart below shows, in February 2020 the typical median-priced home sold for $235,000, an increase of just under 1%. Here’s the beauty though, thanks to interest rates dropping from an average of 4.41% a year ago to 3.29% today, even with the slight increase in price, the typical St Charles County home costs less today than a year ago! Not just by a little either as the payment on the median price a year ago (no money down) would have been $1,178.18 at the current rates at the time, the payment today, at the higher price but lower rates would be just $1,019.15, a savings of $159.03/month or 13.5%! Oh, and just to show the “compound effect” of this, over the life of the loan, you will save $55,249 in interest.
So, what are you waiting for? Buy a house!
Mortgage interest rates hit a record low this week with an average interest rate of 3.29% on a 30-year fixed-rate mortgage according to the Freddie Mac Primary Mortgage Market Survey. As the chart below shows, interest rates came close to this level at the end of 2012 but then quickly shot up to over 4.5% shortly after.
Now is the time to buy or at least refinance!
Anyone that has been thinking of buying a home should, if able, shift into high geat and find one now to take advantage of the low rates and the increased buying power that comes with it. The first step would be to get yourself pre-approved and, for that, I would recommend Michael McCarthy with Flat Branch Home Loans…he’s great and our firm does a lot of business with him. You can find his info at STLBestLender.com. If you a homeowner with a mortgage and no plans to move, I would also suggest you get in touch with Mike to see how much money you can save by refinancing your existing mortgage at a lower rate.
For quite a while now we have enjoyed the positive effects on the real estate market from low mortgage rates but it looks like it’s going to get even better! Yesterday’s announcement by the Fed of the emergency step of lowering the benchmark U.S. interest rate by one-half of one percent, in an effort to offset the negative effect tot eh financial markets from the coronavirus will likely lead to even lower mortgage interest rates.
What’s the connection between the federal funds rate and mortgage interest rates? This is something often asked not only by homebuyers but is even within the real estate community as since the Federal Reserve doesn’t “set” mortgage rates, the connection is not always clear. I’m not an expert in this area by no means, but I have a decent understanding of it and will share it from the perspective of the most popular home mortgage, the 30-year fixed-rate mortgage. First, we have to understand where the money for those mortgages comes from. It comes from investors, investors that compare an investment in 30-year mortgages to other comparable investments. One of those comparable investments would be the 30-year treasury.
As you may have noticed, I’ve been pretty optimistic about the outlook for the real estate market this year however, that is not always the case as I call it like I see it. The reason for my optimism is based upon what a true data geek like myself would base it upon, data! So, what’s the data that has me believing 2020 will be a good year for the housing market in St Louis and beyond? Several things:
- As I have been reporting here for the past couple of years now, mortgage delinquency and foreclosure rates have continued to decline which show the strength of the economy as a whole as well as the housing industry.
- As the US Economic Indicators charts below show, since peaking around 2010, the unemployment rate, 30-year mortgage rate and mortgage delinquency rates have all steadily declines to either record lows or at least the lowest rate in recent history.
- As the St Louis unemployment, home prices and rent chart below shows, unemployment in St Louis has fallen to the lowest level in decades and the relationship between home prices and rents show home prices lagging behind rents indicating that we’ll likely see continued, good housing appreciation rates.
- As the 30-year fixed rate mortgage chart below shows, mortgage rates are at near record low rates giving buyers much more buying power. In my market update video I shared here a day or two ago I illustrate just how much more buying power this translates into.
- As I reported last week, St Louis home sales last year managed to top the prior year slightly, in spite of the low-inventory market we have been stuck in. This shows the demand that is out there.
- As I reported earlier this week, the home sales trend for 2020 in St Louis is in positive territory has well.
The maximum loan amount for an FHA-Insured home loan on January 1, 2020, will increase from $314.827 to $331,760 for a single-family home purchased in the St Louis metro area. FHA insured home loans have lower credit standards than a typical conventional loan, require a downpayment of just 3.5% and allow all of the purchasers closing costs to be paid by the seller (up to a limit) thereby extending the opportunity of homeownership to a wider audience.
Below are all of the FHA Mortgage Limits for the St Louis MSA for 2020:
- One-Family dwellings – $331,760
- Two-Family dwellings – $424,800
- Three-Family dwellings – $513,450
- Four-Family dwellings – $638,100
To find out more about FHA home loans, or to get pre-approved for an FHA home loan click on the button below to connect with Mike McCarthy.
Buying a home for veterans will get a little easier come January 1, 2020, especially those veterans moving up to a more expensive home, as a result of the Blue Water Navy Veterans Act of 2019 signed into law by President Trump in June 2019. The primary focus of the Act was to provide disability benefits to veterans who served in Vietnam, it also made significant changes to the VA Home Loan benefit available to all veterans. The VA home loan changes go into effect on January 1, 2020. Below are highlights of the changes to the VA home loan benefit:
- Conforming Loan Limits – There will no longer be a limit, or cap, on the amount for a no-downpayment home loan to a veteran.
- VA funding fee increase – The VA charges a funding fee to support the VA home loan program. The fee is currently 0.15% for Veterans and Servicemembers and on January 1st will increase to 0.30%.
- Purple Heart – The VA funding fee will be waived for active Servicemembers who have earned a Purple Heart.
- Native America Direct Loan – As of January 1st, the existing cap of $80,000 will be removed for Veterans using their entitlement for a VA Native American Direct loan to purchase (or build) a home on Federal trust land.
To find out more about the changes to the VA home loan program, click on the button below to connect with Mike McCarthy,
The good news just keeps coming for the residential real estate industry! The most recent is from a report just released by CoreLogic showing the mortgage delinquency rate in the U.S. was at 3.8%, the lowest rate in at least 20 years! In addition, not one state in the country had an increase in overall delinquency rates in September.
Foreclosure Inventory Reaches Low as well…
The foreclosure inventory rate for September was 0.4%, another 20+ year low!
In August, the overall mortgage delinquency rate (30 or more days past due) was 3.7% for the U.S. which is a 0.2 percentage point decline from a year ago and is the lowest overall delinquency rate in 14-years, according to date just released by CoreLogic. The delinquency rate for August of 3.7% marks the lowest delinquency rate during the month of August in 20 years. The serious delinquency rate (120+ days late) decline of 1.2% a year ago to just 1.0% in August 2019, nearly a record low. The Foreclosure Rate fell in August 2019 to 0.4% from 0.5% a year ago.
Missouri mortgage delinquency rates are low as well…
During August 2019, the overall mortgage delinquency rate for Missouri was exactly the same as the national rate, 3.7%. The serious delinquency rate in Missouri was 1.1%, just slightly above the national rate, and the foreclosure rate was 0.2%, half of the national rate.
See the current mortgage interest rates here.
In our MORE, REALTORS, 5 Minute St Louis Real Estate Market Update video below, you can quickly and easily get the latest information on home prices, home sales, trends and more for the entire St Louis area!
Thinking of selling and want to know if your neighborhood is a seller's market? Contact us and we'll answer that question for you.You can now subscribe to our ITUNES Podcast Channel to receive our updated market videos via podcast automatically each week! Just click here, then click on "Subscribe Free".)
Sell Your Home For The Highest Price In The Least Amount of Time! See how- STLSellersAdvantage.com
Save Commission On Your Home Sale Without Sacrificing Service! See how- FairCommissionRates.com
The outlook for mortgage interest rates looks promising as well with the most recent Fannie Mae Housing Forecast predicting the 30-year fixed rate will stay at 4.5% through the end of 2020.
St Louis Mortgage Interest Rates
(click on chart for live, interactive chart)
30 Year Fixed Rate Mortgage Average – 2000 – Present
(Click on Chart for LIVE chart with current data)
The number of St Louis homeowners refinancing their home mortgages during the first quarter of this year dropped over 10% from a year ago and was down over 15% from the first quarter of 2016.
In our MORE, REALTORS, 5 Minute St Louis Real Estate Market Update video below, you can quickly and easily get the latest information on home prices, home sales, trends and more for the entire St Louis area!
Sell Your Home For The Highest Price In The Least Amount of Time! See how- STLSellersAdvantage.com
Save Commission On Your Home Sale Without Sacrificing Service! See how- FairCommissionRates.com
Thinking of selling and want to know if your neighborhood is a seller's market? Contact us and we'll answer that question for you.You can now subscribe to our ITUNES Podcast Channel to receive our updated market videos via podcast automatically each week! Just click here, then click on "Subscribe Free".)
Even with the recent increase, mortgage interest rates are still reasonably low from a historical perspective. As the second chart below illustrates, 20 years ago the rates were around 8 percent. Mortgage interest rates then spent nearly a decade around the 5% – 6% range before beginning the descent after the housing bubble burst in 2008.
Mortgage Interest Rates – 2018- Chart
Mortgage Interest Rates – 1995 -2018- Chart
It takes more than a month for a trend…
Just like I often comment with regard to home prices and sales, looking at a single month of activity really does not paint the whole picture and, while it may be a good “leading-indicator” of where things are headed, it’s not going to accurately depict a trend. For this, I believe looking at the past 12-month period and comparing it to the prior 12-month period is more accurate. It takes into account the seasonal fluctuations that occur and adjust for unseasonal weather during a given month that could skew the data if just looking at a one-month period. The table belows the total building permits for the 12-month period ending January 31, 2018 and comparies that activity to the prior 12-month period for each of the 7-counties reported on. As you can see, five of the counties have a double-digit increase in new home building permits issued from the prior 12-month period while St Charles County shows a double-digit decline, and Lincoln County a slight decline.
New Home Building Permits- St Louis Area – January 2018
Even though Labor Day is just a few days away, home sales that closed within the past 30 days show that homes are still selling quickly in St Louis. Below is our list of the 10 St Louis cities where homes sold the fastest in the past 30 days. As the list reveals, the city of Manchester, where homes that sold did so in a median time of only 11 days, came in at number 1 on the list and the median time to sell was only 15.5 days for the cities on the top 10 list.
St Louis Fastest Sold Cities
(click on table for complete and up to date information)
In addition, the “transition rates” all improved as well from a year ago. Transition rates show which way the borrowers are moving, from slightly delinquent to more delinquent, or from slightly delinquent to current for example. Below are the transition rates for March 2017, according to the Corelogic report:
- Borrowers going from current to 30 days late – 0.6% for March 2017, down from 0.7% in March 2016
- Borrowers going from 30 days late to 60 days late – 11.6% for March 2017, down from 13.2% in March 2016
- Borrowers going from 60 days late to 90 days late – 20.8% for March 2017, down from 23.1% in March 2016
All of this is good news for the real estate industry as the trends are positive and are is a good “leading indicator” of what is to come. As mortgage delinquencies decrease, foreclosures, short sales and other distressed home sales decline, putting less downward pricing pressure on the housing market and providing sustainability to the improving housing market.
Speaking of mortgages, if you are considering refinancing, want to know what current rates and terms are, or would like to get pre-approved for a mortgage, I would highly recommend speaking with Ryan Derryberry, a mortgage loan professional with Movement Mortgage. Ryan is a great guy, is honest and knows his stuff. Movement is a great company, founded and operated on great principals and offer some mortgage products you won’t find anywhere else….More information on Ryan, including his contact info, can be found here.
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However, mortgage interest rates are being forecasted by many economists and industry guru’s to hit 4.5% – 5.0% during 2017. While we’ve seen predictions like that for a couple of years in a row now, I think it’s going to come true this time therefore, if you have been thinking about buying, you may want to start looking now!
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Continue reading “Mortgage Rates Hit Highest Rate In 2016 This Week“
Interest rates decline as well…
While the number of loan applications declined, so did the interest rate on home mortgages, according to the MBA report:
- 30 year fix rate conventional mortgages decreased to 3.71 percent from 3.73 the week before,
- 30 year fixed rate jumbo loans (larger than $417,000) decreased to 3.71 percent from 3.72 percent the week before,
- FHA loans bucked the trend with interest rates increasing to 3.56 percent from 3.54 percent the week before,
- 5/1 ARMS decreased to 2.93 percent from 2.97 percent.
St Louis home sales increase 5 percent during the same period:
The tables below reflect St Louis home sales for the same one-week period, compared with prior week, as in the MBA’s report and illustrate that St Louis perhaps appears to be bucking the trend. St Louis saw an increase in home sales during the most recent week, which, theoretically, should translate into an increase in home mortgage applications, contrary to what we see in the MBA report on a national basis.
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LIVE Mortgage Interest Rates – Updated Daily Continue reading “Home Loan Applications Decline As Do Mortgage Interest Rates; St Louis bucks trend“
- Repealing the Mortgage Interest Deduction (MID) is a form of tax increase. Families with children would bear more than half of the total increase.
- IRS data show that taxpayers in the 35-45 age group take the largest MID on average compared to any other age group of taxpayers.
- First time home buyers would be hurt the most if the MID is curtailed.
- Current data from the IRS show that 65% of the taxpayers who have claimed the MID made less than $100,000.
- The housing market has not emerged from the crisis that began in 2007.
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Continue reading “Finally Others Agree That The Mortgage Interest Deduction Isn’t Critical To The Housing Market“
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LIVE Mortgage Interest Rates – Updated Daily Continue reading “Falling Interest Rates Make St Louis Homes Even More Affordable“
Affordability is UP in St Louis county, not DOWN…
As the table below shows, home affordability in St Louis county has actually increased in the past year, not decreased as reported in the aforementioned article. For the purposes of my analysis, I used home sales data for “non-distressed” sales only, so not including foreclosures or short sales, to get a more accurate picture of the true market.
Affordability has improved in Jefferson County as well but, as the table below shows, has declined in the past year in the city of St Louis, Franklin county and St Charles county.
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Continue reading “Home Affordability Rises In St Louis County, Falls In St Charles County“
What brought this to mind this morning was a friend of mine on Facebook (who is a loan officer for a St Louis mortgage company) posted a link to an article written by an owner of a Chicago real estate company outlining the benefits of the MID and, while I think he did an excellent job of laying out the potential tax savings of deducting mortgage interest and property taxes on a home, I think he left out a key component, namely, the Standard Deduction.
Why the MID doesn’t help the normal home buyer in St Louis:
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Continue reading “The Truth About The Mortgage Interest Deduction“
Our newly released, 5-minute, video market update below will give you a quick overview of St Louis home prices, where the sellers markets are, the buyers markets and much more! If you are considering buying or selling a home, or are an investor or just a homeowner wanting to keep up on the market, you don’t want to miss this!
Whether you are thinking of buying or selling and would like me to look at your situation and your market to determine the best strategy, just call, or text me, at 314.332.1012 and I’ll be happy to help!
St Louis Home Price Trends By City/Municipality
St Louis Home Price Trends By Zip Code
St Louis Sellers Markets
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Continue reading “St Louis Real Estate Market Update VIDEO – January 2016“
