Potential home buyers have received good news for the third week in a row, as home loan rates have been diving. The 30-year Fixed-Rate-Mortgage (“FRM”) dropped to 4.63% during the week of December 13, reaching its lowest point since September. Similarly, the 15-year FRM hit 4.07%, down .14%. Finally, the 5-year Treasury-indexed hybrid adjustable-rate mortgage (“ARM”) dropped to 4.04% during the same time period. All of this is a long way of saying that home loans are cheaper, and therefore buyers may be able to afford more expensive homes as a result.
The 30-year FRM serves as a benchmark measure and has decreased or remained steady over the last five weeks; it appears that prudent investors and prospective buyers are taking note of the stabilizing home loan rates as well. Applications for home loans increased by 1.6% over the last week.
In other news, it appears that the White House is nominating Vice President Mike Pence’s chief economist Mark Calabria to be the next head of the Federal Housing Finance Agency. This could have a notable impact on the national housing market as Mr. Calabria appears to want to shake up the status quo. In a 2016 essay, Mr. Calabria opposed the process of pooling several fixed income streams and selling those packages to investors (remember 2008?), also known as “securitization.” In this article, Mr. Calabria said, “Our politicians have long been more interested in expanding ever cheaper credit than in promoting economic and financial stability.
Most people believe that Mr. Calabria has been grandstanding and will not pursue his stated goals as aggressively once he has been confirmed by Congress, they do not believe he will change the status quo. Indeed, most people who follow the housing market believe that there is room for a common understanding regarding many aspects of an admittedly flawed housing finance ecosystem. Many policy-makers express unease at the notion, or even the appearance, of the federal government providing support for the purchase of mega-mansions.
The take away from this article is that housing rates are decreasing, which is good for buyers. Further, the housing market may see a paradigm shift in the near future as a result of Mr. Calabria’s anticipated positions on key issues; this could prove to be an opportunity for the savvy investor as well. At the Chernov Team we keep up-to-date on the national housing market as well as the local markets like Encino, Sherman Oaks, and Studio City. At the Chernov Team we understand that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.