In recent articles, we have discussed Fixed-rate mortgages (“FRMs”), and how the interest rates in effect on FRMs impact housing sales vis-à-vis affordability based on the lifetime of the loan, rather than the principal of the loan. When interests’ rates are low, houses are more affordable under the lifetime cost of the loan.
There is good news on the horizon, as a large number of prospective home buyers have been seeking financing from lending entities; this signals an uptick in the housing market.
The 30-year FRM averaged 4.45% over the last week, representing a nine-month low. Similarly, the 15-year FRM averaged roughly 3.88%, which represents a decrease over the previous week, and the 5-year Treasury-Indexed hybrid adjustable-rate mortgage (“ARM”) increased by .04% from 3.83% to 3.87%.
FRMs made up approximately ninety-one percent (91%) of all loan applications last week, are keeping pace with the 10-year treasury yield; which has, in turn, gained a benefit from the signals the Federal Reserve (the “Fed”) has been sending as well as from the wild swings n the stock market.
Since houses are more affordable, and interest rates on FRMs and ARMs are reaching record lows, people are seeking out loans in record numbers (the highest level since April of 2010).
Further, the market is suggesting there has been a steady increase in demand for homes; some analysts believe the stall in the housing market could be a result of investors waiting out the storm that was the midterm election.
While we cannot predict how long this will last, the bottom line is there are more buyers with more affordable loans on the market; this is a good signal for people seeking to sell their homes in the near future.
At the Chernov Team we take pride in understanding the ins and outs of the real estate market, and that begins with an understanding of the overall health of the lending market; unaffordable loans are bad news for the housing market, while extra-affordable loans are good for the housing market. At the Chernov Team we understand that whoever shows up to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.
