Tag: interest rates

Buying Still Cheaper Than Renting

Even in light of rising home prices, Trulia‘s October 2016 “Rent vs. Buy Report” successfully argues that owning your home with a conventional 30-year fixed rate mortgage costs less than renting in major US metros, even in high priced areas like Honolulu, HI (which sees 17.4% cost reduction over renting). The highest difference was 53.2% in Miami, FL and West Palm Beach, FL.

Nationally, the average was an impressive 37.7% cost reduction.

It’s a Game of Pace

Even while home prices are appreciating nation-wide, interest rates have remained so low that the pricing increase has not approached matching rental inflation. In fact,

Prices would have to appreciate 23% in Honolulu, HI, to over 45% in Ventura County, CA before renting, at current rates, becomes less expensive than buying. On the other side, rates would have to approach 9.1%, which would be a 145% increase over the current average of 3.7%, for renting to be financially more attractive than buying. (We have not seen rates like those since January 1995, according to Freddie Mac)

Consider also the Family Wealth aspect of home ownership, coupled with ownership being closely tied to the American Dream, and the reduced out-of-pocket cost of owning over renting, and it might make one wonder if the benefits of renting are really worth it.

The Takeaway

The numbers are clear. It makes good financial sense to be a homeowner. Let’s not forget the slice of the American Dream that comes with it! If you are interested in taking advantage of the benefits of home ownership, but aren’t sure where to start, call or contact me today! contact your Benchmark mortgage consultant today. Find Your Branch here: Get Started Now!

The EU Referendum, Brexit, and US Mortgage Rates

by Jason Haeger

“The sudden stop in employment growth rules out any chance of a rate hike from the Fed at next week’s FOMC meeting, particularly now that the UK vote on whether to leave the European Union appears to be going down to the wire,” said Capital Economics Chief Economist Paul Ashworth. (source: Housingwire.com)

Britain’s exit from the EU increases the value of the dollar, which will push U.S. mortgage rates still lower. “This would create another mini refinance mortgage boom at financial institutions as homeowners rush to lock in near-historic low interest rates,” says Steve Rick, chief economist for CUNA Mutual Group. (source: Bankrate.com)

Fed Not Expected To Raise Rates

As Paul Ashworth indicated in his quote in HousingWire, The Federal Open Market Committee (who determines monetary policy of the Federal Reserve) is not likely to raise interest rates in their next meeting in July.

Futures dropped in the wake of the UK’s vote to leave the EU today, June 24th. This lack of confidence puts more pressure on the FOMC to, once again, postpone a rate hike.

US Dollar Strengthens as Pound is Pummeled

The pound fell to near 1985 levels, making it the lowest value in three decades. According to the Federal Reserve of St. Louis, 1GBP is now down to 1.37USD. (source: WashingtonPost)

When our currency is worth more, it has more purchasing power, which is cause for suspecting that this could make the cost of housing cheaper still.

Is a refinance boom coming? That remains to be seen, but with the relatively high supply in the housing market coupled with a stronger dollar, we may begin to see the supply begin to normalize as homeowners cash out on their accumulated equity.

The Takeaway

No matter your opinion of the EU Referendum result, mortgages are still, historically speaking, ridiculously cheap.

Mortgage prices tend to follow Treasury yields, which have been trending down all year, too. Last week, the interest on 10-year Treasuries dropped to its lowest in four years on worries that Britain would vote to leave the European Union. When the political and economic outlook is uncertain, the world’s money tends to flow into safe investments like U.S. bonds, including mortgages. – Loraine Woellert, Senior managing editor for Redfin research (source: Forbes.com)

Notes:

FOMC(Federal Open Market Committee): http://www.federalreserve.gov/monetarypolicy/fomc.htm

Home Prices and Mortgage Interest Rates to Rise in 2016

by I Am Benchmark

Your home’s mortgage payment is based on the price of the home (minus the down payment), and the interest rate for the loan.

Both prices and interest rates will likely rise in 2016.

Home Prices

CoreLogic anticipates a national 5.2% home value increase for the next year. The percentage varies by state, with WA, CA, NV, UT, AZ, NM, FL, and VT seeing the greatest increase at an average of 7.6% (the highest being CA at 10.8%, the lowest of this group being NM at 6.0%). The lowest forecasted home price increase is WV at 1.3%. Clearly, the majority of the country is projected to see a real home value appreciation that outpaces currency inflation (0.5% from 2014-2015).

Which reminds one of this post: click here

Mortgage Interest Rates

All four establishments who provide future projections on mortgage interest rates agree that rates will rise in 2016. The following table shows the change for each quarter of the next year.

Quarter	Fannie Mae	Freddie Mac	MBA	NAR	Average of all four
2016 1Q	3.9	4.0	4.2	4.1	4.05
2016 2Q	4.0	4.2	4.4	4.3	4.23
2016 3Q	4.0	4.4	4.6	4.6	4.4
2016 4Q	4.1	4.6	4.8	4.9	4.6

So, What’s the Bottom Line?

Since home prices and interest rates expected to increase over the next year, it makes sense to buy sooner rather than later, if you are buying a new home.

Don’t Miss This “I Wish I Had” Moment

by bmadmin

When I was a kid every once and a while I would hear a grown up say “I wish I had….” It might have been buy that Microsoft stock when my friend told me about it or that piece of land that looked like a dump and was dirt cheap but now has a booming shopping center on it.

Now that I’m an adult I’ve even had a few “I wish I had” thoughts.

Today in America we are living in one of those “I wish I had” moments when it comes to real estate. Over the last few years, real estate markets all over the US have had a tough time. The slow economy has caused millions of homes to be foreclosed upon and property values have suffered nationwide.

While this is obviously not a good thing, it has created a golden opportunity or an “I wish I had” moment.

Everybody likes a good deal. Everyone likes to buy things when they are on sale.

In the US today homes are on sale!

According to data from the United States Census Bureau, the average home’s sales price fell from $329,400 in August of 2007 to $242,300 in October of 2011. This is a decline of over 26% in just 50 months.

When was the last time you that you thought 26% off of anything wasn’t a good deal? But it gets even better!

According to Freddie Mac the average mortgage interest rate on 30 year fixed rate loan fell to the lowest level it has been since they began tracking it in 1971. This means not only are you getting a house that is on sale, you are borrowing the money to buy that house as cheap as it has ever been available.

This is an opportunity that won’t last much longer as home values are starting to recover. According to the National Association of Realtors home sales continue to improve.

The real estate market has hit the bottom and is heading back up.

If you do not currently own your own home or been thinking about upgrading your current one now is the time to do it.

If you don’t you may look back ten years from now and say “I wish I had…”

Brad Hacker is a Certified Mortgage Planner for Benchmark Mortgage in Lexington KY. His primary focus is helping people achieve the dream of homeownership and assisting them on the road to financial freedom. Brad specializes in helping his Lexington mortgage clients integrate their home into their long and short term financial goals.