Mortgage rates pull back ahead of Federal Reserve meeting

By Kathy Orton October 27

(Win McNamee/Getty Images)

After two weeks of spikes, mortgage rates retreated this week, falling back to where they had hovered most of the summer.
With long-term bonds trading in a narrow band, home loan rates likely have settled in ahead of the Federal Reserve meeting next week. While most observers do not expect the Fed to raise rates in November, they are anticipating a rate hike in December.
At the same time, the financial markets appear reluctant to make any moves ahead of the presidential election, which means mortgage rates are likely to hold steady at least until after Nov. 8.

[Mortgage applicants may benefit from changes in credit scoring system]

Bankrate.com, which puts out a weekly mortgage rate trend index, found that 80 percent of the experts it surveyed believe rates will remain unchanged in the coming week, moving less and plus or minus two basis points. (A basis point is 0.01 percentage point.)

According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average tumbled to 3.47 percent with an average 0.6 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.52 percent a week ago and 3.76 percent a year ago. The 30-year fixed rate, which had jumped 10 basis points in two weeks, dropped back below 3.5 percent, where it has spent all but two weeks of the past four months.
The 15-year fixed-rate average slipped to 2.78 percent with an average 0.5 point. It was 2.79 percent a week ago and 2.98 percent a year ago.
The five-year adjustable rate average inched down to 2.84 percent with an average 0.4 point. It was 2.85 percent a week ago and 2.89 percent a year ago.

[You don’t need a stellar credit score to qualify for a mortgage]

“Mortgage rates continue to be relatively stable and at near record lows,” Sean Becketti, Freddie Mac chief economist, said in a statement. “The 30-year fixed-rate mortgage fell 5 basis points week-over-week to 3.47 percent, erasing last week’s increase. At the same time, the 10-year Treasury yield ended the week relatively flat – up about 2 basis points.”
Meanwhile, mortgage applications declined this week, according to the latest data from the Mortgage Bankers Association.

Content from PrudentialDefying millennial stereotypes

Young Americans still know the value of hard work and are driven to help others. Watch one 18-year-old's story.

The market composite index — a measure of total loan application volume — fell 4.1 percent from the previous week. The refinance index fell 2 percent, while the purchase index decreased 7 percent.
The refinance share of mortgage activity accounted for 62.7 percent of all applications.

Will California real estate experience the toughest year yet in 2017?

Projected to have lowest housing affordability in six years

KEYWORDS CALIFORNIA CALIFORNIA ASSOCIATION OF REALTORS CALIFORNIA HOUSING CALIFORNIA REAL ESTATE CAR

The trials that plagued the California housing market in 2016 aren’t expected to get too much better in 2017 as the real estate market is projected to face another year of supply shortages and affordability constraints, according to the "2017 California Housing Market Forecast" released by the California Association of Realtors.

CAR predicted that 2016 would face a shortage of available inventory and continued high costs that would limit the state’s improvement, a predication that ultimately came true according to the state’s real estate agents.

Affordability is only projected to get worse, which is currently already California real estate agents' No. 1 concern for the market.

"Next year, California's housing market will be driven by tight housing supplies and the lowest housing affordability in six years,” said CAR President Pat "Ziggy" Zicarelli.

However, he added, "The market will experience regional differences, with more affordable areas, such as the Inland Empire and Central Valley, outperforming the urban coastal centers, where high home prices and a limited availability of homes on the market will hamper sales.”

“As a result, the Southern California and Central Valley regions will see moderate sales increases, while the San Francisco Bay Area will experience a decline as homebuyers migrate to peripheral cities with more affordable options," said Zicarelli.

The CAR predicts existing home sales will modestly increase and rise 1.4% next year to reach 413,000 units, up slightly from the projected 2016 sales figure of 407,300 homes sold. 

Sales in 2016 also will be virtually flat at 407,300 existing, single-family home sales, compared with the 408,800 pace of homes sold in 2015.

Interest rates aren’t estimated to change significantly, with the average 30-year, fixed mortgage interest rates to only rise to 4% in 2017, up from 3.6% in 2016.

Meanwhile, California home prices are forecast to slow down in pace, with the median home price to increase 4.3% to $525,600 in 2017, following a projected 6.2% increase in 2016 to $503,900, representing the slowest rate of price appreciation in six years.

The state’s overall U.S. Gross Domestic Product is projected to grow 2.2% in 2017, after a projected gain of 1.5% in 2016, while California's nonfarm job growth will rise 1.6%, down from a projected 2.3% in 2016.

"With the California economy continuing to outperform the nation, the demand for housing will remain robust even with supply and affordability constraints still very much in evidence. The net result will be California's housing market posting a modest increase in 2017," said CAR Vice President and Chief Economist Leslie Appleton-Young.

"The underlying fundamentals continue to support overall home sales growth, but headwinds, such as global economic uncertainty and deteriorating housing affordability, will temper stronger sales activity," Appleton-Young continued.

Bobby Darvish of Platinum Lending Solutions offers best market rates for Residential & Commercial mortgage in California.