News & Opinions
The latest news and insights from Hanley Wood’s outspoken experts and key thought-leaders throughout the residential and commercial design and construction industry.
Comments on Existing Home Sales: Too early to see impact of higher mortgage rates, Inventory has Bottomed
Bill McBride / Calculated Risk / August 21, 2013
First, the headline sales number was no surprise (see Lawler: Early Look at Existing Home Sales in July).
Second, the strong sales rate in July is not a sign that higher mortgage rates have had no impact on sales. The NAR reports CLOSED sales, and the usual escrow period is 45 to 60 days. Mortgage rates didn’t start increasing sharply until the 2nd half of May (see Freddie Mac Weekly Primary Mortgage Market Survey®), so buyers could have locked in rates in May – and pushed to close in July. My guess is sales will be down in August reflecting higher mortgage rates.
The key number inRead More
Tony Polito / Metrostudy / August 16, 2013
News reports, homebuilder stock prices and economists in general have shown concern over the spike in interest rates from early May to today. While this should not have been a surprise based on comments from Fed Chairman Bernanke last year that all good things come to an end (Fed stimulus), the sky is falling comments from some in the media is concerning. Let’s look at the facts: the Market Composite Index is running near the 23 year average; the Refinance Index is still running above the 23 year average; however, the Purchase Composite Index is running only about 75% of average. Low interestRead More
Brad Berton / APARTMENT FINANCE TODAY / August 19, 2013
We all knew the ultra-low mortgage rates seen over the last couple years wouldn’t last forever. Still, the recent rise of a full percentage point over a two-month period left even the steeliest of apartment professionals reaching for their Pepto-Bismol.
From early May to early July, the benchmark 10-year Treasury yield, against which lenders quote most fixed-rate loans, shot up more than 100 basis points (bps), from about 1.6 percent to more than 2.7 percent. Meanwhile, lender spreads—the amount a lender adds to the benchmark to produce a final interest rate—have also widened graduallyRead More
Diana Olick / CNBC / August 5, 2013
As mortgage rates rise and refinancings fall dramatically, banks are in search of new business. That, in turn, has them easing lending standards for some borrowers, according to a new monthly survey from the Mortgage Bankers Association.
Credit availability rose 2 percent in July and is up 3 percent from May, when interest rates began their climb, according to the MBA index.
“The increase was primarily driven by increases in product offerings that allow cash-out refinancing, and some increase in offerings for borrowers with higher LTVs, or lower credit scores,” according to
Michael Neal / NAHB / August 5, 2013
According to Freddie Mac, the average interest rate on a 30-year fixed rate mortgage rose by 8 basis points over the week to 4.39%. Since the beginning of the year, mortgage rates have risen by about 1 percentage point and are now at a level last seen in August 2011.
The rapid rise in mortgage interest rates could affect housing affordability through higher monthly mortgage payments. However, monthly mortgage payments are not the only path by which rising interest rates can affect affordability. Homebuyers can instead decide to raise their downpayment amount in order to maintain an otherwiseRead More