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You are here: Home / Archives for Federal Reserve

What’s Ahead For Mortgage Rates This Week -March 23rd , 2020

March 23, 2020 by Nosari Home Mortgage, Inc.

 What’s Ahead For Mortgage Rates This Week -March 17th, 2020Last week’s economic reports included readings from the National Association of Home Builders on housing market conditions, Commerce Department readings on housing starts and building permits issued and  National Association of Realtors® reporting on sales of previously-owned homes.

The Federal Reserve canceled the scheduled meeting of the Federal Open Market Committee and Fed Chair’s press conference, but the Fed did lower its target federal funds rate early in the week. Weekly readings on mortgage rates and initial jobless claims were also released.

 Builder Confidence, Housing Starts and Building Permits Decrease

Builder confidence in housing market conditions dropped two index points to 72 in March. Readings over 50 indicate that most builders are confident about housing market conditions. Component readings of the Housing Market Index were also lower.

Builder confidence in current housing market conditions fell two points to 79; builder sentiment about housing market conditions within the next six months fell four points to 75 and builder confidence about buyer traffic in new housing developments dropped one point to 56.

NAHB Chief Economist Robert Dietz said that March readings were compiled before the coronavirus outbreak and that April’s readings would show more accurate impacts of the coronavirus on builder confidence. As state and local governments begin to restrict non-essential activity, home sales and buyer traffic readings will decline.

February housing starts fell to 1.599 million starts as compared to January’s reading of 1.624 million starts; analysts expected 1.493 million housing starts for February’s report. The Commerce Department also reported lower numbers for building permits issued. 1.464 million building permits were issued in February; analysts expected 1.500 million permits issued as compared to January’s reading of 1.550 million permits issued. Analysts expect the coronavirus to cause declines in housing starts and real estate activity in general as the virus spreads.

Mortgage Rates Rise as Fed Lowers Target Federal Funds Rate

The Federal Reserve canceled the scheduled meeting of its Federal Open Market Committee after announcing its decision to lower the target federal funds rate to 0.00 to 0.25 percent.

Freddie Mac reported higher mortgage rates last week as mortgage lenders worked through a backlog of refinancing applications. Rates for a 30-year fixed-rate mortgage averaged 3.65 percent and were 29 basis points higher. 15-year fixed-rate mortgages had an average rate of 3.06 percent, which was also 29 basis points higher than in the prior week. 5/1 adjustable-rate mortgage rates averaged 10 basis points higher at 3.11 percent.

Discount points averaged0.70 percent for fixed-rate mortgages and 0.20 percent for 5/1 adjustable rate mortgages.

First-time jobless claims jumped to 281,000 initial claims last week as employers closed and citizens were encouraged to limit non-essential activities. Unemployment claims will increase as more businesses close or reduce services.

The National Association of Realtors® reported rising sales of previously-owned homes with a seasonally adjusted annual pace of 5.77 million homes sold and was the highest reading for February sales since 2007. Home sales are expected to decrease as the coronavirus advances.

Open houses and home showings will decrease as stricter efforts to contain the coronavirus occur.

What’s Ahead

This week’s scheduled economic reports include readings on new home sales, inflation and consumer sentiment. Weekly readings on mortgage rates and new jobless claims will also be released.

Filed Under: Financial Reports Tagged With: Federal Reserve, Financial Reports, Mortgage Rates

Could Fed Interest Rate Hike Help Home Buyers?

October 26, 2018 by Nosari Home Mortgage, Inc.

Could Fed Interest Rate Hike Help Home BuyersNews of the Federal Reserve hiking interest rates appears to have caused unnecessary panic among people poised to purchase a first home or a larger one for a growing family.

Headlines and news reports that talk about interest rates being at their highest since 2014 can be alarming. Announcements from the Fed that rates would increase four times in 2018 and again in 2019 seems downright scary. After all, isn’t it logical that increased interest rates mean that monthly mortgage payment could be substantially higher?

As it turns out, neither the click-bait headlines about dramatic rate increases or higher monthly premiums are real-life concerns. A thoughtful look at interest rates and rational thinking about homeownership indicates that today’s market could be an excellent time to buy.

Interest Rates Are Not Frighteningly High

Americans have largely come to recognize that the media thrives on scare tactics to get you to tune in or click a link. Stating that interest rates are the highest since 2014 is a fair statement, on its face. But the reality behind the numbers is entirely different if you take a long look at historical rates.

Homebuyers that stepped into the market as the economy began to surge in 2017 did a fine job of positioning themselves. That’s because they took full advantage of tremendously low rates while moving into a stable jobs environment. It’s important to keep in mind that low Fed standards of 1.5 percent had already increased from the historic low.25 percent set in 2008 to stimulate the horrific economy.

As the Great Recession hit, unemployment started its climb to 10 percent in 2009 and things were generally bad. Wonderfully low interest rates were of little use when people were out of work and those who were employed lacked job stability. The Fed’s goal was to gradually increase rates as the economy steadily recovered. The common wisdom was to raise rates to 3 percent by 2020.

But if you look back over rate data from the 1970s until the Great Recession, rates tended to be at 5 percent or higher. The Fed’s reported intentions would likely leave potential homebuyers in a better position than most over the 40-50 years. That’s because the country is in the midst of an economic surge that appears to have legs.

Fed’s Hike Won’t Deter Many Buyers

The Chicken Little’s of the housing sector may be crying the sky is falling, but nothing could be further from the truth. The modest increases planned by the Fed do not substantially change a potential homeowner’s buying power.

For those with a specific monthly mortgage payment window, the rate increase could slightly change the listing price options moving forward. On the other side of the coin, rate hikes tend to flatten or at least slow asking prices. While buyers cull together a down payment, home prices may be slowing. That could prove very beneficial in terms of securing a dream home.

The basic point about the Federal Reserve raising rates is that this should not necessarily be viewed as a negative. The Fed reportedly had a long-term plan that followed alongside our economic recovery. If you compare the current rates against wage increases, low unemployment, and a juggernaut economy, home buyers are in the driver’s seat right now.

Whether you are interested in buying a new property or refinancing your current property, contact your trusted mortgage professional to find out about the current financing options available.

Filed Under: Real Estate Tagged With: Federal Reserve, Market Conditions, Real Estate

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Chris Nosari


Nosari Home Mortgage
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