Long-term mortgage rates retreat after run-up in fall
Long-term mortgage rates have continued to decline, according to Freddie Mac.
Mortgage rates began rising significantly in September, bringing fears in the Houston market as the region’s sales fell 6 percent from the year before.
But in mid-November, the trend reversed, and now the average rate for a 30-year fixed-rate mortgage is back at 4.55 percent, about where they were this past summer, “which was before the deterioration in home sales,” Freddie Mac wrote in its most recent mortgage market survey.
As mortgage rates have moderated, Houston-area home sales edged up from the previous November, except for houses in the lowest price bracket, which have become harder to find.
Home prices show slower growth for 7th month
Home-price growth has slowed for the seventh consecutive month, according to the latest S&P CoreLogic CaseShiller National Home Price Index.
Nationally, home prices grew 5.5 percent in October, the lowest level in almost two years.
A slowdown in homeprice appreciation is one reason four out of every five Houston homes sold for less than their listing prices this November, according to the startup Knock.
But according to CoreLogic Economist Ralph McLaughlin, the slowdown is a sign of “a gentle softening of the housing market, rather than a crash landing.”
He pointed to an uptick in existing home sales and the fact that mortgage rates are the lowest they have been for three months.
“While the market is undoubtedly cooling, we believe it is a healthy respite for would-be homebuyers who have been stymied by increasing prices, falling inventory and rising mortgage rates over the past several years,” McLaughlin said.
Government raises ceiling for reverse mortgages
The federal government has announced it is raising its limit for reverse mortgages in 2019. A single-family homeowner will be able to receive a mortgage for as much as $726,525, a 7 percent increase from 2018.
Many senior citizens are homeowners with hundreds of thousands of dollars in equity. Reverse mortgages arrange for such homeowners to tap into that money before selling the home by lending money that will be repaid when the homeowner dies or moves.
However, reverse mortgages can be complicated, since many charge origination fees, closing costs, servicing fees and mortgage insurance premiums in addition to interest, and homeowners may be on the hook to repay the loan immediately if they do not maintain the home.
Federally backed loans show signs of greater risk
The share of federally backed loans going to borrowers receiving down payment assistance has increased in the past five years from 30 to 39 percent — a sign that the government is making riskier loans, according to the Urban Institute.
The Federal Housing Administration finances 33 percent of purchases by first-time homebuyers, and the level of risk that the program takes on could affect the financial health of the FHA and borrowers.