How High Will Mortgage Rates Actually Climb?

How High Will Mortgage Rates Actually Climb? Image courtesy of TeddyBear[Picnic] / FreeDigitalPhotos.net

The lowest mortgage rates on record have lured buyers during the last few years, but the Federal Reserve has already given plenty of signals that will soon come to an end.

Mortgage rates are already inching up, ever-so-slightly. From January to June, the 30-year fixed-rate mortgage climbed from 3.7 percent to 4.2 percent. Mortgage rates recently have been hovering around 4 percent.

In this latest era of super-low mortgage rates, what’s normal? A 6 percent interest rate is “normal,” says Jonathan Smoke, realtor.com®’s chief economist. He says mortgage rates likely won’t hit that point in the next two years, however.

“We will likely see less than a 100 basis point increase over the next two years, which would bring us to around 5.5 percent in 2017,” he says.

If Smoke’s prediction holds true, mortgage rates will then remain below normal even in two years. However, that increase in rates would translate into a 12 percent increase in monthly payments over current rates, according to Smoke.

For now, mortgage rates remain low, and in 80 percent of the U.S. markets, it’s more affordable to buy a home than rent, according to realtor.com®.

Source: “Just How High Might Mortgage Rates Go?” realtor.com® (Aug. 14, 2015)

10 Ways to Make Moving Easier

Image courtesy of stockimages / FreeDigitalPhotos.net

Peak moving season is underway. While moving can be a stressful undertaking, there are simple ways to make the process more organized. CityLab recently asked moving experts to share some of their top tips to make moving easier. Feel free to share these moving tips with your clients.

First steps

• Document all of your cords: “Take photos or make notes on how all of your media equipment is set up: television, sound equipment, modems and computer equipment,” says Lior Rachmany, CEO of Dumbo Moving + Storage in New York City.
• Update your address: Streamline the change of address process by using Updater, which can save time and money by forwarding mail and also updates numerous businesses including alumni associations, charities, and professional organizations with the new address. Updater even shares moving announcements with friends and family.
• Create a pet plan: The moving process can be stressful for pets too. Consider leaving pets with a friend or a boarder until the move is complete. If that’s not an option, this checklist lists 10 tips for keeping pets safe during a move.
• Schedule touch-up paint jobs: If you’re renting, you will need to see if you’re responsible for paint job touch-ups before moving out. If that’s the case, schedule a painter before the move. “Once you have a moving date set, get a painting bid and plan for the painter to be the last person in before you turn the keys over,” suggests Brendon DeSimone, author of Next Generation Real Estate. “Waiting until the last minute could be a logistical nightmare.”
• Recruit some help. Not using a mover? Make sure you repay family and friends for their help in some way (pizza is always a good incentive!)

Packing 101

• Plan a “first night in the new house” box: The last thing you’ll want to do after moving all day is to dig through numerous boxes to find your toothbrush. Designate a box for your toiletries, medications, deodorant, and a change of clothes so they’re easy to find.
• Your suitcases are your friends:  Use your large suitcases as easily transportable storage! Fill them up with clothes, towels, and light-weight items.
• Be mindful of important documents: Don’t toss your birth certificate or other important but easy-to-lose documents in random boxes. Make a folder with anything important and carry it with you.

Unpacking

• Strategize your layout: Put labels on items for movers so they don’t put them in the wrong room. You can also make signs showing where large items need to be.
• Save all receipts: “In many cases, moving expenses are deductible from federal income taxes,” says Rachmany of Dumbo Moving + Storage. “If you’re moving because of a change in employment, you may be able to claim this deduction even if you do not itemize.” Try to keep track of all moving costs for your accountant.

Source: “13 Tips to Make Moving Slightly Less Hellish,” CityLab (Aug. 6, 2015)

Owners May Underestimate Their Equity

Owners May Underestimate Their Equity. Image courtesy of Stuart Miles / FreeDigitalPhotos.net

A large number of home owners may be erroneously perceiving themselves as underwater on their mortgage, suggests a new analysis by economists at the University of California, Berkeley.

Between mid-2011 and the fourth quarter of 2014, home prices nationally have risen about 20 percent. But in a recent Fannie Mae National Housing Survey, the percentage of home owners who perceived they were underwater on their mortgage averaged about 6 percentage points more than estimates from other national surveys.

According to CoreLogic housing data, from the end of 2011 to the end of 2014, the number of underwater home owners fell from 21 percent down to 9 percent.

However, about 23 percent of home owners surveyed by Fannie Mae say they had negative equity at the end of 2014.

What’s more, by the end of 2014, only 37 percent of home owners with a mortgage in the Fannie Mae survey perceived they had more than 20 percent of home equity, but CoreLogic data showed that 69 percent had significant home equity.

Regardless of an increase in home prices after 2011, the percent of home owners who have perceived significant home equity has barely budged.

The National Association of REALTORS® recently reported that the median existing-home price for all housing types reached $236,400 in June – surpassing the median sales price set in July 2006 at the time of the housing boom.

Many home owners may not be realizing how much values have risen since 2011, economists note. By not realizing those equity gains, they may not see opportunities for selling and buying different homes and their chances of qualifying for mortgages.

The researchers at University of California, Berkeley, refer to it as a “negative perception gap” or an “appreciation gap,” which they say is impeding the housing market. They estimate that at the end of 2014, the gap between the estimated and perceived percent of mortgage home owners who had significant equity was 32 percentage points – which would equate to about 15.2 million home owners.

“The appreciation gap presents a potential opportunity,” the authors note. “It is an opportunity to remove a barrier that may have hindered housing and mortgage market activity. … Better appreciating how much their assets have appreciated ought to strengthen home owners’ demand for housing, as well as their demands for other goods and services. Thus, in addition to the opportunity to help home owners on an individual basis, shrinking the appreciation gap presents a potential opportunity to speed up the recovery of the housing and mortgage markets, better match workers with jobs, and strengthen the economy generally.”

Source: “Are 30 Million Home Owners Underestimating Their Equity?” Real Estate Economy Watch (Aug. 4, 2015)

More States Break Previous Home Price Peaks

More States Break Previous Home Price Peaks. Image courtesy of David Castillo Dominici / FreeDigitalPhotos.net

Home prices are rising as inventories of homes for-sale remains limited. The National Association of REALTORS® recently reported that the median existing-home price for all housing types reached $236,400 in June – 6.5 percent above year-ago levels, surpassing the last peak median sales price set in July 2006 by more than $6,000.

Corelogic’s latest Home Price Index names 15 states and the District of Columbia that soared to new highs in home prices in June:

• Alaska
• Arkansas
• Colorado
• Hawaii
• Iowa
• Kentucky
• Nebraska
• New York
• North Carolina
• North Dakota
• Oklahoma
• South Dakota
• Tennessee
• Texas
• Wyoming

That brings the number of states at or within 10 percent of their peak home prices to 35.

“The current cycle of home price appreciation is closing in on its fourth year with no apparent end in sight,” says Anand Nallathambi, president and CEO of CoreLogic. “Pent-up buying demand and affordability, together with higher consumer confidence buoyed by a more robust labor market, are a potent mix fueling a 6.5 percent jump in home prices through June with more increases likely to come.”

The only two states that have shown year-over-year depreciation in June were Massachusetts, where prices have fallen 1.5 percent, and Louisiana, which had a 0.1 percent drop.

CoreLogic’s data excludes distressed sales in the index, and projects that this group of home prices will increase 4.2 percent year-over-year.

Source: CoreLogic

Make Yourself More Persuasive

Make Yourself More Persuasive. Image courtesy of Flare / FreeDigitalPhotos.net

In real estate, persuasion can take you far, whether it’s finding ways to save your clients money in a negotiation or trying to court new business.

Scott Yancey, CEO of the startup CloudWords, offers some tips on how to become more persuasive, taking from his experience of being an entrepreneur in pitching a new business idea to influential investors. He says the keys to becoming more persuasive are:

• Use data. Back up your point with research, facts, and evidence. Cite credible resources so your information is shown as reliable. Have this information available with you so you can cite it, when you need it.
• Become the “devil’s advocate.” Consider what the opposing argument will be and consider the other side’s priorities. You’ll then be more prepared to respond to arguments and you’ll be able to craft your messages more effectively to resonate and engage with your audience.
• Don’t gloss over objections. Listen to the other side’s objections and criticisms and don’t dismiss them – “as it shows you’re not defensive and gives confidence in the person you’re persuading that you genuinely want their feedback and are seeking the best resolution – not just your resolution,” notes Yancey. Talk about their objections so they feel heard and see where you can reach a consensus.

Source: “How to Get What You Want: 5 Ways to Be More Persuasive,” Forbes.com (July 31, 2015)

Mortgage Rates Dip Back Below 4%

Mortgage Rates Dip Back Below 4%. Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Average fixed mortgage rates continue to fluctuate week-to-week, with the 30-year fixed-rate mortgage dropping below 4 percent this week, offering temporary relief to home buyers and refinancers after hitting its highest average for the year earlier this month, Freddie Mac reports in its weekly mortgage market survey.

“The mortgage rate has bounced between 3.98 and 4.09 percent since the first full week of June, falling a bit when events overseas take a turn for the worse and rising when the clouds appear ready to part,” says Sean Becketti, Freddie Mac’s chief economist. “With no clear direction coming from the Fed [this week], we expect more of the same in coming weeks.”

Freddie Mac reports the following national averages for the week ending July 30:

• 30-year fixed-rate mortgages: averaged 3.98 percent, with an average 0.6 point, dropping from last week’s 4.04 percent average. A year ago, 30-year rates averaged 4.12 percent. Earlier this month, 30-year rates reached the highest average for the year at 4.09 percent.
• 15-year fixed-rate mortgages: averaged 3.17 percent, with an average 0.6 point, dropping below its 3.21 percent average last week. A year ago, 15-year rates averaged 3.23 percent.
• 5-year hybrid adjustable-rate mortgages: averaged 2.95 percent, with an average 0.4 point, dropping from last week’s 2.97 percent average. Last year at this time, 5-year ARMs averaged 3.01 percent.
• 1-year ARMs: averaged 2.52 percent, with an average 0.3 point, decreasing from 2.54 percent the prior week. A year ago, 1-year ARMs averaged 2.38 percent.

Source: Freddie Mac