Todays Rates: Purchase - 30 Year Fixed: 3.125%   APR: 3.201%     15 Year Fixed: 2.375%   APR: 2.494%      30 Year Fixed High Balance: 3.125%   APR: 3.205%      15 Year Fixed High Balance: 2.500%   APR: 2.608%          Refinance - 30 Year Fixed : 3.375%   APR: 3.432%     15 Year Fixed: 2.625%   APR: 2.726%      30 Year Fixed High Balance: 3.375%   APR: 3.436%      15 Year Fixed High Balance: 2.625%   APR: 2.769%

2017 Summer Housing and Mortgage Outlook

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What can home-buyers expect in the 2017 Summer Housing Market?

A recent decline in mortgage rates could have a positive effect on housing demand for the summer home-buying season.  The average 30 year fixed rate mortgage rate has dropped from 4.14% to 3.93% over the past three months, according to the Freddie Mac Primary Mortgage Market Survey (PMMS).

Mortgage Rates are tied to movements in the U.S. 10 Year Treasury Note.  The U.S. 10 Year Treasury Note is widely considered to be the benchmark for the mortgage rates, since mortgages prepay on average between 7 – 10 years.  The 10 Year Treasury Yield dropped to a 2.15% level today, the lowest level since November 2016, which in turn has been the driving force for the recent drop in mortgage rates.

Many economic and political factors have played a part in the recent downward movement in mortgage rates:

  • The May 2017 U.S. Employment Report indicated that new jobs and wage growth both came in worse than market expectations, which could lead to a possible slowdown in the U.S. Labor Market. 
  • In the 1st Quarter 2017, U.S. consumer spending growth slowed to its lowest level in eight years.  This could lead to a potential decline in U.S. GDP growth, since consumer spending is approximately 70% of U.S. GDP.
  • The financial markets are not as optimistic that the current administration’s infrastructure spending and tax plan will come to fruition.  This would have led to a projected upturn in U.S. economic growth and inflation expectations, which would have presumably driven treasury yields / mortgage rates higher.
  • Geopolitical tension between Qatar and several other Arab countries, uncertainty for the upcoming British election, and all of the recent terrorist attacks have led to the recent market flight to safety, driving down treasury yields / mortgage rates.

For summer homebuyers, this recent decline in mortgage rates gives them the unexpected added benefit of lower monthly payments once they find the home they wish to buy. 

However, the inventory of homes available for sale has been steadily declining and is at its lowest level in almost twenty years.  This absence of available housing, mostly due to a lack of construction of new homes, could lead to a further appreciation of housing prices during this summer home-buying season.

If you are looking to buy a house in the summer, make sure you are preapproved with a mortgage lender because well-priced available homes will go quickly often at asking price. “Realtors are urging serious buyers to make their best offer first in the current sellers’ market,” says Stephanie Tomaras, Lyons Senior Business Development Manager.  Being pre-approved will make your offer more competitive in a sellers’ market. 

In addition, down-payments are usually the biggest hurdle in holding back would-be homebuyers who could afford the monthly mortgage payments, which could be comparable or possibly lower than their current rent payments.  Most lenders now offer mortgage loans with down-payments of as little as 3% for qualified first-time home buyers, which could be an added benefit in helping you buy your dream home.

By Stephen Casil

Lyons Vice President Secondary Markets

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