What’s up with mortgage rates? Jeff Lazerson of Mortgage Grader in Laguna Niguel gives us his take.
RATE NEWS SUMMARY
From Freddie Mac’s weekly survey: The 30-year fixed rate dramatically dropped, all the way down to 3.80 percent from last week’s 3.93 percent. The 10-year Treasury bill is hovering just above 2 percent, gradually trending down since the summer. Nice!
The Mortgage Bankers Association reports a 3.3 percent decrease in loan application volume from last week.
BOTTOM LINE: Assuming a borrower gets the average 30-year conforming fixed rate on a $417,000 loan, last year’s rate of 4.47 percent and payment of $2,105 is $162 more than this week’s payment of $1,943.
WHAT I SEE: From rate sheets hitting my desk that are not part of Freddie Mac’s survey: Locally, well qualified borrowers can get loans for 1 point at 3.625 percent on a 30-year fixed rate, 2.875 percent on a 15-year fixed and 3.75 percent on a Fannie Mae high balance loan ($417,001 to $625,500). FHA fixed rates can be had at 3.25 percent and 1 point.
WHAT I THINK: It’s time to recount my 10 real estate predictions of 2014 that were provided in these pages last December.
1) Home prices will drop between 6 and 8 percent in Orange and Los Angeles Counties. I was double wrong as home prices rose between 5 and 9 percent in 2014.
2) Interest rates rising to 5 percent earlier in the year and dropping to 3.25 percent in the second half. Rates did go up to about 4.4 percent and now hover around 3.625 percent. Close enough. Yes on my prediction.
3) Occupancy inspections on rentals in light of the new rules that make it easier to get qualified on rentals. Wrong.
4) Loosey-goosey underwriting programs come back. Yes, for sure.
5) Big increase in home equity lines of credit (HELOCS). Yes.
6) Auction companies including Irvine-based Auction.com will capture 2 to 3 percent of the non-distressed housing market. Rick Sharga, executive vice president of Auction.com said, “You’re half right. Auction.com sold 1 percent of the 5 million homes sold in 2014, primarily distressed properties. The total estimated residential auction market was 2 percent.”
7) HUD staff was going to start rolling back the high mortgage insurance premiums. Wrong. It never happened. In fact, they were trying to add another fee that was recently defeated in Congress.
8) The Fannie and Freddie wind down is going nowhere. 100 percent correct.
9) No mortgage innovations will be introduced this year. Wrong. Fannie just re-introduced the 3 percent down loan.
10) Bargains galore for buyers in 2014. I think I am half right on that.
I think I need to hit the batting cages or maybe Windex for my crystal ball. Last year (2013 predictions) I was batting 600. This year I slipped 100 points, only being right on half my predictions.
Next week, come and read my 2015 predictions. It’s going to be a great year for real estate!
Jeff Lazerson can be reached at jlazerson@mortgagegrader.com
