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Mortgage rates are down, but not enough for most borrowers

DDA Mortgage • December 22, 2022


Mortgage rates continued the downward trend this week amid signs that the U.S. economy is cooling down due to the tightening monetary policy. The recent declines, however, have not been enough to convince borrowers to take out a home loan. 


“This week, labor cost data provided a ray of hope as it showed that hourly compensation was lower than previously reported in the second and third quarters for all sectors except manufacturing,” Danielle Hale, Realtor.com’s chief economist, said in a statement.


Hale added, “Anyone paying attention to the price at the pump would also have noted a decline. Next week’s Consumer Price Index data will confirm whether these trends are pervasive across the variety of goods and services consumers buy.” 


All eyes on the Fed 

Inflation and labor market are slowing down, which means that the Federal Reserve does not need to increase the federal funds rate as aggressively as it did with the 75 basis point hikes from the last four meetings. Most investors expect that in its meeting next week, the Fed will hike rates by 50 bps instead. 

That’s why the average 30-year fixed-rate mortgage rate decreased to 6.33% this week, down 16 basis points compared to the previous week, according to the latest Freddie Mac survey. The same loan rates averaged 3.10% one year ago. 


At Mortgage News Daily, rates were even lower, at 6.29% on Thursday afternoon. 

“Mortgage rates decreased for the fourth consecutive week due to increasing concerns over lackluster economic growth,” said Sam Khater, Freddie Mac’s chief executive, in a statement. 


“Over the last four weeks, mortgage rates have declined three-quarters of a point, the largest decline since 2008. While the decline in rates has been large, homebuyer sentiment remains low, with no major positive reaction in purchase demand to these lower rates.” 


According to Hale, the reason is crystal clear. Recent declines in rates have brought the cost of purchasing a home down by an average of $185 per month, relative to the recent peak in rates. Still, borrowers are paying $880 per month more on average than last year. The analysis considers a buyer of a median-price home for sale today making a 10% down payment. 


Hale said that setting a home purchase budget has been “incredibly difficult for home shoppers who have watched their purchasing power swing up and down as rates fluctuate.” 


Flat and falling home prices


According to data from the Mortgage Bankers Association (MBA), mortgage applications fell 1.9% this week compared to the Thanksgiving holiday-adjusted results from the previous week. 


“Prospective homebuyers continue to delay decisions to purchase homes, even as home prices flatten or fall,” said Bob Broeksmit, MBA’s president and CEO, in a statement. “The average loan size for a purchase application last week was at its lowest level in nearly two years, another indication that home prices are cooling.”


However, some analysts see some limitations to home price correction. The credit analysis agency Moody’s expects home prices to decline 12.2% in 2022, but by a 4.1% drop in 2023. 


“The market maintains fundamental strengths, including favorable demographic trends, supply constraints after a decade of underbuilding, and generally solid mortgage underwriting and structures, in the form of mainly 30-year fixed loans,” Moody’s analysts wrote in a report. 


They added that the risks vary across metropolitan areas and different market segments, with potential house price declines of 15%-25% or more in some areas. Still, home values in these areas generally will remain well above pre-pandemic levels, Moody’s analysts said. 



“The extent of recent booms, current construction levels, and changes in migration patterns (e.g., as remote work and environmental issues evolve) will drive local prices,” the analysts wrote. 




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Habitat for Humanity sees success with aging in place program

By Didier Malagies • January 22, 2025
A dedicated aging in place (AIP) program offered by the Oswego County Habitat for Humanity (OCHFH) in New York says it is seeing success by incorporating family, community and local resources to ensure older homeowners can remain where they prefer. “It’s been projected that, over the next 20 years, households led by individuals in their 80s will become the fastest growing age group , which provides stability within their communities,” said Samuel Raponi, OCHFH executive director. Through the organization’s AIP program, Habitat collaborates with families, local organizations and other community members in an effort to provide homes that prioritize living for older adults, he said. “This ultimately enhances their quality of life. We employ two different assessments in each case to ensure that the homeowners’ needs are clearly understood,” he added. An initial assessment of the client’s living situation aims to assess each person’s daily living activities, which are scrutinized by a “health or human services professional,” the organization said. This includes how they manage regular tasks like cleaning, shopping, paying bills or interacting with their community. A second evaluation specifically assesses home repair needs, and how to make a dwelling more livable for the needs of an older person. “These assessments enable OCHFH to provide modifications to their homes tailored to each homeowner’s specific lifestyle,” Raponi added. “Among the kinds of modifications we make are installing lever door handles, ramps, railings, grab bars, walk-in showers with a low threshold, and raised toilets to make homes more accessible for older adults.” Other resources, including Meals on Wheels , may be seen as necessary to deploy depending on a person’s circumstances, and all combine into a living situation that is aimed at being more generally beneficial for someone seeking to age in their own home. AIP is actively seeking more collaborative partners in the health care sector, owing to unique challenges visited upon older people who may not be able to adequately address their health needs. “Low-income older adults face a higher risk of chronic diseases and disabilities due to limited access to primary care and a greater likelihood of living in substandard, deteriorating housing,” Raponi added. A recent study from Carewell suggested that many older adults see aging in place as a financial necessity considering the costs of other kinds of living arrangements older people may choose. Nearly half of respondents (47%) characterized aging in place as both a preference and a financial necessity in tandem. 

Is it time to prequalify for a mortgage now

By Didier Malagies • January 20, 2025
1. Assess Your Financial Health Credit Score: Check your credit score (usually 620 or higher is required, though higher scores get better rates). Debt-to-Income Ratio (DTI): Calculate your monthly debt payments compared to your gross monthly income (lenders typically prefer a DTI below 43%). Savings: Ensure you have enough for a down payment (typically 3-20%) and closing costs. 2. Gather Financial Information Lenders will need the following: Proof of income (pay stubs, tax returns, W-2s/1099s). List of assets (savings, investments, retirement accounts). Details of current debts (credit card balances, student loans, etc.). 3. Choose a Lender Research different lenders, including banks, credit unions, and online lenders. Compare prequalification options (many allow online applications). 4. Complete the Prequalification Process Fill out the lender’s prequalification form (online, over the phone, or in person). Provide basic details about your income, debts, and assets. 5. Review Prequalification Results The lender will give you an estimate of the loan amount and potential interest rate. Remember, prequalification is not a guarantee of approval and doesn’t involve a hard credit inquiry. 6. Follow Up with Preapproval If you’re serious about buying, consider getting preapproved, which involves a more in-depth review and is stronger than prequalification. Tips: Use online calculators to estimate affordability before reaching out to lenders. Avoid large purchases or opening new lines of credit during the prequalification and preapproval process. Would you like details on specific lenders or tools to compare mortgage options? tune in and learn at https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329

USA Today: If Social Security falters, reverse mortgages could be worth a look

By Didier Malagies • January 13, 2025
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