Homebuyers might want to keep a close eye on mortgage interest rates.
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Recently, rates have “inched up just a bit,” says Justin Lopatin, vice president of residential banking for PERL Mortgage in Chicago.
The rise could be due to higher demand at the start of the spring-homebuying season or anticipation of Wednesday’s statement from the Federal Reserve, among other factors.
The Fed’s Federal Open Market Committee left its benchmark federal funds rate unchanged at 0.25% to 0.50%. This rate is used primary by banks.
In its statement, the FOMC said job markets, housing and household income had improved, yet consumer spending had moderated and economic activity apparently slowed. Inflation remains low.
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Mortgage rates this week
- The benchmark 30-year fixed-rate mortgage rose to 3.83% from 3.75%, according to Bankrate’s April 27 survey of large lenders. A year ago, it was 3.86%. Four weeks ago, the rate was 3.83%. The mortgages in this week’s survey had an average total of 0.16 discount and origination points. Over the past 52 weeks, the 30-year fixed has averaged 4%. This week’s rate is 0.17 percentage points lower than the 52-week average.
- The benchmark 15-year fixed-rate mortgage rose to 3.05% from 3%.
- The benchmark 5/1 adjustable-rate mortgage rose to 3.21% from 3.13%.
- The benchmark 30-year fixed-rate jumbo mortgage rose to 3.76% from 3.67%.
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Weekly national mortgage survey
Results of Bankrate.com’s April 27, 2016, weekly national survey of large lenders and the effect on monthly payments for a $165,000 loan:
| 30-year fixed | 15-year fixed | 5-year ARM | |
|---|---|---|---|
| This week’s rate: | 3.83% | 3.05% | 3.21% |
| Change from last week: | +0.08 | +0.05 | +0.08 |
| Monthly payment: | $771.65 | $1,143.43 | $714.47 |
| Change from last week: | +$7.51 | +$3.97 | +$7.20 |
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Loans closing faster
Housing markets have been challenging for buyers.
Lopatin says that in his market buyer demand “heavily outweighs” the supply of for-sale homes; appraisers still sometimes have trouble finding 3 or 4 closed sales of comparable properties to support a sale price, and “very aggressive closing dates” in purchase contracts might not always be “realistic.”
Closing dates are critical for buyers who need to schedule their move into their new home.
While contracted closing dates might be tight, lenders closed loans faster in March, according to a report by mortgage software company Ellie Mae.
Ellie Mae CEO Jonathan Corr said in a statement that closing days decreased from 46 days in February to 44 days in March.
The proportion of loans that closed rose slightly to more than 70%, the highest closing rate since Ellie Mae began to track that data in August 2011. 67% of the borrowers whose loan closed had a FICO credit score of 700 or higher.
Homeowners remain locked in
Supply constraints might not ease anytime soon as homeowners continue to enjoy low rates for existing and refinanced loans.
Some are taking advantage of higher home values to cash-out equity and pay off credit-card or student debt, Lopatin says.
Remodeling rather than selling is also in vogue.
The Joint Center for Housing Studies at Harvard University reported this month that spending for remodeling is expected to “increase 8.6% by the end of 2016 and then accelerate further to 9.7% by the 1st quarter of next year.”
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