Mortgage Rates Forecast For November 2016
The Fed meeting. The 2016 election.
November could be a very wild ride for mortgage rates.
For now, rates remain relatively calm. According to Freddie Mac’s weekly mortgage rate survey, 30-year mortgage rates are steady, closing last month at 3.47%, on average, nationwide.
30-year mortgage rates are down 50 basis points (0.50%) since the start of the year. 15-year mortgage rates are down, too, with rates in the high 2s.
That’s almost free money.
Analysts and mortgage shoppers alike called for higher rates in 2016. The opposite happened.
Even if you purchased a home in the last year, there’s a good chance you could benefit from a refinance.
More than 8.7 million U.S. homeowners are missing the chance to refinance. And, if you’re buying a home, there have been few better times to be looking.
Because of how mortgage rates have dropped, if you could afford a $400,000 home in January, today, you can afford a home for $422,000 — a purchase power increase of five percent.
There have been few better times in history to be shopping for a mortgage rate.
Click to see today’s rates (Nov 1st, 2016)
30-Year Mortgage Rates Average 3.47%
The average conventional 30-year fixed rate mortgage ended October at 3.47%, according to Freddie Mac’s Primary Mortgage Market Survey (PMMS).
The Freddie Mac rate is available to “prime” borrowers paying an accompanying 0.6 discount points at closing.
A “prime” borrower is one with excellent credit, a large downpayment, and adequate income, and one who is applying for a mortgage amount within conventional loan limits.
That’s why average rates are terrific for market trend analysis, but not very useful to consumers looking for their rate. There are a number of reasons for this.
First, Freddie Mac compiles quotes from more than 100 lenders. Some quotes are lower, some higher; but each response is blended with all the others.
As a consumer, you make a final choice on only one rate. But that is actually advantageous. You can “poll” multiple lenders — by requesting written quotes from three or four — and choose the best offer. You’re not stuck with an average.
Second, you may not want to pay discount points. Instead, you could choose to pay more for a lower rate, pay no points at all, or even request a no-closing-cost mortgage.
Third, you might not fit the profile of the “prime” borrower. You have little to no downpayment saved, or have a recovering credit score. But less-than-prime qualification factors may work to your advantage, too.
Namely, you may be eligible for a government-sponsored loan program.
Freddie Mac’s interest rate survey applies to conforming loans and conventional mortgage rates only. Government-backed FHA and VA mortgage rates are not surveyed as part of the report; nor are mortgage rates for USDA loans.
Rates for these other loan types are even lower.
All of this makes it easier for today’s refinancing homeowners to qualify for streamlined loans such as the FHA Streamline Refinance, the VA Streamline Refinance, and the USDA Streamline Refinance.
Streamlined refinance loans can close in as few as 30 days because of reduced paperwork requirements and no appraisal in most cases. Streamlined refinances are simpler for banks to underwrite and approve.
Click to see today’s rates (Nov 1st, 2016)
Mortgage Rates For November 2016
Today’s mortgage rates are well-entrenched in the 3s — and some borrowers report getting rates in the twos. Yes, really.
Loans now cost just $445 monthly for every $100,000 borrowed, excluding escrows for taxes and insurance; and, private mortgage insurance (PMI), where applicable.
Editor’s Note: PMI is neither good nor bad.
It should be noted, though, that although mortgage rates are low today, they may not stay low for long. Mortgage rates change quickly with the economy, and with shifts in market sentiment.
Mortgage-backed securities (MBS) — the Wall Street asset upon which mortgage rates are “made” — have been erratic of late, which has rates on shaky ground.
MBS pricing is currently responding to influences on the economy, including the Federal Reserve’s monetary policy, the jobs market, and developments in nations abroad (e.g.; Great Britain).
Thirty-year mortgage rates found a resting point at around 3.5% this summer, and nothing has moved them skyward since.
November could be the month, though, in which rates finally change significantly. Two events will dwarf all other economic releases this month: the seventh Fed meeting of the year, and the presidential election.
1. The November 2016 Fed Meeting
The Federal Reserve meets November 1-2 to determine the nation’s monetary policy. The 12-member panel will decide whether to raise the Fed Funds Rate, or hold.
In September, the Fed voted to keep its benchmark rate near 0.25%. But three-in-ten voting members wanted a hike.
The pendulum seems to be swinging toward an upward rate adjustment, and robust job creation could sway more Fed members into the “hike” camp by the end of 2016.
More than 14 million jobs have been added in the economy since 2010 and the unemployment rate has dropped near 5.0 percent. But wage growth appears to have stalled.
This is important.
Stagnating wages tend to slow consumer spending, which can stave off inflation. Inflation works against low mortgage rates.
Lack of inflation, therefore, can work in favor of lower mortgage rates.
The upcoming Non-Farm Payrolls report has relevance to today’s mortgage rate shopper — the report may give convincing reason for mortgage rates to jump in the coming weeks.
The Fed, however, won’t have the advantage of the latest data when it makes its decision — the monthly Jobs Report is released two days after the Fed meeting adjourns.
With limited information — and the upcoming election — the Fed is very likely to punt the rate-hike decision until its final meeting of the year in December.
Now could be the right time to lock: before markets have more time to build in a near-certain year-end increase.
Click to see today’s rates (Nov 1st, 2016)
2. The 2016 Presidential Election
The next President of the United States will be chosen on Tuesday, November 8.
The outcome could move markets, but perhaps not in a predictable fashion.
Wall Street builds in expectations — for all market-related events including the election. If those expectations are not met, markets move quickly, often at break-neck speed.
This summer, the European Union (EU) lost a member for the first time when Britain voted to exit the 28-country bloc. That sent mortgage rates in an overnight downward spiral.
Why? Investors widely expected Britain to stay. When that didn’t happen, there was a “flight to safety.” Investors bought into safer assets such as mortgage-backed securities, on which U.S. mortgage rates are based.
A similar event may be in progress.
Wall Street has “baked in” a win for the Democratic nominee based on polling and political analysis.
This candidate is viewed as the more predictable option. That makes it easier for investors to forecast future policy.
If the Republican nominee wins, there could be a fast re-alignment of expectations overnight. Mortgage rates could swing wildly, possibly for the better.
Remember that when investors are unsure, they vie for safe assets. The asset of choice is often mortgage-backed securities. High demand for these bonds would drive down mortgage rates, possibly to their lowest levels in months.
As a mortgage rate shopper, though, you can’t go wrong with today’s mortgage rates. They are still near lowest levels of 2016.
Mortgage rates should remain very low before and after the election of 2016.
Click to see today’s rates (Nov 1st, 2016)
Mortgage Programs With Low Rates Now
Mortgage programs today come with ultra-low rates, solidly in the 3s.
But some mortgage programs come with lower rates than others.
Ellie Mae, a mortgage software firm which processes 3.7 million applications per year, gathers data on loans run through its system monthly. Its September Origination Insight Report was telling.
Government-backed programs, often perceived to have worse terms, actually carried the best mortgage rates.
The following average rates were reported by Ellie Mae.
- Conventional loans: 3.81%
- FHA mortgages: 3.73%
- VA loans: 3.52%
Conventional loans are the go-to program for most home buyers with large downpayments, good credit, and significant assets left after closing.
But the Fannie Mae and Freddie Mac — the two major mortgage rule-making agencies in the U.S. — have rolled out new programs for a wider array of buyers. A newer option donned HomeReady™ requires just 3% down and is available to those with modest incomes.
The government-backed VA home loan is even easier to qualify for. It comes with lenient credit requirements and is available to home buyers who have served in the U.S. military. There is no downpayment necessary, and no monthly mortgage insurance charged.
FHA loans are extremely popular, used by about 40% of first-time home buyers in their 20s and 30s. Flexible lending requirements allow new graduates to obtain an approval just after starting their careers.
Mortgage rates for these programs are low, and could go lower this November.
Click to see today’s rates (Nov 1st, 2016)
This Week’s Economic Calendar
This week, there is no shortage of rate-affecting news. Most notably, watch for the Fed’s post-meeting announcement, Friday’s Non-farm Payrolls release, and ongoing developments in the presidential race.
The complete calendar for this week reads:
- Monday: Personal Consumption Expenditures
- Tuesday: Bank of Japan monetary policy announcement
- Wednesday: Federal Reserve Meeting announcement
- Thursday: Jobless Claims
- Friday: Non-farm Payrolls
Remember: Mortgage interest rates change quickly and often without notice. It’s a good, safe time to lock a low rate. Today’s mortgage rates may not last.
What Are Today’s Mortgage Rates?
Mortgage rates are currently near 3.5 percent. Home buyers have excellent purchasing power at today’s rates; and refinancing households can save more cash with a refinance.
Get today’s live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.
Click to see today’s rates (Nov 1st, 2016)
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
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