Purchase and Refinance Applications Increase

CF Funding shares positive news for the housing market today, as both refinance and purchase applications have increased for the week ending June 6. The Market Composite Index by the MBA reported yesterday that mortgage applications increased by 10.3 percent last week, which is a 22 percent increase from the previous week (on a seasonally adjusted basis). Readers should note that Memorial Day fell on the previous week, however, data was adjusted to reflect the holiday.  

The refinance index saw an increase of 11 percent from the previous week, and the purchase index saw an increase of 9 percent from the previous week, on a seasonally adjusted basis. The purchase index increased by 19 percent compared to the previous week on an unadjusted basis. However, unadjusted purchases were still 13 percent lower than the same week last year. CF Funding is confident that both purchase and refinance indexes will continue to rise as the housing market improves this year.

Refinances are still representing a large percent of mortgage activity, as the refinance share increased to 54 percent on the index last week, from 53 percent the previous week. Adjustable-rate mortgages were unchanged, representing 8 percent of total applications on the index. Interest rates increased slightly last week, as the reported 30-year fixed contract interest rate (for loans $417,000 or less) was 4.34 percent, up from the previous week’s 4.26 percent. Jumbo 30-year fixed rates also increased, at 4.27 percent last week in comparison to the previous week’s 4.22 percent.

The average interest rate reported for 30-year FHA loans increased slightly, from 3.99 percent to 4.06 percent. 15-year fixed-rate mortgage interest rates also increased from 3.39 to 3.43 percent. CF Funding is pleased to see that the increase in interest rates has not slowed down applications, as rates are still historically low and home affordability is rising. As seen in the graph, current rates near 4.5 percent are much lower than rates seen 5 years ago near 5.5 percent.

Today, rates saw a slight decrease with the best-execution 30 year fixed rate mortgage near 4.21 percent, in comparison to yesterday’s 4.25 percent. The 52-week low is about 3.97 percent, according to Mortgage News Daily, and the 52 week high is about 4.85 percent. Those interested in mortgage rate updates may find up-to-date information through the CF Funding website at www.cffunding.com/index.php/mortgage-rates.

Mortgage Credit More Available, Rates Remain Low

CF Funding is pleased to share that mortgage credit is becoming more available, according to the Mortgage Credit Availability Index (MCAI). In the month of May, mortgage credit availability increased by about 1.4 percent, from 113.8 in April to 115.1. Some investors have lowered credit score requirements for FHA loans, which had an effect on the score. JUMBO loans also become slightly more available in May. 

As seen in the graph, the index benchmarked to 100 in March 2012. The Mortgage Credit Availability Index did not exist during the housing boom, but an expanded historical chart has been released which reveals credit availability scores as high as 850 in 2006. Scores quickly dropped from October 2006 to October 2008 to levels near 100, and have remained close to 100 for the past six years. CF Funding is happy to see credit availability increase, although the pace is slow.

The MCAI uses several factors to calculate credit availability, including credit scores, loan types, LTV ratios, and other factors. Underwriting data from over 85 lenders and investors are used to create the index.

In other mortgage news today, interest rates were relatively unchanged in response to the Employment Situation Report. Total nonfarm payroll employment increased by 217,000 in May, but the unemployment rate remained at 6.3 percent. Most major worker groups (adult men, adult women, whites, blacks, and Hispanics) showed little to no change in unemployment in May.  The number of long-term unemployed was nearly unchanged as well. As a response, the most prevalently quoted conforming 30-year fixed rate remained at about 4.125 to 4.25 percent, according to Mortgage News Daily. Best-execution rates for FHA/VA today are near 3.75 percent, and 15 year fixed rates are near 3.375 percent. Interest rates for a 5-year adjustable rate mortgage are about 3 to 3.5 percent, depending on the lender. These rates are calculated based on an ideal scenario and may vary based on credit scores and other factors.

Although interest rates have risen since last year, rates are still considerably low in comparison to previous years. Over the past 20 years, the rate for a 30-year fixed rate mortgage reached as high as 8.5 percent (in 2000) and 8.8 percent in 1995.

CF Funding regularly reports mortgage interest rates on the lender’s website at www.cffunding.com/index.php/mortgage-rates. Those looking to refinance and take advantage of historically low rates may contact the lender by calling 888-344-4080.

Why Homeowners Should Sell Now

Many homeowners have considered selling this spring, but were hesitant to list their homes after hearing of the winter slump, which produced lower-than-expected home sales. However, many economists believe the harsh weather had a major effect on home sales, and as the weather improved, so did the market. Last week, CF Funding reported that new residential home sales were up 6.4 percent in April from the revised March estimate, reaching a total of 433,000. Median home prices in April reached over $275,000. The lender also shared that rental prices are rising at the fastest pace since the recession, while home prices and interest rates are still relatively low.  

It is a well known fact among real estate professionals that Spring is considered the busiest time for home sales. About 60 percent of home sales occur between the months of May and August each year, on average. Those who list a home sooner than later during this time period are more likely to see results. Luckily for homebuyers, the National Association of Home Builders recently reported that housing affordability has increased to an average score of 65.5 in the first quarter of 2014, with some areas as high as 93.7. As homes become more affordable, more buyers feel comfortable searching for a new home, which increases demand. Home prices are expected to rise over the next few years, so many buyers are searching now rather than later.

Considering the low inventory on the market now, there is less competition when selling your home this Spring. However, inventory is expected to increase as the housing industry further improves. As home prices increase, many homeowners will return to positive equity, allowing them to sell homes they previously could not.

For those looking to buy a home, credit could be easier to obtain now than in the coming years, as interest rates are expected to rise slowly. The average interest rate for a 30-year fixed rate mortgage in April 2014 was about 4.3 percent. While this is a slight increase from last year’s rates, 4.3 percent is incredibly low when compared to the 1980’s and 1990’s, where interest rates reached over 16 percent. Those with low credit scores may be surprised to learn that CF Funding Corporation has many mortgage programs available, for all credit types, with down payments as low as only 5 percent. According to the Las Vegas Sun, “Mortgage lenders are opening their vaults again, with banks expected to lend $723 billion this year for home purchases. That’s up 9 percent from 2013.”

It is undeniable that now is a great time to buy or sell a home. For more information about CF Funding’s free preapproval process, contact the lender at 888-344-4080.

Home Prices at Peak, Gains Expected to Slow in 2014

CF Funding is pleased to share with homebuyers that home prices in the U.S. are at their peak, according to property analysts, and further increases are expected to be more subtle. Many homeowners have benefited from rising home prices in recent years, as they were able to regain the equity in their homes, allowing them to refinance or remodel. However, many counties have reached new home price peaks over the past few years, some now higher than pre-recession levels. A few counties that have reached price peaks include San Francisco County, CA, Travis County, TX, and Jefferson County, CO, as mentioned in a Reuters Press Release on Thursday.

Median home prices are up 11 percent from a year ago, and are now at their highest level since December 2008. On Wednesday, CF Funding shared that “Home price gains were high in Chicago, with a year-over-year gain of 11.5 percent. Price gains were also high in Cleveland, Detroit, Miami, Minneapolis, and New York.” Luckily for homebuyers, interest rates remain lower than expected as the Federal Reserve plans to keep interest rates below historic averages for awhile.

 The median sales price of residential properties in the U.S. reached $172,000 in April, which is the largest year-over-year increase “since median prices bottomed out in March 2012,” according to Realty Trac. Vice President Daren Blomquist said median home prices are still 28 percent lower than pre-recession peaks of $237,537, seen in August 2006. However, “There are a surprising number of markets… where median home prices have surpassed their previous peaks since the Great Recession ended in June 2009.” This “surprising number” of markets is about 19 percent of major counties in the U.S. CF Funding is happy to see homeowners regaining equity across the country.

Some markets have seen home prices slow down over the past year, such as Phoenix, AZ, which had a 9 percent home price appreciation in April 2014 versus a 30 percent annual appreciation in April 2013. Tampa, FL saw a 5 percent appreciation over the past year versus a 19 percent annual appreciation in April 2013. Jacksonville, FL had only 4 percent appreciation in April 2014 versus a 17 percent appreciation in April 2013. This is a clear sign of a slowdown in home prices that will allow homes to become affordable for many Americans this year. CF Funding will provide many homebuyers with the opportunity to fund their first home this year as the lender provides home mortgages in IL, CO, TN, CA, and FL.

Consumer Confidence Rises in May

CF Funding is pleased to share that consumer confidence has risen in May to a score of 83.0. The Consumer Confidence Index, provided by the Conference Board, had decreased in April to 81.7. The index is now at its second-highest reading since 2008, with March of this year slightly higher at a score of 83.9.

The lowest score seen in the Consumer Confidence Index was 25.3 in February of 2009. Consumer confidence has risen significantly since then, but is not yet at its peak  pre-recession levels. In 1985, the index was at a score of 100. Consumer confidence in regards to present-day conditions improved in May, with those stating business conditions as “bad” declining from 24.8 to 24.1 percent. Those who believe jobs are “plentiful” rose about 1 percent from 13.0 to 14.1, and those who believe jobs are “hard to get” decreased from 32.8 to 32.3 percent.

Consumer expectations increased in May, with those expecting business conditions to improve (over the next 6 months) increasing from 17.2 to 17.5 percent. Those expecting business conditions to worsen decreased from 10.5 to 10.2 percent. Confidence in the labor market improved slightly, with those expecting more jobs increasing from 14.7 to 15.4 percent, and those expecting their incomes to grow increasing from 16.8 to 18.3 percent. According to Lynn Franco, Director of Economic Indicators at The Conference Board, “Consumers assessed current conditions, in particular the labor market, more favorably. Expectations regarding the short-term outlook for the economy, jobs, and personal finances were also more upbeat. In fact, the percentage of consumers expecting their incomes to grow over the next six months is the highest since December 2007 (20.2 percent).”

Home prices rose slowly in March, according to the S&P/Case-Shiller Index released this week. The index for March revealed a 12.4 percent increase in home prices in comparison to February’s 12.9 percent. Home price gains were high in Chicago, with a year-over-year gain of 11.5 percent. Price gains were also high in Cleveland, Detroit, Miami, Minneapolis, and New York. Las Vegas had one of the highest annual returns at about 21 percent. Only two cities in the index have set record highs since the housing crisis: Dallas, TX and Denver, CO. CF Funding is happy to be a part of the growing housing industry in these cities as the lender is licensed in both Texas and Colorado.

For more updates on home prices, mortgage rates, and housing industry news, follow CF Funding on Facebook at www.facebook.com/cffundingcorp or visit the lender’s news feed at www.cffunding.com/index.php/news.