interest rates Archives - Hillwood Loves Realtor

Credit for Builders Remains Tight, But Tightening is Less Widespread

Paul Emrath2024-02-20T14:19:38-06:00

During the fourth quarter of 2023, credit for residential Land Acquisition, Development & Construction (AD&C) remained tight, according to both NAHB’s survey on AD&C Financing and the Federal Reserve’s . However, the tightening was not as widespread as it was in recent quarters. The net easing indices derived from both surveys were negative once again in the fourth quarter, indicating net tightening of credit, but not as negative as they were in the third quarter. The NAHB index posted a reading of -19.7, compared to -49.3 in the third quarter, while the Fed’s index posted a reading of -39.7 compared to -64.9 in the third quarter. Although both the NAHB and Fed indices have been in negative territory for eight consecutive quarters, the fourth quarter 2023 readings were as close to positive as either index has been since the first quarter of 2022. According to the NAHB survey, the most common ways in which lenders tightened in the fourth quarter were by reducing the amount they are willing to lend (cited by 73% of the builders and developers who reported tighter credit conditions), increasing the interest rate on the loans (69%), and lowering the allowable Loan-to-Value or Loan-to-Cost ratio (65%). Meanwhile, results from the NAHB survey on the cost of the credit were mixed. Quarter-over-quarter, the average contract rate remained the same on loans for land acquisition at 8.31% but increased from 7.78% to 8.12% on loans for land development, and from 8.37% to 8.40% on loans for pre-sold single-family construction. In contrast, the average contract rate declined from 8.66% to 8.41% on loans for speculative single-family construction. The average initial points paid on the loans declined from 0.86% to 0.71% on loans for land acquisition and from 0.93% to 0.73% on loans for speculative single-family construction but increased from 0.58% to 0.60% on loans for land development, and from 0.86% to 1.08% on loans for pre-sold single-family construction that are tracked in the NAHB AD&C survey. The above changes caused the average effective interest rates (rate of return to the lender over the assumed life of the loan, taking both the contract interest rate and initial points into account) to move in different directions. There was a relatively small decline (from 10.85% to 10.58%) on loans for land acquisition, and a more substantial decline (from 13.74% to 12.96%) on loans for speculative single-family construction. On the other hand, the average effective rate increased from 10.76% to 11.25% on loans for land development, and from 14.57% to 15.65% on loans for pre-sold single-family construction. More detail on credit conditions for builders and developers is available on NAHB’s AD&C Financing Survey web page. ‹ Declines for Custom Home BuildingTags: ad&c lending, ad&c loans, ADC, construciton loans, construction lending, credit conditions, economics, home building, housing, interest rates, lending

Credit for Builders Remains Tight, But Tightening is Less WidespreadPaul Emrath2024-02-20T14:19:38-06:00

Higher Rates and Lack of Supply Continue to Hamper Mortgage Market

Jesse Wade2024-02-07T10:19:56-06:00

By Jesse Wade on February 7, 2024 • Per the Mortgage Bankers Association’s (MBA) survey through the week ending February 2nd, total mortgage activity increased 3.7% from the previous week, and the average 30-year fixed-rate mortgage (FRM) rate rose two basis points to 6.80%. The 30-year FRM has floated around 6.8% for much of the start of the year, only moving one basis point from January. Total mortgage activity is 12.9% lower than last year. One reason for this is the 30-year FRM was at a relatively lower level of 6.18% last year. The Market Composite Index, a measure of mortgage loan application volume, rose by 3.7% on a seasonally adjusted (SA) basis from one week earlier. Purchasing activity fell 0.7% and refinancing activity increased 12.3% week-over-week. Purchasing activity was 18.6% lower than one year ago, and refinancing activity was up 0.7% from one year ago. The refinance market has remained dull due to most homeowners having lower rates than the current levels, while in the purchase market the lack of housing supply continues to hamper potential buyers. The refinance share of mortgage activity rose from 34.2% to 35.4% over the week, while the adjustable-rate mortgage (ARM) share of activity fell from 6.6% to 6.4%. The average loan size for purchases was $434,800 at the start of February, up from $421,800 over the month of January. The average loan size for refinancing decreased from $273,500 in January to $270,500 in February. The average loan size for an ARM was up at the start of February to $949,200, while the average loan size for a FRM rose to $337,300. ‹ Homeownership Rates by Race and EthnicityTags: finance, interest rates, mba, mortgage applications, mortgage bankers association, mortgage lending, refinancing

Higher Rates and Lack of Supply Continue to Hamper Mortgage MarketJesse Wade2024-02-07T10:19:56-06:00

Builders’ Top Challenges for 2024

Ashok Chaluvadi2024-01-24T12:17:19-06:00

According to the January 2024 survey for the NAHB/Wells Fargo Housing Market Index, high interest rates were a significant issue for 90% of builders in 2023, and 77% expect them to be a problem in 2024. The second most widespread problem in 2023 was rising inflation in US Economy, cited by 83% of builders, with 52% expecting it to be a problem in 2024. The cost and availability of labor was a significant problem to only 13% of builders in 2011. That share has increased significantly over the years, peaking at 87% in 2019. Due to the pandemic, fewer builders reported this problem in 2020 (65%), but the share rose again in 2021 (82%) and 2022 (85%). Not surprisingly, given the increase in construction job openings, the share eased slightly in 2023 to 74%. A similar 75% expect the cost and availability of labor to remain a significant issue in 2024.In 2011, building materials prices was a significant problem to 33% of builders. The share has fluctuated over the years, from a low of 42% in 2015 to a peak of 96% in 2020, 2021, and 2022. The slowdown in single-family construction in 2023 made this less of a problem for builders last year, as ‘only’ 63% reported it as a significant issue. Fewer expect it to face it in 2024 (58%). Compared to the supply-side problems of materials and labor, problems attracting buyers have not been as widespread, but builders expect many of them to become more of a problem in 2024. Buyers expecting prices or interest rates to decline if they wait was a significant problem for 71% of builders in 2023, with 77% expecting it to be an issue in 2024. Negative media reports making buyers cautious was reported as a significant issue by 56% of builders in 2023, and 54% expect this problem in 2024. Concern about employment/economic situation was another buyer issue for 48% of builders in 2023, but 55% anticipate this issue in 2024. Gridlock/uncertainty in Washington making buyers cautious was a significant problem for 42% of builders in 2023, but a larger 54% expect it to be a problem in 2024. Less than 30% of builders experienced problems in 2023 with buyers being unable to sell existing homes, potential buyers putting off purchase due to student debt, and competition from distressed sales/foreclosures. For additional details, including a complete history for each reported and expected problem listed in the survey, please consult the full survey report. ‹ Employment Situation in December: State-Level AnalysisTags: builders, Building Materials, construction, hmi, home building, housing trends report, inflation, interest rates, labor, single-family

Builders’ Top Challenges for 2024Ashok Chaluvadi2024-01-24T12:17:19-06:00

Modest Increase in Mortgage Activity to Start 2024

Jesse Wade2024-01-10T10:29:12-06:00

By Jesse Wade on January 10, 2024 • Per the Mortgage Bankers Association’s (MBA) survey through the week ending January 5th, total mortgage activity increased 9.9% from the previous week, and the average 30-year fixed-rate mortgage (FRM) rate rose five basis points to 6.81%. After the total mortgage activity index fell 10.7% in the last week of December, it bounced back in the first week of the year. The data includes an adjustment for New Year’s. The Market Composite Index, a measure of mortgage loan application volume, rose by 9.9% on a seasonally adjusted (SA) basis from one week earlier. Purchasing activity increased 5.6% and refinancing activity increased 18.8% week-over-week. Purchasing activity was 6.8% lower than one year ago, and refinancing activity was up 30.2% from the same week one year ago. Despite the 30-year FRM rate increasing over the week, both refinancing and purchasing activity saw small increases as rates start to settle around seven percent, which is significantly lower than the 2023 peak rate of 7.9% in October. The refinance share of mortgage activity rose from 36.3% to 38.3% over the week, while the adjustable-rate mortgage (ARM) share of activity fell from 6.0% to 5.4%. The average loan size for purchases was $402,900 at the start of January, down from $408,600 over the month of December. The average loan size for refinancing increased from $272,200 in December to $274,100 in January. The average loan size for an ARM was down at the start of January to $862,600 while the average loan size for a FRM rose to $324,400. ‹ Consumer Credit Outstanding Climbs as Credit Card Debt SurgesTags: finance, interest rates, mba, mortgage applications, mortgage bankers association, mortgage lending, refinancing

Modest Increase in Mortgage Activity to Start 2024Jesse Wade2024-01-10T10:29:12-06:00

How Interest Rates Affect Your Home Purchase

Texas REALTORS Staff2022-10-26T19:14:33-05:00

Your monthly house payment depends on many factors, including the interest rate on your mortgage. Here are some things to keep in mind about interest rates when you’re planning to buy a home. Rates Change Over Time The rate you can get on a loan today will likely vary slightly from yesterday’s or tomorrow’s rate. Over longer periods, rates can fluctuate dramatically. Interest on a 30-year mortgage topped 18% in 1981 and dipped below 3% in 2020. People will predict which direction rates are heading, but no one knows for sure. If you’re concerned rates will rise while you’re looking for a home, some lenders give you the option to lock in a rate for a period of time. Different Loans Charge Different Rates The interest on a 30-year fixed-rate mortgage is typically higher than the rate on a 15-year fixed-rate loan. Interest rates on adjustable-rate mortgages are usually even lower; however, as the name suggests, those rates can change over time. How Much Will a Loan Payment Change? The difference in a monthly payment depends not only on the loan’s interest rate but also the amount of money borrowed. A buyer who borrows $250,000 at 5% will pay $148 more per month than if the rate was 4%. On a $400,000 loan, though, the difference would be $237 each month. Interest rates are just one aspect of a mortgage, and a mortgage is one of dozens of considerations when you purchase a home. Working with a REALTOR® ensures that you have a professional at your side to guide you through the entire process.

How Interest Rates Affect Your Home PurchaseTexas REALTORS Staff2022-10-26T19:14:33-05:00

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