Boston Area Interest Rates: The Watch Continues

Economists and mortgage lenders are still keeping a watchful eye on Boston area interest rates. Federal Reserve chair Janet Yellen recently told the House financial services committee that no immediate decision has been made to raise interest rates. However, she said a December rate hike was still a “live possibility.”

Will the Fed Raise Boston Area Interest Rates in December?

Will Boston Area Interest Rates Rise in December?

Anticipation and speculation over if and when the Fed will raise interest rates has been a hot topic. Housing experts have largely agreed that even a slight bump in Boston area interest rates would not have much impact on home mortgage rates. Still, the Fed is considering the possibility of a rate hike before the end of the year.

Yellen’s meeting before the House committee occurred one week after the Fed decided not to raise rates during October.

Yellen cited the U.S. economy as “performing well,” saying domestic spending was increasing at a good rate. However, she cautioned that net exports and trade performance were slowing. She also referenced poor job gains in recent months. There were 64,000 fewer jobs added in September than had been projected. The U.S. economy added 271,000 jobs in October, and strong hiring drove unemployment figures down to 5%.

These and other factors may cause the Fed to raise Boston area interest rates during December.

Despite inflation currently below 2%, the widely accepted threshold established by the Federal Reserve, Yellen said that level is due to “declines in energy prices and the prices of non-energy imports.” The Fed expects crude oil prices to rise slightly, then stabilize, moving the inflation rate back up to the 2% mark. Yellen says if that happens, “it could be appropriate to adjust rates in our next meeting.”

The Fed chair reiterated there had been no firm decision made to raise interest rates in December. The decision will be based largely on the review of new data collected between now and then. Among the chief components of that data is one more jobs report for November. Whether Boston area interest rates will be affected will depend on how the Fed interprets the findings.

It’s important to note there is little correlation between a modest interest rate hike by the Fed and actual Boston area interest rates for mortgage loans. Historically, mortgage lending experts say a slight increase hasn’t had a big impact on home loan rates. A quarter-point rate increase on a $250,000 mortgage only increases the monthly payment by roughly $35. Lenders say it usually takes an increase of a full percentage point to have a noticeable effect on consumers.

Find more news that may affect Boston area interest rates in our Boston Real Estate News section to your right under Boston Real Estate Categories. We also post news and tips each day on Twitter and Facebook. Follow us there for up to the minute news on Boston area interest rates and mortgage news.

Boston Area Mortgage Rates May Still Rise in 2015

Boston area mortgage rates could still be on the uptick despite conflicting economic indicators. Boston area Federal Reserve President Dennis Lockhart, a highly-respected voting member on the Fed’s monetary policy committee, said there is “more downside risk” to the U.S. economy as a result of an international slowdown and stagnation in addition to the nation’s most recent disappointing jobs report.

Lockhart said the Fed will continue to monitor consumer strength and confidence signals in the next few weeks and coming months to decide whether to proceed with the first rate increase in almost a decade. He has publicly stated a rate hike is likely to occur before the end of this year.

Boston Area Mortgage Rates: What an Increase May Mean

What an increase in Boston area mortgage rates may mean for housing

It’s important to note there is little correlation between a small interest rate hike orchestrated by the Federal Reserve and actual Boston area mortgage rates. Mortgage experts say historically a slight increase in the interest rates by the Fed hasn’t had a profound impact on Boston area mortgage rates. A quarter-point rate increase on a $250,000 mortgage only increases the monthly payment by roughly $35. Such a payment increase probably won’t prevent buyers from buying, but it could mean they may buy a slightly less expensive home. Experts say it usually takes an increase of a full percentage point to have a noticeable effect on consumers.

Some industry insiders say the potential threat for Boston area mortgage rates to increase could be the resulting effect on credit standards for prospective buyers trying to qualify for a mortgage. First time buyers may see loan qualifications tighten slightly as a safeguard against a repeat of the housing crisis of less than a decade ago are now in place.

A greater concern is how a rise in Boston area mortgage rates may affect consumer confidence. If consumers feel threatened or unassured that further increases are imminent they may elect to stay on the sidelines temporarily to see what happens.

Still, other experts say a rate hike could very well be the catalyst to motivate potential purchasers. If they’ve been waiting to purchase and now realize there’s no better time than the present to buy it could spur many to act rather than to continue to wait any longer.

Get more news as it affects Boston area mortgage rates in our Boston Real Estate News section to your right under Boston Real Estate Categories. We also post news and tips each and every day on Twitter and Facebook, and would encourage you to follow us there for up to the minute news that may affect Boston area mortgage rates.

Boston Area Real Estate News – June 2015

Boston Area Real Estate News - June 2015

In our Boston Area Real Estate News for June 2015:

Buyers Still Positive On Boston Area Housing

Buyer's views toward Boston Area housing have not varied much over the past year, and they are still positive on homeownership as a good financial investment.

According the Federal Reserve Bank of New York's 2015 housing survey, U.S. households, on average, expect home-price growth to continue at a 4.4% pace for the next year, comparable to the average year-ahead expectation reported in last year's survey.

Boston area home price change expectations

Last year's survey was the first in the series, with this year's survey getting administered to 1,205 U.S. heads of household in February 2015.

Survey respondents were asked for the current value of a typical home in their zip code, and what they expected the value of that home to be in one year and in five years.

With regard to longer-term expectations, the average expected annualized change in home prices over the next five years was 2.9%. These figures were slightly lower than the corresponding figures in the 2014 survey, where the mean expected annualized change in home prices over the longer horizon was 3.1%. Overall, respondents expected home price growth to continue, but at a slower pace at a horizon beyond one year.

Respondents were asked about Boston area housing being a good or bad investment

The survey found that more than 60% of both renters and owners think that buying property in their zip code is a (very or somewhat) good investment, while only about 10% think it is a bad investment.

When it comes to renters answering this question, there was little difference in how they answered compared to 2014.

Here in Greater Boston Area, owners seem to have become more bullish since last year's survey. The proportion of owners who think that Boston Area housing is a good investment increased from 58.5% in the 2014 survey to 63.2%, while the proportion thinking that Boston Area housing is a bad investment declined from 11.9% to 9.8%.

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5 Things About the Current Boston Area Home Buying Season

Many analysts are saying the Boston Area housing market has normalized amid the pickup in activity since the recession doldrums. But all is not well for people trying to buy–especially if they're first-time buyers or on the lower end of the price spectrum. Here's what you need to know to compete as 2015's spring Boston Area home buying season swings into the home stretch.

Inventory is Still Short

There are a lot of potential buyers in the market, but supply of available homes for sale is just not enough to satisfy demand, which is causing prices to be on the high side. As of the end of April, the number of available homes for sale—both newly constructed and previously owned—was well below the six-month supply considered a balanced market: 5.3 months for pre-owned homes and 4.8 months for new ones, according to NAR.

Prices Are on the Rise

Inventory constraints coupled with demand for real estate are pushing prices up. In many locations around the Boston area, homes are selling at or above their list price. Don't expect the price gains to go away. Freddie Mac predicts an average home price gain of 4.5% in 2015 (on a national basis), while the National Association of Realtors is now forecasting that homes will rise by 6.7% this year.

Competition is Easing from Investors

For buyers the good news is, in 2015 there's less competition shaping up from investors in general. In the depths of the housing crisis, institutional investors were the big winners, snapping up single-family homes by the thousands. But they're less of a force today. In the first quarter of 2015, a total of 14,621 single-family homes were sold to institutional investors nationwide (defined as entities that purchase at least 10 properties per year), according to RealtyTrac. That's about 3.4% of all sales, down from 6.2% a year ago, and the lowest share for institutional investors in four years. All-cash deals are also down: of non-owner-occupied buyers, 44.7% were all-cash, compared to 61% a year ago and also the lowest level in four years.

Lower Priced Homes are Moving Fast

Markets are moving slightly faster than they were last year, so it's going to be a little more difficult overall for homebuyers to find a home they want in a reasonable time frame. Homes priced at the lower end of the market are moving quickest: only 50% of homes priced in the lower one-third were still on the market after two months, compared with 65% of higher-priced homes.

Financing Eases, But Mortgage Rates Are Rising

In the worst days of the housing crisis, it was tough to get credit. These days credit availability is at its highest level since the housing downturn, but watch out: interest rates have stayed at historic lows for months now, and Freddie Mac is predicting increased volatility. This past week, rates rose to the highest level in 2015. (See our next article below).

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Where Boston Area Mortgage Rates Are Moving

With summer now in full swing (even though the calendar hasn't officially welcomed it yet), more potential home buyers are looking around. There is good news as Boston Area mortgage rates remain at near historic lows, although they are rising, according to Freddie Mac.

Although existing home sales slipped 3.3% to a seasonally-adjusted pace of 5.04 million units, sales are up 6.1% on a year-over-year basis. The S&P/Case-Shiller 20-city home price index also posted a solid gain of 5% over the 12-months ending in March 2015.

The average 30-year fixed mortgage sits at 3.87 percent this week, an increase from 3.84 percent the previous week. The recent boost has brought Boston Area mortgage rates to their highest levels of 2015.

15-year fixed rates this past week averaged 3.11 percent with an average 0.5 point, up from last week when it averaged 3.05 percent. A year ago at this time, the 15-year fixed rate averaged 3.21 percent.  

5-year Treasury-indexed hybrid adjustable-rate mortgages (ARM) averaged 2.90 percent this week with an average 0.5 point, up from last week when it averaged 2.88 percent. A year ago, the 5-year ARM averaged 2.96 percent.

1-year Treasury-indexed ARM's averaged 2.50 percent this week with an average 0.3 point, down from last week when it averaged 2.51 percent. At this time last year, the 1-year ARM averaged 2.41 percent.

However, a year ago, 30-year rates averaged 4.21 percent. The rise in Boston Area mortgage rates was due to positive housing data as U.S. home sales climbed 7 percent in April. Overall lower mortgage rates are playing a role in bringing out local home buyers. The historic low for 30-year rates was 3.31 percent in November 2012.

Boston Area Mortgage Rates Move Higher Again

Average Boston area mortgage rates followed 10-year Treasury yields higher and rose for the third consecutive week last week. At 3.85%, the average 30-year fixed-rate Boston area mortgage rate is just below the high for 2015.

The 15-year fixed Boston area mortgage rates averaged 3.07% with an average 0.6 point last week, up from the previous week when it averaged 3.02%. A year ago at this time, the 15-year fixed rate mortgage averaged 3.29%.

Higher Boston Area Mortgage Rates Mean Less House

Boston area mortgage rates continued to inch upward for the third week in a row.

Higher Boston area mortgage rates will mean more expensive mortgages and less house. Right now, the 30-year mortgage costs nearly a half-percent cheaper than the same mortgage cost a year ago, and more than a full point cheaper than mortgages cost five years ago. If you agree with (almost literally) everyone else that interest rates will rise over the next 12 months, the time to lock in a low rate is now.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 2.89% last week with an average 0.5 point, down from the previous week when it averaged 2.90%. A year ago, the 5-year Adjustable rate mortgage averaged 3.01%.

The 1-year Treasury-indexed adjustable rate mortgage averaged 2.48% last week with an average 0.4 point, up from the previous week when it averaged 2.46%. At this time last year, the 1-year ARM averaged 2.43%.

The labor market continues to improve with the U.S. economy adding 223,000 jobs in April, a solid rebound from merely 85,000 job gains in March. Also, the unemployment rate dipped to 5.4% in April as the participation rate ticked up to 62.8% and jobless claims were far less than expected.

Pending sales of existing homes in March rose 1.1 percent, according to the National Association of Realtors. The median price of an existing home nationwide was up 7.8 percent from a year earlier.

With just about everyone agreeing that Boston area mortgage rates are moving higher, there’s simply no time like the present to get started looking for a Boston area home.

Get more information as it pertains to Boston area mortgage rates in our section on Boston Mortgage Info to your right under Boston Real Estate Categories.

Remember, we also post tips daily on Twitter and Facebook. Check us out there as well.

Boston Area Real Estate News – March 2015

Boston Area Real Estate News - March 2015

In our Boston Area Real Estate News for March 2015:

Home Prices Up Year-Over-Year

Home prices across most of the country were down for December, but still faired better than they were a year ago.

Black Knight Financial Services released its latest Home Price Index Report this past week, which showed that home prices nationwide were down an almost-flat 0.1 percent in December. At the same time, 2014 ended with home prices doing 4.5 percent better than a year prior.

Boston Area home prices were down in December, but up overall in 2014 over the previous year

According to the report, the average home prices in the U.S. in December were around $241,000, up from $230,000 a year before and inching closer to the June 2006 peak of $268,000.

The Northeast and Midwest showed the most notable price drops in December, while a few metro areas actually showed rising home prices for the month.

It's not unusual to see home prices and sales drop off during December, as most people have their focus on the holidays.  However, data suggests that's all about to change…

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Why Boston Area Home Prices May be Ready to Lift Off

Data suggests that Boston Area home prices are about to accelerate.

Earlier this week, the S&P/Case-Shiller Home Price Index, on a month-over-month nonseasonally adjusted basis, posted an increase for the first time since August. Winter's chill is beginning to thaw, even though old man winter is still clinging on in many areas. On a seasonally adjusted basis, the index posted its best price gain since 2014. Prices, however, are still more than 16 percent below their prerecession peaks.

A few things have been holding back Boston Area home prices lately. For one, inventories have dried up a little, limiting choices. The National Association of Realtors (NAR) notes that families are staying in their homes longer, an average of 10 years vs. the long-term norm of seven years. Wage gains have also been lukewarm so far in the recovery, which is hampering first-time buyers. And evidence shows that student loan debt is limiting the ability of many Millennials to get a mortgage.

Yet positives are showing up.

The household formation rate has increased to its highest level since the housing bubble. New-purchase mortgage applications are inching higher, thanks to the recent decline in home loan interest rates. (See our next story below)

New first-time homebuyer affordability, according to the NAR, has returned to early 2014 levels. And thanks to deleveraging efforts — defaults, short sales and the like — household mortgage debt has returned to 2001 levels, according to data from the Federal Reserve.

While some hurdles still remain, including relatively tight mortgage credit conditions, Boston Area home prices look ready to accelerate as winter — which has been brutal in much of the country — gives way to the summertime peak in housing activity. Plus, this year's prices could get a boost because relatively fewer homes are available. As Boston Area home prices rise, new construction activity will follow, providing a lift to U.S. economic growth later this year.

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Boston Area Mortgage Rates Rise for Third Straight Week

Boston Area mortgage rates are still well below year-ago levels, but rates rose for the third consecutive week this past week.

Freddie Mac says the average rate on a 30-year fixed-rate mortgage rose to 3.80 percent in the week ending Feb. 26, up from 3.76 percent last week. A year ago, 30-year rates averaged 4.37 percent.

A 15-year fix averaged 3.07 percent this week, up from 3.05 percent. A one-year adjustable-rate mortgage averaged 2.44 percent, down from 2.45 percent.

Freddie Mac says rates rose this week, in part, on strong housing data. New home sales topped expectations in January, hovering near a six year high. The monthly S&P/Case-Shiller Home Price Index showed prices in December in the 20 largest cities were up an average of 4.6 percent from a year earlier.

Stay plugged in with us right here, and we'll keep you up to date on Boston Area mortgage rates, as well as news affecting interest rates overall.