How Much Home People Are Getting For Their Money Compared To The Past

By CHUCK GREEN Home affordability has been a popular topic for the past few years as prices rose and interest rates shot up. First-time homebuyers have complained that they need to spend more to get less than their parents did and industry leaders say they are somewhat right. Andrew Lokenauth, publisher of BeFluentInFinance.com, said that last year the median home price was $428,700 and that with a 20% down payment of $85,740, the mortgage amount would be $342,960. This would require 34.2% of the median household income of $79,900 to cover the monthly principal and interest payments, he said. Lokenauth noted that in 1950, the median home price was $7,400. With 20% down, the mortgage amount would be $5,920, requiring…

Is America’s Obsession With Homeownership A Good Thing?

By CHUCK GREEN As Americans remain determined to climb the homeownership ladder despite affordability challenges and a lack of inventory, the link between buying a house and success is strengthening, but that may not be benefitting society or the people who have to sacrifice to compete in the current market. Roger Valdez, director at the Center for Housing Economics, told The Mortgage Note that life in the United States has been profoundly shaped by the 30-year mortgage, and as a result, mobility and entrepreneurship have likely suffered. “There’s been a sort of desperation to get into a home and a mortgage over the last three years. The pandemic shifted people’s work and life habits in such a way that, for…

Feds Consider One More Rate Hike Despite Impacts On Housing Market

By CHUCK GREEN The housing market has been slowing down due to interest rate hikes, but that likely won’t stop officials from pushing further in their fight against inflation. And average American homebuyers and sellers will be affected by their decisions as affordability continues to be a concern nationwide. Last week, the Federal Reserve Board voted to hold interest rates steady at their monthly policy meeting, keeping the federal funds rate target range between 5.25% and 5.5%. Chairman Jerome Powell said in his remarks that despite the pause, “We are prepared to raise rates further if appropriate, and we intend to hold policy at a restrictive level until we are confident that inflation is moving down sustainably toward our objective.”…

It’s Been 15 Years Since Fannie Mae, Freddie Mac Conservatorship

By CHUCK GREEN Back in 2008, Fannie Mae and Freddie Mac were in trouble. In fact, without government intervention, they faced imminent collapse, and on Sept. 6 of that year, both were placed in conservatorship by the director of the Federal Housing Finance Agency. With those conservatorships hitting their 15th anniversary, William Emmons, an adjunct lecturer at Washington University in St. Louis, said the takeover was historically significant because they were the first large-scale government interventions in what came to be known as the Global Financial Crisis. “In other words, their collapse was a bellwether of things to come. Lehman Brothers failed one week later, which triggered the chain reaction of collapsing banks, AIG, and market confidence,” Emmons told The…

Feeling The Pain: Fed’s Hikes Affect Housing Market

By CHUCK GREEN Mortgage rates are hovering around 7% as the summer winds down and with potential homebuyers facing high monthly payments for the few properties for sale, people are wondering when the Federal Reserve will loosen its grip on monetary policy so the housing market can free up again. Last month, Chairman Jerome Powell announced the key interest rate would be lifted to 5.25% to 5.5% — the upper figure representing a level not seen since 2001, according to the Associated Press. Powell said that they don’t expect to reach their goal of 2% inflation until 2025, and they do not intend to cut rates until next year. “The Fed’s rate hikes attempt to combat inflation, increasing mortgage interest…

What Does Today’s Mortgage Professional Look Like?

By CHUCK GREEN Mirror, mirror, on the wall, show us a reflection of who we are. American homebuyers are getting older. The typical first-time homebuyer is now 36, while the repeat buyer’s age climbed to 59 last year. So what about the mortgage professionals that cater to these consumers? Are they older, industry veterans, or are they young and eager businessmen and women inspired to get into their career paths by the pandemic housing boom? Based on information from Zippia, a career planning site, the average mortgage broker is 44 years old, and 67.5% of brokers are male. The average mortgage originator is also 44 years old. Zippia estimates that 56.2% are men. Beth Rosenbaum, principal of WOSG, a mortgage…

Mortgage-Free Living: Are Americans Paying Off Their Houses?

By CHUCK GREEN Okay, you’ve undoubtedly heard of those who play with house money. Yeah, that rocks. By the same token, you’re probably similarly familiar with those who don’t owe money on their house. No mortgage. Zippo. That not only rocks – and thunderously, at that — it brings the house down. C’mon, who doesn’t dream of having a mortgage-burning party and being free of that debt? But home mortgage burnings are nearly unheard of in present-day America as the country is now more of a mortgage-ownership society than a home-ownership society. Mortgage balances were at $12.04 trillion at the end of March, according to officials at the Federal Reserve Bank of New York’s Center for Microeconomic Data. The free…

Office Demand: Should Mortgage Professionals Be Back In Person?

By CHUCK GREEN Does anyone need some elbow room? When COVID appeared to seize control over, well, nearly everything, there seemed to be ample space in offices – including those related to the mortgage industry – across the country. Desks? It was almost as though some hadn’t been occupied in decades. That scenario is gradually changing. According to the Spring 2023 U.S. Office Occupier Sentiment Survey by CBRE, 65% of respondents say their companies are requiring that employees return to the office. 71% of financial and professional services company respondents said they are required to be back in the office, and most of the companies they work for expect attendance for more than half of the week. So should mortgage…

Reduced Profits Sting Sellers

By CHUCK GREEN To home sellers who agonizingly watched the prices of their abodes recede recently, leaving a nasty gash in profits, there’s little to say but “ouch.” Want a touch of solace? Apparently, the waters are rippling with plenty of others in the same predicament. A first quarter 2023 U.S. Home Sales Report released by ATTOM showed that on median-priced single-family home and condo sales across the country, profit margins dipped to 44.2%, sagging from 48.7% in the fourth quarter of last year. A silver lining is that the typical investment return stayed relatively high. In fact, it was nearly double where it was four years ago. From the peak of 56.1% in the second quarter last year, the…

Leaders React To Mortgage Fee Changes As Debate Continues

By CHUCK GREEN Industry leaders and economists are sharing their opinions about changes to fees for loans backed by Fannie Mae and Freddie Mac after reports that homebuyers with good credit scores and substantial down payments will pay more so fees for borrowers limited by income or wealth can be reduced. The changes to the loan-level price adjustment matrix by officials at the Federal Housing Finance Agency went into effect on May 1 and are the target of two bills in Congress. Rep. Stephanie Bice of Oklahoma, vice chairwoman of the Republican Main Street Caucus, introduced the Free Market Mortgage Act. She said the changes will force homebuyers with good credit to pay more for their mortgages to subsidize loans…