Rising Home Prices Spur Increase in FHA Loan Limits

Federal Housing Administration (FHA) loan limits will rise in most areas in 2017, applicable to cases assigned on or after Jan. 1, 2017, FHA recently announced. The increase, motivated by rising home prices, comes after the announcement that maximum conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac would also rise next year.
 
The loan limit ceiling, according to a released by the U.S. Department of Housing and Urban Development (HUD), will rise to $636,150 from $625,500 in high-cost areas (areas where the loan limit exceeds the floor). The floor will rise to $275,665 from $271,050, applicable to areas where 115 percent of the median home price is less than 65 percent of the national conforming loan limit of $424,100.
 
The maximum claim amount for FHA-insured reverse mortgages (HECMs) will also rise to $636,150, 150 percent of the national conforming loan limit.
 
View the FHA loan limits by county here.
 
Source: U.S. Department of Housing and Urban Development (HUD)

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Reprinted with permission from RISMedia. ©2016. All rights reserved.


Mortgage Rates Reach Year-Peak to Date as Rate Rise Looms

Mortgage rates have reached their peak to date this year in the week leading up to the expected rise in the key interest rate, with the 30-year fixed-rate mortgage averaging 4.13 percent, according to Freddie Mac's recently released Primary Mortgage Market Survey® (PMMS®). The key rate, which the Federal Reserve will determine action on next week, generally informs the movement of mortgage rates. Analysts widely anticipate an increase in the rate, despite initial claims to the contrary after the election.
 
"The 10-year Treasury yield dipped this week following the release of the Job Openings and Labor Turnover Survey," says Sean Becketti, chief economist, Freddie Mac. "The 30-year mortgage rate rose another five basis points to 4.13 percent, starting the month 18 basis points higher than this time last year. As rates continue to climb and the year comes to a close, next week's FOMC [Federal Open Market Committee] meeting will be the talk of the town, with the markets 94 percent certain of a quarter-point rate hike."
 
The 15-year fixed-rate mortgage, in addition, moved higher, averaging 3.36 percent with an average 0.5 point, according to the survey. The 5-year Treasury-indexed hybrid adjustable-rate mortgage, as well, rose to an average 3.17 percent with an average 0.5 point.
 
For more information, please visit www.freddiemac.com.

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Post-Election Housing Sentiment: Too Soon to Tell?

Too soon to tell?
 
More Americans expect home prices to rise, according to Fannie Mae's recently released Home Purchase Sentiment Index® (HPSI)—but that expectation is likely muddled by the charged election atmosphere, which has resulted in opposing attitudes toward housing. The amount of Americans who said home prices will rise increased four points to 35 percent in November—a reversal of trend. The HPSI overall decreased 0.5 points to 81.2 percent last month, a half-point higher than its reading the same time last year.
 
"The November Home Purchase Sentiment Index outcome is difficult to interpret, as the data collection period occurred across the Presidential election timeline," says Doug Duncan, senior vice president and chief economist at Fannie Mae. "The results are fairly evenly split between responses collected before and after the election, and there is evidence of an increase in consumer optimism in the immediate aftermath of the election. However, we caution readers against drawing conclusions about sustainable changes in consumer sentiment so soon after the election."
 
The amount of Americans who said it is "a good time to buy a house" decreased one point to 30 percent; the amount who said it is a good time to sell, however, decreased six points to 13 percent, and the amount who said it is a bad time to sell increased two points to 38 percent—indicators of an upcoming swing to a buyer's market.
 
The amount of Americans who said mortgage rates will go down in the next year decreased as well, six points to -51 percent. Mortgage rates shot up over 4 percent in the wake of the election—the first time rates were above 4 percent since 2015—and have continued to rise every week since.
 
"Low mortgage rates have been the primary driver of positive attitudes toward the home-buying and -selling climate throughout the recovery," says Duncan. "However, if mortgage rates continue their recent rise, we may see a dampening in home purchase attitudes. There are clear predecessors for rapid market changes that ultimately dissipated, which urges caution in the interpretation of stability in short-term rate changes. Most recently was the very temporary market reaction to the Brexit and, earlier, the 'Taper Tantrum,' and in both instances the rate regime returned to roughly its prior position. The drivers are somewhat different in this instance but nonetheless suggest modesty in drawing near-term conclusions."
 
Housing on the whole is expected to slow next year, with realtor.com® estimating home prices decelerating to a rate of 3.9 percent from an expectation of 4.9 percent.
 
"We do not see in the November HPSI results a fundamental departure from a flattening of housing activity relative to prior periods," confirms Duncan. "This is consistent with our corporate forecast of a modest growth in the 12 months ahead.”
 
Source: Fannie Mae

For more real estate information, including a FREE Home Market Analysis and Market Area Statistics, please contact us at 866-977-7623.

Reprinted with permission from RISMedia. ©2016. All rights reserved.