As July comes to an end, consumers who are purchasing or refinancing found themselves navigating through some tricky terrain. For many, especially those with school-age children, heading into August will bring a sense of urgency as they use the start of the school year as a barometer in completing their real estate transactions.
This past month there were many metrics affecting consumers regarding the price they pay for homes as well as mortgages. Listed below are three metrics worthy to put under the spotlight.
Rates and Applications
Even though mortgage rates as published by Freddie Mac’s weekly lender survey leaped to record highs, the last two weeks saw a decline. The benchmark 30 Year Fixed Rate mortgage is currently at 4.31% and based on trends tomorrow’s survey should result in no change or just a tad higher.
For the seventh straight week mortgage applications have also declined. This metric is critical as it is used by lenders to report consumer demand. The data is comprised from members of the M.B.A. (Mortgage Bankers Association). Higher rates have been attributed to the decline because of the impact of mortgage payments, which has a compounding effect on qualifying
Next Fed Chair
Current Federal Reserve Chairman Ben Bernanke has announced his retirement and will be calling it quits on December 31st. His replacement has made the news during the past several weeks. As an appointed position, President Obama must navigate the turbulent political waters in naming someone who has the knowledge and respect to guide the nation’s fiscal policy. Current nominees high on the list of contenders is past Treasury Secretary Larry Summers and current Federal Reserve Vice-Chair Janet Yellen. As late as today and part of his meeting with fellow Democrats, Obama was asked specifically about his choice of Summers. Several leaders frown at the notion he could be selected.
69% use a Mortgage
Those customers who were flush with cash or who could easily qualify for mortgages have been able to snap up properties which were available following the foreclosure crisis. Many of those were investors and their thirsty appetite of grabbing deals have made it tough for traditional buyers. First-Time Buyers have been eagerly looking to enter the housing market, but their pace has thinned due to available inventory.
Even though mortgage money has been relatively cheap, only 69% of those purchasing a property used a mortgage! The data provided by the National Association of Realtors provides a glimpse of the competition in the current market. Imagine you are bidding for a property and there are three making offers, yet one of the three has the ability to match your offer and not need a mortgage. That is the current reality and another reason why it is tough for some to enter the market.
As consumers welcome August, those who are contemplating a real estate transaction will be paying attention to a variety of data. However, regardless of market conditions those who will be successful in closing their transaction will position themselves to close on time; by the end of escrow or by the end of the rate lock.