Charleston Mortgage Rates and New National Lending RulesThe Federal Reserve has held interest rates steady at near-record lows over the last several years in an effort to entice buyers into the market, and experts don’t expect serious increases in the rate this year. In fact, the central bank said it would not raise short-term interest rates until the unemployment rate drops below 6.5%. Since September the Fed has been buying a total of $85 billion in long-term mortgage backed securities (treasury bonds) each month to help push down borrowing costs (mortgage rates). Part of that is the program known as Operation Twist, in which the Fed buys $45 billion in longer-term Treasuries and sells the same amount of shorter-term ones. As soon as the Fed stops doing this which will eventually happen rates will have to go up.
“Mortgage rates were essentially at a generational low last year — they could move modestly higher this year, but it will be the second-lowest [rate] in 40-plus years,” says Yun, chief economist at the National Association of Realtors.The Consumer Financial Protection Bureau issued new qualified mortgage standards last week that detail criteria lenders must use to determine if a borrower qualifies for a loan.The rule states a qualified mortgage cannot include risky features such as extending beyond 30 years or include exotic terms like interest-only payments or negative-amortization payments, where the principal amount increases. Loans can’t carry fees and points above 3% of the total mortgage and limits the total debt-to-income ratio at 43% — which some worry will restrict credit and discourage home buyers at the lower-end of the income scale from seeking a mortgage. On the other hand, some experts argue the rule that mortgage payments don’t exceed 43% of a borrower’s pre-tax income doesn’t go far enough.“That figure is still high, most borrowers meet that standard easily today,” says Jed Kolko, chief economist at online housing marketplace Trulia. “These rules are not primarily designed to change the mortgage market today, they are to prevent a repeat of the very lax mortgage rules we saw during the bubble.”Lance Roberts, CEO of Streettalk Advisors, would like to see the ratio fall to around 30-35% to help generate more savings, but there could be a downside to bumping up the requirement. “You are going to exclude more low-income and first-time home buyers from being able to buy a house, but that is OK…America is the only country in the world where the poor people live in a three-bedroom house with a pool in the backyard.” Many feel that not everyone is meant to be a homeowner, and that “American dream” is what got us into this problem in the first place.Additional mortgage rules are aimed at curbing over-borrowing, but could make the process longer for potential home buyers and could prevent some potential buyers from being able to qualify for a loan.“The mortgage rates are very low, but only a few people are able to access that low rate,” says Yun. “A modest increase in mortgage rates may not be harmful, provided that there is a return to more normal underwriting standards.”
CHARLESTON, SOUTH CAROLINA – Average mortgage rates on fixed mortgages fell this week and are just slightly above record lows reached earlier this year. The low rates have contributed to a modest housing recovery.
GSE Freddie Mac said Thursday that the rate on the 30-year loan declined to 3.59%, down from 3.66% last week. Five weeks ago, the rate fell to 3.49%, the lowest since long-term mortgages began in the 1950s.
The average on the 15-year fixed mortgage, a popular refinancing option, slipped to 2.86%. That’s down from 2.89% last week and from the record low of 2.8% five weeks ago.Cheap mortgages are a key reason the housing market is finally started to rebound five years after the bubble burst. However, another large factor is banks are not releasing the foreclosed homes they have on their books, and are sitting on them thus reducing the inventory and increasing demand. Sales of newly built and previously occupied homes are well above last year’s levels. Prices have increased consistently, largely because the supply of homes has shrunk while sales have risen. And Charleston SC builder confidence is at its highest level in five years, mean while home builders in areas like Mount Pleasant, SC are seeing very good signs of growth. Scott’s Creek in Mount Pleasant, SC neighborhood has 18 homes under construction currently and more under contract.Still, the Charleston SC housing market has a long way back to full health. Some national economists forecast that sales of previously occupied homes will rise 8% this year to about 4.6 million. That’s well below the 5.5 million annual sales considered healthy. Many people are still having difficulty qualifying for home loans or can’t afford larger down payments required by banks. If you need help with home financing in Charleston South Carolina and need advice contact me at.
Mortgage rates in Charleston SC are low because they tend to track the yield on the 10-year Treasury note. A weaker U.S. economy and uncertainty about how Europe will resolve its debt crisis have led investors to buy more Treasury securities, which are considered safe investments. As demand for Treasurys increase, the yield falls.To calculate average rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.The average does not include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1% of the loan amount.The average fee for 30-year loans was 0.6 point, down from 0.7 point last week. The fee for 15-year loans also slipped to 0.6 point from 0.7.The average rate on one-year adjustable rate mortgages fell to 2.63% from 2.66% last week. The fee for one-year adjustable rate loans was unchanged at 0.4 point.The average rate on five-year adjustable rate mortgages declined to 2.78% from 2.80%. The fee held steady at 0.6 point.