Home Affordability Gradually Improving
- posted 11.6.2014
- Yelaine Suarez
- Mortgage News
Prospective homebuyers received promising news regarding affordability with the latest Primary Mortgage Market Survey, released July 17.
The average 30-year fixed-rate mortgage dipped to 4.13 percent through mid-July, a decline of 0.6 percent from the week before and 4.37 percent a year earlier. Fifteen-year FRMs, meanwhile, dropped from 3.24 percent to 3.23 percent on a week-over-week basis, compared with 3.41 percent in mid-July 2013. Five-year Treasury-indexed adjustable-rate mortgages were also down, dropping from 2.99 percent to 2.97 percent week over week, and from 3.17 percent a year earlier.
Frank Nothaft, vice president and chief economist for Freddie Mac, attributed the latest dips to economic data that revealed some weakness after a strong June jobs report. Federal Reserve Chair Janet Yellen also made statements earlier in the week alluding to the need to keep monetary policy accommodative, reiterating that the central bank won't move to raise interest rates until further signs of economic stability have presented themselves.
"Mortgage rates were little changed amid a week of light economic reports," Nothaft explained. "Of the few releases, industrial production rose by 0.2 percent in June, below the market consensus forecast. Also, the producer price index for final demand rose 0.4 percent in June, rebounding from a 0.2 percent decline this prior month."
From a consumer perspective, these rates constitute a welcome sign in a market where inventory is still rather tight and lending standards have remained rather stringent. Mortgage interest levels continue to hover near historical lows, and a separate report—the CoreLogic Home Price Index—noted that a slowdown in price appreciation has occurred not only for the high end of the market, but across all buying classes.
Use our Home Affordability Calculator to get an estimate on how much house you can afford.