Buyers in today’s market can expect to pay about 17 percent of their gross monthly income on their mortgage. The average, since 1975, has been 25 percent and at times, such as the early 1980s, mortgage payments were as much as 45 percent of gross income. Zillow.com calculated housing affordability using data dating back to 1975. Based on median household income, median home value, the average 30-year fixed-rate mortgage, and an assumed 20 percent down payment, their research determined that homes are more affordable now than they’ve been at any point in the past 35 years. More here.
The National Association of Realtors’ Pending Home Sales Index rose 5.1 percent in March, the sixth increase in the past nine months. The Index is a forward-looking indicator that tracks contract signings but not closings. Lawrence Yun, NAR’s chief economist, said home sales have shown an uneven but notable improvement. Since reaching their bottom last June, pending home sales have risen 24 percent, which demonstrates that the market is recovering on its own. Yun said modest near-term gains in existing-home sales are likely. More here and here.
According to the Mortgage Bankers Association’s Weekly Applications Survey, the average contract interest rate for 30-year fixed-rate mortgages fell to 4.80 percent last week from 4.83 percent the week before. Despite the drop in rates, the Market Composite Index, which measures total mortgage loan application volume, decreased 5.6 percent. Michael Fratantoni, MBA’s vice president of research and economics, said applications fell last week due to a decrease in government purchase applications as new, higher FHA premiums went into effect. More here and here.
While it may be the case that price continue to decline a bit, no one in the mortgage business expects interest rates to stay where they are for much longer. This might be the time to pick up the phone and call your Realtor. If you don’t have a Realtor, get in touch with me an I will recommend a good one to you.
Data through March, released by the S&P/Experian Consumer Credit Default Indices, shows mortgage defaults fell to 2.33 percent from 2.45 percent in February. It was the fourth consecutive month of declines in mortgage default rates and puts them 41 percent below year-before levels. David M. Blitzer, managing director and chairman of the index committee for S&P Indices, said declining debt levels, combined with the economic recovery, are supporting lower defaults and improvement in consumers’ financial condition which should help maintain the recovery. The indices track defaults of consumer balances across major loan categories. More here.