Scottsdale mortgage rates

Scottsdale mortgage rates continue to be in the news. With the recent rise in interest rates by the Federal Reserve, and the likelihood of additional increases on the horizon, the obvious question remains, “Is it still a good time to purchase a home?”

Let’s look at what’s transpired in recent months since the presidential election in November. The average interest rate for a 30-year fixed-rate mortgage increased from 3.68% to 4.2%, based on Freddie Mac's mortgage rate survey report. However, despite the increase, even a 4% rate is very low compared to historical averages. To put that into perspective, for roughly 30 years from 1971 to 2001 mortgage interest rates were above 7% most of the time. In October 1981, they peaked at 18.16%. It wasn’t until 2008, just over eight short years ago, that interest rates began to drop consistently below 6%.

Scottsdale mortgage rates have risen slightly since the presidential election.

While Scottsdale mortgage rates are expected to continue to rise slightly this year, most agree that aggregate increases will be less than 1% – meaning rates should remain below the 5% level. With that in mind, relatively speaking, mortgages will still be affordable for most home purchasers. And, as mentioned above, compared to where interest rates were just a decade ago, a 4% to 5% interest rate will seem like a bargain!

Since 2009, the Federal Reserve has purchased significant amounts of mortgage-backed securities. The recent strength of the stock market – as a result of the presidential election results – has meant those purchases have temporarily been suspended. In addition, the Fed has indicated they may raise the federal funds rate at different intervals this year. The fed funds rate is the rate at which banks loan money to each other. However, there is a loose relationship between the fed funds rate and the longer-term mortgage interest rates.

A small increase in the Fed’s actions may translate to a slight increase in mortgage rates and their monthly payments. As an example, on a $200,000 30-year fixed-rate mortgage at 4% the payment would be roughly $955 per month. At 4.5% the payment would be approximately $1,013. A 5% mortgage rate would equate to payments of roughly $1,074 per month.

As you can see, the impact of slightly higher rates isn’t really a significantly higher monthly payment. It likely would only impact those homebuyers who were watching their budgets carefully, or those that would be on the borderline of loan qualification.

A greater concern than Scottsdale mortgage rates seems to be the rising home prices continuing to occur throughout the U.S. The median sales price of a home in 2016 rose 5.5% from the previous year. Experts expect a 5.3% increase this year. And therein lies the real issue. The “double-whammy” of higher interest rates combined with higher sales prices may be the deterrent to may home buyers – especially first-timers.

Let’s take a look at six factors that may have more impact than interest rates on your monthly mortgage payment.

Your Credit Score
Higher credit scores translate to lower interest rates for applicants with good credit. A score of at least 740 will likely get the best rate from most mortgage lenders.

Your Down Payment
A popular misconception is that you have to have a down payment of at least 20% in order to buy a home. However, if you do have 20% to put down you can avoid having to pay private mortgage insurance (PMI), a type of insurance that protects the lender against the borrower defaulting on their mortgage payments. According to Freddie Mac, the PMI premium can run anywhere from $30-$70 per $100,000 of your mortgage amount. Naturally, with a larger down payment, the monthly payment amount is less since you’re financing a lower loan amount. That's always true, regardless of what Scottsdale mortgage rates do or don't do in the future.

Points
"Points" are actually percentage points of the loan amount – 1 point equals 1% of the loan amount – so, if you’re borrowing, say, $200,000, a point would be $2,000. You can pay points to lower your interest rate. Since points are prepaid, be sure you “do the math” and determine whether buying down the interest rate is the best financial decision for you at the time – and to make sure it’s saving you interest in the long run.

The Term of the Loan
While a 30-year fixed-rate mortgage loan is the most popular selection, if you can afford the increased payment it may be worth looking at a shorter term. A 15-year term will not only be issued at a lower interest rate, but you’ll save more than 50% in total interest repayments over the life of the loan. Even borrowers who opt for a 20-year or 25-year term are pleasantly surprised at the interest savings they can enjoy by paying slightly more money each month. Ask your mortgage lender for an amortization schedule with different terms for comparison and see which term fits your financial capabilities best.

Closing Costs
Closing costs and fees vary from one lender to the next. It’s worth shopping around to find the best deal on closing costs. In addition, some fees are negotiable, so ask questions and make the best deal you can. Lastly, remember who pays the closing costs is strictly between you and the seller of your home. So, be prepared to negotiate with the seller for him to pay part – or all – of the closing costs as part of the contract.

Home Sales Price
Naturally, a higher price tag for a more expensive home translates to higher monthly mortgage payments. Make sure you are looking for homes in your affordable price range. What’s the joy in buying a home if you have to struggle to make the monthly payments – even if you qualify for a higher amount? Consider selecting and buying a less expensive home, even if you have to do without certain features or extras. You’ll sleep better at night.

You can find more articles pertaining to the Scottsdale mortgage rates in the "Scottsdale Mortgage Info" section of articles just below Scottsdale Real Estate Categories in the column to your right.

Remember to also check us out by finding us on Facebook and following us on Twitter.

The Scottsdale mortgage outlook is expected to include higher interest rates for 2017. The Federal Reserve’s recent short-term interest rate hike was both highly anticipated and expectedly minimal. And, while the fed funds interest rate has little direct correlation to longer-term mortgage interest rates, there has been – and may continue to be – a slight upward movement in rates for home loans.

Even prior to the Federal Reserve’s action, the average interest rate for conventional 30-year fixed rate mortgages increased after the recent presidential election. The rate hike saw record-low mortgage rates increase on average from a half to three-quarters of a percent. Post-election stock market activity meant investors were bullish on stocks and less interested in the bond market. Since long-term mortgage rates are more closely tied to the 10-year yield of U.S. Treasury bonds, rates rose as bond market investments declined.

The Scottsdale mortgage outlook of rising rates are more closely tied to the 10-year yield of U.S. Treasury bonds.

A burning question exists, however, as to whether the Scottsdale mortgage outlook of rising rates will really make much difference to the housing market in 2017. The reason for the question is simple:  Increasing rates, as exhibited by the Federal Reserve, are indicators of a stronger national economy – and a stronger economy historically favors the housing industry.

In addition, as one economist with Fannie Mae pointed out, “If interest rates are rising because the economy is growing more rapidly, then typically, incomes also rise, and the rising incomes offset the increase in the size of the mortgage payment…”

The unknown factor, however, tends to be largely intangible – buying a home is one of the most emotional purchases an American consumer will likely make. In a recent survey published by real estate brokerage firm Berkshire Hathaway HomeServices, 76% of existing homeowners and 79% of potential homeowners mentioned higher interest rates as a major challenge for the existing housing market. Even more significant is that each of those statistics reflect increases of 16% and 8%, respectively, from the same period of time in 2015.

The report also revealed the anxiety of a larger number of owners and prospective buyers would increase if the Scottsdale mortgage outlook were to include further rate increases. The lesson here is that when it comes to housing, perception is reality. Case in point:  Interest rates are still within 1% of all-time historic lows, but to many potential buyers – especially first-timers – it may not seem that way, in light of the recent attention rate increases have received.

Still, in the face of recent increases there are real estate experts who feel rates won’t climb much higher in 2017. Redfin, for example, predicts rates will likely reach no higher than 4.3% for a 30-year fixed rate mortgage. In addition, they expect an ever-improving credit market, citing large financial institutions like Bank of America, Wells Fargo, JP Morgan and Quicken, who in 2016 offered mortgage loans with just 1% – 3% down. Redfin says these and other programs will attract more millennials and first-time buyers into the U.S. housing market in 2017.

In addition, to further highlight the intangible impact the Scottsdale mortgage outlook may have on the home buying public, Zillow offers this recent finding. In a survey of consumer housing trends, Zillow says home purchases were more closely tied to a consumer’s overall financial health than to any interest rate changes. They found certain life events – like employment changes, promotions, job-loss, or a change in the household make-up were more impactful factors affecting a home purchase. As a result, Zillow says, while there is naturally concern over the part of prospective homebuyers about rising interest rates, they are quick to realize that by historical standards the cost of borrowing money today for a home mortgage is very low. Lastly, while rate increases may have an impact on where they buy or the size home they buy, most purchasers are committed to entering the housing market once they elect to do so.

Of concern to many experts is the affordability factor that appears to be weakening – especially among first-time home buyers. Year over year – from 2015 to 2016 – the number of available homes for the average first-time buyer dropped over 12% according to Trulia. Other Trulia findings show that while premium or higher-end homes comprise roughly 50% of available listings nationwide, starter homes – attractive to first-timers – make up only 25% of listings. In addition, first-time buyers are expected to spend roughly 39% of their monthly income to afford a home, compared to 37% in 2015.

Finally, as we analyze the Scottsdale mortgage outlook for 2017, one continuing concern lingers in the housing market – available inventory. Experts say the biggest obstacle facing a strong spring housing market won’t be higher interest rates, but a lack of home supply. Real estate listings throughout the U.S. fell in 2016 compared to 2015 with little sign of improving enough during 2017 to impact the spring. Sales increases, quite simply, are dependent on housing supply – and one can’t occur without the other. While the new-home market is on the rise, homebuilders have still been unable to keep up with the demand for new housing, and housing starts have been lower than usual. In addition, homeowners who would normally be selling their homes to move into larger, better or more expensive homes aren’t moving as they once did. Experts say a typical homeowner stays in their existing home twice as long as they did just 15 short years ago. Increased interest rates will likely continue this trend as consumers won't sell their homes unless they have another home to buy – and probably will be less likely to pay more for the financing than they currently pay for their lower-rate mortgages.

In summary, the Scottsdale mortgage outlook seems to be less about rising rates and move about other factors – some that are intangible like financial well-being – and others that are more practical like home inventory and new- and existing-home supply from which to choose.

You can find more articles pertaining to the Scottsdale mortgage outlook in the "Scottsdale Mortgage Info" section of articles just below Scottsdale Real Estate Categories in the column to your right.

Remember to also check us out by finding us on Facebook and following us on Twitter.

Economists and mortgage lenders are still keeping a watchful eye on Scottsdale interest rates. Federal Reserve chair Janet Yellen recently told the House financial services committee that no immediate decision has been made to raise interest rates. However, she said a December rate hike was still a “live possibility.”

Will the Fed Raise Scottsdale Interest Rates in December?

Will Scottsdale Interest Rates Rise in December?

Anticipation and speculation over if and when the Fed will raise interest rates has been a hot topic. Housing experts have largely agreed that even a slight bump in Scottsdale interest rates would not have much impact on home mortgage rates. Still, the Fed is considering the possibility of a rate hike before the end of the year.

Yellen’s meeting before the House committee occurred one week after the Fed decided not to raise rates during October.

Yellen cited the U.S. economy as "performing well," saying domestic spending was increasing at a good rate. However, she cautioned that net exports and trade performance were slowing. She also referenced poor job gains in recent months. There were 64,000 fewer jobs added in September than had been projected. The U.S. economy added 271,000 jobs in October, and strong hiring drove unemployment figures down to 5%.

These and other factors may cause the Fed to raise Scottsdale interest rates during December.

Despite inflation currently below 2%, the widely accepted threshold established by the Federal Reserve, Yellen said that level is due to "declines in energy prices and the prices of non-energy imports." The Fed expects crude oil prices to rise slightly, then stabilize, moving the inflation rate back up to the 2% mark. Yellen says if that happens, "it could be appropriate to adjust rates in our next meeting."

The Fed chair reiterated there had been no firm decision made to raise interest rates in December. The decision will be based largely on the review of new data collected between now and then. Among the chief components of that data is one more jobs report for November. Whether Scottsdale interest rates will be affected will depend on how the Fed interprets the findings.

It’s important to note there is little correlation between a modest interest rate hike by the Fed and actual Scottsdale interest rates for mortgage loans. Historically, mortgage lending experts say a slight increase hasn’t had a big impact on home loan rates. A quarter-point rate increase on a $250,000 mortgage only increases the monthly payment by roughly $35. Lenders say it usually takes an increase of a full percentage point to have a noticeable effect on consumers.

Find more news that may affect Scottsdale interest rates in our Scottsdale Real Estate News section to your right under Scottsdale Real Estate Categories. We also post news and tips each day on Twitter and Facebook. Follow us there for up to the minute news on Scottsdale interest rates and mortgage news.

Scottsdale mortgage rates could still be on the uptick despite conflicting economic indicators. Scottsdale Federal Reserve President Dennis Lockhart, a highly-respected voting member on the Fed’s monetary policy committee, said there is "more downside risk" to the U.S. economy as a result of an international slowdown and stagnation in addition to the nation’s most recent disappointing jobs report.

Lockhart said the Fed will continue to monitor consumer strength and confidence signals in the next few weeks and coming months to decide whether to proceed with the first rate increase in almost a decade. He has publicly stated a rate hike is likely to occur before the end of this year.

Scottsdale Mortgage Rates: What an Increase May Mean

What an increase in Scottsdale mortgage rates may mean for housing

It’s important to note there is little correlation between a small interest rate hike orchestrated by the Federal Reserve and actual Scottsdale mortgage rates. Mortgage experts say historically a slight increase in the interest rates by the Fed hasn’t had a profound impact on Scottsdale mortgage rates. A quarter-point rate increase on a $250,000 mortgage only increases the monthly payment by roughly $35. Such a payment increase probably won’t prevent buyers from buying, but it could mean they may buy a slightly less expensive home. Experts say it usually takes an increase of a full percentage point to have a noticeable effect on consumers.

Some industry insiders say the potential threat for Scottsdale mortgage rates to increase could be the resulting effect on credit standards for prospective buyers trying to qualify for a mortgage. First time buyers may see loan qualifications tighten slightly as a safeguard against a repeat of the housing crisis of less than a decade ago are now in place.

A greater concern is how a rise in Scottsdale mortgage rates may affect consumer confidence. If consumers feel threatened or unassured that further increases are imminent they may elect to stay on the sidelines temporarily to see what happens.

Still, other experts say a rate hike could very well be the catalyst to motivate potential purchasers. If they’ve been waiting to purchase and now realize there’s no better time than the present to buy it could spur many to act rather than to continue to wait any longer.

Get more news as it affects Scottsdale mortgage rates in our Scottsdale Real Estate News section to your right under Scottsdale Real Estate Categories. We also post news and tips each and every day on Twitter and Facebook, and would encourage you to follow us there for up to the minute news that may affect Scottsdale mortgage rates.

Scottsdale Real Estate News - June 2015

In our Scottsdale Real Estate News for June 2015:

Buyers Still Positive On Scottsdale Housing

Buyer's views toward Scottsdale housing have not varied much over the past year, and they are still positive on homeownership as a good financial investment.

According the Federal Reserve Bank of New York's 2015 housing survey, U.S. households, on average, expect home-price growth to continue at a 4.4% pace for the next year, comparable to the average year-ahead expectation reported in last year's survey.

Scottsdale home price change expectations

Last year's survey was the first in the series, with this year's survey getting administered to 1,205 U.S. heads of household in February 2015.

Survey respondents were asked for the current value of a typical home in their zip code, and what they expected the value of that home to be in one year and in five years.

With regard to longer-term expectations, the average expected annualized change in home prices over the next five years was 2.9%. These figures were slightly lower than the corresponding figures in the 2014 survey, where the mean expected annualized change in home prices over the longer horizon was 3.1%. Overall, respondents expected home price growth to continue, but at a slower pace at a horizon beyond one year.

Respondents were asked about Scottsdale housing being a good or bad investment

The survey found that more than 60% of both renters and owners think that buying property in their zip code is a (very or somewhat) good investment, while only about 10% think it is a bad investment.

When it comes to renters answering this question, there was little difference in how they answered compared to 2014.

Here in Scottsdale, owners seem to have become more bullish since last year's survey. The proportion of owners who think that Scottsdale housing is a good investment increased from 58.5% in the 2014 survey to 63.2%, while the proportion thinking that Scottsdale housing is a bad investment declined from 11.9% to 9.8%.

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5 Things About the Current Scottsdale Home Buying Season

Many analysts are saying the Scottsdale housing market has normalized amid the pickup in activity since the recession doldrums. But all is not well for people trying to buy–especially if they're first-time buyers or on the lower end of the price spectrum. Here's what you need to know to compete as 2015's spring Scottsdale home buying season swings into the home stretch.

Inventory is Still Short

There are a lot of potential buyers in the market, but supply of available homes for sale is just not enough to satisfy demand, which is causing prices to be on the high side. As of the end of April, the number of available homes for sale—both newly constructed and previously owned—was well below the six-month supply considered a balanced market: 5.3 months for pre-owned homes and 4.8 months for new ones, according to NAR.

Prices Are on the Rise

Inventory constraints coupled with demand for real estate are pushing prices up. In many areas around the Scottsdale area, homes are selling at or above their list price. Don't expect the price gains to go away. Freddie Mac predicts an average home price gain of 4.5% in 2015 (on a national basis), while the National Association of Realtors is now forecasting that homes will rise by 6.7% this year.

Competition is Easing from Investors

For buyers the good news is, in 2015 there's less competition shaping up from investors in general. In the depths of the housing crisis, institutional investors were the big winners, snapping up single-family homes by the thousands. But they're less of a force today. In the first quarter of 2015, a total of 14,621 single-family homes were sold to institutional investors nationwide (defined as entities that purchase at least 10 properties per year), according to RealtyTrac. That's about 3.4% of all sales, down from 6.2% a year ago, and the lowest share for institutional investors in four years. All-cash deals are also down: of non-owner-occupied buyers, 44.7% were all-cash, compared to 61% a year ago and also the lowest level in four years.

Lower Priced Homes are Moving Fast

Markets are moving slightly faster than they were last year, so it's going to be a little more difficult overall for homebuyers to find a home they want in a reasonable time frame. Homes priced at the lower end of the market are moving quickest: only 50% of homes priced in the lower one-third were still on the market after two months, compared with 65% of higher-priced homes.

Financing Eases, But Mortgage Rates Are Rising

In the worst days of the housing crisis, it was tough to get credit. These days credit availability is at its highest level since the housing downturn, but watch out: interest rates have stayed at historic lows for months now, and Freddie Mac is predicting increased volatility. This past week, rates rose to the highest level in 2015. (See our next article below).

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Where Scottsdale Mortgage Rates Are Moving

With summer now in full swing (even though the calendar hasn't officially welcomed it yet), more potential home buyers are looking around. There is good news as Scottsdale mortgage rates remain at near historic lows, although they are rising, according to Freddie Mac.

Although existing home sales slipped 3.3% to a seasonally-adjusted pace of 5.04 million units, sales are up 6.1% on a year-over-year basis. The S&P/Case-Shiller 20-city home price index also posted a solid gain of 5% over the 12-months ending in March 2015.

The average 30-year fixed mortgage sits at 3.87 percent this week, an increase from 3.84 percent the previous week. The recent boost has brought Scottsdale mortgage rates to their highest levels of 2015.

15-year fixed rates this past week averaged 3.11 percent with an average 0.5 point, up from last week when it averaged 3.05 percent. A year ago at this time, the 15-year fixed rate averaged 3.21 percent.  

5-year Treasury-indexed hybrid adjustable-rate mortgages (ARM) averaged 2.90 percent this week with an average 0.5 point, up from last week when it averaged 2.88 percent. A year ago, the 5-year ARM averaged 2.96 percent.

1-year Treasury-indexed ARM's averaged 2.50 percent this week with an average 0.3 point, down from last week when it averaged 2.51 percent. At this time last year, the 1-year ARM averaged 2.41 percent.

However, a year ago, 30-year rates averaged 4.21 percent. The rise in Scottsdale mortgage rates was due to positive housing data as U.S. home sales climbed 7 percent in April. Overall lower mortgage rates are playing a role in bringing out local home buyers. The historic low for 30-year rates was 3.31 percent in November 2012.