How will unemployment report and economic recovery plans by the federal government affect interest rates?
Monroe Cottage is a Queen Anne-style house in Monrovia built in the 1880s by a city founder.
About 66% of homeowners who utilized the services of a Realtor, for example, managed to sell their home — while only 30% of those who attempted to sell their own properties were successful.
22% of those who attempted to list properties on their own eventually enlisted the help of a real estate agents. Of those homeowners, 55% were eventually able to sell.
Fixed mortgage rates rose for the third straight week after setting all-time lows, with the typical 30-year rate increasing from 3.59% to 3.62%, home finance giant Freddie Mac reported.
Freddie Mac’s weekly survey, released Thursday morning, pegged this week’s average for the 15-year fixed loan at 2.88%, up from 2.84% a week earlier. The start rates on variable-interest loans were mixed.
As the economy strengthens in fits and starts, demand decreases for the ultra-safe securities issued by the U.S. Treasury. That pushes up their yield, or effective interest rate, and many other rates, including those on mortgages, tend to follow.
The yield on the benchmark 10-year Treasury note closed at 1.8% Wednesday after bottoming out at 1.4% on July 24. The average 30-year fixed mortgage rate, as calculated by Freddie Mac, hit an all-time low of 3.49% that same week.
The Freddie Mac rate survey, which dates back to 1971, is a closely watched indicator of mortgage trends. It asks lenders what they are offering on loans of up to $417,000 to solid borrowers who have 20% or higher down payments or 20% equity in their homes if they are refinancing.
In the latest survey, these borrowers would have paid 0.6% of the loan amount in lender fees and discount points.
Rising rates could throttle the latest in a long series of refinancing booms as mortgage rates gradually descended from double-digit levels in the 1980s.
The mortgage arms of big banks and independent lenders have been collecting huge profits when they sell loans made at the low rates.
The home health care industry is expected to see a boom in coming years, adding 1.3 million jobs, according to the U.S. Labor Department. “If those jobs can’t be filled,” writes the Associated Press, “many older Americans are likely to face living with relatives or in nursing homes, which will only cost families and taxpayers more money.”
With the demand for senior care rising, it seems it is only a matter of time before cost for these services go up as well.
Who will take care of you as you age?
Citing past research on reverse mortgage products that has been conduced by the Boston College Center for Retirement reserach, the center finds that now, more than ever, reverse mortgages are poised to take an important place in the retirement landscape.
With the average American woefully unprepared for funding his or her retirement years, people are going to have to use home equity to their advantage, says Alicia Munnell, director of the Center for Retirement Research at Boston College. A reverse mortgage is one viable way to do it.
“This is not a flawless area,” says Munnell. “But I am a great fan of reverse mortgages. I have been for 15 years. No, they are not right for everybody.”
A recent Consumer Financial Protection Bureau report on the reverse mortgage business raised several findings about the products including concerns about reverse mortgage counseling as well as the trend toward younger borrowers.
With regard to borrowers getting younger, Munnell says, the CFPB made the issue out to be a larger concern than it actually is.
“It doesn’t bother me,” she says. “If borrowers are taking a reverse mortgage younger in order to postpone drawing upon Social Security or to pay off their existing mortgage, both seem like legitimate goals.”
While counseling funding has been a contested topic in recent months and years as funding for the counseling was momentarily suspended in 2011, the CFPB drew attention to the quality of counseling as well.
“They are complex instruments and counseling needs to be done. My sense is we need to get a better understanding of who should take out a reverse mortgage. People need this kind of cushion so that if they have an adverse event, they have some capital to draw on.”
Munnell says that for the middle of the income distribution of U.S. households, Americans must consider their home equity as part of their retirement plan, with the average having saved only about $100,000 for retirement.
“I see a future where people in their 60s are having dinner with friends and the conversation leads to: “Where are you getting your reverse mortgage?” It will be the norm. It is going to take a while, but we will have a cohort of people entering retirement who only have $100,000 in their 401(k) plans.”