Sunday, July 24, 2016

Mortgage Rates: Most Millennials Have Never Seen A 5 Percent Loan, But They Fret About Them Anyway

Mortgage rates rose for the second week, averaging 3.45 percent for a 30-year, fixed-rate loan, up from 3.42 percent the week before. A year ago, rates averaged 4.04 percent, according to Freddie Mac’s weekly survey.

Despite the uptick, rates have held below 4 percent since December, tying a 29-week run of cheap borrowing we had from November 2014 to June 2015.
During that sprint, the cost of a 30-year loan averaged 3.77 percent. This time, it’s held to 3.64 percent.
mortgage rates
Source: Freddie Mac
Home loans are cheap by any standard. That’s good news particularly for young and first-time buyers, who tend to be more sensitive to cost. Even though they’ve never lived in a high-rate environment, millennial homebuyers still fret about mortgages . Peak millennials — the biggest cohort, born in 1990 — turned 25 last year. They’ve barely witnessed 4 percent rates.
In a Redfin survey, 47 percent of all buyers said they’d look for a less expensive house if rates rose by a point or more. Among respondents 34 and younger, the share was more than 50 percent.  Five percent of millennials said they’d give up looking for a house altogether if rates jumped.
peak millennial
Source: Freddie Mac
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Rates are lower now than they were in May, when the survey was taken. That’s one reason June was one of the most competitive months on record for home sales, according to Redfin data.
Mortgage rates will tick up and down week to week, but they’ll stay low for the foreseeable future.
“We don’t expect any significant movement in mortgage rates in the near term,” Freddie Mac chief economist Sean Becketti said. “This summer remains an auspicious time to buy a home or to refinance an existing mortgage.”

Bobby Darvish of Platinum Lending Solutions

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