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Real Estate News 8/31/20

 Consumers will have to pay more to refinance their home loans after Fannie Mae and Freddie Mac (the Agencies) announced that they are raising fees for lenders on the loans. The change is designed to shield the two entities from the additional risk brought on by the coronavirus pandemic. In a letter to lenders, Fannie Mae specifically cited “market and economic uncertainty resulting in higher risk and costs.” The price adjustment adds 0.5% of the loan amount to the consumer’s cost. That amounts to $1,400 on the average loan. After a delay of the effective date, the fee will be in effect for loans delivered to the Agencies by December 1. Because of processing times, this means that the fee will basically apply to most refinances that have not already made application with their lender, In announcing the delay, an exemption for smaller loan amounts (below $125,000) was also added. The move was met with strong criticism from the industry, seen as a slap in the face of the one sector of the economy that has been thriving during the pandemic. “This announcement is bad for our nation’s homeowners and the nascent economic recovery,” wrote Bob Broeksmit, CEO of the Mortgage Bankers Association, in a statement. “Requiring Fannie Mae and Freddie Mac to charge a 0.5% fee on refinances they purchase will raise interest rates on families trying to make ends meet in these challenging times.” Source: CNBC

Buyers are finding greater selection in their house hunt as new listings increase above pre-pandemic levels, according to realtor.com®’s latest Weekly Recovery Report, reflecting the week ending Aug. 8. The increase in new listings now brings all four major components of housing activity tracked on the index—also including housing demand, asking prices, and pace of sales—above the pre-pandemic baseline of January 2020. “Seller confidence has been improving gradually after reaching its bottom in mid-April, and now it appears to have reached an important recovery milestone,” says Javier Vivas, director of economic research for realtor.com®. “After five long months, sellers are back in the housing market; while encouraging, the improvement to new listings is only the first step in the long road to solving low inventory issues keeping many buyers at bay.” The realtor.com® Housing Market Recovery Index reached a reading of 105.6 nationwide for the week ending Aug. 8, 5.6 points above the pre-COVID-19 baseline. The index uses 100 as its baseline period to compare the housing market’s recovery to January 2020, before the coronavirus outbreak hit the U.S. While new listings growth has recovered to pre-COVID-19 levels, it still remains down 6% year over year, realtor.com® reports. “The small number of homes for sale has been a key limited factor for buyers in the market, so continued recovery in new listings bodes well for home sales in the coming months,” realtor.com® reports. Source: NAR

Black Knight reported that last month’s record-breaking low interest rates contributed to creating the most affordable average-priced homes since 2016. Buying power for homebuyers increased 10% from last year, Black Knight noted, adding that shoppers can now afford roughly $32,000 more home than one year earlier while keeping their monthly payment the same. “As of mid-July, it required 19.8% of the median monthly income to make the payment on the average-priced home purchase, assuming a 20% down payment and a 30-year loan,” said Black Knight Data & Analytics President Ben Graboske. “That was more than 5% below the average of 25% from 1995-2003. This means it currently requires a $1,071 monthly payment to purchase the average-priced home, which is down 6% from the same time last year, despite the average home increasing in value by more than $12,000 during that same time period.” Graboske added that while “record levels of job losses are certainly still weighing on the housing market and broader economy, for those shopping for a home now, buying power has clearly trended up.” Homebuyers are not the only ones profiting from this environment. Black Knight determined that the historically low 30-year-rates incentivized a record 18.1 million homeowners to refinance last month. Source: DSNews 

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