Welcome back to iLeads Mortgage Market Minute, where we bring you the latest, most relevant news regarding the mortgage market. We hope you enjoyed last week’s edition where we talked about What Happens When Borrowers Have More Control of the Lending Process?. This week we’re bringing you:
FHFA announces 2021 plans to serve underserved areas*
Plans include new product for manufactured housing
The Federal Housing Finance Agency published the 2021 plans for Fannie Mae and Freddie Mac to serve the most vulnerable communities through their Duty to Serve plans.
While these plans normally encompass three years – and would need to lay out the plan for years 2021 to 2023 – due to disruptions caused by the COVID-19 pandemic, the FHFA announced the government-sponsored enterprises would be releasing just one year – an extension of their 2018 to 2020 plans.
Back in 2016, the FHFA issued a final rule that implemented the DTS provisions as mandated by the Housing and Economic Recovery Act of 2008. The statute requires the enterprises to serve three specified underserved markets – manufactured housing, affordable housing preservation and rural housing – by increasing the liquidity of mortgage financing for very low-, low- and moderate-income families.
These are the areas the Duty to Serve plans target:
Manufactured housing: Exploring financing options for one of the largest affordable housing opportunities
Affordable housing preservation: Helping keep established affordable properties available as low-cost housing alternatives
Rural housing: Supporting the financing of housing for targeted high-needs rural regions and populations
In order to put together the priorities for their plans, the GSEs engaged in activities such as requests for comment, public roundtables, conferences, listening sessions and direct research.
The Average Family Can’t Afford To Own a Home in Most U.S. Counties, Study Finds*
Want to buy a home? These days you’ll likely need to make more than an average salary to afford the monthly payments.
A new report from property data firm Attom Data Solutions analyzed how affordable it is to be a homeowner across the country. Owning a home was affordable in 41% of counties nationwide as of the fourth quarter of 2020. The largest metropolitan areas where owning a home is still affordable for the average household include Chicago, Houston, Philadelphia, Cleveland and Tampa, Fla.
To produce the report, researchers looked at the median home prices and average wage data across 499 counties nationwide. They calculated the cost of major homeownership expenses—mortgage payments, taxes and insurance—for median-priced homes, assuming that there was a $100,000 loan in place.
Could 2% define mortgage rates for the next decade?*
Mortgage rates have fallen from 12% in the 1980s
The end of 2020 won’t necessarily mean saying goodbye to the favorable 2% mortgage rates that hit historically low levels 16 times over the past 12 months.
In fact, most industry observers believe rates will remain at the same low levels in 2021 as the Federal Reserve uses low rates as a weapon to combat the economic effects of the COVID-19 pandemic.
This means 2021 will still be a good time to purchase or refinance a home, according to Len Kiefer, Freddie Mac‘s deputy chief economist.
“There’s certainly a risk that rates could head higher, but our baseline forecast has them remaining near record lows,” Kiefer said. “In that scenario, the pressure on housing markets will continue and it’s likely that we will continue to see strong house price growth, though perhaps not as red-hot as what we’ve had in recent months.”
Even with interest rates falling more than a full percentage point in 2020, Kiefer said he believes the housing market would have still enjoyed a strong second half of the year absent the record-low rates. But the statistics – record home sales and price growth – would not have been so “eye-poppingly strong,” he said.
Will we have a buyer’s housing market in 2021?*
The days of spamming customers are coming to an end
If you’re looking to buy a home, you’ll stand the best chance in a buyer’s housing market, where listings are flush, demand is low and buyers have the upper hand — not to mention most of the negotiating power.
Seller’s markets, on the other hand, are on the opposite side of the spectrum. They’re marked by high levels of competition and rising home prices, and in most cases, you’ll have a harder (and more expensive) time finding a home.
For most of America, we saw the latter conditions in 2020, with buyers facing unprecedented competition and increasingly out-of-reach home prices for much of the year.
Will 2021 be more of the same? Let’s take a look.
A buyer’s housing market in 2021?
It’s not likely we’ll see a buyer’s housing market in 2021, at least according to experts. Most major players are projecting home prices to rise, and while strong construction could put more inventory on the market, it likely won’t be enough to tip the scales in buyers’ favors.
With that said, it does seem like buyers will see some relief at some point. For example, home prices are still expected to rise in 2021, but at a smaller pace than we saw in 2020. Freddie Mac projects prices to rise only 2.6% — much better than 2020’s 5.5% clip.
Finding highly affordable leads to keep sales coming in
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