Long Island NY Mortgage Rates Expected Higher Next Year

According to the latest forecast from Freddie Mac's economists, Long Island NY mortgage rates are expected to hit 5 percent for a 30-year fixed rate loan in 2015.

Expect to see interest rates climb throughout 2015, with yields on the 10-year Treasury averaging about 2.9 percentage points, up from about 2.6 percentage points in 2014, and 30-year fixed Long Island NY mortgage rates mortgage gradually climbing, averaging 4.6 percent and rising to 5.0 percent by the end of next year.

Economists expect higher Long Island NY mortgage rates in 2015

Rising Long Island NY Mortgage Rates May Dampen Affordability

Meanwhile price increases are expected to slow from the 9.3 percent pace we saw in 2013, the 4.5 percent we saw this year, and 3.0 percent in 2015. Continued house price appreciation and rising Long Island NY mortgage rates will dampen homebuyer affordability.

Total housing starts in 2015 will increase by 20 percent and total home sales will increase by about 5 percent over that time period to the best sales pace in eight years.

Single-family originations will fall an additional 8 percent from 2014 to 2015 to $1.1 trillion annualized as increases in purchase-money lending are insufficient to offset a drop in refinance. Refinance is expected to make up just 23 percent of originations in 2015.

The good news for 2015 is that the U.S. economy appears well poised to sustain about a 3 percent growth rate in 2015 — only the second year in the past decade with growth at that pace or better. There are several reasons for the better economic performance. Governmental fiscal drag has turned into fiscal stimulus, lower energy costs support consumer spending and business investment, further easing of credit conditions for business and real estate lending support commerce and development, and more upbeat consumer and business confidence, all of which portend faster economic growth in 2015.

With that, the economy will produce more and better-paying jobs, providing the financial wherewithal to support household formations and housing activity. All of this according to Frank Nothaft, Freddie Mac vice president and chief economist.

With the forecast of higher Long Island NY mortgage rates on the horizon, there may never be a more affordable time to buy a home than right now. Talk to us about rates, and where prices are for Long Island NY housing. We're here to help.

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FHFA Mortgage Mistakes Coming Again?

In October, Fred Watt, the director of the FHFA, announced that he plans to allow 3% down payment mortgages for the many financial institutions that Fannie and Freddie guarantee. He states that his intention is to include more minorities and people who had their savings wiped out by the Great Recession re-enter the housing market. This comes at a time when U.S. homeownership rate has fallen to 64.4% from 69.2% in 2004 as blacks, Hispanics, and first-time buyers struggle to qualify for loans. Is this just more huge mortgage mistakes about to happen all over again? Many think so.

Lowering the required down payment on mortgages could be making the same mortgage mistakes all over again

Repeating the Same Mortgage Mistakes Again

Some financial industry executives and lawmakers, Republicans in particular, are calling Watt's move an irresponsible opening of credit floodgates that could contribute to the same mortgage mistakes made before, and another economic meltdown. The chairman of the House Financial Services Committee (Jeb Hensarling) stated that Watt's plan returns to the policies that originally caused the housing crash. He went on to say "an invitation by government for industry to return to slipshod and dangerous practices that caused the mortgage meltdown in the first place and wrecked our economy."

The CEO of home builder Toll Brothers, Douglas Yearley, a New York Stock Exchange traded company, called Watt's plan "a really dumb" idea. Paul Wallison, a former Treasury official under Ronald Reagan and currently at the American Enterprise Institute wrote an article critical of Watt's plan that was widely distributed, including being published by the Wall Street Journal. Part of  Wallison's article stated, "Since the taxpayers are still standing behind Fannie and Freddie, it's clear who will have to pay the bill when these mortgage mistakes result in defaults in the future."

The director of Housing Finance Policy for the Urban Institute in Washington, Laurie Goodman, believes lowering the down payment requirement and keeping the other rules in place is a good first step in expanding the number of people qualifying for home loans.

One of the important rules that applies to low down payments is the requirement that borrowers obtain private mortgage insurance for any mortgage with less than a 20% down payment.

The goal is to ease lending to people with high credit scores but small savings accounts since credit scores are more important for staying current with a mortgage than the size of the down payment you made to get that mortgage.

What do you think? Is this heading in the direction of making the same mortgage mistakes again that thrust us into the recession in the first place? We'll keep you posted on the progress of this lowering of the down payment requirements.

To get more tips on Long Island NY mortgage information, check out our other articles by clicking on the Long Island NY Mortgage Info link to your right under Long Island NY Real Estate Categories.
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Long Island NY Home Equity Loans Double

Long Island NY home equity loans have nearly doubled this year, partly due to the continuous increase in the price of homes. The rise in home values has pulled more and more borrowers out from underwater.

Long Island NY home equity loans have nearly doubled in 2014 due in part to increased home values and prices

While the share of borrowers that cashed-out some Long Island NY home equity has increased considerably over the past year, the refinance volume has also fallen sharply, resulting in a relatively small amount of equity cashed-out. Nationally, the volume of cash out refi's is roughly $8 billion, which is less than one-tenth of what we saw at the peak in mid-2006.

Long Island NY Home Equity Loans Save on Interest

The good news, to put it into numbers, those that lowered their payment by refinancing into a cheaper mortgage rate will save more than $1.5 billion in interest payments over the next 12 months of their new loan.

On average, that's an interest rate reduction of about 1.3 percentage points — a savings of about 24% On a $200,000 loan, that translates into mortgage interest savings on average of about $2,700 during the next 12 months.

Freddie Mac released these figures recently about Long Island NY home equity:

  • Of borrowers who refinanced during the third quarter of 2014, 36% shortened their loan term, a 4% decline from the previous quarter. From 1990 through 2013, on average 28% of borrowers shortened their term.
  • About 72% of those who refinanced their first-lien home mortgage maintained approximately the same loan amount or lowered their principal balance by paying in additional money at the closing table, unchanged from the previous quarter. Twenty-eight percent cashed-out some of their Long Island NY home equity, the highest share in five years; the peak on cash-out share was 89% during the second and third quarters of 2006.

We have more articles concerning refinancing and Long Island NY home equity loans in our Long Island NY Mortgage Info section of articles under Long Island NY Real Estate Categories to your right.

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Fewer Long Island NY Underwater Properties

The RealtyTrac U.S. Home Equity and Underwater Report for the third quarter of 2014 released recently shows there were fewer Long Island NY underwater properties. 8.1 million U.S. residential properties were still seriously underwater—where the combined loan amount secured by the property is at least 25 percent higher than the property's estimated market value—representing 15 percent of all properties with a mortgage and an estimated $1.4 trillion in negative equity.

Long Island NY underwater properties continue to show improved numbers in the 3rd quarter 2014.

The third quarter negative equity numbers showing Long Island NY underwater properties were down to the lowest level since RealtyTrac began reporting negative equity in the first quarter of 2012.

In the previous quarter nationwide, 9.1 million residential properties representing 17 percent of all properties with a mortgage were seriously underwater, and in the third quarter of 2013, 10.7 million residential properties representing 23 percent of all properties with a mortgage were seriously underwater.

The recent peak in negative equity was in the second quarter of 2012, when 12.8 million U.S. residential properties representing 29 percent of all properties with a mortgage were seriously underwater.

The decrease in Long Island NY underwater properties is promising but the estimated $1.4 trillion in negative equity nationwide means that the flood waters are not receding as quickly across the country as they were before, even though Long Island NY underwater properties are down slightly, corresponding to slowing home price appreciation. Daren Blomquist, vice president at RealtyTrac said, "slower price appreciation means the 8 million homeowners seriously underwater could still have a long road back to positive equity."

Get more tips and articles regarding the Long Island NY housing crisis by checking other articles we have for you in the Long Island NY Real Estate News to your right under our Long Island NY Real Estate Categories.

Free Credit Score: Help or Hindrance?

Knowing your credit score is important. But with the sheer number of different credit score systems out there, are any of them really doing you any good, or are they just a big hindrance?

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To get more tips on Long Island NY mortgage information, including more articles about your credit score and the various ways to improve yours, check out our other articles by clicking on the Long Island NY Mortgage Info link to your right under Long Island NY Real Estate Categories.
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