86% of Mortgages Have a Rate Below 6%

According to a report by the FHFA National Mortgage Database Aggregate Statistics, 85.6% of mortgaged homes have a rate below 6%, down from the peak of 92.8% in the 2nd quarter or 2022.

Key Points:

• Strong Borrowers: The average credit score among borrowers with an active loan is an impressive 743.

• Low Foreclosure Risk: Only 0.3% of borrowers have negative equity.

• Improved Loan-to-Value Ratios: National LTV ratio improved to 48.3% from 70% a decade ago.

• Outstanding Mortgages: At the end of Q1 2024, there were 50.8 million outstanding mortgages with unpaid balances totaling $11.7 trillion.

Ralph’s Take

Despite concerns that homeowners wouldn't list their properties due to low interest rates; we're seeing a positive shift. Nationally, new listings have spiked nearly 10% year-over-year. The big takeaway? Current mortgage holders are thriving. They boast high credit scores, low LTVs, minimal ARMs, and substantial equity. Current homeowners are in excellent financial shape.

Fortune: Homeowners Sitting on a Record Amount of Equity.

Home prices are significantly higher than before the pandemic, driven by buyers using record amounts of equity. Realtor.com’s chief economist, Danielle Hale, highlights that buyers not affected by current mortgage rates are opting for more expensive homes. This trend is also evident among sellers, particularly baby boomers unaffected by high mortgage rates. Here’s what else the Fortune article reports:

• Baby boomers: 17% are free of the lock-in effect

• Mortgage rates: Averaging 7.14% daily, 6.86% weekly.

• Market shift: Increase in lower-priced home inventory

• Future outlook: Potential for mortgage rate drops may stabilize or further shift prices depending on market dynamics.

Ralph’s Take

There is hope for first-time buyers as inventory of lower-priced homes is increasing nationally. Home prices are rising at their slowest pace in almost a year, showing signs of plateauing. A potential drop in mortgage rates could stimulate both buyer and seller activity, with significant market changes depending on which group returns more intensely.

Redfin: U.S. Home Prices Hit New All-Time High

The median sale price nationwide hit $397,954 for the four weeks ending June 30th, a new all-time high according to Redfin, with a 4.9% year-over-year increase. Here are additional key findings from Redfin:

• Pending sales: Down 4.6% YOY, the largest decline in 4 months

• New listings: Up 9.9% YOY, the highest increase in 2 months

• Active listings: Up 17.5% YOY

• Housing supply: 3.3 months (balanced market is 4-5 months)

• Median days on the market: 32 days, up 5 days YOY

• Homes sold above list price: 32.3%, down 3.7% YOY

• Homes lowering asking price: 6.9%, the highest on record

Ralph’s Take

There’s a mix of good and bad news her. The record high sale price and elevated mortgage rates are challenging to buyers. However, the 10% increase in new listings and the record percentage of sellers lowering their prices present opportunities. Buyers can leverage these conditions to their advantage.

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Visual of the Week

Wondering if the upcoming Presidential election will shake up the housing market? Here's what you need to know. History shows home sales may slow down a bit in November, but they usually bounce back fast, prices keep climbing, and mortgage rates tend to dip a bit. Overall, the impact is minor and short-lived. Have questions? Let's chat.

Mortgage Watch

Today’s average 30-year fixed mortgage rate dips to 6.82%

> The rate you may be eligible for can vary greatly from the daily average published via Mortgage News Daily. I use this figure as a proxy for how the mortgage market is shifting.

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