Palm Beach, FL, March 26, 2019 --(PR.com
)-- Greg Englesbe, an investment banker and philanthropist with 23 years in the residential mortgage business, has confidence in the housing market and is predicting a turnaround in the refinance market. Pointing to recent data from Black Knight, there are now 3.27 million homeowners who could reduce their mortgage rate by at least 0.75% by refinancing their mortgage. “This is a 16% year-over-year increase and the greatest number of potential candidates since January 2018,” notes Englesbe. “The number of homeowners who could benefit from a refinance has now jumped 75% since November 2018.”
Englesbe also pointed to the average rate on the popular 30-year fixed mortgages which has fallen 21 basis points in the past week, from 4.94 percent to 4.73 percent on Thursday, according to Mortgage News Daily. “This rate is for borrowers with good credit and strong down payments. The drop comes after the 30-year fixed hit a recent eight-year high of 5.05 percent at the start of November. Looking at the lenders, the important measurement is the change from recent highs. In that regard, most lenders are roughly 3/8ths of a percentage point lower in rate than they were a month ago, which comes out to a savings of roughly $70 per month on a $300,000 loan.”
“Strong demand for housing last year kept home prices surging. More homeowners are now sitting on more cash in the form of home equity,” he continued. Collectively, homeowners with mortgages saw their equity increase by just over 8 percent last year, according to CoreLogic. That is from a combination of home value gains and borrowers paying down their mortgages. It adds up to roughly $678 billion in additional wealth over the last year — or about $9,700 per homeowner.
“This rising equity fuels the remodeling market, as people tap that extra cash to do home remodels or upgrades. Home remodeling was very strong last year, not just because of rising equity, but because homebuilders are putting up fewer homes, meaning more people are staying in older homes longer and repairing or upgrading,” says Englesbe.
“Looking at the housing market overall, a stronger pace of growth in single-family starts suggests builders are more confident in American families’ ability to finance home purchases,” he added. Builders broke ground on more homes and applied for more permits to start construction in the future, a solid vote of confidence in economic growth and a surge of much-needed inventory for the supply-starved housing market. Starts were 19% higher than in December and 7.8% lower than year-ago levels. Permits were 1.4% higher than in December and 1.5% lower than last year. Builders are making a bigger bet on single-family houses, rather than apartment buildings. Single-family starts ran at a 926,000 seasonally adjusted annual pace, one of the strongest monthly tallies of the recovery. The January starts figure beat the MarketWatch consensus forecast of a 1.212 million annual rate.
Englesbe stated the average loan size for purchase applications increased to a record high, led by a rise in the average size of conventional loans. “This suggests that move-up and higher-end buyers have so far become a greater share of the spring market,” he says.
Looking at other housing indictors, Englesbe notes entry-level buyers have been plagued by a short supply of affordable homes for sale. The increase in listings has been mainly on the move-up and high end. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) increased to 4.67 percent from 4.65 percent, with points increasing to 0.44 from 0.42 (including the origination fee) for loans with a 20 percent down payment.
Englesbe points out, “In late 2018, mortgage rates rose over a full percentage point from the prior year, which was one of the main reasons that weakness in home sales continued into early 2019. However, the impact of recent lower rates and a strong labor market has led to a rise in purchase mortgage demand as spring home buying season begins.”