This year has seen challenges for home buyers, with higher rates and lower inventory. However as the year closes, current trends suggest a shift that could be beneficial for homebuyers. This change is primarily due to falling mortgage rates and an increase in the number of properties for sale.

Decrease in Mortgage Rates:
Freddie Mac reports that the rate for a 30-year fixed mortgage has fallen to an average of 7.03%. This is a considerable drop from its 23-year peak of just over 8% recorded in early October. Such a reduction in mortgage rates can greatly influence the affordability and appeal of buying a home.

Surge in Mortgage Applications:
In response to lower mortgage rates, Redfin has observed a 15% increase in mortgage applications since early November, which previously reached a 28-year low. This rise in applications reflects a growing interest in purchasing homes, spurred by more favorable lending conditions.

More Homes on the Market:
Additionally, there’s been a 7% increase in new home listings compared to last year, when interest rates were on the rise. This increase in available properties provides more choices for buyers and may help reduce the intense competition for homes.

Gradual Recovery of the Housing Market:
Despite these positive signs, the recovery of the housing market is progressing slowly. Freddie Mac warns that the increase in applications is beginning to slow down, indicating that while the market is improving, a full recovery is not immediate.

Impact of Federal Reserve’s Rate Increases:
The recent decline in mortgage rates is partly linked to expectations that the Federal Reserve may pause its interest rate hikes. From March 2022 to July 2023, the Fed significantly raised its benchmark rate, affecting the cost of mortgages. This has been a major factor in the sluggish movement of the housing market.

Homeowners’ Hesitance to Sell:
Elevated rates also meant that homeowners with mortgages at rates between 3% and 4% were less likely to sell, leading to fewer homes on the market. This shortage played a role in driving up home prices, adding another hurdle for new buyers.

The current changes in the housing market, characterized by lower mortgage rates and an increase in home listings, offer positive news for homebuyers. However, the market’s recovery is ongoing, and its future trajectory remains uncertain. Homebuyers should stay informed and alert to navigate these shifting market conditions.

The Federal Housing Administration (FHA) has recently made a significant announcement that will impact many homebuyers and homeowners across the United States. As we step into the calendar year 2024, the FHA has updated its loan limits for both Single Family Title II forward and Home Equity Conversion Mortgage (HECM) insurance programs. This change, driven by the persistent rise in home prices throughout 2023, brings new opportunities and considerations for borrowers.

Reflecting on the Housing Market Trends

Julia Gordon, the Assistant Secretary for Housing and Federal Housing Commissioner, highlighted the changes as a response to the continuous upsurge in home prices witnessed nationwide in 2023. With affordability becoming a growing concern, these increased loan limits aim to make FHA’s low-down-payment financing more accessible, ensuring that well-qualified borrowers can still enter the market.

Understanding the New Loan Limits

The FHA adheres to a formula prescribed in the National Housing Act for setting annual loan limits. This involves analyzing county or Metropolitan Statistical Area (MSA) home sale data to adjust loan limits across different cost categories. For 2024, the loan limits are as follows:

One-Unit Properties: The low-cost area “floor” is set at $498,257, with the high-cost area “ceiling” at $1,149,825. For Alaska, Hawaii, Guam, and the U.S. Virgin Islands, the ceiling is $1,724,725.
Two-Unit Properties: Limits range from $637,950 in low-cost areas to $1,472,250 in high-cost areas, and up to $2,208,375 in the special exception areas.
Three-Unit Properties: These start at $771,125 and go up to $1,779,525 and $2,669,275 in high-cost and special exception areas, respectively.
Four-Unit Properties: The limits are set at $958,350 for low-cost areas, $2,211,600 for high-cost areas, and $3,317,400 for the special exception areas.
These adjustments, particularly for the special exception areas, account for the higher costs of construction in regions like Alaska, Hawaii, Guam, and the U.S. Virgin Islands. The changes will be effective for FHA case numbers assigned on or after January 1, 2024.

HECM Loan Limits on the Rise

The HECM maximum claim amount is also seeing an increase. From $1,089,300 in 2023, it will rise to $1,149,825 in 2024, applicable to all areas including the special exception regions.

The Calculation Process

The process of setting these limits is detailed and follows specific guidelines. The FHA sets Single Family forward mortgage loan limits at 115 percent of area median house prices, subject to established floor and ceiling limits. These are based on the national conforming loan limit set by the Federal Housing Finance Agency (FHFA) for conventional mortgages.

For 2024, the national conforming loan limit for a one-unit property is $766,550. The FHA’s minimum national loan limit floor for a one-unit property is 65 percent of this, equating to $498,257. High-cost areas are those where the loan limit exceeds this floor, and the maximum loan limit ceiling for such areas is $1,149,825.

Accessing Detailed Information

For those seeking more information or a complete list of FHA loan limits, including areas at the FHA ceiling and between the floor and ceiling, the FHA’s Loan Limits Page offers comprehensive details.

As we navigate through these changes, it’s essential for borrowers, real estate professionals, and lenders to stay informed and understand how these new limits might influence their decisions and opportunities in the housing market. The FHA’s adjustments for 2024 are a clear response to the dynamic housing market and aim to support sustainable homeownership in a diverse range of economic environments. If you want to see what you can qualify for in the coming year please fill our our quick mortgage analysis on our website!

Starting the journey to buy your first home is an exciting venture, filled with hopes and dreams. For many first-time buyers, the financial aspect of purchasing a home, particularly the initial down payment and closing costs, can be a significant hurdle. This is where first-time home buyer grants come into the picture, providing essential support. These grants, often funded by government agencies or non-profit organizations, are designed to make the dream of homeownership more achievable for those new to the property market.

A Deep Dive into National Grant Programs

Several national programs offer substantial assistance to first-time home buyers. The U.S. Department of Housing and Urban Development (HUD) provides valuable resources, including grants for down payment assistance and closing costs. The HUD’s Good Neighbor Next Door program is particularly notable, offering a 50% discount on the list price of homes in revitalization areas to public servants like teachers, firefighters, and law enforcement officers. Another significant program is the HomePath Ready Buyer program from Fannie Mae, which provides up to 3% in closing cost assistance to first-time home buyers who complete an educational course. Additionally, the USDA offers programs for those looking to buy in rural areas, providing loans with no down payment requirements.

Eligibility and Application Insights

Eligibility for these grants usually hinges on factors like income level, credit score, and first-time homebuyer status, often defined as someone who hasn’t owned a home in the previous three years. Some programs focus on particular groups, such as veterans or low-to-moderate income families. It’s essential for applicants to thoroughly understand the requirements of each grant they consider. Education is also a key component, with many programs requiring participants to complete homebuyer education courses to qualify, thereby ensuring they are well-informed about the responsibilities of homeownership.

Your Gateway to a New Home

If you are dreaming of owning your first home, these grants can significantly reduce the financial challenges. They provide more than just monetary assistance; they also bring confidence to first-time buyers, supporting them through their journey into homeownership. Prospective buyers should consult with local housing authorities, real estate professionals, or financial advisors to identify the best grant opportunities. The path to homeownership, facilitated by these grants, becomes less intimidating and more achievable, turning aspirations of owning a home into a tangible reality.

If you are looking to prequalify or learn how much you can qualify for and what specific programs and grants you can apply for schedule a call on our website and we can help you review your options.

In the ever-changing landscape of real estate finance, understanding the latest mortgage rate trends is crucial for both prospective and current homeowners.
The rates for 30-year fixed, 15-year fixed, 5/1 Adjustable Rate Mortgages (ARMs), and jumbo loans have all moved lower, marking a change from previous weeks. After climbing above 8 percent, mortgage rates have now dipped back into the 7 percent range. This shift is partly attributed to cooling inflation, hinting at potential changes in the Federal Reserve’s approach.
The Federal Reserve’s Stance
The Federal Reserve’s decision to raise its key interest rate in July significantly impacted borrowing costs across various financial products, including mortgages. Despite the recent cooling of inflation, the central bank maintained its stance on another rate hike this month, signaling that higher rates may be the new normal for some time.
The Impact on Homebuying
This fluctuation in mortgage rates coincides with rising home prices, a combination that has significantly affected homebuying activity. Data from Black Knight indicates that over half of the home purchase mortgages originated in July had a monthly payment exceeding $2,000, with 23 percent surpassing $3,000. This affordability squeeze is particularly challenging for first-time homebuyers, many of whom are finding themselves priced out of the market.
As we navigate these turbulent times in the mortgage market, staying informed and seeking expert advice is more important than ever. Please schedule an appointment on our website and we can give you a personalized quote.