Alert: Mortgage Rates For November 2017
Important Predictions To Note On Mortgage Rates For November 2017
Mortgage rates are poised to move in November. Important forecast predictions on mortgage rates for November 2017. NSH Mortgage has the wisdom and tools to help you on stay on top of your mortgage rates for November 2017.
Mortgage rates have been dropping since the first quarter of 2017. Analysts predicted 30 year fixed rates in the mid-fours, yet rates in the high threes have prevailed. November, exactly 12 months since Trump was voted in and rates skyrocketed, could be another defining month.
One year ago, home-buyers and refinancing homeowners regretted postponing a mortgage rate lock as rates rose 0.60% in just a few weeks. No one expects those increases this year, but a few government initiatives are threatening rates to some extent. So are you looking to buy or refinance, the mortgage rates for November 2017 could be the month to do it.
Freddie Mac: Mortgage Rates Still Solidly Below Four Percent
Mortgage agency Freddie Mac has been tracking rates for more than 45 years. In October, it reported some of the lowest rates in its survey’s history. Since 1971, mortgage rates have been below four percent for just 200 weekly readings out of more than 2400 weeks on record.
That means the rates available now are in the 90th percentile of good rates since Freddie Mac has been tracking them. A Market-watch poll has revealed, that analysts thought the rates would be near 4.5% through 2017. So far this year, the highest weekly average rate has been 4.3%, and we have not seen those levels since March.
What does that mean for the home buyer or refinancing household? A lot and, here is the difference in principal and interest payment on a $250,000 mortgage. In particular, it is between the expected and the actual levels since October 26, 2017.
- 4.50%: $1,267 per month.
- 3.94%: $1,185 per month.
That $82 per month difference makes home buying more affordable, or could make a refinance pencil out. Is it time to take action? It surely could be, before November events take their toll on rates.
Conventional Loan Rates
Conventional refinance rates are holding low, as are rates for home purchases. The Freddie Mac has indicated polls lenders only on conventional rates, not ones for FHA, USDA, or VA loan types. Yet these mortgage programs are worth looking into if you have a small down payment or damaged credit.
Conventional loans, however, are more suited for those with decent credit and at least three percent down. Whereas, it is preferably to be at five percent due to higher rates that come with lower down payments. In fact, 20% in equity is preferred whenever you are refinancing.
With adequate equity in the home, a conventional refinance can pay off any loan type. These loans can even cancel mortgage insurance.
FHA Mortgage Rates
FHA is currently the go to program for home buyers who do not qualify for conventional loans. The good news is that you could get a lower rate on a FHA loan than you can for conventional. According to the loan software company Ellie Mae, which processes more than 3 million loans per year. FHA loans averaged 4.23% in September, while conventional loans averaged 4.26%.
You might be wondering why Ellie Mae reports higher average rates than does Freddie Mac. It is because Ellie Mae considers loans at all credit and down payment levels. Whereas, Freddie Mac has the perfect scenario for the average rates.
So, even with damaged credit, you can get a great rate. Yes, these loans come with mortgage insurance, but overall cost per month is not that much more than for conventional loans. A little known program, called the FHA streamline refinance, lets you convert your current FHA loan into a new one at a lower rate, if rates have fallen since you received your loan.
A FHA streamline requires no W2s, pay-stubs, or tax returns. And you do not need an appraisal, so current home value does not matter.
Homeowners with a VA loan currently are eligible for the ever popular VA streamline refinance. No income, asset, or appraisal documentation is required. If you have experienced a loss of income or diminished savings, a VA streamline can get you into a lower rate and better financial situation. This is true even when you would not qualify for a standard refinance.
USDA Mortgage Rates
Like FHA and VA, current USDA loan holders can refinance via a streamlined process. With the USDA streamline refinance, you do not need a new appraisal. You do not even have to qualify using your current income. The mortgage lender will only make sure that you are still within USDA income limits.
Home buyers are also learning the benefits of the USDA loan program for home buying. No down payment is required, and rates are ultra low. Qualification is easier because the government wants to spur homeownership in rural areas. Home buyers might qualify even if they have been turned down for another loan type in the past.
Forecasted Predictions On Mortgage Rates For November 2017
While a monthly mortgage rate forecast is helpful, it is important to know that rates change daily. You might get 4.0% today, and 4.125% tomorrow. Many factors alter the direction of current mortgage rates.
There is no shortage of market moving news on mortgage rates for November 2017. The top seat at the Federal Reserve is up for grabs, and Trump is pushing through wide reaching tax reform. In addition, a Federal Reserve meeting adjourns November 1st. The group is not expected to raise rates, but its report released the same day could move markets. Where will rates end up by December?
Will Trump Replace Fed Chair Janet Yellen?
This is a question everyone is asking. Since, Yellen has been the rock steady leader of the Federal Reserve since 2014. She has soothed markets with a predictable, data dependent path, according to CNBC.
Her term is up in February and Trump has stated that Yellen might stay. But he is looking at other candidates, including former investment banker Jerome Powell and Stanford economist John Taylor.
The more rate unfriendly choice could be Taylor. Since, Taylor would likely be less sympathetic to short term misses in the data or weakness in financial conditions. Additionally, it would want to keep the hiking cycle on track.
Powell, though, would be more likely to pause Fed rate increases if economic data appears weak. What does this mean for rates? Trump could drop more hints about his choice in November. If a rate unfriendly candidate appears to be the front-runner, rates could rise in anticipation. Conversely, an interest rate hike slated to fill the seat could have no effect on rates at all, or cause them to drop.
Trump Budget & Tax Reform Could Usher In A New Era For Rates
Trump got a budget through the Senate as October ended. Next up is the passage by the House of Representatives. If this happens, it could be the catalyst to ignite larger reform: overhauling the tax code.
The president calls the new tax plan, the biggest cuts ever in the history of this country. It would cut corporate tax from 35% to 20% as well as doubling the standard deduction for some filers. What does tax reform have to do with mortgage rates? As it turns out, a lot.
Lower taxes could increase economic activity and spur the economy. Corporations would become more profitable, and the average family would have more to spend. All this increased economic activity would lead to inflation in two basic ways. First, the demand for goods and services would rise as people have more to spend. This could lead to higher prices.
Second, tax cuts mean there is less money coming into the government. So, Uncle Sam would issue more debt to pay for regular government operations. This causes rates to rise, because government securities and mortgage backed securities are the same type of asset.
In other words, more of the same kind of stuff in the market causes value of those assets to drop. As value drops, interest rates must rise to continue attracting buyers. The president is calling for a tax plan signed into law by Thanksgiving. That means mortgage rates could be in for a bumpy ride in November. Watch for headlines about tax proposals introduced to Congress this month.
The Fed Will Raise Rates In December
The Federal Reserve meeting adjourns November 1st. There is just a 1.5% chance that the group will hike rates, however, according to CME Group’s Fed-Watch tool. That does not mean a hike is not coming.
The same poll pegs chances of a federal funds rate increase near 97% when the Federal Open Market Committee (FOMC) adjourns on December 13th. Mortgage rates will not necessarily rise when that happens, though. The Fed does not control the mortgage rates yet, only the markets do that. Because this hike is so widely expected, it is already priced into today’s mortgage rate levels.
Interest rates are like stock prices. A company says it developed a groundbreaking product that will debut next year. The stock goes up now, not a year from now. Likewise, a company announces its sales will be much lower next year. The stock price drops today.
Mortgage rates rise and fall on the future, not on the present. If you want to know where mortgage rates will go, watch out for economic news that points to inflation or major economic changes, even if those events will happen months or years from now.
This Month’s Economic Calendar
The next 30 days hold no shortage of market moving news. Notably, watch for the jobs report on November 3rd, and the FOMC meeting minutes release on November 22nd.
- Wednesday, November 1st: Federal Reserve meeting adjourns.
- Friday, November 3rd: Jobs Report, unemployment rate, wages.
- Wednesday, November 15th: Consumer Price Index which is a closely watched inflation measurement index.
- Thursday, November 16th: Federal Reserve Governor Lael Brainard speaks.
- Friday, November 17th: Housing Starts.
- Tuesday, November 21st: Existing Home Sales.
- Wednesday, November 22nd: FOMC minutes released.
- Monday, November 27th: New Home Sales.
Now could be the time to lock in a rate if any one of these events push up rates this month.