Mortgage Rates Hit 6 Week High With Housing Market At A Crossroad

Dated: September 14 2018

Views: 319

Ben Carson Addresses Housing And Urban Development Department Employees

Rates for home loans rose to a six-week high as upbeat economic data and a bulging deficit spurred a yield-lifting bond sell-off and big questions gripped the housing market.

The 30-year fixed-rate mortgage averaged 4.60% in the Sept. 13 week, according to Freddie Mac’s weekly survey. That was up six basis points during the week, and marked the third straight weekly gain. The 15-year fixed-rate mortgage averaged 4.06%, up from 3.99%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.93%, unchanged during the week.

Those rates don’t include fees associated with obtaining home loans.

Mortgage rates follow the 10-year U.S. Treasury note, which jumped over the past week on signs of wage growth, which signals faster inflation. A report from the Congressional Budget Office also found that the deficit had widened meaningfully, signaling more supply of government bonds would be necessary. More supply might dampen demand, and when bond prices fall, yields rise.

After a dismal summer selling season, the housing market seems stuck. More would-be buyers are dropping out, choosing to rent rather than compete for scarce, over-priced homes to purchase.

With little relief on the horizon, observers increasingly believe substantial shifts in housing policy are needed. One of the biggest issues facing the housing market is what’s often called “exclusionary zoning,” a phrase that admittedly makes eyes roll and many people tune out.

Exclusionary zoning simply means that powerful people in a community try to make it harder for newcomers to enter. That can mean limiting the number, or the type, of new homes that can be built — only single-family homes, no apartment buildings, for example. It can also mean setting rules for housing characteristics, such as specifying minimum yard sizes or minimum parking requirements.

Efforts like those are often referred to as “Not In My Backyard.” They’re intended to maintain the character of an existing community, a goal that’s both logical and clearly within the rights of existing residents. But it happens at the expense of people who can’t play by the same rules — often people of color and those at lower income levels.

And while it’s understandable that homeowners would seek to protect their investments by maintaining certain price levels in their communities, it’s also clear that such efforts exacerbate not only the housing crisis, but also social inequity.

Anti-Nimby (sometimes called “Yimby”) efforts have been gathering steam and may get a bigger boost from an unlikely source. The Department of Housing and Urban Development said in August that it wants to “streamline and enhance” a rule on desegregation. Revamping the “Affirmatively Furthering Fair Housing” rule would “provide for greater local control and innovation; seek to encourage actions that increase housing choice, including through greater housing supply,” HUD said.

A 2015 academic paper found that lowering regulations on building in high-density areas like New York and Silicon Valley would boost U.S. GDP by nearly 10%. As the noted scholar Edward Glaeser wrote, “Whether these exact figures are correct, they provide a basis for the claim that America’s most important, and potentially costly, regulations are land use controls.”

Many housing advocates are optimistic that HUD’s move could be a step toward bringing such controls back in line with the needs of the housing market.


Blog author image

Mark Ross

For Mark Ross, founder of Ross NW Real Estate and professional real estate broker, real estate has always been the career of choice. During his 30 years in the industry, Mark has gained experience in ....

Latest Blog Posts

10 Ways To Save On A Kitchen Remodel

A kitchen remodel is among the most popular renovation projects for homeowners, but it can quickly become the most expensive. According to HomeAdvisor, the average kitchen remodel costs $25,656, or

Read More

6 Mortgage Tips For Single Homebuyers With Children

If you’re a single parent, it’s arguably more challenging to buy a home than for those in a partnership with dual incomes. Yet it’s easy to see why so many single parents are eager to purchase

Read More

How To Deal With Unsolicited Offers

If you’re one of those lucky people who own a home in a “hot” area, it’s a pretty sweet feeling. You made a good real estate call. If you decide to sell, all signs point to it being an easy

Read More

Homebuying And Mortgage Guide For Singles

Many people might picture homeownership as an event that happens only after two people get married and start a financial partnership. Some mortgages are still structured to reflect that idea. But

Read More