July 2018 Mortgage Newsletter

Rates Stable
Not much to report regarding rates since our last newsletter. After increases and months of volatility, rates have been stable for several weeks now. It should continue that way through the end of the summer while consumers are vacationing and enjoying the summer season.
For those that are house hunting, there is still a lack of supply especially in the lower priced housing market. Whether you see forecasts in the news or speak to your Real Estate professional, all indications are that there is a lack of inventory. Surprisingly prices have been stable in New Jersey. That’s a sign of a healthy market. A win-win environment for both Buyers and Sellers.
Some forecasters are pessimistic due to the possible negative effects to the economy of trade wars. Otherwise all seems to be well even after several rate increases by the Feds and their commitment to continue increasing rates in the Future.
Currently our rates are exactly the same as they were at the beginning of the June. Again, we feel that rates will be stable through the end of the summer. Here are our current rates:

Conventional 30 Year Fixed 4.25% APR

Conventional 15 Year Fixed 3.625% APR

FHA 30 Year Fixed 3.75%

10 Year ARM 4%

7 Year ARM 3.875%

Please keep in mind that rates are subject to change based upon market conditions.
There are many attractive No PMI programs available for those putting down less than 20%, even for Jumbo Mortgages. The US Department of Agriculture (USDA) has a wonderful guarantee program that requires no money down with extremely attractive rates for properties in Rural Areas. You would be surprised that most of New Jersey is considered Rural including municipalities located in densely populated counties such as Somerset and even Middlesex County. There are also geographically targeted areas that have No PMI programs. Every consumer’s circumstance is unique. Don’t hesitate to contact us to discuss what program would be best for you.
The New Jersey Association of Realtors released its report for Real Estate activity in the state of New Jersey for the Month of May. Housing affordability index is a very important indicator of market conditions. Let’s take a look at 3 market segments, Single Family, Condo/Townhouse and Senior/Age Restricted Housing in New Jersey:

New Jersey Housing Affordability Index Comparison

Single Family 2016 2017 2018
Year to Date 151 152 141
% Change 0% +.7% -7.2%
Condos/Townhouses 2016 2017 2018
Year to Date 176 177 165
% Change 0% +.6% -6.8%
Senior/Age Restricted 2016 2017 2018
Year to Date 272 252 219
% Change -3.9% -7.4% -13.1%
The above Indices quantify affordability of housing. For example and index of 130 requires a median household income to be 130% of what is required for a median priced home under current interest rates. A higher number means greater affordability. As you can see above, the affordability index decreased signifying HOMES ARE LESS AFFORDABLE. Considering home prices (especially for single families and condo/townhouses) have been flat, Homes are becoming less affordable as a result of the rise in interest rates.

Vibha Singh
NMLS ID 66034

Ambika Singh
Loan Officer
NMLS ID 1541005
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