Newz: Appraiser Humor, Mortgage Rate Changes, New GSE Time Analysis
January 3, 2025
What’s in This Newsletter (In Order, Scroll Down)
- LIA – Code Violations and Expertise
- Mortgage Rate History Since 1971 What about 2025?
- Hurricane-Proof $600K Dome Home on Florida’s Space Coast
- Lyle Radke of Fannie Mae with George Dell, SRA, MAI, ASA, CRE to discuss upcoming changes by the GSEs on Time Analysis
- Backers of most U.S. mortgages (GSEs) have done little about climate risks
- Top Ten Reasons Why It Is Great to be an Appraiser – Humor
- Mortgage applications decreased 21.9 percent from two weeks earlier
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Mortgage Rate History Since 1971 What about 2025?
Excerpts: For many homebuyers, the last few years have felt like a perfect storm of challenges—soaring home prices and climbing mortgage rates colliding to limit affordability. It’s left many wondering if 2025 will finally calm the waters. Will rates dip low enough to bring some relief, or is another wave of increases on the horizon? While there’s no magic compass to navigate these market shifts, a look back at mortgage rate history can offer clues—and maybe even some hope for those waiting to make their move.
Despite the Federal Reserve’s 25-basis-point rate cut in November, mortgage rates have remained in the high 6% range, offering limited relief to borrowers. However, optimism persists in the market as many believe rates could continue to ease in the months ahead, potentially sparking renewed interest among buyers and homeowners.
While the history of mortgage rates provides valuable context, it’s important to recognize that average mortgage rates are just a benchmark. Borrowers with healthy credit profiles and strong finances often get mortgage rates well below the industry norm.
Current rates are more than double their all-time low of 2.65% (reached in January 2021). But if we take a step back and look at the history of mortgage rates, they’re still close to the historic average since 1971 of 7.73%
To read more and see the graphs and many links to more info, Click Here
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The O’Rourke Mortgage Rate Forecast for 2025
Property owners will adjust to the “one time ever” very low recent rates due to short term economic changes due to Covid.
The probability of seeing those rates is again is very low, if even possible.
Many owners will finally accept the more “typical” rates from the recent past of 6-7%.
In last week’s newsletter I included a link to: “2025 Mortgage Rates Forecasts Are Now Wrong” but I could not resist doing my own forecast ;>
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Highest and lowest mortgage rates
The lowest average mortgage rates on record came about when the Federal Reserve lowered the federal funds rate in 2020 and 2021 in response to the pandemic. As a result, the weekly average 30-year, fixed-rate mortgage fell to 2.65%, while the average 15-year, fixed-rate mortgage sunk to 2.10%.
What’s the Highest Mortgage Rate in History? From 1971 to present, the highest average mortgage rate ever recorded was 18.63% in October 1981. Mortgage rates held steady above 18% in the two-month span between Sept. 10 and Nov.
My comments: There is not much data on rates before the early 1970s when the GSEs started purchasing loans from lenders.
When I purchased my duplex in December, 1985 I got a great rate: 15%! Rates had been as high as 18.6% in 1980 to 1985. The Fed was reacting to very high inflation in the 1970s by raising interest rates, similar to the Fed recent changes.
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Hurricane-Proof $600K Dome Home on Florida’s Space Coast
Excerpts: 4 bedrooms, 2 baths, 3,224 sq.ft., Built in 2009
The otherworldly dwelling, which is designed to withstand a Category 5 hurricane, landed on Florida‘s Space Coast in 2009 and boasts 3,224 square feet of rocket-inspired space. The four-bedroom home’s interior features an “astronaut-in-space mural” in the primary bedroom along with other hand-painted artwork.
Offered completely furnished, the 1.22-acre turnkey property also has a heated, screened-in pool and a second dome with a bonus room over the garage that could be used as a home office, yoga studio, or game room.
To read more and see the graphs and many links to more info, Click Here
To see the Zillow listing, Click Here
My comments: Guess they can get reasonably priced insurance…
I wonder how difficult it would be to raise a dome home 8 ft. or more? Some part of Florida are significantly affected by hurricanes, increasing ocean heat, and sea level rise.
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Lyle Radke of Fannie Mae with George Dell, SRA, MAI, ASA, CRE to discuss upcoming changes by the GSEs on Time Analysis
Webinar begins Wednesday, Jan. 15, 2025, at 9:00 AM Pacific.
A Free Class Follows thirty minutes after the TYN2K Webinar, “Intro to Market Analysis” immediately begins.
Start expanding your skills in this Free 2-hr informational course from George Dell’s Valuemetrics.Info Appraiser Education. Taught by Craig Gilbert, ASA, SRA, CRP, RAC Member, and George Dell, SRA, MAI, ASA, CRE.
You don’t have to subscribe to George Dell’s Analogue blog to register. But, the video will be available for our blog subscribers first, in about a week or less. Then it will be available for the public. The video with Lyle will be separate from the video of the two-hour free webinar with Craig
To register for this free event, Click Here
My comments: I signed up. Find out directly from the Fannie speaker about the new GSE requirements for market conditions changes.
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New in the January, 2025 issue of Appraisal Today
This issue focuses on 2025 planning: Now is the time to plan for the coming increases in appraisal orders in 2025.
- New Year’s resolutions. Set goals for 2025 and plan how you will accomplish them
- What are your best current and former AMC/lender clients? Now is the time to plan for the 2025 increase in appraisals.
- Client Rating Grid
- How to communicate with appraisers online
The New Year is a common time to make resolutions, business and personal. I have lots of ideas in this article.
Who are your worst and best clients? The Client Rating Grid Can Help.
I have included an rtf file in this email and on the paid subscriber page so you can set up your own Client Rating Grid, if needed.
Appraisers online can help you find out what they think about your clients.
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Backers of most U.S. mortgages (GSEs) have done little about climate risks
Excerpts: As sea levels rise and natural disasters become more intense, homes in low-lying coastal areas or tinder-dry mountains are starting to lose value.
That’s a problem for the finances of Fannie Mae and Freddie Mac, the government-sponsored enterprises that back half of the nation’s outstanding mortgages — and keep the residential real estate market liquid by buying mortgages from banks and repackaging them into securities.
In the first year of the Biden administration, financial regulators seemed to recognize the risk, identifying the mortgage market as one of the main channels through which climate change could destabilize the financial system.
Since then, reports have been published, comments gathered and summits held. But when it comes to insulating the two enterprises and borrowers from climate-related catastrophe, the Federal Housing Finance Agency — which regulates Fannie and Freddie — has issued only vague guidance.
To read more, Click Here
My comments: I had never thought about this topic. I’m not sure when this topic started, but similar recent articles have been in Bloomberg and New York Times. Both are behind paywalls. The link is to a Seattle newspaper.
How will appraisers be affected? I am sure there are effects on value of these risks, especially if their insurance premiums and availability are different from other homes.
I live between two major earthquake faults, 10 miles east and west of the faults. I have never seen any effect on values of homes on top of the faults. Of course, earthquakes are not predictable. But, I would never live on top of a major fault and would pay much less for living close to a fault.
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Top Ten Reasons Why It Is Great to be an Appraiser -Humor
10. Dazzle your friends with your knowledge of external obsolescence.
9. The wonderful world of rats, bats, and spiders.
8. Be a part of the profession blamed for the collapse of the savings and loan industry.
7. See places in people’s houses that usually require a search warrant to access.
6. Arouse the suspicion of an entire neighborhood when inspecting comparable sales.
5. Chance to really irritate annoying real estate salespeople.
4. Walk around holding a clipboard just like “Skip” down at the Jiffy Lube.
3. Spend hours writing volumes of supporting documentation to justify the market value of a property you already decided on when you pulled into the driveway.
2. See that some people really do hang those black velveteen pictures of Elvis on their living room walls.
1. Be one of a handful of people who know that USPAP is not a medical term.
Many thanks to Joe Ibach, MAI, for this great list! He doesn’t know the source… seems like it was one of those email/send/resends that was floating around on the Internet!
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HOW TO USE THE NUMBERS BELOW. Appraisals are ordered after the loan application. These numbers tell you the future for the next few weeks. For more information on how they are compiled, Click Here.
Note: I publish a graph of this data every month in my paid monthly newsletter, Appraisal Today. For more information or get a FREE sample go to www.appraisaltoday.com/order Or call 510-865-8041, MTW, 7 AM to noon, Pacific time.
My comments: Rates are going up and down. We are all waiting for rates to drop or stabiize in 2025.
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Mortgage applications decreased 21.9 percent from two weeks earlier
WASHINGTON, D.C. (January 2, 2025) — Mortgage applications decreased 21.9 percent from two weeks earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending December 27, 2024. The results include an adjustment to account for the Christmas holiday.
The Market Composite Index, a measure of mortgage loan application volume, decreased 21.9 percent on a seasonally adjusted basis from two weeks earlier. On an unadjusted basis, the Index decreased 55 percent compared with two weeks ago. The holiday adjusted Refinance Index decreased 36 percent from two weeks ago and was 10 percent higher than the same week one year ago. The unadjusted Refinance Index decreased 62 percent from two weeks ago and was 6 percent lower than the same week one year ago.
The seasonally adjusted Purchase Index decreased 13 percent compared with two weeks ago. The unadjusted Purchase Index decreased 48 percent compared with two weeks ago and was 17 percent lower than the same week one year ago.
“Mortgage rates moved higher through the last full week of 2024, reaching almost 7 percent for 30-year fixed-rate loans,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Not surprisingly, this increase in rates – at a time when housing activity typically grinds to a halt – resulted in declines in both refinance and purchase applications.”
The refinance share of mortgage activity decreased to 39.4 percent of total applications from 44.3 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.2 percent of total applications.
The FHA share of total applications decreased to 16.6 percent from 17.2 percent the week prior. The VA share of total applications increased to 15.7 percent from 15.2 percent the week prior. The USDA share of total applications decreased to 0.4 percent from 0.5 percent the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased to 6.97 percent from 6.89 percent, with points increasing to 0.72 from 0.67 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $766,550) increased to 7.13 percent from 6.99 percent, with points increasing to 0.64 from 0.60 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 6.69 percent from 6.68 percent, with points increasing to 1.05 from 0.77 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
The average contract interest rate for 15-year fixed-rate mortgages increased to 6.43 percent from 6.37 percent, with points increasing to 0.75 from 0.72 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
The average contract interest rate for 5/1 ARMs decreased to 5.97 percent from 6.11 percent, with points increasing to 0.65 from 0.58 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
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Ann O’Rourke, MAI, SRA, MBA
Appraiser and Publisher Appraisal Today
1826 Clement Ave. Suite 203 Alameda, CA 94501
Phone: 510-865-8041
Email: ann@appraisaltoday.com
Online: www.appraisaltoday.com
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