First-timers ‘anxious’ about rising mortgage rates
A poll of existing homeowners and prospective home buyers has found differing views among the two groups on the effect of higher interest rates. Following the Fed’s decision to initiate increases those who are already owners are indifferent about the subsequent rise in mortgage rates. However, among the (mostly millennial and Gen X) prospective buyers 62 per cent responded to the poll by Berkshire Hathaway HomeServices that they feel ‘anxious’ about their current financial situation.
Although mortgage rates are low by historic standards, 67 per cent of prospective buyers said that rates were ‘average’ or ‘high’ already, suggesting that increases will further intensify their views of unaffordability.
“The Fed is seeing more people going back to work and with the expectation of job growth for America it feels comfortable with its intent to raise rates,” said Berkshire Hathaway HomeServices President Stephen Phillips. “But the reality is that an entire generation of first-time buyers has never experienced a meaningful rate increase; this is a new and unfamiliar phenomenon to them.”
For existing owners, the poll found that increased mortgage payments would result in cutting spending on things such as family vacations and home improvements.
New loan rules delay California closings
Home sales in California have been hit by new rules on mortgage lending along with continuing affordability issues. The California Association of Realtors’ latest report highlights the likely short-term impact of the Know Before You Owe rules (TRID) which came into effect in October: “Some sales may have been either pulled forward into September to beat TRID’s effective date or been delayed. The impact, however, should be transitory as the roll-out and implementation process move further along” said CAR president Ziggy Zicarelli.
Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 369,680 units in November, down 8.4 per cent from October and 1.4 per cent lower year-over-year.
The median price of that home type dipped 0.2 per cent in November to $475,000 from $475,990 in October but was 6.8 per cent higher than the revised figure for November 2014.
Facebook offers $10,000 to employees living near Silicon Valley HQ
Silicon Valley may be the destination for high-flyers in the tech space but affording to live nearby can be a struggle. Recognizing the need to incentivize employees to live within an easy commute of its Menlo Park campus, Facebook is offering employees who buy or rent a home within 10 miles of the HQ $10,000. VentureBeat reports that for some employees with families there could be $15,000 or more on offer to help with housing costs.