July 11, 2024: "Today’s Inflation Data Could Push Mortgage Rates Down", a CNET/Money look at inflation and the prospects for a Fed move by Katherine Watt included an observation from HSH.com vice president Keith Gumbinger:
While today’s data won’t likely prompt a rate cut from the Fed at its next policy meeting in late July, it should help mortgage rates become more affordable down the road.
"There is already a growing case for a September rate cut," said Keith Gumbinger, vice president of mortgage site, HSH.com. "Inflation only needs to show a step or two in the right direction between now and then to give the Fed the confidence it is seeking to begin a rate-cutting cycle."
June 2024: "Should You Co-Sign on Your Child’s Mortgage?", a Bottom Line discussion of the pros and cons of helping your children buy a home prominently featured advice from Keith Gumbinger, HSH.com's Vice President.
June 10, 2024: "Mortgage Predictions: The Fed Isn’t Rushing to Lower Interest Rates This Week", a CNET/Money article by Katherine Watt discussing the upcoming Fed meeting and what it means for mortgage shoppers included some commentary by Keith Gumbinger, HSH.com's vice president:
At this week’s meeting, we’ll receive an updated Summary of Economic Projections, which could offer clues as to the direction of mortgage rates over the next several months.For example, a rapid decline in mortgage rates would only spur more homebuying demand. Without the supply to support that demand, lofty home prices could press even higher, according to Gumbinger."In the SEP, we’ll learn if Fed members still expect to be cutting rates this year or not, and get a sense of where they believe economic growth, unemployment and inflation will be headed for the remainder of 2024 and beyond," said Keith Gumbinger, vice president of mortgage site HSH.com.Today’s unaffordable housing market isn’t due to just high mortgage rates. Homebuyers are also being pinched by elevated home prices, limited housing supply and the pain of high inflation. Unfortunately, there’s no quick fix to all of these problems. But baby steps are better than no steps at all."Frustrating for some as it may be, it’s better that conditions continue to align slowly," said Gumbinger.
June 8, 2024: "There’s Still a Way to Snag a 3% Mortgage Rate", a Bloomberg review of assumable mortgages by Paulina Cachero featured a salient quote from Keith Gumbinger, HSH.com's vice president:
For the most part, only government-backed mortgages - loans from the FHA, as well as the US Department of Agriculture and Veterans Affairs - are eligible for assumption. That represents about one out of five US homes with a mortgage. And the limit for a loan the government will back is about $1 million in high cost areas like New York.
However, finding a transferable loan may be a challenge at a time when there are so few listings on the market, said Keith Gumbinger, the vice president of HSH Associates.
"We have very thin inventories of homes for sale of any kind in most marketplaces," he said.
June 7, 2024: "Top Real Estate Tips", a National Association of Realtors radio program and podcast hosted by Stephen Gasque featured HSH.com vice president Keith Gumbinger discussing mortgage rates, mortgage qualifying and the changing mortgage market this spring.
May 21, 2024: "The decision to sell your home vs. rent it out is ‘complicated,’ experts say - what to know", a CNBC look at the choices facing some homeowners this spring by Kate Dore, CFP included some observations and guidance from HSH.com vice president Keith Gumbinger:
Many Americans are sitting on low-interest-rate mortgages and could face a decision when it is time to move: sell or rent out their existing property. That choice could be tricky, especially for those eager to buy another home.
However, renting out your old home while buying another "gets very, very complicated, which is why most people don’t do it," said Keith Gumbinger, vice president of mortgage website HSH.
Homeownership has become increasingly unaffordable amid higher interest rates and soaring home values. That makes qualifying for a second mortgage harder, especially without tapping equity from your original property, Gumbinger said.
Plus, if you are using rental income to qualify for the second mortgage, lenders typically only consider 75% of your proceeds, Gumbinger said.
May 16, 2024: "Builder Stocks Are Up. Lower Mortgage Rates May Be on the Horizon", a Barron's look at what's happeining in housing markets this spring by Shaina Mishkin featured some context provided by Keith Gumbinger, HSH.com's vice president:
The pullback from recent highs is encouraging for home buyers, says Keith Gumbinger, vice president at mortgage information website HSH.com - but rates remain off even their 2024 low of 6.6%.
"While any improvement in rates is welcomed by potential home buyers, it’s not as though they have or are likely to move very much, at least until we get a string of improved inflation reports and the prospect for rate cuts by the Fed are again strengthened," Gumbinger says.
April 17, 2024: "When Your Mortgage Refinance Plans Can't Wait", a Smart Moves look at homeowner choices this spring by syndicated columnist Ellen James Martin included some commentary from HSH.com VP Keith Gumbinger:
But the cost of the renovation they needed, which included installing an elevator, was too steep to cover out of their savings. So they’re planning to refinance their mortgage to cover the expense.
"Mortgage rates are still stubbornly high -- and higher than was expected this spring. But some homeowners simply need to tap their equity now with a cash-out mortgage refi. They can’t wait until rates finally drop down to do the necessary remodeling," says Keith Gumbinger, a vice president at HSH.com, which tracks home loan markets across the country.
"If these owners last refinanced their mortgages to an exceptionally low rate during the pandemic, they’re loathe to give up that rock-bottom loan. But for the short term, at least, they accept that the current rates are the ‘new normal,'" Gumbinger says.
Along with your FICO score, another key qualifier is your "debt-to-income ratio." If you face high minimum payments each month -- whether on credit cards or car payments -- you might be unable to borrow as much as you need when you refinance.
As Gumbinger says, one way to lower your monthly debt payouts is to move balances from your highest interest-rate credit cards to your lowest rate one. Alternatively, consider moving high credit card debt to an installment loan made through a credit union or a community bank.
"Too high a monthly payout is a problem for many mortgage borrowers," Gumbinger says.
March 28, 2024: "Pending home sales pick up in February as buyers gear up for spring", a Yahoo Finance early look at the spring homebuying season by Gabriella Cruz-Martinez included a quote from HSH.com vice president Keith Gumbinger:
The uptick in the index, an early indicator of the housing market’s health, showed signs that buyers are coming to terms with elevated rates. A modest bump in new listings may have played a role in attracting buyers, as well as a sense of urgency to race against climbing rates.
Keith Gumbinger, vice president of HSH.com, has guessed as much.
"Mortgage conditions were only slightly less favorable in February than January," he said, noting that higher rates may have muted some activity last month. Rates vaulted from 6.63% to 6.94% by the end of February and continue to linger near 7%.
March 12, 2024: "Mortgage Predictions: What Today’s Inflation Report Means for Mortgage Rates", a CNET/Money look at inflation's effect on mortgage rates by Katherine Watt featured a callout quote and commentary by Keith Gumbinger, HSH.com's vice president:
Ultimately, mortgage rates are affected by an array of market factors like inflation and bond yields, as well as by personal financial factors, such as your credit score and income.
"If inflation is easing, so will mortgage rates, although not necessarily at the same speed or depth, since there are other contributing factors that go into the consumer’s final rate," said Keith Gumbinger, vice president of mortgage site HSH.com.
Though we could see interest rate cuts before summer, data from the past few months points to a much more resilient economy than many were expecting. Aside from the housing market, the economy hasn’t been suffering under the weight of steep interest rates, according to Gumbinger, so the Fed isn’t in a hurry to trim rates quickly or drastically.
March 8, 2024: "A Look At Mortgages in 2024", a National Association of Realtors radio program and podcast hosted by Stephen Gasque featured HSH.com vice president Keith Gumbinger discussing mortgage rates, mortgage qualifying and the financing outlook for homebuyers this spring and beyond.
March 8, 2024: "Biden proposes $10,000 tax breaks for first-time homebuyers, ‘starter home’ sellers", a CNBC review of proposed tax policy and housing conditions by Kate Dore, CFP, featured some comments and observations from HSH.com vice president Keith Gumbinger:
While rates have fallen from 2023 peaks, the average interest rate for 30-year fixed-rate mortgages was still hovering around 7%, as of March 7.
"We’re close to multidecade highs for mortgage rates," said Keith Gumbinger, vice president of mortgage website HSH.
"Unless [Biden’s proposed credit] counts as qualifiable income, it’s not going to actually make it easier for homebuyers to qualify for mortgages," he said.
"What we don’t need today in the market is more demand," said Gumbinger. "We have plenty of demand, but we don’t have adequate supply."
February 26, 2024: "Mortgage Forecast: 6% Rates Approaching, Though Cloudy Skies Ahead", a CNET/Money review of mortgage conditions by Katherine Watt included observations from Keith Gumbinger, HSH.com's vice president.
"Investors got a little ahead of themselves in terms of expectations for lower rates this year," said Keith Gumbinger, vice president of mortgage site HSH.com. Given the state of the economy -- like sticky inflation and the Federal Reserve’s reactive monetary policy -- financial markets may have been overly optimistic in projecting when interest rate cuts would start.
What the experts are saying
"I don’t think present conditions change the overall forecast for mortgage or other interest rates all that much, but sustained higher economic growth or more persistent inflation would."
February 13, 2024: "Navigating Your First Home Purchase: Expert Tips", a Porch roundup of professional advice by Ismirelda Forst included a featured contribution from HSH.com vice president Keith Gumbinger:
Common mistakes to avoid when budgeting for mortgage payments
"It’s important for potential homeowners to remember it is likely that only the principal and interest portion of their monthly payment won’t change from time to time. The other components - taxes, insurance costs, HOA fees, or dues - will likely increase over time. This means monthly payments will rise, and when they do will also trigger the need to add more funds to replenish escrow accounts. This can mean an unexpected out-of-pocket expenditure and an increase in regular monthly payments, and these need to be planned for and budgeted accordingly.
"Rather than focusing strictly on the monthly mortgage payment, it can be a good idea to consider a broader approach to budgeting, incorporating all necessary recurring household costs as a whole. In addition to the Principal, Interest, Taxes, Insurance, and Association fees (aka "PITIA"), this would include costs for water, sewer, trash collection, and similar required expenditures. Couple these with your required mortgage payment, and round this figure up to the nearest hundred-dollar increment to allow for some leeway. This can help offset or even eliminate the impact of surprise increases or changes in costs, which may upend your budget."
February 3, 2024: "Best Money Moves in 2024", a Bottom Line financial planning and strategy article prominently featured advice from Keith Gumbinger, HSH.com's Vice President.
For Better Consumer Deals
Mortgage and auto-loan rates are high, but if consumers plan, they can save.
Housing
If you are a seller: You have a solid advantage. Homes have experienced tremendous price increases over the past few years. Inventories are low so you should be able to sell quickly at asking price. Caveat: Make sure the numbers work for purchasing your next residence. Unless you are downsizing, you are likely exchanging a low 30-year fixed mortgage rate for one in the 7.25% to 7.75% range now.
If you stay in your home for a few more years and renovate, focus on projects that offer the highest return - screened-in porches, window replacements and composite deck additions.
If you are a buyer: The market has not been this unaffordable since the 1980s. If you must buy now, plan to refinance in the future - I expect mortgage rates to come down to the 5.5% range over the next few years. On the other hand, putting off a purchase may not hurt your chances of buying a home - US housing prices are expected to rise at a slower pace in 2024. Cash buyers may be able to make an offer below asking price in return for a quick closing date.
January 31, 2024: "Mortgage Rate Projections: What We Expect From Today’s Fed Meeting", a CNET/Money look at the Federal Reserve's actions and effects on housing and mortgage markets by Katherine Watt included HSH.com vice president Keith Gumbinger as a featured participant:
Why won’t the Fed cut rates at the January meeting?
"While considerable progress has been made, the Fed is still waiting for more evidence that inflation is on a sustainable downward path. Since the economy doesn’t appear to actually need lower rates to help lift economic growth, the Fed can afford to be patient."
When will the Fed start cutting interest rates?
"There is a chance that the first cut in rates could come as early as the March 19-20 meeting, but the April 30-May 1 seems more likely at the moment, and that provided that core inflation takes another step or two down by then."
Will interest rate cuts mean lower mortgage rates?
"Mortgage rates will continue to settle provided that inflation continues to move to the Fed’s 2% core PCE goal and the Fed continues to signal that they will be lowering rates on a more or less regular basis."
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