December 6, 2024: "Mortgage Rate Forecast Following Strong Labor Data", a CNET Money look at home financing conditions and possible Fed actions by Katherine Watt featured a quote from Keith Gumbinger, HSH.com's VP:
This comes less than two weeks before the Federal Reserve's final policy meeting of the year on Dec. 18. The central bank has already made two rate cuts this year -- by 0.5% in September and by 0.25% in November. Investors are now betting on the Fed implementing another 0.25% rate cut this month, though the inflation data released on Dec. 11 will be the deciding factor, said Keith Gumbinger, vice president at mortgage site HSH.com.
November 15, 2024: "Mortgage Predictions: The Fed isn't hurrying to see lower rates", a CNET Money look at home financing conditions and possible outcomes by Katherine Watt featured a couple of observations from HSH.com VP Keith Gumbinger:
With longer-term Treasury yields holding high and a December cut on shaky ground, mortgage rates are prone to staying painfully elevated. For average home loan rates to drop to the 6% level before the start of 2025 is becoming more of a remote chance than a realistic forecast.
"It's not impossible for rates to do a sharp downturn between now and the end of the year, but it does seem highly unlikely," said Keith Gumbinger, vice president of mortgage site HSH.com.
Though some experts see mortgage rates decreasing by the end of the year, they moved significantly up in October and reversed any improvements we saw in September.
"Even if there is a meaningful downturn in inflation to end the year, I don't think we'll see rates make it back to near 6%, but there is a chance they could drift back to the mid-6% range over the next six weeks," Gumbinger said.
November 8, 2024: "What Is a Guarantor? Who Can Be One and What Are the Risks", a Bottom Line discussion of the process and risks lending support to family and friends prominently featured advice from Keith Gumbinger, HSH.com's Vice President.
October 30, 2024 "We Asked 4 Real Estate Pros to Debunk This Major Down Payment Myth", a Apartment Therapy article by Cianna Garrison featured a range of observations from HSH.com vice president Keith Gumbinger:
"Trying to reach a 20% down payment is often unrealistic," says Keith Gumbinger, a New Jersey-based mortgage expert and vice president of mortgage research firm HSH.com. He adds that even if you’re following an aggressive savings plan, going from zero to $84,000 could mean "saving $1,000 per month, every month, for the next seven-plus years." (That’s two years longer than respondents in Apartment Therapy’s survey saved for - recent buyers saved for an average of five years.)
With rising home prices, Gumbinger has found that first-time buyers consider saving for a down payment to be "the most significant hurdle to homeownership." That might be why the recent buyers Apartment Therapy surveyed (excluding those who bought their homes outright) put down an average of 17.38%, and nearly half of those buyers put down 10% or less.
"Most buyers look to accumulate just enough to get into the market - a 5% down payment and enough funds to cover loan costs - and then jump in if they can," Gumbinger adds.
"Most first-time borrowers need to plan for a minimum of 3% down, as this is the lowest down payment allowed by Fannie Mae and Freddie Mac for certain programs," Gumbinger says. "More likely, a borrower will need at least 3.5% down (Federal Housing Authority (FHA) loans) or 5% for conventional conforming loans," he adds.
You should expect to pay between 2% to 5% of your purchase price in closing costs, according to Freddie Mac.
Gumbinger recommends aiming to save for 5% in closing costs, although he caveats that percentage estimates are just that - estimates. "The percentage-based figure could be higher on a lower-cost home," he says. "For example, let’s say that a title insurance policy might cost $1,000 - this is only a 0.33% fee on a $300,000 home but a full 1% fee on a $100,000 home, for example."
Gumbinger says that while fees may vary, closing costs shouldn’t "be radically different from lender to lender for the same given property and borrower." To get a better sense of what you might be paying, he suggests asking lenders about typical fees before you apply.
October 23, 2024: "Homebuyers: Coping Skills for Bewildering Times", a Smart Moves look at challenging housing finance markets by syndicated columnist Ellen James Martin included some commentary from HSH.com vice president Keith Gumbinger:
During a period of mortgage rate volatility like this one, home loan experts caution that it’s always possible for buyers to overspend their budgets.
Here are a few pointers for determined buyers:
Realize that overborrowing remains a risk.
Keith Gumbinger, a vice president at HSH Associatess (hsh.com), which tracks mortgage markets for consumers, notes that most lenders work on commission.
"The bigger the loans they make, the higher their profits," Gumbinger says.
Though household expenses have risen dramatically in many categories, lenders still use mortgage applicants’ gross income as the main gauge of their borrowing capacity.
"Lenders don’t know how much money you have left over after you’ve met all your other obligations ... They mainly focus on the long-term debts on your credit reports, such as car loans and credit card balances," Gumbinger says.
October 18, 2024: "Investing In Real Estate This Fall", a National Association of Realtors radio program and podcast hosted by Stephen Gasque featured HSH.com vice president Keith Gumbinger discussing real estate investment financing options and trends this fall.
October 8, 2024 "Co-sign a Mortgage for Your Kid? 5 Reasons to Think Twice Before You Do", an AARP article by Diane Harris on the pros and cons of co-signing a mortgage included some observations from Keith Gumbinger, HSH.com vice president:
What will the impact be on my family?
In addition to purely financial factors, think about the possible emotional fallout. "If your child falls behind on payments or can’t make them at all, and it messes up your credit and savings, there can be a lot of hard feelings," says Keith Gumbinger, vice president of HSH.com, which publishes consumer loan information. "Relationships can be damaged or destroyed."
To help ward off problems, talk frankly with your child about your expectations around cosigning and consider putting some safeguards in place. For example, you might ask for the lender to send monthly statements to you as well as your child, so you can see that the mortgage is being paid on time - and, if not, stage an early intervention. Getting ahead of the problem can help, since there’s typically a 15-day grace period before a lender reports a missed payment on your credit report.
"Everyone has to go into this understanding what their rights and responsibilities are," Gumbinger says.
September 26, 2024: "China Cut Rates on Existing Mortgages. Why Such Relief Isn’t Likely in the U.S.", a Barron's look at China's efforts to stimulate its economy by Elizabeth O'Brien featured an observation and comparison suggested by Keith Gumbinger, HSH.com's vice president:
If the U.S. economy were to tip into a recession like China, lawmakers would have options to help homeowners. For example, in the housing bust during the financial crisis of 2008-09, the federal government created the Home Affordable Modification Program (HAMP) and the Home Affordable Refinance Program (HARP) to help homeowners avoid foreclosure, refinance, and stabilize the housing market overall. While that isn’t directly comparable to the Chinese initiative, its approach and goals were broadly similar, and it better reflects what could be accomplished in this country, says Keith Gumbinger, vice president of mortgage information website HSH.com.
September 25, 2024: "Mortgage rates came down, but aren't heading as low as you might remember", a Detroit Free Press discussion of mortgage rates and housing conditions by Susan Tompor included a range of examples and comments from HSH.com vice president Keith Gumbinger:
"Lower rates should help first-time homebuyers engage the market a little better," said Keith Gumbinger, a vice president at HSH.com, a mortgage information website.
Someone with a slightly lower income level could even have a better chance at qualifying when their monthly payments are lower, thanks to the latest drop in mortgage rates. For example, he said, consider someone buying a median-priced home in metro Detroit for $280,700.
At a 6% mortgage rate, he estimated that the homebuyer would likely need an income of $72,665 or higher to qualify. If rates were at 7%, he said, the borrower would need an income of about $78,993 to qualify. That's assuming the buyer had a 20% down payment.
At 6% with only a 10% down payment - probably more realistic for a first-time homebuyer - the buyer would need an income of around $83,306 to qualify for that mortgage, he said.
In this example, the loan amount with a 10% down payment would be $252,630. And he noted that there are costs for PMI, or the required private mortgage insurance, as well, which raises the income needed to qualify.
"Affordability - the intersection of price and financing costs relative to incomes - is what's keeping home sales from improving much," Gumbinger said.
"But perhaps the biggest roadblock is a lack of desirable, affordable homes available to buy. Yes, inventory levels are said to be improving, but the market doesn't just need more inventory."
The right kind of inventory is needed, he said, for home sales to improve. Seeing more higher-end luxury homes up for sale won't help boost sales overall, he said, if buyers remain on the sidelines because more starter-size homes are needed in a community.
Potential homebuyers, typically, he said, should not try to time the market and wait to see if they can snag a lower rate.
"There are no guarantees that more favorable conditions will come or will come at a time when you can take advantage of them," Gumbinger said.
September 19, 2024: "The Fed Has Cut Rates. Is Now the Time to Refinance Your Mortgage?", a Barron's look at mortgage refinancing considerations by Shaina Mishkin included an observation or two from HSH.com VP Keith Gumbinger:
Refinancing isn’t free, which is why mild declines in mortgage rates typically don’t move the needle. But it might not take as low a rate as you think for refinancing to pay off. "Most homeowners don’t really consider refinancing until the interest rate on the new loan is about a percentage point or more below the rate they are paying," says Keith Gumbinger, vice president of mortgage information website HSH.com. "But a smaller break can provide value."
ICE, for example, considers a household "in the money" to refinance when their rate is 0.75 percentage point higher than the market rate. At recent mortgage rates measured by the Mortgage Bankers Association, that would mean that homeowners with a 6.9% rate or higher should consider their options. If rates drop to 6%, homeowners with rates as low as 6.75% should think more seriously about refinancing.
But the choice to refinance is ultimately deeper than a rate-to-rate comparison. Other factors, like loan term and closing costs, will change the math. A refinancing calculator on websites like HSH.com can help determine if the time is right.
September 19, 2024: "Mortgage Rates Forecast For 2024: Experts Predict How Much Rates Will Drop", a Forbes roundup of mortgage-rate forecasts by Robin Rothstein included HSH.com's near-term outlook, provided by HSH.com vice president Keith Gumbinger:
HSH.com: 30-year, fixed-rate mortgages will fluctuate below 6.4% in the near term
"Things are changing fast - but for now, I’d say that 6% to 6.4% is a more likely range for the next while," Keith Gumbinger, vice president at mortgage information website HSH.com, tells Forbes Advisor.
September 18, 2024: "Will interest rate decline shake up California housing market?", a Los Angeles Times look at the imapct of lower mortgage rates on housing by Andrew Khouri incorporated a bit of analysis from Keith Gumbinger, HSH.com's vice president:
The central bank’s federal funds rate does not directly affect mortgage rates, but it can do so indirectly since it sets a floor on all borrowing costs and provides a signal of how entrenched the Fed thinks inflation is.
Keith Gumbinger, vice president of research firm HSH.com, said the Fed’s cut Wednesday may not move mortgage rates much because, to some extent, mortgage investors have already priced in the expectation that rates would decline in response to the Fed’s decision.
More cuts, however, are expected in the future.
Gumbinger said if the Fed achieves a so-called soft landing - taming inflation without causing a recession - he would expect mortgage rates to be in the mid-5% range by this time next year.
If the economy turns sour, mortgage rates could fall further, though even in that scenario Gumbinger doubted they’d reach the 3% and below range of the pandemic.
September 18, 2024: "Mortgages Rates Are Way Down. How Fed Rate Cuts Could Change the Picture", a Barron's discussion of the effects of Fed moves on mortgage rates by Shaina Mishkin features some observations from HSH.co VP Keith Gumbinger:
Recent mortgage rates are already pricing in Federal Reserve rate cuts of 0.5-0.75 percentage point through November’s meeting, says Keith Gumbinger, vice president at HSH.com, a mortgage information website. That is because mortgage rates move with the long-term bond market, which is influenced by future economic expectations, not the short-term fed-funds rate."Whether [mortgage] rates move up or down after the meeting strongly depends on what the Fed says about its future intentions," says Gumbinger.
September 18, 2024: "Lock-In Baby Boomers Being Blamed for Housing Inventory Shortages Have Few Options: Experts", a Epoch Times opinion and discussion article of the housing "lock-in effect" by Mark Gilman include comments from Keith Gumbinger, HSH.com's VP:
According to Zillow, the average price of a home is currently $361,282. The Clever study shows that more than one-third of baby-boomer homeowners surveyed paid less than $50,000 for their current home, and only 12 percent paid more than $200,000.
And yet, boomers may have few choices themselves.
"Where are they going to go? In this marketplace, unless you’re planning on moving to a retirement community, it’s really hard to downsize," Keith Gumbinger, vice president of HSH.com, told The Epoch Times.
"They might be in a home that’s now worth $700,000, for instance, and if they downsized, they would be giving up everything they have for a little less-expensive house. They aren’t going to Florida because prices are off the charts there. There are no more inexpensive markets to move to. There’s more of an emphasis now on aging in place."
There may be other factors in play, according to Gumbinger, who says the unwillingness to move may also result from a fear of a repeat of the Great Recession.
"When you think about it, you look at what they’ve gone through in their lifetimes from booms to busts and multiple swings in interest rates," he said. "If you look at the reason people might be staying in their homes, with the lock-in effect and all, the genesis of this may have also come out of the last housing market crash where we had underwater homes."
But he added that while baby boomers dominate the housing market today, another generation is poised to grab an even bigger percentage of home ownership in the future.
"Millennials will be greater in size, and they will be the ones imposing on those coming up behind them."
September 14, 2024: "What the Fed’s Interest Rate Cut Will Mean for Your Money", a Barron's look at the Fed's effect on personal finances by Ian Salisbury included several observations from Keith Gumbinger, HSH.com's Vice President:
Today’s average 30-year rate has already declined to 6.2%, well below last year’s peak. It isn’t clear how much further rates have to fall. One way mortgage rates could still decline sharply is if the economy slows and the Fed is forced to make deeper-than-expected short-term rate cuts to spur growth, says Keith Gumbinger, vice president of mortgage website HSH.com. While that might mean cheaper mortgages, it would pose other problems for consumers.
Absent that, Gumbinger says mortgage rates could still drift down, but the pace would be gradual. Assuming the federal-funds rate ends up in the 3% to 3.5% range next year, Gumbiner says his working guess is that mortgage rates will end up around 5.5% - about where they were in 2008, the last time short-term interest rates were in the same range.
September 9, 2024: "Mortgage Rate Predictions", a CNET Money article written by Katherine Watt included an outlook from Keith Gumbinger, HSH.com's vice president:
Financial markets react to shifting expectations for the economy, so anticipation of the Fed’s upcoming move is already factored into the current mortgage market. A dramatic shift in mortgage rates next week would only happen if the Fed made a larger-than-expected rate cut or no rate cut at all, said Keith Gumbinger, vice president of mortgage site HSH.com.
Yet things could change in the coming months. "The right combination of weaker labor conditions, more quickly declining inflation and/or a more broad economic stumble (not to mention any number of global geopolitical or military issues) could push them [below 6%] easily enough," said Gumbinger.
August 30, 2024: "Mortgage rates are falling, improving home buying conditions", a CNBC look at one avenue for buying a home by Ana Teresa Solá included an observation from Keith Gumbinger, HSH.com's VP:
A zero-down mortgage, also known as a no down payment mortgage, allows you to finance 100% of the cost of the home. Such loans can be appealing because you can essentially enter homeownership without a down payment.
But it may be good to think twice before taking such an offer up, experts say. Banks and lenders are essentially offering two loans to cover the purchase of a house, Cohn said. The first mortgage covers about 97% of the cost while the second loan completes the additional 3%, she explained.
And these loans often become due and payable if the home is sold or if the mortgage is refinanced at some point in the future, added Keith Gumbinger, mortgage expert and vice president of HSH.com.
August 23, 2024: "How to Buy a Home Fast", a National Association of Realtors radio program and podcast hosted by Stephen Gasque featured Keith Gumbinger, HSH.com's vice president discussion how borrowers should prepare to get a mortgage as quickly as possible.
August 22, 2024: "The Cash Advantage: How to Save Big When Buying a Home with Cash", a blog post at New American Funding written by Clare Trapasso featured a range of observations from HSH.com VP Keith Gumbinger:
"There is no concern when accepting a bid that the deal will fall through, at least from a ‘can't get a mortgage’ perspective," said Keith Gumbinger, vice president of the mortgage information site HSH.com.
If the home doesn’t appraise for as much as the buyers offered, then the buyers may have trouble coming up with the difference. That could jeopardize the deal.
"Paying cash for the property can also eliminate mismatches in appraised value versus asking/sales price that can trip up a sale," said Gumbinger. "The cash buyer is limited only by the amount of funds they have or are willing to spend."
The biggest obstacle to purchasing a home in cash is that many buyers, especially first-time buyers, don’t have that kind of money.
"Most folks don't have hundreds of thousands of dollars freely laying around, except perhaps when they have sold a property and are downsizing or relocating to a lower-cost housing market," said Gumbinger.
Even those who can sell investments or another home to come up with the money risk losing out on higher returns they may have earned in other financial investments.
They may also need to pay taxes if they took money out of investments.
"There’s always the question of whether buying a home with cash and ‘locking up your money in a house’ is the best idea," said Gumbinger. However, "there are a few specific advantages to being able to purchase using all cash."
August 9, 2024: "You can still buy a home on a $75,000 salary in these 11 major U.S. cities", a CNBC look at the least costly housing markets by Mike Winters featured original research from HSH.com's "The salary you must earn to buy a home in the 50 largest metros".
August 9, 2024: "What Lower Interest Rates Mean for Home Buyers", a National Association of Realtors radio program and podcast hosted by Stephen Gasque featured HSH.com vice president Keith Gumbinger discussing the reasons why interest rates fell and what it means for homebuyers and homeowners.
August 9, 2024: "Recession or Business as Usual? Here’s the Truth About the Economy Right Now", a CNET/Money review of economic and financial conditions and what it means for the housing market by Katherine Watt included an observation by HSH.com vice president Keith Gumbinger:
An interest rate reduction at the Fed’s September monetary policy meeting is now in the bag. Some market watchers demanded one sooner, but most experts say an emergency rate cut would indicate the Fed is panicking, which would only generate more volatility.
"An emergency cut would send investors the wrong signal about the economy and its prospects, and that might prompt even more turbulence in financial markets," said Keith Gumbinger, vice president of mortgage site, HSH.com.
August 8, 2024: "Mortgage Rates Forecast For 2024: Experts Predict How Much Rates Will Drop", a Forbes update on mortgage rate prospects for the next month or two by Robin Rothstein featured a forecast from Keith Gumbinger, HSH.com's vice president:
HSH.com: 30-year fixed-rate mortgages will average between 6.6% and 6.9% through September
"Mortgage rates have moved lower in recent weeks amid growing expectation that the Fed will soon be lowering short-term rates," says Keith Gumbinger, vice president at HSH.com, a mortgage website. "We’ll know more about their future direction after the September Fed meeting concludes."
August 6, 2024: "The salary you need to buy a home in the 15 most expensive U.S. housing markets", a CNBC review of pricey housing markets by Mike Winters includes original research from HSH.com's "The salary you must earn to buy a home in the 50 largest metros".
August 2, 2024: "Mortgage Rates Are Down. Here’s How Much Further They Could Fall", a Barron's update and outlook for mortgage rates by Shaina Mishkin included a forecast from HSH.com vice president Keith Gumbinger:
Those further mortgage rate declines could be in view, which would lower housing costs. Forecasts published by the National Association of Realtors, Fannie Mae , and the Mortgage Bankers Association foresee rates ending the year in the mid-to-high 6% range, down significantly from this spring’s high of 7.22%. But a few factors could drive them even lower.
If the Fed makes the move in September, and a second cut starts to look likely, mortgage rates could drop lower, says Keith Gumbinger, vice president of mortgage website HSH.com. "If the economy and labor markets are still solid by then and inflation gently fading as it has been, there could be space for perhaps a decline into the low mid-6s [on a fixed 30-year mortgage] later this year," says Gumbinger, whose latest forecast says rates could fall as low as 6.3% this year after the Federal Reserve signals additional cuts.
July 26, 2024: "Refinance Rates Move Up: Mortgage Refinance Rates for July 26, 2024", a CNET Money review of mortgage rates by Katherine Watt included an outlook from HSH.com VP Keith Gumbinger:
Where will refinance rates end up in 2024?
"The odds are good that rates will end 2024 lower than they are now," said Keith Gumbinger, vice president of mortgage site, HSH.com. But predicting exactly where mortgage rates will end up is difficult because it hinges on economic data we don’t yet have.
July 23, 2024: "This family just bought their dream home - and it came with a 2.5% mortgage rate", a ResiClub/FastCompany look at assumable mortgages by Meghan Malas featured explanations by Keith Gumbinger, HSH.com's VP:
Assumability clauses are most commonly found on government-backed loans, including FHA, VA, and USDA-backed mortgages. However, these only account for a small fraction of homes for sale at any given time, around 10% to 15%, according to Keith Gumbinger, a mortgage industry expert with more than three decades of experience and vice president of HSH.com, a publisher of mortgage and consumer loan information.
A 2.5% fixed-rate mortgage in 2024 may sound too good to be true - and for many it is. And the process is not without some obstacles.
"Assumable mortgages are theoretically available, but for most, not practically available," Gumbinger explains.
There are two main hurdles in purchasing a home with a lower assumable mortgage rate:
• The homebuyer usually needs to make up the difference between the outstanding loan balance and the purchase price of the house. Due to rapid home price appreciation over the last few years, a homebuyer looking to assume a low-rate mortgage will likely need significant cash holdings to make it work.
• The homebuyer has to work with the seller’s lender, who isn’t always incentivized to help and may be unfamiliar with the process.
"Unlike making a new loan to a buyer, helping you assume an existing mortgage isn't likely a profitable process for the existing lender," Gumbinger tells ResiClub. "The borrower or the borrower's representative will likely need to be diligent to push the process along."
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."
March 6, 2024: "How to Avoid Common Homebuying Mistakes", a look at common homebuying mistakes and how to avoid them by syndicated columnist Ellen James Martin included some suggestions from HSH.com VP Keith Gumbinger:
You may have sufficient income to carry the payment on a new car as well as a mortgage payment on a home in the price range you have in mind. But it’s wise to hold off on that new vehicle until your home deal closes.
"This is not the time to buy a luxury Lexus SUV or even a Honda Civic," says Keith Gumbinger, a vice president at HSH Associates, a New Jersey firm that tracks mortgage rates for consumers, including those with "bruised credit".
As Gumbinger explains, making a major purchase with credit can easily depress your credit score, as can opening new credit lines, whether or not you use them.
"You need to hang back financially until you get the house you really want," Gumbinger says.
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."
Back to HSH.com in the News — 2023