Presented by Philip Clark, CFP®, January 2020
As 2019 ended, home loans were cheaper than they were at the start of the year. Looking at Freddie Mac’s Primary Mortgage Market Survey, the average interest rate on a 30-year, fixed-rate mortgage was 3.74% on December 26, which was up from 3.68% a month earlier, but well under the 4.51% mean rate seen on January 3. The average interest rate on 15-year, fixed-rate home loans took a similar path: averaging 3.99% on January 3, it was at 3.15% on November 27 and at 3.19% on December 26.1
30-year and 15-year fixed rate mortgages are conventional home loans generally featuring a limit of $484,350 ($726,525 in high-cost areas) that meet the lending requirements of Fannie Mae and Freddie Mac, but they are not mortgages guaranteed or insured by any government agency. Private mortgage insurance, or PMI, is required for any conventional loan with less than a 20% down payment.
Existing home sales, though, remained sluggish. The National Association of Realtors reported a 1.7% November decline, following a revised 1.5% retreat in October. The Census Bureau announced that new home sales increased 1.3% in November, partly making up for a 2.7% dip.2,3
New home construction was up in November. Housing starts rose by 3.2%, and the rate of building permits issued accelerated by 1.4%.2
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