Locked-In & Loaded: Homeowners Sitting on a Mountain of Equity

Locked-In & Loaded: Homeowners Sitting on a Mountain of Equity

According to new numbers from FHFA and BatchService via ResiClub, the national average loan-to-value ratio (LTV) sits at just 62.2%. That means the typical homeowner today owns nearly 40% of their home outright — a powerful financial position. 

For reference: If a home is worth $400,000, and the mortgage balance is $320,000, the LTV is 80% (20% equity). A lower LTV = stronger footing. Nationally, that figure has plummeted, with some states far below average.

Ralph’s Take

This aligns perfectly with what we’re seeing in Westchester. Many sellers aren’t under pressure — they’ve built up significant equity and are comfortably locked into ultra-low…

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Early Signs Buyer Demand Is Picking Up

Early Signs Buyer Demand Is Picking Up

More buyers are jumping back into the market – and that means it may be time for you to do the same thing. Mortgage applications are up, demand is growing, and home showings are increasing. Those are signs that serious buyers are active today.

If the right buyer walked through your door tomorrow, would you be ready?

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Get Rewarded for Renting

Get Rewarded for Renting

Rocket Mortgage has introduced a new initiative, Rocket Rent Rewards, aimed at assisting renters in transitioning to homeownership by offering up to $5,000 toward closing costs. This program allows eligible homebuyers to receive a credit equivalent to 10% of their total rent payments over the past year when they secure a mortgage through Rocket Mortgage.

• Eligibility: Renters who have consistently made payments over the last 12 months finance a home through Rocket Mortgage.

• Benefit Calculation: 10% of the total rent paid in the previous year, up to $5,000.

Ralph’s Take

This is a strategic way to make homeownership a little more accessible for renters. Consistently…

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Fed Hits Pause: No More Rate Cuts — for Now

Fed Hits Pause: No More Rate Cuts — for Now

In its latest policy meeting, the Federal Reserve opted to maintain the federal funds rate at 4.25% to 4.5%, pausing after three consecutive rate cuts. Fed Chair Jerome Powell emphasized there is no immediate need to adjust the policy stance, noting that while inflation has decreased from its 2022 peak, it remains slightly above the 2% target. This decision comes amid political pressures, with President Trump criticizing the Fed for not implementing deeper rate cuts to stimulate economic growth.

Ralph’s Take

The Fed’s decision to keep rates steady comes as no surprise, with little impact on the mortgage market. Its focus remains on the labor market, but inflation remains a…

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FHFA: 73% of Mortgages Still Under 5%

FHFA: 73% of Mortgages Still Under 5%

The highest level of mortgages over 6% since 2016.

While mortgage rates remain significantly higher than three years ago, the pool of borrowers with lower-rate loans is steadily eroding as most new homeowners are securing loans in the 6% to 7% range. The Federal Housing Finance Agency (FHFA) reports that 73.3% of U.S. mortgage holders now enjoy interest rates below 5.0%, a drop of 12.2 percentage points from the Q1 2022 high of 85.5%.

As borrowers adjust to the new normal, opportunities for refinancing may continue to emerge. A glimpse of this occurred in September 2024 when the average 30-year fixed rate briefly dipped to 6.11%. Savvy homeowners with higher-rate loans seized that…

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Housing Market Gains Momentum in 2024’s Final Push

Housing Market Gains Momentum in 2024’s Final Push

Redfin’s Homebuyer Demand Index is sitting near its highest level since September 2023. The index, which tracks seasonally adjusted metrics like tours and other services provided by Redfin agents, has risen 7% compared to the same period last year. Meanwhile, mortgage-purchase applications have risen 17% month-over-month, while pending sales are up 6.5% year-over-year.

Ralph’s Take

This comes as no surprise, as many buyers had postponed making significant decisions until after the election, resulting in a post-election surge in activities like property tours — a trend that persists. At the same time, buyers are adjusting to current mortgage rates, recognizing that a…

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Today’s mortgage debt doesn’t mean a housing bubble is brewing

Visual of the Week

Today’s mortgage debt doesn’t mean a housing bubble is brewing.

Homeowners have built up record equity, and it’s nearly triple the amount of mortgage debt. This extra cushion gives homeowners more security, making the market much more stable than it was in 2008.

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Could This “Magic Rate” Unlock the Market?

Could This “Magic Rate” Unlock the Market?

According to a recent analysis by John Burns Research and Consulting (JBREC), there may be a "magic" mortgage rate that could spark renewed activity in the housing market. For 12 consecutive years, mortgage rates remained below 5%, enabling many homeowners to lock in favorable terms. Currently, 86% of mortgage holders have rates under 6%. JBREC's survey suggests that the 5.5% mortgage rate represents the tipping point that could release the “ lock in effect ”. Additional findings:

• 72% of buyers would not accept a rate above 5.5%

• 22% of buyers would accept a rate higher than 6%

• 66% of consumers believe a “normal” rate is below 5.5%

• 88% of consumers believe…

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How the Fed Rate Cut Impacts Housing

On Wednesday, the Federal Reserve made an unexpected move by cutting its target interest rate by 0.50 percentage points (or 50 basis points). This was the first rate cut in 1,650 days. During this time, we saw:

• 11 rate increases since early 2022.

• Mortgage rates peak at nearly 8% in October 2023.

• Existing home sales plummet to 1995 levels.

• Home affordability hit a 40-year low.

This is expected to be the beginning of a rate-cutting cycle, with further reductions expected later this year and into 2025.

How the Fed Rate Cut Impacts Housing

The Federal Reserve's decision to cut interest rates is generally positive for the housing market for several reasons:

Mortgage…

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The "Mortgage Rate Lock-In Effect”

The "Mortgage Rate Lock-In Effect”

A recent Redfin article delved into the "mortgage rate lock-in effect”, where homeowners are reluctant to sell their homes due to their advantageous low mortgage rates - which is intensifying the housing shortage. As we mentioned in July, 86% of mortgages have an interest rate below 6%, but that has been gradually decreasing over the past two years (93% in 2022, 91% in 2023, 86% this year).

Current percentage of mortgages with:

• Rates Below 6%: 85.7% (down from 92.8% in 2022)

• Rates Below 5%: 76.1% (down from 85.6% in 2022) 

• Rates Below 4%: 57.4% (down from 65.3% in 2022) 

• Rates Below 3%: 22% (down from 24.7% in 2022)

Ralph’s Take

…

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