February Mortgage Newsletter
Since the final numbers are out, in this Newsletter I will be presenting important information regarding 2018 Mortgage and Real Estate data. This should provide an insight to future market trends.
Market Volatility Relation to Mortgage Rates
2018 was a year of volatility and one of the worst performances for the stock market in the past decade. Although a record setting year in October and the volatility throughout the year, it is one that perhaps Investors would not look back on fondly. At the end of the year, the S&P 500 was down 6.2% and the Dow was down 5.6%. This was only the second time in the past decade both the Dow and S&P were down. In 2015 they were both slightly down and the NASDAQ was up that year. The 2018 Year ended horribly. In December the Dow was down 8.7% and the S&P 500 was down 9%. This was the biggest decrease since 1937.
This was record setting volatility. In the history of the Dow, there have only been 8 times that the Dow has swung 1,000 or more in a single session. Incredibly 5 of the 8 times took place in 2018. Undoubtedly volatility is due to instability, fear, economic slowdown, inflation worries and political uncertainty.
The volatility in the Stock market was reflected in Mortgage rates. It is not uncommon for Mortgage rates to decline when the Stock market declines. This is typically due to investors investing in bonds that are safer as opposed to Stocks. So the decrease in the Stock market has had a positive effect on rates.
In our last newsletter, our 30 Year Fixed rates were down .375%. Our rate continued to go down .125% in the month of January. This is great news for buyers as we head into the spring market. There is now talk of rates going under 4%. I certainly hope so. Although this time of year is traditionally slow, this year seems particularly slower than usual. Here are our current rates:
Conventional 30 Year Fixed 4.0% APR
Conventional 15 Year Fixed 3.375% APR
FHA 30 Year Fixed 3.375%
10 Year ARM 3.875%
7 Year ARM 3.75%
Interestingly, although our 30 Year Fixed is down .125%, our 7 Year ARM and 10 Year ARM is up .125%. Currently there just is not enough difference between ARMS and Fixed Rates to opt for an ARM. When rates were approaching 5, there was enough of a spread and people had started seriously considering ARMs.
Here are the final year end numbers for the State of New Jersey as reported by NJAR.
New Jersey YTD 2017 YTD 2018 % Change
New Listings 181.007 183,156 +1.2%
Pending Sales 117,584 117,192 -0.3%
Closed Sales 117,704 117,004 -0.6%
Median Sales Price $280,000 $290,000 +3.6%
Average Sales Price $358,225 $368,607 +2.9%
Days on Market 71 65 -8.5%
Affordability Index 154 141 -8.4%
In every Newsletter for 2018, I stated that the market was stable. The yearend numbers are well balanced. It’s a healthy real estate market in New Jersey. The only number that sticks out a little is the affordability Index and that has gotten better with interest rates going down.
There is evidence that there will be an increase in housing Inventory in 2019. It that does happen, it will have a negative impact on price. The 4 interest rate hikes by the Fed in 2018 didn’t help the stock market. The fed has said they will increase rates 2 times this year. Let’s see how that plays out and how that effects mortgage rates.
I have access to Real Estate data for each township in New Jersey. Let me know if you would like to see market trends similar to the above data. This is very important information and I will be happy to share it with you. I work with many professional Real Estate agents across NJ as well as Attorneys, Home Inspectors and other professionals. If you need a referral, I will be happy to provide one.
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