May 2018 Mortgage Newsletter

Rates Rising
There are 3 rate increases expected by many that will be made by the Federal Open Market Committee. There are some Financial Commentators that are suggesting there should be more. Ron Insana of CNBC, “The Fed, Wednesday’s statement notwithstanding, will likely have to get more, rather than less, aggressive in its efforts to “normalize” interest rate policy. That could mean four, rather than three, rate hikes this year.” If Mr. Insana is correct and there are 4 rate increases, that is something the market is not expecting and it could result in a sharp spike in rates.

Employment numbers are expected to be announced and predictions are that there will be a decrease to 4.0%. Decreasing numbers could be another reason for a rise in rates. There are several other economic indicators that suggest that rates are on the rise.

As reported by Freddie Mac, the last time rates were in the 5% range was in February of 2011. If rates do go over 5%, it will be interesting to see how it will impact the Real Estate Market. On a national level, the Real Estate Market seems to be relatively steady and the rise in interest rates has not had a negative impact so far. Let’s hope that if rates go up, it will not have a negative impact on the Real Estate Market.

The New Jersey Association of Realtors released its report for Real Estate activity in the state of New Jersey for the Month of March. I can’t remember the last time we had such a large increase in the median price of homes. Here are some interesting statistics:

New Jersey YTD 2017 YTD 2018 % Change
New Listings 46,735 44,194 -5.4%
Pending Sales 27,620 27,963 +1.2%
Closed Sales 22,207 21,817 -1.8%
Median Sales Price $255,000 $269,900 +5.8%
Days on Market 85 74 -12.9%
Affordability Index 165 154 -6.7%
The median price number jumps out again this month. An increase of 5.8% is substantial. A decrease in new listings ie decrease in supply is a reason for the increase in price even though interest rates have been increasing. Although most of the indicators are leaning towards a seller’s market, the market seems to be well balanced.

This month I added the Affordability Index data. When affordability goes down, that means less people can afford a home. A decrease of 6.7% makes sense since median prices are up and homebuyer’s affordability is less due to the rise in interest rates. Long term this can have a negative effect on Home Values. So those thinking of selling, should get their house on the market. Those that are buying should do so soon before rates go up.

This month I would like to present the Adult Housing Market Segment. In the past, developers were complaining that the demand was not strong enough and in some cases, they convinced municipalities to allow for re-zoning from Senior Housing to non age restricted housing. They aren’t doing that any more. Check out these numbers:

New Jersey YTD 2017 YTD 2018 % Change
New Listings 2,405 2,290 -4.8%
Pending Sales 1,721 1,578 -8.3%
Closed Sales 1,422 1,350 -5.1%
Median Sales Price $165,000 $185,500 +12.1%
Days on Market 79 66 -16.5%
Developers are now acknowledging that this is “Hot Market” and many are anxious to get into it especially in New Jersey with the densely populated senior community.

We had a slight increase of .125% in the beginning of April and it came back down to pretty much the same as we reported in the last Newsletter:

Conventional 30 Year Fixed 4.25% APR

Conventional 15 Year Fixed 3.75% APR

FHA 30 Year Fixed 3.75%

10 Year ARM 3.875%

7 Year ARM 4%

The 10 Year ARM and 7 Year ARM rates are .125% lower this month as compared to what was reported in April.

We will be hosting a Free Home Buyer Seminar June 16th. For more information and registration, please visit All attendees receive a free 150 page Home Buyer workbook and a $1,000 Closing cost coupon. At the Homebuyer Seminar speakers provide valuable tools that assist in the Home Buying Process. Topics include Title Insurance, Pitfalls to avoid, how to get the best interest rates, no closing cost transactions, all about Credit reports and much more. Reserve your spot today while there is availability.

Vibha Singh
NMLS ID 66034

Ambika Singh
Loan Officer
NMLS ID 1541005

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