Frank Nothaft Quotes on Home (10 Quotes)

Over the last couple of years, we've seen many markets with strong home value appreciation. They're up at a considerable pace in many markets across the country, particularly from New England all the way down to Washington, D. C., ... Home values are up in D. C., for example, by over 10 percent over the past year. That means families have built up home equity.

The Fed's acknowledgement of weakness in the economy and a flight to quality in the bond market caused fixed-rate mortgage rates to slide further. And low mortgage rates certainly help offset rising home values, keeping houses affordable for a larger pool of homebuyers.

There's about 6 trillion in single-family mortgage debt outstanding, and total home value is about 13 trillion, which means there's about 7 trillion in home equity outstanding. Last year was a big year for liquefying home equity -- about 100 billion. That's a drop in the bucket compared to 7 trillion.

Continued low mortgage rates open the housing market to a broader segment of the population and contribute to the on-going vitality in home sales. And, since mortgage rates are expected to remain low until the economy picks up more steam, the housing sector should stay active and healthy for some time to come.

Long-term mortgage rates, which dropped again for the fifth consecutive week, remain low enough to keep refinancing activity a viable option for many. Not only can homeowners take some equity out of their home, many may also be able to lower their mortgage rate at the same time.

For the typical family, home equity accounts for the bulk of their wealth.

And with mortgage rates at their lowest level in six months, home sales should continue strong through the autumn months.

The refinance share of mortgage applications in the fourth quarter of 2005 was 45 percent while the average rates on 30-year fixed-rate mortgages climbed 0.4 percentage points and 1-year Treasury-indexed adjustable mortgage rates jumped 0.6 percentage points from third-quarter averages. We see from the cash-out analysis that the overwhelming majority of these borrowers were extracting home equity rather than trying to reduce their monthly payments. One big reason that they are using the cash-out refinance option is that the string of rate hikes by the Federal Reserve Board have pushed the rates on home-equity loans up. Home-equity loans are typically linked to the prime rate, which currently is at 7.5 percent. In contrast, the average rate on 30-year fixed-rate mortgages is presently near 6.25 percent.

Going forward, homeowners wanting to use some of the equity in their homes for home improvement or other purposes will make up a larger portion of the refinance business.

Meanwhile, home construction remains strong and home sales continue to break records easily. In fact, total home sales should end the year two percent higher than 2003's all time record level.