Mortgage rates dropped for the third week in a row after rising significantly after President-elect Donald Trump won the election, however, the 10-year Treasury did see an increase.
“After trending down for most of the week, the 10-year Treasury yield rose following the release of the CPI report,” Freddie Mac Chief Economist Sean Becketti said.
The 30-year fixed-rate mortgage decreased yet again to 4.09 percent for the week ending Jan. 19, 2017. This is down from last week’s 4.12 percent but still up from last year’s 3.81 percent.
The 15-year FRM decreased from last week’s 3.37 percent to 3.34 percent this week. This is still up from last year’s 3.1 percent.
You never know what might come up, which makes savings for a rainy day important.
Emergencies come up. “But a lot of Americans aren’t ready for them financially, according to new research from the New York Federal Reserve.
“The average American age 40 or under says there’s nearly a 50% chance they would not be able come up with $2,000 next month if there were an emergency.”
“Overall, Americans said in October there was a 34% chance they couldn’t come up with that amount of money if they had to. That’s down from a 42% chance in 2013 when the New York Fed first started asking the question in its Survey of Consumer Expectations. But it’s still up from 32% in February.” (Gillespie, Patrick. “Many Americans Don’t Have Enough Emergency Cash. CNNMoney. Cable News Network, 7 Dec. 2016. Web. 12 Dec. 2016.)
After hitting bottom in 2012, home prices took off dramatically before leveling off a bit in mid-2014. In the last two months, though, they turned higher again. The amount of equity homeowners now have — the value outside their mortgage debt — has doubled in the last five years, according to CoreLogic.
September home prices showed a 6.3 percent annual gain, slightly more than in August and a clear sign that prices are heating up again after cooling through much of spring and summer. CoreLogic’s chief economist said that home equity wealth has doubled during the last five years to $13 trillion, large because of the recovery in home prices.
While homeowners today show more wealth on paper, they are not extracting it at nearly the rate they did during the last housing boom. Near-record-low mortgage rates have certainly prompted thousands of borrowers to refinance and lower their monthly payments, but a very small share have extracted cash in these refinances and home equity lines of credit (HELOC).
Need or want to spend less? Many financial advisers (such as the famous Dave Ramsey program) propose that you should use cash for just about everything. But that can be difficult to implement, so here’s an alternative.
“…A new study by the Urban Institute and D2D Fund offers a middle ground that consumers might find more realistic: Use cash for anything under $20.”
Why focus only on small purchases? CNN has several good points, among these reasons:
Impulse buys are often small.
We’re more likely to ignore the small purchases.
It’s risky to carry around wads of cash.
“…So while “cash only” sounds good in theory, “cash only for the small things” might be much more useful in practice. It offers the best of both worlds: more budgetary control, plus the benefits and protections plastic can provide. So back away from the scissors and put the credit card back in your wallet. Just make sure to dust off that ATM card, too.”