Fannie Mae Response to What Determines Rate on a 30-Year Mortgage? Useful Information for Conventional and Manufactured Home Buyers and Shoppers that can Benefit Your Planning; Facts-Analysis

As the featured image in this article provided by mortgage giant Fannie Mae reflects, there has been a bit surprising to many roller-coaster on mortgage rates in 2024. Despite the fact that the Federal Reserve announce two different rate cuts and there was dip in mortgage interest rates going into that first rate cut, it was followed by a fairly sharp increase in mortgage rates.

Following this explanation provided by Fannie Mae will be additional facts-evidence and analysis (FEA) with MHLivingNews commentary in Part II.

Part I

What Determines the Rate on a 30-Year Mortgage?

A new piece from Fannie Mae’s Economic & Strategic Research (ESR) Group pulls back the curtain on what factors affect the 30-year mortgage rate. When the Federal Reserve cut the federal funds rate in September, many market observers expected mortgage rates would also decline. Instead, the average rate on a 30-year mortgage rose from 6.09 percent on September 19, the day after the Fed’s first rate cut, to as high as 6.84 percent on November 21, before dipping slightly again in recent weeks.

This has caused potential homebuyers, mortgage lenders, and other market observers to ask us — why have mortgage rates risen despite the Fed cutting rates? The short answer is this: the federal funds rate is used to benchmark short-term interest rates, while the rate on a 30-year mortgage is a long-duration loan — with a rate that is determined in the bond market.

In a new Housing Insights piece, Nathaniel Drake, Economic Analyst, explains how the 30-year mortgage rate is constructed, what factors influence it, and how mortgage rates have changed since the onset of the pandemic.

Among the takeaways:

The 30-year mortgage rate is benchmarked to the rate of the 10-year Treasury note. As the rate on the 10-year Treasury note moves, mortgage rates follow suit.
The rate on the 10-year Treasury note is determined by investors’ expectations for shorter-term interest rates in the economy over the duration of the bond plus a term premium, which compensates investors for the risks associated with holding a longer-duration bond.
Mortgage rates are determined by adding a spread to the benchmark 10-year Treasury note. The spread, or difference, between the rate offered on a 30-year mortgage and the 10-year Treasury note is composed of the primary-secondary mortgage spread (reflecting industry costs of originating a mortgage and lender margins) and the secondary mortgage spread (reflecting additional risk present in mortgage-backed securities relative to the 10-year Treasury note).
Since the Federal Reserve cut interest rates in September, the market has digested positive economic data releases, stickier-than-expected inflation data, and the outcome of the 2024 election. These have pushed the rate on the 10-year Treasury note upward, and thus mortgage rates have risen.

Learn more by reading the new Fannie Mae Housing Insights piece.

Data sources for charts: Freddie Mac, Federal Reserve Board, Fannie Mae

Part II – Additional Facts Evidence and Analysis (FEA) with MHLivingNews Commentary

In no particular order of importance are the following information and sources.

It’s funny.

The Fed cut rates but borrowing rates went higher today because they are based on the 10 year yield and it’s ripping higher into the close.

So mortgage and auto loan rates will be higher tomorrow than they were today. pic.twitter.com/wOCW4uWhx4

— QE Infinity (@StealthQE4) September 18, 2024

First-time homebuyers are being priced out of the market with the cost of homeownership at its highest in three decades.

The average 30-year fixed mortgage rate is ~6.5% — up 135% since Trump left office (2.7%). The median home sales price is up ~25% since Trump left office. pic.twitter.com/bSL8qWsw3N

— RNC Research (@RNCResearch) September 17, 2024

2) So, with higher interest up more than double since Biden-Harris took office, plus conventional housing costs up sharply too, housing affordability has crashed in roughly the last 4 years.

That is obviously bad news for millions of affordable housing seekers. Homelessness is higher than ever.

Top 10 States for Homelessness & Top 10 Cities for Crime – ‘Unfortunately Folks This Bad Stuff and These Crises are Going to Get Worse Until…’ Shocking Fact-Based Lessons with MHVille Analysis

https://www.manufacturedhomepronews.com/william-haupt-iii-expose-homeless-at-historic-rate-under-biden-harris-homelessness-is-the-canary-in-mine-something-radically-wrong-if-anybody-is-living-on-streets-mhlinks/

Note that if past experience is relevant now, it may take several years before interest rates begin to fall back to lower levels, even if the Trump-Vance (R) agenda is successful. So, for those who think they need to buy a home and get a loan sooner than later, it would be prudent to expect that rates will be similar to what they have been under Biden-Harris. Time will, of course, tell.

3) While Fannie Mae and Freddie Mac offer 30-year mortgage loans on manufactured homes, even the arguably problematic Manufactured Housing Institute (MHI) has suggested that the two Government Sponsored Enterprises (a.k.a.: GSEs or Enterprises) are charging a half-percent higher rate than is typically charged for conventional housing. Additionally, MHI said that

Despite the HERA statute requiring Fannie and Freddie to “consider” personal property manufactured loans as part of its statutory Duty to Serve requirements, neither GSE has made a single personal property loan since HERA was adopted 16 years ago.

MHLivingNews unpacked MHI’s problematic behavior in via a Q&A with the Manufactured Housing Association for Regulatory Reform (MHARR) president and CEO, Mark Weiss, J.D. who ripped MHI’s CEO Lesli Gooch on that topic, as have others. See that linked below.

MarkWeissJDPresidentCEO-ManufacturedHousingAssociationRegulatoryReformMHARRPicLogoInexcusableMajorProblemExclusiveQAMarkWeissJDpresCEO-MHARR-MHLivingNews — https://www.manufacturedhomelivingnews.com/inexcusable-and-major-problem-exclusive-mhlivingnews-question-and-answer-qa-with-mark-weiss-j-d-president-and-ceo-of-manufactured-housing-association-for-regulatory-reform-mharr/

4) It may be better for housing seekers to explore other mortgage options, such as FHA Title II (land-home loans), VA loans, and USDA (Rural Development) loans. They often offer a lower down payment and a lower interest rate than other financing options, but they are typically used in a ‘land-home’ loan. So those going into a land-lease can’t normally use a mortgage loan, although it is theoretically possible. The Q&A with left-leaning Bing’s artificial intelligence powered Copilot illustrates that point.

Isn’t it true that FHA Title II, VA, or USDA (Rural Development) land-home loans on manufactured homes are often available with a lower down payment and interest rate that Fannie Mae or Freddie Mac originated loans?

Yes, that’s correct! FHA Title II, VA, and USDA (Rural Development) loans often offer lower down payments and interest rates compared to loans originated by Fannie Mae or Freddie Mac. These government-backed loans are designed to make homeownership more accessible, especially for those who might not qualify for conventional financing.

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5) It is also worth mentioning that some states, local jurisdictions (e.g.: counties), and mortgage lenders may have programs that can be used to buy a new manufactured home that can also be competitive with FHA, VA, or USDA loan programs.

Not all lenders have experience with doing manufactured home loans, and so, some will attempt to steer a customer in a different direction. If necessary, ask for a different loan officer that has manufactured home loan experience, or simply ask in advance for someone who has closed numbers of manufactured home loans.

6) Other information on manufactured housing and manufactured home living or related research follows.

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‘YoungAdultsCantAffordToBuyGoingFromOwnershipToRentersSocietyFromFreeCitizensToMereSubjectsAtMercyOfPowerful'PlusSundayWeeklyHeadlinesReviewMHProNews — *https://www.manufacturedhomepronews.com/young-adults-cant-afford-to-buy-going-from-ownership-to-renters-society-from-free-citizens-to-mere-subjects-at-mercy-of-powerful-elites-i/*

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October2023UltimateManufacturedHousingAndMobileHomeManufacturedHomeResearchTrendsStatisticsExpertViewsFactChecksAndInsightsMobileManufacturedHomeLivingNews — *https://www.manufacturedhomelivingnews.com/october-2023-ultimate-manufactured-housing-and-mobile-home-manufactured-home-research-trends-statistics-expert-views-fact-checks-and-insights/*

HomeownershipRatesInEuropeOtherPartsOfTheWorldComparedToUnitedStatesHomeownershipRateEyeOpeningFactsWithAnalysisAndCriticalMHVilleInsightsForAffordableHousingAdvocatesMHProNews — https://www.manufacturedhomelivingnews.com/homeownership-rates-in-europe-other-parts-of-the-world-compared-to-united-states-homeownership-rate-eye-opening-facts-with-analysis-and-critical-mhville-insights-for-affordable-housing-advocates/

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https://www.manufacturedhomepronews.com/masthead/hud-admits-decades-of-delay-as-election-approach-manufactured-housing-association-for-regulatory-reform-mharr-say-hud-took-10yrs-to-ok-multi-family-manufactured-homes-after-they-raised-issue/

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Mobile Home and Manufactured Home Living News explores the good, bad, and ugly realities that keep the most proven form of affordable home ownership under-appreciated and misunderstood. MHLivingNews provides third-party research and other resource collections and reports not found on other sites. We also provide thought provoking analysis that are designed to open minds and hearts. This is the widely acknowledged best source for authentic news on mobile and manufactured home living, as well as the policies that impact this segment of housing that provides 22 million Americans with good, surprisingly appealing living.

On our MHProNews sister-site and here on MHLivingNews, we lay out the facts and insights that others can’t or won’t do. That’s what makes our sister site and this location the runaway leaders for authentic information about affordable housing in general, the politics behind the problems, and manufactured homes specifically.

That’s a wrap on this installment of “News through the lens of manufactured homes and factory-built housing” © where “We Provide, You Decide.” © ## (Affordable housing, manufactured homes, reports, fact-checks, analysis, and commentary. Third-party images or content are provided under fair use guidelines for media.) (See Related Reports, further below. Text/image boxes often are hot-linked to other reports that can be access by clicking on them.)

CongRepAlGreenDeskTamasKovachLATonyKovachPhoto12.3.2019ManufacturedHomeProNews — All on Capitol Hill were welcoming and interested in the discussion of manufactured housing-related issues in our 12.3.2019 meetings. But Texas Congressman Al Green’s office was tremendous in their hospitality. Our son’s hand is on a package that included a copy of the Constitution of the United States and other goodies. MHProNews has worked with people and politicos across the left-right divide.

By L.A. “Tony” Kovach – for MHLivingNews.com.

Tony earned a journalism scholarship and earned numerous awards in history and in manufactured housing. For example, he earned the prestigious Lottinville Award in history from the University of Oklahoma, where he studied history and business management. He’s a managing member and co-founder of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com. This article reflects the LLC’s and/or the writer’s position, and may or may not reflect the views of sponsors or supporters.

http://latonykovach.com

Connect on LinkedIn: http://www.linkedin.com/in/latonykovach