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Century Mortgage

Consumers Optimistic About Decreasing Rates in 2018

The most recent National Housing Survey from Fannie Mae reveals a slight yet significant decrease in the number of consumers who believe mortgage rates will increase in the next twelve months. Following a record-high 64% last month, the number dropped to 62%. What makes this dip noteworthy is that it indicates that consumers are rapidly gaining hope for more affordable mortgage rates in 2018. After mortgage rates fell below 4% for the first time in 2017, homebuyers and refinancing homeowners indicated hope that the trend will continue into the next year. To put things into perspective, Freddie Mac reports that mortgage rates have averaged about 8.25% over the past 45 years, making today’s rates nothing to grumble about as they linger in the low 4’s. While consumer concerns over mortgage rates decrease, their worries increase about housing availability. Fears are mounting particularly for renters who are getting priced out of their rented spaces. The latest Fannie Mae survey showed consumers fully anticipate rent increases of 4.0% over the next year. Rising rental prices – along with fees associated with a move into a rental unit – are lowering the relative cost of homeowner ownership every day. In addition, savvy renters […]

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Steady Albeit Slow Growth for Home Building Equals Same for Economy

Nine years after the housing crisis, housing construction as an industry hasn’t yet fully healed. The slow but steady growth, however, might be a positive factor in boosting new home construction – and the economy. As a reaction to the slow pace of recovery, housing construction will likely continue to add significantly to economic growth for some time. Recent data illustrates the strength of the residential construction sector. With inventory of previously-owned homes persisting at long-time lows, housing analysts and economists turn to home builders for relief from the supply pressures in the housing market. That’s good news for housing and, at the same time, good news for the economy. Aside from providing more units for homebuyers to choose from, housing construction – especially single-family homes that need furniture, appliances, flooring and more – helps improves economic growth that could lengthen the business cycle in the process. The National Association of Home Builders (NAHB) estimates that building the average single-family home generates about three jobs. For a construction industry that lost 1.5 million jobs in the wake of the financial crisis, this explains why the rate of recovery for home construction has been so slow to some extent. Builders are […]

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Mortgage Apps Increase amid Boost in Home Purchaser Confidence

The Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey showed that the Market Composite Index (MCI) – which measures mortgage loan application volume – increased 2.4% on a seasonally adjusted basis from the previous week. The seasonally adjusted Purchase Index rose 2% from the previous week, reaching its highest level since October of 2015. On an unadjusted basis, the Index climbed 3%. The seasonally adjusted Conventional Purchase Index rose 2% from one week ago, hitting its highest level since April of 2009. The adjustable-rate mortgage (ARM) share of activity fell to 8.2% of total mortgage applications. The FHA loan portion of total applications rose scantily to 10.5% from 10.4% the previous week. The VA loan portion and USDA portion of total loan applications both remained unchanged at 10.8% and 0.8% respectively, from one week ago. The Refinance Index rose 3% from the previous week. The unadjusted Purchase Index rose 2% compared with the prior week and was 6% higher than the same week one year ago. The refinance share of mortgage activity rose slightly to 41.9% of total loan applications from 41.6% the previous week. On the heels of industry gains illustrated by the Weekly Mortgage Survey, the Fannie Mae […]

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Home Shopper Confidence in Housing Steady Yet Cautious

Americans are still as confident in the U.S. housing market as has been recently reported, yet they are decidedly more cautious. The quarterly Modern Homebuyer Survey*, released by ValueInsured, revealed the Q1 index finished at 67.7 out of 100. Sixty-three percent of Americans said they are hopeful that 2017 will be a better year for housing opportunities than in 2016. This is a slight dip from the 69% that felt the same optimism in January. The survey was conducted following the most recent Federal Reserve interest rate increase. Despite assuaged confidence, Americans still have a strong desire to buy and still value owning a home in America. In fact: 76% of Americans said owning home is an important part of their American Dream. 77% of Americans believe buying a home is one of the best financial investments they can make. 79% believe buying a home is more financially favorable than renting. 79% of non-homeowners said they would like to purchase a home. Guarded sentiment came mostly as a result of prospective first-time homebuyers and upgrading homeowners, who reported a sense of increasing risk when it comes to escalating home prices and rising interest rates. Sixty-one percent of interested homebuyers expressed […]

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Fed Rejects Rate Hike Following Dreary Q1

The Federal Reserve announced it had decided against raising its benchmark interest rate following central bankers’ two-day summit recently in Washington. Citing the fact that economic progress had “slowed” at the start of 2017 and that household spending “rose only modestly,” the Federal Open Market Committee (FOMC) declared in a statement that it would “maintain” nationwide interest rates for the moment. “The committee views the slowing in growth during the first quarter as likely to be transitory and continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, labor market conditions will strengthen somewhat further, and inflation will stabilize around 2% over the medium term,” according to the statement . The decision was largely anticipated following the FOMC’s third meeting of this year, with the Fed having already increased rates in March. “The outcome of the meeting is not a surprise. However, the Fed should continue raising rates at a modestly faster pace than previous years – two to three rate hikes total this year,” Jason Pride, Director of Investment Strategy at Glenmede, commented. Fed officials seemed willing to overlook the 2017 Q1 relaxed growth rate, under the presumptions […]

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Fed’s Go-Slow Approach is Reinforced by Economic Conditions

The economic case for a Federal Reserve interest-rate hike at their next meeting in June just lost its footing. Two recent U.S. government reports revealed that inflation showed a slight setback in March while at the same time retail sales decreased sharply for a second consecutive month. Labor Department data showed the consumer-price index (CPI) dropped 0.3%, while a measure that excludes energy and food decreased by the most since 1982. “Both reports would be arguments in a case that a dove would make for why the Fed needs to be more patient,” commented Stephen Stanley, Chief Economist at Amherst Pierpont Securities LLC. “It’s a relatively soft consumer performance in the first quarter, and you couple that with a pretty abrupt halt in the gradual uptrend in inflation.” Retail sales were down 0.2% last month after a 0.3% drop in February that had previously been reported as a gain, Commerce Department data showed. Six of 13 major retail categories recorded lower receipts for the month of March. Auto purchases dipped 1.2% following a 1.5% slip in the previous month. While the pullback at retailers highlights a weak first quarter for consumer spending – one that economic experts had already accounted […]

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Existing Home Sales Highest Since 2007

March marked the best month for real estate sales since February of 2007, with sales increases of 5.9% over the previous month. The amount of home buyers for existing homes boomed in March after stumbling unexpectedly in February for various speculated reasons. The National Association of Realtors® (NAR) said sales of existing single-family houses, townhouses, condominiums, and cooperative apartments were at a seasonally adjusted annual rate of 5.71 million, an increase of 4.4% from the adjusted February number of 5.47 million. NAR Chief Economist Lawrence Yun attributed the solid sales during the month to strong gains in the Northeast and Midwest. “Although finding available properties to buy continues to be a strenuous task for many home buyers, there was enough of a monthly increase in listings in March for sales to muster a strong gain. Sales will go up as long as inventory does.” Sales of single-family homes rose 4.3% to a seasonally adjusted annual rate of 5.08 million from 4.87 in February, marking 6.1% higher sales over the same month in 2016. Condo sales also increased, growing 5.0% to a seasonally adjusted annual rate of 630,000 units, a 5.0% annual gain. The median existing-home price for all housing types […]

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Home Seller Profitability Highest Since 2007

The Q1 2017 U.S. Home Sales Report released by ATTOM Data Solutions reveals that the typical U.S. home seller earns 24% return on their investment (about $44,000 per sale), which is the highest profit for home sellers since the middle of 2007. According to Daren Blomquist, Senior Vice President for ATTOM Data Solutions, many homeowners aren’t ready to sell to home buyers despite the increased ROI, which is causing the market’s ever-worsening inventory problem. “The first quarter of 2017 was the most profitable time to be a home seller in nearly a decade, and yet homeowners are [staying] in their homes longer before selling,” Blomquist commented. “This counterintuitive combination is in part the result of the low inventory of move-up homes available for current homeowners, while also perpetuating the scarcity of starter homes available for first-time homebuyers.” Nonetheless, Blomquist reports some promising signs that inventory may be loosening up. “There are some early signs this inventory logjam may be loosening up in some markets,” Blomquist said, “with the average homeownership tenure down from a year ago in nine of the 66 markets we analyzed, including Memphis, Dallas, Boston, Portland, and Tampa. Sky-high potential price gains may be finally prompting more […]

Fannie Mae Makes it Easier to Buy Even with Student Loan Debt

In a surprising move, Fannie Mae announced its new programs to make it easier for consumers to qualify to be first time home buyers, or pay off their student loans via a refinance. The new program is called Student Loan Solutions. This is undoubtedly fantastic news for Americans who hold some of the $1.4 trillion in student loan debt. Effective immediately, Fannie Mae is easing the home loan process with three major changes so that becoming home buyers or reducing student loan debt may become a reality. Change #1: Student Loan Payment Calculation Fannie Mae has changed how lenders calculate student loan payments. Whereas before the change, mortgage lenders had to use 1% of the outstanding balance or the fully amortizing repayment amount, now lenders can calculate debt to income ratio (DTI) based on the student loan payment just as it appears in the credit report. This is good news for borrowers on an income-driven repayment (IDR) plan such as PAYE and REPAYE. Change #2: Student Debt Paid By Others In the case that a parent or other third party pays the bill, Fannie Mae is disregarding the payment altogether. That applies not only to student loans, but payments for […]

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US Economy Stronger Than It Appears

The most recent GDP numbers report a meager 0.3% increase in consumer spending for the first quarter of 2017 – the smallest amount since 2009. But economists are counting this as good news. While it may seem contrary, a closer look at what consumers spent less money on tells the real story. For example, they spent less on things like gasoline, winter heating bills, and out-of-season clothing- all things consumers would prefer to spend less money on in the grand scheme of things. It’s true that the scant jump in GDP is far below the 3.5% increase reported at the end of 2016 and leaves the increase in growth at a low 0.7%. However, a close look at the details reveals that the drops in spending are in the “right” places. Americans cut spending on gasoline by $6 billion in the first three months of this year, which is a result of lower prices at the pump – a good thing for U.S. citizens. An atypical warm weather trend allowed households to use less fuel to heat their homes. February was unusually the second hottest on U.S. record. The result was lowered spending on “housing and utilities”, with a drop […]

Century Mortgage

Fannie and Freddie Profitable Once Again

The U.S. Treasury has received billions in profit from post-crisis Fannie Mae and Freddie Mac revenues – and investors are suing for it. For decades, Fannie Mae and Freddie Mac helped in causing a steady rise in home buyers—until the subprime crisis hit and Fannie and Freddie were on the hook for billions in losses. Legislators swore to reorganize the two companies and some planned to phase them out entirely. However, over eight years later, Fannie and Freddie still operate under government control—and they’re now a bigger part of the system, guaranteeing payment on nearly 50% of all U.S. mortgages, an increase from 38% before the crisis. There is one crucial difference: Any profits the companies generate go to the government instead of investors. In 2012 the government altered the terms to say that every quarter Fannie and Freddie would send Treasury all their profits except for a certain amount of money kept in reserve. That reserve started at $3 billion in 2013 and was scheduled to fall by $600 million every subsequent year, until hitting zero in 2018. The latest payment, a combined $9.9 billion to the U.S. Treasury at the end of March, made the total amount of […]

MBA Proposes Reform for Secondary Market

The proposal, GSE Reform: Creating a Sustainable, More Vibrant, Secondary Mortgage Market, was released by the Mortgage Bankers Association (MBA), offering a detailed outline of a secondary mortgage market that MBA believes could emerge reformed and revitalized if changes are instituted. In the spotlight are two critical areas: the appropriate transition to the reformed system, and the role of the secondary mortgage market in advancing an affordable housing strategy. Anxious to create a sustainable solution regarding the government’s role in the housing industry that doesn’t create a reprise of the errors that led to the financial crisis, MBA Chairman Rodrigo Lopez CMB, Executive Chairman of NorthMarq Capital, stated that the paper “…not only lays out a detailed end state solution that will work for the residential and multifamily markets, but also the transition steps to accomplish this goal.” MBA’s proposed approach to GSE Reform includes specific changes that will: Introduce considerably higher levels of risk-bearing private capital into the mortgage system, aiming to drastically reduce the system’s reliance on government support.   Heighten the stability of the mortgage system with numerous Guarantors that will function as privately-owned utilities.   Better the level of service and performance in the secondary mortgage […]

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March New Home Purchase Mortgage Applications Shot Up 6.7%

Mortgage applications for new home purchases rose 6.7% in comparison to March of 2016 according to the recently released Builder Application Survey (BAS) for March 2017. Compared to February of this year, mortgage applications soared by 23% relative to the previous month. These changes do not include any adjustments for usual seasonal patterns. Based on data from the BAS, the Mortgage Bankers Association (MBA), which conducts the survey, estimates new single-family home sales hit a seasonally adjusted annual rate of 670,000 units in March 2017. The seasonally adjusted estimate for March marks an increase of 14.3% from February’s pace of 586,000 units. On an unadjusted basis, the MBA estimates that there were 62,000 new home sales in March 2017, an upsurge of 21.6% from 51,000 new home sales in February. “Mortgage applications for new homes accelerated in March, with the Builder Application Survey Index reaching its highest point since the series began in August 2012,” commented MBA’s Vice President of Research and Economics Lynn Fisher. “The pick up from a fairly modest February showing suggests that developers are finding ways to bring new product on line to help supplement otherwise low inventories of existing homes for sale in the US. […]

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Vacation Home Sales Tumble; Investment Property Sales Increase

Despite 2016’s strong pace of home sales – the highest in a decade – there was a marked drop in activity from vacation home buyers, according to an annual second-home survey released by the National Association of Realtors® (NAR). NAR’s 2017 Investment and Vacation Home Buyers Survey revealed that vacation home purchases last year decreased to an estimated 721,000, down 21.6% from 2015 (920,000) while investment-home sales in 2016 rose 4.5% to 1.14 million. Owner-occupied purchases bounded upward 12.5% to 4.21 million last year – the highest level since 2006 (4.82 million). The two highest cited reasons for buying a vacation home were a) vacations or as a family retreat (42%) and b) future retirement (18%). Investors, on the other hand, purchased to generate income through renting (42%) and for potential price appreciation (16%). “The ability to generate rental income or remodel a home to put back on a market with tight inventory is giving investors increased confidence in their ability to see strong returns in their home purchase,” commented Lawrence Yun, NAR Chief Economist. The NAR survey additionally implicated that vacation and investment buyers were more inclined to use their property as a short-term rental in 2016. Forty-four percent […]

Century Mortgage

CFPB Seeks to Reduce Complications from Information Collection Requirements

The Consumer Financial Protection Bureau just released its proposal intended to make the adoption of mortgage data reporting requirements – set to take effect in January, 2018 – less complicated. While it does add more data points to be reported, the CFPB’s new HMDA rule will make reporting data online easier. “The Home Mortgage Disclosure Act (HMDA) shines a much-needed spotlight on the mortgage market, which is the largest consumer financial market in the world,” CFPB Director Richard Cordray said in a statement. “Today’s proposal reflects the bureau’s ongoing and substantive engagement with stakeholders in the marketplace, and will help [the] industry meet its new reporting obligations.” Under the 1974 Home Mortgage Disclosure Act (HMDA), the CFPB introduced new data reporting requirements in the fall of 2015 In it, the CFPB updated existing rules which will force mortgage lenders to provide information on the subject property’s value, loan terms, prepayment penalty terms and the duration of teaser (or introductory) interest rates. The HMDA was intended to speak to problems minorities faced in gaining access to a mortgage. It requires lenders to collect data from the purchase, home improvements and refinancing as well as report that data to federal regulators. However, […]

Gen Xers Better off while Boomers and Millennials Moving with their Kids

Generation X is finally on the mend and on the move. Young Boomers are buying homes with enough room for their adult children to live with them. Millennials are heading to the suburbs with their kids. All this was revealed in a recent study by the National Association of Realtors® (NAR), the 2017 Home Buyer and Seller Generational Trends, which evaluates the generational differences of recent home buyers and sellers.

Reduced Consumer Spending Under Close Watch

Consumer spending fell short of January’s projections as rising prices hit Americans where they feel it most – the wallet. As a result, leading inflation-adjusted purchases dropped by the largest margin since September of 2009 when it sank a full 1%. The 0.2% advance in spending followed a 0.5% increase in the prior month, the Commerce Department reported on Wednesday in Washington.

Recent New Home Sales Surge

Despite persistently low inventories of homes for sale and recently increased mortgage rates, new construction sales rose 6.1% on the month and increased an impressive 12.8% on the year, according to the Census Bureau. The Midwest led the charge, with sales increases of close to 31% month over month and more than 50% on the year. Transactions in the Northeast fell just over 21% in February from January but were still up.

Savvy Clients Want Sustainability

Mounting consumer consciousness and demand for sustainable, green properties is spurring an exchange of ideas between Realtors® and homebuyers and sellers. Over 50% of Realtors® find that consumers are interested in real estate sustainability issues and practices, according to the National Association of Realtors®’ (NAR) recent REALTORS® and Sustainability report.

Housing Industry Welcomes Ben Carson

Ben Carson has officially been awarded the title of the 17th secretary of the Department of Housing and Urban Development after a majority Senate vote of 58-41 and will begin immediately serving his term with the housing agency.Securing one of the few remaining cabinet members left to be approved, Carson’s inaugural first day is scant more than a month after President Donald Trump was sworn into office.

FHA Loans on the Rise Thanks to Millennial Buyers

The most recent Millennial Tracker report released from Ellie Mae indicates that the mortgage market FHA loans are on the rise – and will likely continue to be – as increasing numbers of Millennials take on the rite of homeownership. Millennials, who make up a growing number of homebuyers in the U.S., are leveraging FHA loans to maximize the advantages of lower down payments and lower average FICO score requirements.

Job Report Expected to Cement Rate Hike

Markets are more confident that there is a 94% likelihood of a rate hike this month, up from 40% a week ago. Much talk has been had about the possibility of a rate spike in March and as the time looms closer, evidence shows that the probability is ever more likely. Janet Yellen, Chairman of the U.S. Federal Reserve, has given the strongest indication to date that policymakers will indeed raise interest rates this month.

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