The Right Advice,
Right When You Need It

Wildfires, and California’s Housing Market

In Northern California, over 170,000 acres – an area larger than the island of Manhattan – were ravaged by 22 wildfires that spread through seven counties, and destroyed 3,500 homes, and incinerated countless buildings. The cause of the fire that spread through San Francisco’s northern region – an area recognized as one of California’s economic powerhouses – has not yet been established. However, the damage, wreckage, and destruction it caused in this usually highly prosperous region, will result in slashed home prices, scarce availability, and wrecked infrastructure – all factors that need to be considered as displaced homeowners decide whether or not they should return and rebuild, or start somewhere fresh as homebuyers. As a multibillion-dollar tourist industry, the jobs it provides and the services it offers, will take a long time to recover. Rebuilding the homes, businesses, and schools will likely take up to a decade to complete should residents choose to return. The average home price for a residence in Napa County alone was $876,200, while the average home price for a residence in neighboring Sonoma County was $750,000. But after the fires, and with more than 172,000 homes gone in the blaze, it will cost an estimated […]

How do the Holidays Effect the Economy?

Turkey. Mistletoe. A ten-second countdown. That’s right. The holidays are just around the corner, and corporations throughout the country have already been preparing for the effects the celebratory time will have on their business operations. Are you prepared? What effect are you anticipating the holidays to have on your growth, your revenue, and your overall success? According to the National Retail Federation (NFR), 2017 holiday sales are expected to grow between 3.6 and 4 percent. According to their website, “NRF expects holiday retail sales in November and December – excluding automobiles, gasoline and restaurants – to increase between 3.6 and 4 percent for a total of $678.75 billion to $682 billion, up from $655.8 billion last year.” NFR President and CEO Matthew Shay says that although 2017 hasn’t been “perfect, especially with the recent devastating hurricanes,” he believes NFR’s forecast reflects the economy’s “realistic, steady momentum, and overall strength of the industry.” “We believe that a longer shopping season and strong consumer confidence will deliver retailers a strong holiday season,” he said. But when it comes to the sectors related to the housing and/or mortgage industries, NFR reports the following: “Consumers continue to do the heavy lifting in supporting our […]

Student Debt Delays Homeownership Longer than Anticipated

Month after month, college graduates slowly pay off their student loan debt. These loans represent the four to five years students studied for an array of classes and pulled all-nighters to cram for exams. Now that their education is complete students also have outstanding student loan debt in the tens (or even hundreds) of thousands of dollars. So how does student loan debt affect a college graduate’s ability to purchase their first home? According to a recent study by the National Association of Realtors, and the nonprofit group American Student Assistance, millennials attributed their student loan debt for the delay of their first home purchase by approximately 7 years. The results of the above study are based on a 41-question survey answered by more than 2,200 people aged 22 to 35 who are currently repaying their student loans. Saving for a down payment for a home or qualifying for a mortgage is difficult due to the student loan bills that can add up to hundreds of dollars per month. A potential borrower’s debt–to–income ratio increases due to their loan balances, a circumstance often thoroughly analyzed by loan officers before they issue a mortgage. According to realtor.com®’s chief economist, Danielle Hale, […]

Riskier Mortgages, Higher Home Prices

Potential homebuyers are seeking out ways to afford their monthly mortgage payments. While the number of adjustable-rate mortgage (ARM) originations rose just over 40 percent from the first quarter to the second quarter of this year, ARM’s have lower interest rates than fixed-rate loans, as well as have a fixed period of at least five years. So after years, the rate can change, and still ARM’s are considered riskier than the classic 30-year fixed mortgage. By definition, an adjustable-rate loan’s rate will be different after the fixed period, either increasing or decreasing depending on the broader market rate. According to CNBC.com, “ARM demand usually rises from the first quarter to the second quarter, because spring is the busiest season for home buying, and it’s when families dominate the market, searching for bigger, higher-priced homes. Still, the jump in ARMs in the spring of 2016 was 15 percent compared with this year’s 40 percent jump. This makes the case that buyers this year are struggling with affordability and opting for a lower-rate product. While mortgage rates remain very low, historically speaking, they have been inching up. The vast majority of homebuyers favored the safety of the 30-year-fixed rate mortgage since the […]

Housing, Holidays, and Interest Rates

Housing, holidays, and interest rates are an intriguing concoction when it comes to the mortgage industry. Consumers, who are caught up in the excitement of the holidays while in the process of purchasing a home, may neglect to consider the effect the season may have on the mortgage industry’s ever-changing interest rates. So, what are the effects of this concoction, and how do they affect home buyers in today’s market? As people wait for the Fed’s next move, speculation about a change in housing interest rates lingers. CNBC reported in December of 2016, that “mortgage rates [were] sitting solidly at the highest level in two years, and could move even higher…”. But, CNBC goes on to report that perhaps interest rates don’t affect housing as much as we thought they did. CNBC states that “…there is great debate over whether rising rates really matter to housing. After all, increasing rates are indicative of a stronger economy, and a stronger economy favors housing.” Chief economist at Fannie Mae, Doug Duncan, told National Mortgage News that, “…[if] interest rates are rising because the economy is growing more rapidly, then, typically, incomes also rise, and the rise in incomes offset the increase in […]

Mortgage Applications Rebuild Foundation

The volume of mortgage applications increased last week for the first time since early September. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of that volume, rose 3.6% on a seasonally adjusted basis during the week ended October 13. It did decline 7% on an unadjusted basis from the week ended October 6, a week was shortened by the Columbus Day holiday. The week’s results included an adjustment to account for that event. The increase in the Composite Index was the result of gains in both refinance and purchase mortgage applications. The seasonally adjusted Purchase Index was up 4% compared to the previous week although the unadjusted version fell 6%. The Purchase Index was 9% higher than during the same week in 2016. Refinancing also gained ground, ending a four-week slide. That index rose 3% although the share of total applications that were for refinancing ticked down to 48.6% from 49.0%. FHA mortgage applications made up 10.4% of the total, compared to 10.3% the prior week, while the VA share ticked down to 10.5% from 10.6%. USDA loans applications increased their share from 0.7% to 0.8%. Mortgage interest rates showed little movement from the previous week. […]

Ways the Holidays Affect the Mortgage Industry

As the holidays approach, (only to end up shocking us with their fast arrival), home buyers, loan officers, and real estate agents continue to work through their home buying processes. But when the Fed changes things up, homeowners may face increased rates, affecting both the borrowing costs and the price tags on homes across the nation. But the looming increase doesn’t necessarily mean people need to expedite buying or selling a house. The most common loan that people generally apply for is a 30-year mortgage with an average interest rate of 3.9%. So, if a home buyer borrowed $200,000 at that rate, their monthly payment would be approximately $944. Money articles found in Time magazine, often address the mortgage industry. Time states that, “…[low] rates have helped the housing market in other ways. After all, the less you pay to borrow, the more you can afford to spend, so cheap money has enabled home prices…to climb at a steady pace… the Federal Reserve is likely to continue raising rates as long as the economy improves. So, mortgage rates may be set to rise a lot further. But that process is likely to take years.” Time states that in the event […]

Home Prices Surged 7.7 Percent in August as Inventory Fell 12.4 Percent

Home prices in August surged 7.7 percent, the largest year-over-year price gain since May 2015. The national median sale price was $293,000, flat from July. None of the metro areas Redfin tracks saw prices decline in August. The median value of off-market homes in August was $251,000, as measured by the Redfin Estimate, up 0.7 percent from July. Sales in August fell 5.5 percent compared to last year, the largest decline posted since July 2016. This follows the 5 percent decline posted in July by the Redfin Housing Demand Index. The number of homes for sale plunged 12.4 percent, the largest year-over-year decline in a 23-month streak of declining inventory. The number of new listings in August was down 1 percent from a year ago, leaving just 2.8 months of supply. Less than six months of supply signals the real estate market is tilted in favor of home sellers. In the San Jose, Calif. metro area, inventory plummeted 50 percent in August compared to a year ago, leaving less than a one-month supply, the lowest of all markets Redfin tracks. Nearly a quarter (24.9%) of homes sold above their list price. The average sale-to-list ratio was 98.5 percent. The typical […]

CFPB Proposes Changes to Publicly Available HMDA Data

The CFPB today issued policy guidance on the loan-level Home Mortgage Disclosure Act data it will make available to the public under the revised HMDA data collection rules, which take effect in 2018. Noting concerns over consumer identity protection—which ABA raised several times to the bureau in previous comments—the CFPB is proposing to not publicly disclose a number of data points, including the universal loan identifier, the application date, the date of action taken by the bank on a covered loan or application, the address of the property securing the loan and the credit score or scores relied on in making the credit decision. The bureau also proposed changes that would reduce the precision of values reported for several data fields, such as the amount of the covered loan applied for, the age of an applicant or borrower, or a borrower’s debt-to-income ratio.

The Evolution of Real Estate Marketing

The Internet has changed the way the real estate market and real estate marketing operate. The traditional mainstays and methods of advertising and promotions no longer function as effectively. Who has a phonebook? How are you going to cold call an e-retailer? You can buy an ad in the newspaper, but the only customers it will attract are the kind of customers who still have a newspaper subscription. Our Internet habits are also leading to the fragmentation of the digital universe, where no two people are seeing the same combination of information sources. The world is also more media savvy than ever. This means advertising simply does not work as well as it used to. People are less likely to see your ad, no matter where you put it, and are inclined to view it with suspicion when they do. People are intolerant of solicitation in general. Most people won’t open up for a door-to-door salesperson, viewing them as an anachronism at best and a nuisance at worst. Cold calls are practically useless, especially now that so many people have cell phones and unlisted numbers. Most cities do not even print home phonebooks anymore, and the commercial phonebooks are usually […]

You’re married: Is it okay to buy a house without your spouse?

Buy a house without your spouse: sensible or sleazy? Can you (or should you) buy a house without your spouse? Yes; you can take title in many ways, and one of those ways is “a married man / woman as his / her sole and separate property.” But what does that mean? And just because you can, does it mean you should? Why would you buy a house on your own? There a several reasons you might want to purchase a house in your name only: to protect your interests, to plan your estate, to save money, or to qualify for a mortgage. To get a mortgage Many mortgage programs have minimum FICO scores that would get a couple declined if one spouse’s score is too low. Whether it’s bad credit or just a too-short credit history, if the result is a FICO under 620, you’ll be disqualified under many mortgage programs. So it would make sense to put the mortgage in your own name if you can qualify without your significant other’s income. To save money A few years ago, the Federal Reserve studied mortgage costs and found something startling. Of over 600,000 loans studied, ten percent could have […]

Fed’s George pushes for more rate hikes despite low inflation

Fed’s George pushes for more rate hikes despite low inflation ·       Kansas City Fed President Esther George tells CNBC that inflation running below 2 percent shouldn’t prevent more interest rate hikes. ·       George made the remarks from the annual Fed conference in Jackson Hole, Wyoming. ·       While Fed officials have indicated a desire to hike interest rates once more this year, traders in the funds market are expressing doubt. Low inflation shouldn’t stop the Federal Reserve from continuing to hike interest rates, Kansas City Fed President Esther George said Thursday. Inflation has been running persistently below the 2 percent target the central bank likes to see as indicative of healthy economic growth. Some officials have expressed caution about the Fed’s collective desire to keep raising rates in that climate. However, George said she feels confident enough in where things stand to keep advocating for tighter policy. “I think we should continue with the gradual rate path,” she told CNBC in a live interview from the annual symposium in Jackson Hole, Wyoming, that the Kansas City Fed hosts. “While we haven’t hit 2 percent, I’m reminded that 2 percent is a target over the long term, and in the context of […]

My Home Didn’t Appraise For Its Purchase Price. Now What?

What Is A Home Appraisal? A home appraisal is the process by which a licensed person assigns a “fair market value” to a property. Appraisals are performed by professionals known as appraisers and, with photos, research, and analysis, home appraisal reports can sometimes stretch to 30 pages of more. The home appraisal process helps to determine whether a home buyer is over-paying for a home relative to similar for-sale homes. This protects the home buyer, refinance applicant, and the mortgage lender providing financing on the home. Home appraisals are used for refinance loans, too. Depending on a home’s appraised value, a borrower will get access to different mortgage rates and options; and, may even get to submit less documentation as part of the mortgage approval process. However, home appraisals don’t always come in “at-value”, which is to say that — sometimes — home appraisals assign a home value that is less than for what you hoped or planned. What do you do then? What Happens When A Home Appraises For Less Than Its Purchase Price? When your home appraises for less than its purchase price, it affects your mortgage, and can affect your contract, too. Remember that mortgage lenders use […]

HARP Extended through 2018 as Changes Made to High-LTV Refi Program

The Federal Housing Finance Agency today extended the Home Affordable Refinance Program through Dec. 31, 2018. The program was scheduled to phase out in September upon the launch of Fannie Mae and Freddie Mac’s new streamlined refinance program for borrowers with high loan-to-value ratios. However, the agency today announced that the new high loan-to-value refi program would only be available for borrowers who originate their loans on or after Oct. 1, 2017; as a result, FHFA determined that HARP remained necessary to serve eligible existing borrowers. More than 143,000 homeowners may still be able to benefit from HARP, the agency added. Since its inception in 2009, more than 3.47 million refinances have been done through HARP. The eligibility date for the new high loan-to-value refi program was necessary to support the GSEs’ credit risk transfer programs, which since March have seen $54.2 billion worth of risk transferred. Fannie and Freddie will modify future credit risk transfers to accommodate the new streamlined refi program. Meanwhile, FHFA today announced that nearly 357,000 refinances of Fannie or Freddie loans were completed in the second quarter, with 9,700 of them coming through HARP. HARP refinances dropped by one third since the prior quarter. Fourteen […]

Interest Income Boosts Bank Profits in Second Quarter

FDIC-insured banks and savings institutions earned $48.3 billion in the second quarter, up 10.7 percent from the industry’s earnings a year before, the FDIC said today. The rise in net earnings was largely driven by a 9.1 percent increase in net interest income as the Federal Reserve continues the process of normalizing interest rates, the agency said. Return on assets, a benchmark for industry performance, hit 1.14 percent — a level not seen since 2007. “America’s banks continue to finance the businesses that drive growth and create jobs,” said ABA Chief Economist James Chessen. “Small business lending was particularly strong in the second quarter, showing confidence by entrepreneurs that our eight-year expansion will continue well into 2018.” With interest rates slowly rising, net interest margin improved to 3.22 percent, up from 3.08 percent the year before and the highest level since 2013. Higher net interest margins were reported at larger institutions, which have a greater share of assets that reprice or mature in the short term. Noninterest income was 1 percent higher compared to the same point in 2016. Total loans and leases increased by 1.7 percent, or $161.2 billion, during the second quarter. While loan growth remains strong — […]

Fed should be cautious in face of weak inflation: Brainard

Inflation is falling “well short” of target so the Federal Reserve should be cautious about raising interest rates until it is confident of a rebound, an influential Fed policymaker said on Tuesday in making the dovish case ahead of a key policy meeting. In a speech highlighting months of weak data that has pushed core U.S. inflation down to 1.4 percent, Fed Governor Lael Brainard said the central bank should go so far as to make clear it is comfortable pushing prices modestly above a 2-percent target. Brainard, a permanent voting member on the Fed’s monetary policy committee who has in the past convinced colleagues to delay tightening, noted that the U.S. economy is on a “solid footing” and benefiting from two years of an “extremely welcome” rebound in global peers. Yet she seized on the fact that core U.S. price readings have sagged for five straight years. “We should be cautious about tightening policy further until we are confident inflation is on track to achieve our target,” Brainard lends in a speech at the Economic Club of New York. “There is a high premium on guiding inflation back up to target so as to retain space to buffer adverse […]

Lenders Optimistic on DTI Change

Fannie Mae recently raised the cap on its maximum debt-to-income (DTI) ratio to 50 percent. Will it help? NAR Research queried lenders about this change in the Survey of Mortgage Originators for the 2nd quarter of 2017. Mortgage lenders were optimistic about the change, but some will maintain overlays to mitigate potential risks. In July, Fannie Mae began buying and insuring loans with DTIs up to 50 percent. This change was an increase from the DTI cap of 45 percent maintained by Fannie Mae in recent years. Some analysts pointed to this change as a potential expansion of the credit box which would result in more home sales in the face of rising home prices and student debt. Others have panned it as simply taking mortgage loans from the Federal Housing Administration (FHA) or other channels. 57.1 percent of lenders in the survey indicated that the change would result in a modest increase in total originations as more borrowers take advantage of the change. Only 21.4 percent felt that this market segment was already served by the FHA, while 7.1 percent felt that the risk was too great to originate. When asked whether they or the investor/aggregator with whom they […]

What Hurricane Harvey means for real estate and mortgage rates

Natural disasters affect real estate and mortgage rates If you’re searching for a modern American nightmare, you don’t have to look much further than the damage done by Hurricane Harvey. The late-summer storm tore through Eastern Texas, displaced millions of people, created more than $100 billion in damage — and perhaps increased mortgage rates? Mortgage rates and Hurricane Harvey The worldwide supply and demand for money determines what we pay for all kinds of financing, including mortgages. As much as Hurricane Harvey was a huge event, its impact on mortgage rates has been minimal. Freddie Mac reports that prime mortgage rates were 3.86 percent for the week of August 24th just before the storm. They actually fell to 3.82 percent for the week of August 31st. Today’s mortgage rates are remarkably low by historic standards, and did not spike as a result of Harvey. This is good news for mortgage borrowers nationwide, and it’s also good news for Harvey victims because it means cheap funding will be available as they re-build. New home construction At this early point, it’s difficult to know just how many homes Harvey destroyed and damaged. Experts estimate above 100,000 units, but it’s likely that the […]

156,000 Jobs Added in August

Total nonfarm payroll employment rose by 156,000 in August, a decrease from July’s downwardly revised figure of 189,000, according to the Bureau of Labor Statistics. The national unemployment rate ticked up to 4.4%, staying within a 10 basis point range in the last five months. Private service-providing industries added a net 95,000 jobs, led by gains in professional and business services, which added 40,000 jobs during the month, and by the health care and social assistance sector, which added 17,000. Goods-producing employment rose by 70,000 jobs during the month, as gains in durable goods manufacturing and construction led by both adding 28,000 jobs in August. The civilian labor force participation rate was 62.9%, the same as in July. Workers unemployed for less than 14 weeks increased by 87,000, while the number of long-term unemployed, those jobless for 27 weeks or more, was essentially unchanged and accounted for 24.7% of the unemployed. The number of discouraged workers was 448,000, a 128,000 decrease from a year earlier. Average hourly earnings increased by 3 cents to $26.39, after a 9-cent increase in July. Over the past year, average hourly earnings have risen by 65 cents, or 2.5%.

Century Mortgage

House Considering Many Dodd-Frank Provisions for the Chopping Block

The Financial Choice Act, which is sponsored by FSC Chairman, Jeb Hensarling, would modify or repeal many of the modifications made by the Dodd-Frank Wall Street Reform and Consumer Protection Act, including wide-ranging changes in financial regulations, revising the structure of the Consumer Financial Protection Bureau, and restraining much of its power. It also contains provisions that will touch the home mortgage industry. In fact, if passed, the bill would incorporate over two dozen proposed regulatory relief bills for local and community financial institutions, which we include for reader’s reference; H.R. 2896, H.R. 1210, and H.R. 766. House Majority Leader, Kevin McCarthy, has stated that he anticipates a full House vote shortly on H.R. 10, The Financial Choice Act, which was voted out of the Financial Services Committee (FSC) on May 4. Information provided by associates at the Ballard and Spahr law firm, Richard J. Andreano, Pavitra Bacon and Barbara Mishkin has been used to explain some of the impact the passage of the law could bring to the mortgage industry, as well as shed light on the impact on CFPB and other regulatory agencies. H.R. 10 would create a safe harbor under the Regulation Z ability to repay requirements […]

Century Mortgage

Homeownership Still Eludes Many Millennials

According to the Census Bureau, the homeownership rate for those under the age of 35 is currently at 34.3%. That’s significantly lower than the pre-recession level of 43%. A new study conducted by Apartment List revealed that 80% of apartment-dwelling millennials (those born between 1982-2004) would, given the right circumstances, become first-time home buyers instead of making monthly rent payments. Whether they can afford to do that, however, is another question completely. With housing inventories as tight as they are today, prices continue to escalate and leave out would-be millennial homebuyers. Researchers surveyed 24,000 renting millennials across the country and discovered that close to 70% of them have saved less than $1,000 for a down payment. Only 15% have put away $5,000 and only 29% are regularly saving a minimum of $200 each month to eventually put towards a down payment for purchasing a home or condo. Researchers further uncovered that millennials significantly underestimate how much it will actually cost to be in the position to make a 20% down payment. At their current pace of saving, millennials who intend to put 20% down for an average condo would need to save for at least 19 years in high-priced real […]

Century Mortgage

Harker Says 3 Rate Increases Still Likely After May Payroll Numbers

Patrick Harker, Philadelphia Federal Reserve Bank President and voting member of the Fed’s rate-setting committee for 2017, has stated that the U.S. central bank continues to be on track to reach the Fed’s 2% goal near the end of the current year. In light of his forecast, Harker once again stated his support for two additional interest rate increases this year. “Turning to inflation, things are still on track, despite a couple of months trending in the wrong direction,” Harker said in prepared remarks for a speech to an economics conference in Reading, Pennsylvania. Within the last 6 months, the US central bank raised its benchmark interest rate twice – both in December, 2016 and March, 2017 FOMC meetings. Despite concerns from some Fed officers regarding inflation, expert analysts anticipate the US central bank will raise rates again at its June 13-14 policy meeting. Harker also remarked that he believes the U.S. economy is now “essentially at normal.” He added that he feels there is very little “slack” remaining in the labor market and that he expects the national unemployment rate to fall to 4.2% by the close of 2018. He showed confidence regarding wages, estimating they would escalate between […]

Century Mortgage

Days on Market Plummets below 30 Days; Existing-Home Sales Slip Slightly in April

Persistently depleted supply levels restrained existing-home sales in April and pushed the average number of days on the market for homes to a new low of 29 days, according to the National Association of Realtors®. Total existing-home sales, which include completed transactions of single-family homes, condominiums, co-ops and townhomes, decreased 2.3% to a seasonally adjusted annual rate of 5.57 million in April. Despite last month’s decrease, sales remain at 1.6% above the same period 12 months ago. NAR Chief Economist, Lawrence Yun, commented that the decrease in real estate closings was “somewhat expected”. He added that “a strong sales increase in March at 4.2% and [the fact that] new and existing inventory is not keeping up with the fast pace homes are coming off the market, demand is easily outstripping supply in most of the country and it’s stymieing many prospective home buyers from finding a home to purchase.” Properties sat on the market for 29 days in April, which is down from 34 days in March and 39 days 12 months ago. It also surpasses last May’s low of 32 days as the shortest timeframe since NAR started tracking the data in May of 2011. Fifty-two percent of homes […]

Century Mortgage

Trump Budget Changes Direction for Fannie and Freddie

President Trump’s $4.1 trillion spending plan contains a stark shift in language regarding government-sponsored enterprises. Specifically, the President’s proposed budget calls for improvements in the housing finance system, yet it makes no mention of the elimination of Fannie Mae or Freddie Mac. According to Dick Bove, Vice President of equity research at Rafferty Capital Markets, this language is notably an important position change and clearly differs from the course that the former administration intended. In essence, President Donald Trump’s budget appears to reverse previous calls to “wind down” Fannie Mae and Freddie Mac. Bove noted that Obama made it clear he intended to eliminate the entities while “President Trump makes no such statement,” Bove said in a research note. “This is a major change in policy,” he added. As former cornerstones of the US mortgage industry, Fannie and Freddie played important roles before the financial crisis. However, when the agencies ran into financial trouble, mortgage loans to less-qualified buyers defaulted and the government bailout that ensued triggered a great deal of public outrage. As a result, Fannie and Freddie then were effectively nationalized during the crisis. In a recent interview with CNBC, Bank of America CEO, Brian Moynihan, expressed his […]

Century Mortgage

Refi Apps on the Rise Purchase Apps Drop Slightly

Mortgage applications rose 4.4% from the previous week, according to reporting from the most recent Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. The Market Composite Index, which measures mortgage loan application volume, rose 4.4% on a seasonally adjusted basis over one week ago. On an unadjusted basis, the Index showed growth of 3% compared with the week prior. The Refinance Index increased 11% from the previous week to its highest level since March 2017. The refinance share of mortgage activity increased to 43.9% of total loan applications from 41.1% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 8.2% of total loan applications. The seasonally adjusted Purchase Index dipped slightly, 1% from the previous week. The unadjusted Purchase Index fell 2% compared with the week prior, which was 3% above the same week 12 months ago. National Association of Realtors® Chief Economist, Lawrence Yun, in a recent NAR report commented, “With [housing] price growth showing little sign of slowing, prospective first-time home buyers will be the most sensitive to any sudden uptick in rates in the months ahead.”* The FHA loan share of total mortgage loan applications grew to 10.8% from 10.6% the previous week. The […]

Century Mortgage Calculator

Economists Predict Minimal Impact from Fed Balance Sheet Reduction

While the financial world watches with baited breath each time the Federal Open Market Committee meets, constant debate arises amongst analysts and economists regarding whether the Federal Reserve will keep conditions the same or raise interest rates. The Fed has indeed increased the interest rate on three separate occasions since December of 2015 and more of them are anticipated before the end of this year. Obviously, the ultimate objective is to maintain a healthy economy for all Americans. Many discussions omit the important topic of what the Fed intends to do with its immense portfolio of bonds. Currently valued at $4.5 trillion, economists believe that the central bank will reduce its portfolio in further efforts to support the economy’s health. The question remains: what impact will reducing the Fed’s portfolio have on monetary policy and rates? According to economists, nothing more than a modest one. Approximately 55% of economists in a Wall Street Journal poll believe that the Fed reducing its balance sheet by allowing assets to mature will raise the yield on 10-year Treasury notes no more than 0.2%. Another 40% thought the impact would be practically negligible, increasing the yield up 0.1% or less. Correspondingly, speaking to what […]

Century Mortgage

NAR Midyear Forecast: Existing-Home Sales Still on the Rise; Inventory Still Too Low

The first quarter of 2017 displayed the best quarterly current sales in precisely a decade, with sales of 5.62 million, with expectations of finishing at nearly 5.64 million – the best since 2006 (6.47 million) – which is a full 3.5% above 2016 sales figures. As a result of substantial price increases in several metro areas, the national median existing-home price is forecast to jump nearly 5% this year. “The housing market has exceeded expectations…despite depressed inventory and higher mortgage rates,” stated Lawrence Yun, Chief Economist for the National Association of Realtors® (NAR). Yun accredited healthy job gains over several years as well as “improving household confidence” to the quickened sales pace and added expectations that sales will hit a decade-high in 2017. Said Yun, “The combination of the stock market being at record highs, 16 million new jobs created since 2010, pent-up household formation and rising consumer confidence are giving more households the assurance and ability to be homebuyers.” Despite the good news that sales are at a decade high level, inventory supply and home price affordability along with modest economic growth threaten to suppress the homeownership dream. The culprits? Listings in the lower- and mid-market price range are […]

Century Mortgage

MBA Survey Reveals Delinquency Decline

The Mortgage Bankers Association (MBA) released its National Delinquency Survey, revealing that delinquency is down on mortgage loans for the first quarter of 2017, specifically on 1-4 unit residential properties. The delinquency rate was reduced by nine basis points from the prior quarter, and was six basis points lower than the previous year. The survey showed a seasonally adjusted rate of 4.71% of all outstanding mortgage loans. “Employment growth started 2017 on strong footing, with the economy adding 216,000 jobs in January 2017 and 232,000 jobs in February. Average hourly wage growth increased 2.8% over the year, and has maintained a generally increasing trend since late 2015. These fundamentals have helped to support the performance of all loan types – whether FHA loans, VA loans or conventional loans,” commented MBA’s Vice President of Industry Analysis, Marina Walsh. There was a slight increase in the percentage of loans on which foreclosure actions were started during the first quarter, coming in at 0.30%. This was a rise of two basis points over last quarter yet still an optimistic reduction of five basis points over one year ago. Loans in the foreclosure process at the end of the first quarter were lower, having […]

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 […]

Century Mortgage

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 […]

Century Mortgage

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 […]

Century Mortgage

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 […]

Century Mortgage

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 […]

Century Mortgage

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 […]

Century Mortgage

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 […]

Century Mortgage

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 […]

Century Mortgage

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 […]

Century Mortgage

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. […]

Century Mortgage

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, […]

Century Mortgage

Borrowers Ready to Take Risks

With home prices that are rising faster than incomes and mortgage rates nearly three-quarters of a point higher than just a few months ago, new borrowers are on the hunt for the best deal they can get on home loans.

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.

Contact Us We Really Do Want to Hear From You
Interested in getting a mortgage? Have a general question for our Loan Officers? Just want to say hello? Send us an email and we will get back with you as soon as possible!
Send