Shelter Six:  Fannie Mae Guidelines Easing

Effective this week, Fannie Mae is easing a number of guidelines including increasing the maximum debt-to-income ratio from 45% to 50%, lowering the required down payment on ARM loans to 5%, and reducing tax return documentation for self-employed borrowers.

After three months of declines, June Single-Family Housing Starts were up 6%.

The average home in the US was worth $200,400 in June, smashing through the $200,000 barrier for the first time.

Seen as good news by many in the industry, CFPB Director Richard Cordray is going to vacate his position to run for governor of Ohio next year, according to one of his friends.

It is the time of year when property tax bills are being released.  Remember that if a tax bill is out, the closing attorney must collect for it at closing because GA law views it as a lien.

Even if a seller has paid the tax bill through his escrow account, if the closing attorney can’t verify that the mortgage company has paid it, then the attorney must collect it at closing.

Rate Update

Mortgage rates ended the week lower, mostly due to speculation that the European Central Bank may not scale back its stimulus programs as soon as some investors had thought.

This Week

Existing Home Sales will be released on Monday, New Home Sales on Wednesday, and Durable Orders on Thursday.  The Federal Reserve will also meet again on Wed as well.

July 24, 2017 by · Leave a Comment

Shelter Six:  Average Credit Score Exceeds 700 for First Time

According to FICO, the average national credit score has reached 700 for the first time.

The average credit score bottomed out at 686 during the housing crisis but has been steadily rising since.

FICO also reported that credit card balances and delinquencies have been trending higher as well and are areas of future concern.

In Fed Chair Janet Yellen’s testimony to Congress last week, she said that short-term rates might not have to rise “all that much further” to reach a “neutral policy stance.”

This comment caused a significant reaction as it implied that the Fed might stop raising rates sooner than previously expected, which would be good news for mortgage rates.

Did you know?  On a Conforming loan, if the lender can document that a non-mortgage debt has been satisfactorily paid by another party for the last 12 months, then the debt can be excluded from the debt-to-income ratio, even if the other party is not obligated on the debt.

Rate Update

Comments from Fed officials as well as weaker than expected retail sales and inflation data all contributed to mortgage rates falling last week after rising the previous two weeks.

This Week

The NAHB Housing Sentiment Index is due out on Tuesday, Housing Starts on Wednesday, and the Philadelphia Fed Regional Manufacturing Index on Friday.  The European Central Bank also has a big meeting on Thursday.

July 17, 2017 by · Leave a Comment

Shelter Six:  Home Prices Continue to Surge

Metro Atlanta home prices are 5.8% higher than a year ago according to the latest S&P CoreLogic Case-Shiller Index.  The national average is 5.5% higher.

June’s Employment Report figures release on Friday were very impressive with 222K jobs added to the economy.

The Unemployment Rate did unexpectedly increase from 4.3% to 4.4% but this was viewed as a sign of strength since it was mostly due to workers entering the labor force.

Average hourly earnings fell short of expectations though and were just 2.5% higher than a year ago.

The Federal Reserve’s target for inflation is 2% and, last year, it appeared that inflation was slowly climbing to this level.  This year, however, inflation has reversed direction and in May was only 1.4% higher than a year ago.

Fed officials have stated that they believe the decline in inflation this year is due to temporary factors, but recent comments indicate that officials are becoming more concerned.

Rate Update

The potential of the European Central Bank scaling back its bond purchase program was the main influence on mortgage rates last week and led to rates pushing higher.

This Week

Retail Sales and Consumer Price figures are due out on Friday.  In addition, Federal Reserve Chair Janet Yellen will be delivering her semi-annual testimony to Congress on Wednesday.

July 9, 2017 by · Leave a Comment

Shelter Six:  Happy Independence Day from Shelter Mortgage!

On July 2, 1776, the Continental Congress ruled in favor of independence from Great Britain leading John Adams to write to his wife that July 2 would go down in history as a day of celebration.

Of course, it was two days later on July 4 that the Continental Congress accepted Thomas Jefferson’s declaration in Philadelphia, but only two men actually signed that day, John Hancock and Charles Thompson, the secretary of Congress.

New York finally approved the document on July 9, the last of the 13 colonies to do so, but it wasn’t until August 2 that the majority of other delegates signed (the final six signed later).

The first Independence Day celebration took place in Philadelphia on July 8, 1776 when the Declaration of Independence was first read in public after the ringing of the Liberty Bell.

Button Gwinnett, Lyman Hall and George Walton signed for Georgia, and all have counties named after them.  Gwinnett was killed in a duel with Lachlan McIntosh in 1777 over who would lead the fight in securing the Georgia-Florida line, making his signature one of the rarest and most valuable of the signers.

On July 4, 1826, former presidents John Adams and Thomas Jefferson passed away in Massachusetts and Virginia respectively, 50 years to the day following ratification of the Declaration of Independence.

Rate Update

A hint of a taper in the European Central Bank’s (ECB) bond purchase program drove European rates higher last week, and U.S. rates followed.  U.S. economic data caused little reaction and mortgage rates ended the week a little higher.

This Week

The ISM National Manufacturing Index will be released on Monday, the ISM National Services Index on Thursday, and the monthly Employment Report on Friday.  Mortgage markets will close early on Monday and will be closed on Tuesday for the July Fourth holiday.

July 3, 2017 by · Leave a Comment

Shelter Six:  Fannie Mae Easing Qualifying Standards

1. Starting in August, Fannie Mae’s automated underwriting model, Desktop Underwriter, will expand the maximum debt-to-income ratio from 45% to 50%.

2. Freddie Mac, the other provider of Conforming loans, already allows for debt ratios up to 50%.  It is still common for FHA debt ratios to actually go as high as roughly 55%.

3. NAR announced last week that the total inventory of existing homes available for sale was significantly less than a year ago and at just a 4.2-month supply.

4. A 6-month supply is considered normal and the low supply of inventory combined with robust buyer demand continues to cause both appreciating prices and quick sales.

5. The median existing-home price reached a record high in May as homes took only 27 days on average to sell, the shortest duration since tracking began in 2011.

6. Even with a low level of inventory in many markets, existing-home sales in May rose a little from April to the third highest level over the past twelve months.

Rate Update

Comments from Fed officials caused some volatility last week but had little net effect, as did the latest economic reports.  Mortgage rates remain flat and near the best levels of the year.

This Week

A Durable Orders economic report is due out today with Pending Home Sales on Wednesday and Core PCE Price Index on Friday.

June 26, 2017 by · Leave a Comment

Shelter Six:  Home Ownership Rate up to 63.6%

1. According to the US Census Bureau, the home ownership rate was 63.6% in the first quarter of 2017, up slightly from last year’s 63.5% level.

2. The Federal Reserve announced a .25% increase in short-term rates last week.  Most experts anticipate one more rate increase later this year.

3. The Fed also announced plans to reduce its $4.5 Trillion balance sheet “relatively soon” and will do so by no longer reinvesting all the principal payments received.

4. Fed officials also commented on inflation calling its recent decline just “temporary” and predicting that it will still climb to the 2% target level in the medium term.

5. Low inflation is always good for mortgage rates.  After rising gradually last year, inflation has been on a downward path so far this year.

6. Core Consumer Price Inflation (CPI) in May was just 1.7% higher than a year ago and down from 1.9% in April.

Rate Update

Mortgage rates were mostly unchanged last week after weaker than expected retail sales and inflation data was offset by comments from the Fed.

This Week

Existing Home Sales will be released on Wednesday and New Home Sales on Friday.   Speeches by Fed officials also may influence mortgage rates as well.

June 19, 2017 by · Leave a Comment

Shelter Six:  Potential Dodd-Frank Overhaul

1. Last week, the US House of Representatives passed the Financial CHOICE Act, which would overhaul and replace 2010’s Dodd-Frank Wall Street and Consumer Protection Act.

2. After the House vote, the bill now goes to the Senate, where its fate is far from clear.

3. A report from Genworth Mortgage Insurance Company shows that over the first quarter of 2017 first-time home buyers bought the most single-family homes since 2005.

4. Developing a plan to sell to first-timers is more important than ever as they now represent 38% of the market, an 11% rise from the first quarter of 2016.

5. Last week’s JOLTS (job openings and labor turnover rates) report revealed that job openings in April rose to a record high while the “quits” rate held steady.

6. Both readings are viewed as signs of a strong labor market.  A high “quits” rate is actually viewed as a signal of strength because workers are more likely to leave their jobs willingly when they are confident about their ability to get another one.

Rate Update

The testimony of FBI Director James Comey, an anticipated European Central Bank meeting, and the failure of United Kingdom’s Theresa May to gain a Parliament majority dominated the headlines last week but didn’t move the meter on mortgage rates, which ended the week mostly flat.

This Week

Wednesday will be a very big day with a Fed meeting as well as the release of Retail Sales and Consumer Price Index (CPI) economic reports.  Housing Starts will come out on Friday as well.

June 12, 2017 by · Leave a Comment

Shelter Six:  Hiring Down From Last Year

1. Friday’s Employment Report was weaker than expected and not necessarily good for business as it showed the economy adding fewer jobs than anticipated.

2. Through May, the economy has added an average of 162K jobs per month this year, down from an average pace of 187K jobs per month during 2016.

3. The Unemployment Rate did unexpectedly fall from 4.4% to 4.3%, which is the lowest level since May 2001.  A good portion of this decline, however, was due to people leaving the labor force.

4. A potential good sign for business is rising credit scores.  According to Fair Isaac Corp, the average credit score nationwide has reached 700, which is the highest average since FICO began tracking the data in 2005.

5. The percentage of “risky” borrowers, those with scores under 600, has also hit a record low of only 20% of US consumers (down from a 2010 peak point of 25.5%).

6. Expect credit scores to continue to rise as a massive number of foreclosures and bankruptcies fall from American’s credit reports over the next few years.

Rate Update

Over the last week, weaker than expected labor market data and tame inflation readings were favorable for mortgage rates, which have now dropped to the low point of 2017.

This Week

The ISM National Services Index and Factory Orders are due out on Monday with the Job Openings and Labor Turnover Report due out on Tuesday.  In addition, there will be a European Central Bank meeting on Thursday.

June 5, 2017 by · Leave a Comment

Shelter Six:  NAR Releases April Housing Data

1. According to the National Association of Realtors’ (NAR) monthly report, April Existing-Home Sales were down 2.3%, but this was mainly due to March’s figures being so strong, and sales were 1.6% higher than last April.

2. April’s Housing Inventory climbed 7.2% from March but was still 9% less than a year ago.

3. Inventory has now fallen year-over-year for 23 straight months and is down to a 4.2 month supply.

4. The median number of days a home was on the market dropped to only 29 days, a new low since NAR started tracking this in May 2011.

5. The median Existing-Home Price was up 6%, the 62nd straight month of a year-over-year gain.

6. First-time buyers represented 34% of sales in April.

Rate Update

With few new political headlines or major surprises in the economic data, last week was a quiet week and mortgage rates ended the week with little change.  According to Freddie Mac, the average Conventional 30-year loan commitment rate dropped to 4.05% in April from 4.2% in March after averaging 3.65% in 2016.

This Week

The Core PCE Price Index is due out on Tuesday, the ISM National Manufacturing Index on Thursday, and May’s Employment Report on Friday.

May 30, 2017 by · Leave a Comment

Shelter Six:  April Housing Starts Down

1. April Housing Starts declined 3% from March, which was well below what was expected.  Much of this, however, was due to weakness in the volatile multi-family segment.

2. A recent survey conducted by Genworth found that 39% of mortgage professionals believe that first-time home buyer demand is being restricted by consumers’ lack of knowledge.

3. The biggest misconception that potential home buyers have is related to the minimum required down payment to obtain a mortgage.

4. The mortgage professionals polled indicated that many home owners believe that they must put 20% down.

5. It is more important than ever that we communicate to potential clients that the required down payments are only 3% for Conventional, 3.5% for FHA, 0% for VA and USDA, and 5% for Jumbo.

6. Shelter’s closings are the fastest and smoothest in town because we always wire the money over first thing the morning of closing, and we only require three funding docs!

Rate Update

Political uncertainty last week influenced investors to transfer money into the bond market, which led to a drop in mortgage rates.  Recent economic data has had little impact.  Mortgage rates are down to the best levels since before the November Presidential election.

This Week

Political news may continue to influence mortgage rates.  Also, New Home Sales will be released on Tuesday and Existing Home Sales on Wednesday. The second estimate of first quarter GDP and Durable Orders will also come out on Friday.

May 22, 2017 by · Leave a Comment

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