Shelter Six:  Stock Market Down, Credit Scores Up

1. The Dow Jones stock index plunged more than 1,000 points last week shaking up the financial markets but having only a minor impact on mortgage rates.

2. FICO consumer credit scores continue to surge hitting a record high of 704 last month.  Scores have slowly climbed each year since a low-point of 686 in 2009.

3. The main reason for increasing credit scores is that fewer people have truly awful scores that drag the average down.

4. Shelter’s new SmartFunds program is a fantastic solution for a retiree or someone who has significant financial assets but no current job or employment income.

5. The program requires the assets to have been seasoned for at least a year and sufficient to cover the loan amount and all monthly debt obligations for 5 years (minimum of $500K).

6. The SmartFunds program does not have a Debt Ratio requirement, requires only 10% down with no PMI, and at least a 680 credit score.

Rate Update

Last week’s weaker than expected CPI inflation data along with the stock market selloff led to mortgage rates moving slightly lower yet still near the highest level in eight years.

This Week

Retail Sales will be released on Monday, the minutes from the Sept 26 Fed Meeting and Housing Starts on Wednesday, and Existing Home Sales on Friday.

October 15, 2018 by · Leave a Comment

Shelter Six:  Red Hot Economic Data Pushes Mortgage Rates Higher

The economy continues to fire on all cylinders, which is great news for the future real estate sales, but not so great news for mortgage rates.

Last Wednesday, the ISM National Services Index soared to 61.8, which is the highest level recorded since tracking began in 2008.

This was followed by Friday’s Employment Report, which showed solid improvements in the labor market.

The economy has now added an astounding average of 211K workers per month so far in 2018 compared to an already very strong 182K per month last year.

The Unemployment Rate has plummeted to only 3.7%, the lowest level since 1969.

Average hourly earnings are also on the rise and were 2.8% higher than a year ago.  All of last week’s data points to a very strong economy.

Rate Update

Since it raises the outlook for future inflation, last week’s stronger than expected economic data was bad news for mortgage rates, which reached their highest levels in seven years.

This Week

The mortgage markets are closed on Monday for Columbus Day.  The biggest economic releases this week will be the CPI and JOLTS reports, both due out on Thursday.

October 8, 2018 by · Leave a Comment

Shelter Six:  The Fed Bumps up Rates .25% but Inflation Remains Tame

1. As expected, the Federal Reserve raised the Fed Funds Rate by .25% last week.  The next rate hike is expected in December.

2. The only surprise at the Fed’s post-meeting press conference was a favorable comment from Fed Chair Powell that Fed officials don’t see inflation spiking more than expected.

3. Following Powell’s comment and right on cue, Friday’s big inflation report came in exactly at the Fed’s stated target level of 2% higher than a year ago.

4. Consumer Confidence is also very strong hitting its highest reading since September 2000 thanks to a healthy labor market and a surging stock market.

5. August home prices were up 5.8% in Metro Atlanta from a year ago, slightly less than the 6% national pace, according to S&P Corelogic Case-Shiller Index.

6. Metro Atlanta home prices are now up 8.1% since the recession peak of 2007 and 78.8% since the low point in 2012.

Rate Update

Last week’s Fed meeting and inflation data were both favorable for mortgage rates leading to a drop in rates from the previous week’s highest point in seven years.

This Week

The ISM National Manufacturing Index will be released on Monday, the ISM National Services Index on Wednesday, and Employment figures on Friday.

October 1, 2018 by · Leave a Comment

Shelter Six:  Home Sales Flat but Inventory up Slightly

1. After four straight months of declines, Existing Home Sales were flat in August.

2. Inventory was a little higher than a year ago though, marking the first year-over-year increase in about three years.

3. Inventory remained at a 4.3-month supply from July, which is still low considering a 6-month supply is considered healthy.

4. In August, Housing Starts rose a strong 9% from July, but most of the increase was due to multi-family units and Single-Family starts were up just 2% from July.

5. Builders point to rising land, material, and labor costs as obstacles to a faster pace of new construction.

6. Overall, the economy remains strong with record highs in the stock market, a solid labor market, faster wage increases, and strong consumer confidence.

Rate Update

A rally in the stock market drew assets away from bonds last week pushing yields higher and mortgage rates to the highest point in seven years.

This Week

The next Federal Reserve meeting will take place on Wednesday.  Investors expect a .25% increase in short-term rates.  New Home Sales will be out on Wednesday, Durable Orders on Thursday, and the Core PCE Price Index on Friday.

September 24, 2018 by · Leave a Comment

Shelter Six:  Condo Financing Easier Than Ever

1. Inflation continues to be tame.  Last week’s Consumer Price Index figures came in lower than expected and were only 2.2% higher than a year ago.

2. After a hot spring and summer, Retail Sales cooled off in August coming in less than expected but July’s figures were revised higher by about the same amount as the shortfall.

3. Non-warrantable condo financing is now easier than ever with Shelter’s new SmartCondo program.

4. SmartCondo requires only 10% down with no PMI and allows credit scores down to 660, debt ratios up to 45%, and an interest-only feature.

5. The program allows up to 75% investor concentration, up to 50% commercial space, and up to 49% single-entity ownership.

6. SmartCondo’s pre-sale requirements also go down to as low as 30% of units sold or under contract.  When it comes to condo financing, be smart with SmartCondo!

Rate Update

Strong economic news domestically as well as no surprises from a key European Central Bank meeting contributed to mortgage rates pushing up slightly last week.

This Week

The NAHB Home Builder Confidence index will be released on Tuesday, Housing Starts on Wednesday, and Existing Home Sales on Thursday.

September 17, 2018 by · Leave a Comment

Shelter Six:  Strong Economic Data Leads to Higher Rates

1. Last week’s Employment Report came in stronger than expected as the economy added 201K jobs in August while Unemployment remained at 3.9%

2. The report’s biggest surprise was August Average Hourly Earnings, which came in 2.9% higher than a year ago and at the largest annual rate of increase since April 2009!

3. There was equally strong data released last week in both manufacturing and services, too.

4. The ISM National Manufacturing Index surged to 61.3, the highest level since May 2004 and the second strongest figure ever recorded.

5. Similarly, the ISM National Services Index jumped to 58.5.  Readings above 50 indicate an expansion, and both sectors have been improving at near record rates for many months.

6. It is easier than ever to get financing for a Non-Warrantable Condo thanks to the lenient guidelines of Shelter’s new SmartCondo program.  Give us a call to learn more!

Rate Update

Last week’s strong economic data raised the outlook for future inflation and thus caused mortgage rates to push higher.

This Week

The Job Openings and Labor Turnover Rates Report (JOLTS) will be released on Wednesday, the Consumer Price Index (CPI) on Thursday, and Retail Sales on Friday.

September 7, 2018 by · Leave a Comment

Shelter Six:  Consumer Confidence Surges

1. Optimism remains strong for the U.S. economy as Consumer Confidence figures surged last week far more than expected and to the highest level since 2000.

2. A strong labor market, solid economic growth, and record stock prices have contributed to the high level of optimism.

3. July Retail Sales, excluding the volatile auto component, rose .6% from June but the June results were revised lower offsetting the surge.

4. Inflation continues to push higher but remains within the Fed’s stated target level of 2%.

5. Shelter’s new SmartTrac program is designed for borrowers who have had a Bankruptcy or Short Sale over one year ago or multiple late mortgage payments within the last year.

6. SmartTrac requires 20% down and a 620 credit score, offers an interest-only feature, and doesn’t require a prepayment penalty.

Rate Update

An easing of U.S. trade tensions last week prompted investors to shift from safer to riskier investments, which had the effect of pushing mortgage rates slightly higher.

This Week

Employment figures are due out on Friday, but not before the ISM National Manufacturing Index on Tuesday and the ISM National Services on Thursday.  News on the trade deals could continue to influence rates as well.

September 3, 2018 by · Leave a Comment

Shelter Six:  July Home Sales Drop Slightly

1. July New and Existing Home Sales both decreased a little from June, while national inventory also dropped slightly from June to a 4.3 month supply.

2. With low inventory and a healthy economy, builders are diligently trying to ramp up production to meet the housing demand.

3. For decades, single-family housing starts averaged about 1.1M a year, hit a low of 350K in 2009, and are now holding steady around 850K.

4. Builders attribute the flat new construction figures to rising land, material, and labor costs.

5. Shelter’s SmartVest program is a great financing solution for experienced real estate investors who may have complex finances.

6. With SmartVest, income is calculated via a cash-flow analysis rather than the traditional Debt Ratio, no tax returns are required, and up to 15 financed properties are allowed.

Rate Update

Last week’s speech by Federal Reserve Chairman Jerome Powell contained no surprises and mortgage rates ended the week slightly lower.

This Week

Pending Home Sales will be released on Wednesday and the Core PCE Price Index on Thursday.

August 27, 2018 by · Leave a Comment

Shelter Six:  Labor Market Remains Strong

1. The JOLTS report measures job openings and labor turnover rates.  Fed officials and investors value this data to help assess the strength of the labor market.

2. In June, there were 6.7M job openings, but only 6.6M people who reported that they were looking for work that month.  It is rare to see more job openings than people seeking work.

3. Another sign of labor market strength is that a large number of workers willingly left their jobs in June, which normally only happens if one is transitioning to a better job.

4. After reaching a 10-year high in November of last year, single-family homebuilding has lost some momentum mostly due to a shortage of skilled labor and rising material costs.

5. July Housing Starts were up a modest 1%, but an encouraging sign is that Building Permits were up 1.3M and 4.2% higher than last July.

6. Shelter’s SmartSelf program allows borrowers to document income with bank statements rather than tax returns, requires only 10% down, no PMI, and a credit score of only 620.

Rate Update

Increased concerns about Turkey last week offset stronger than expected economic data pushing mortgage rates down slightly.

This Week

Existing Home Sales will be released on Wednesday, New Home Sales on Thursday, and Durable Orders on Friday.  News about Turkey or tariffs could also influence rates.

August 20, 2018 by · Leave a Comment

Shelter Six:  Surging Home Prices Equal Lower Affordability

1. Inflation is a major factor on interest rates and continues to gradually climb higher.  In July, Core PPI was up 2.7% while Core CPI was up 2.4%, the highest level since Sept 2008.

2. Metro Atlanta home prices have climbed 5.6% over the past year, according to the latest S&P CoreLogic Case-Shiller Index.  Nationally, home prices are up 6.4%.

3. This is the 22nd straight month with prices rising more than 5%, however, this home appreciation is occurring at 2-3 times the inflation rate.

4. An ongoing related problem is that average hourly pay nationally adjusted for inflation has not changed over last year according to Bureau of Labor.

5. The surge in home prices at a rate greater than inflation with flat consumer income has, unfortunately, led to lower home buyer affordability.

6. Shelter’s new piggyback 2nd mortgage program allows a home buyer to avoid PMI or a more restrictive Jumbo loan by obtaining two mortgages with only 5% down.

Rate Update

Mortgage rates tend to benefit when big, scary stuff shakes global economic confidence and that is what happened with last week’s debt crisis in Turkey.  As a result, rates moved to the lowest level in weeks.

This Week

Housing starts are due out Tuesday with both Retail Sales and Industrial Production due out on Wednesday.

August 13, 2018 by · Leave a Comment

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