Shelter Six:  Nonbanks Surpass Banks in Mortgage Origination Volume

1. Banks no longer reign over the U.S. mortgage market.  According to Inside Mortgage Finance, nonbank lenders have surpassed banks in mortgage volume originated for the first time in 30+ years.

2. Shelter has a new “bank statement program” for self-employed borrowers that uses bank statement deposits only to calculate income and does not require tax returns.

3. The rate is higher for this program as are the qualification standards with 20% down, strong credit, and healthy cash reserves in the bank after closing all required.

4. After an annual report indicating that FHA is the healthiest it has been in years, there is growing talk of another FHA MIP reduction of as much as .30% sometime in 2017.

5. December’s Employment Report came in as expected with both job gains and the unemployment rate coming in right on target.

6. Wage growth, however, was much higher than expected with average hourly earnings 2.9% higher than a year ago, up from 2.5% last month, and the highest level since 2009.

Rate Update

From the presidential election until the last few days of 2016, mortgage rates pushed higher.  Last week, the trend finally reversed and we saw mortgage rates fall back to the best levels in a month.  Friday’s strong economic data halted the rally, however, and mortgage rates ended the week with little change.

This Week

The Job Openings and Labor Turnover Rates Report is due out on Tuesday with Retail Sales due out on Friday.

January 9, 2017 by · Leave a Comment

Shelter Six: Optimism Abounds for Housing and the Economy in 2017

1. Despite the rise in mortgage rates since the election, there are many reasons to be optimistic about the housing market and overall economy heading into 2017.

2. Just last week, the Consumer Confidence Index revealed that consumers are more confident about their future than at any time over the last 15 years.

3. Low unemployment, rising wages, record stock market values, home price appreciation, and growth-friendly economic policies all point toward strength in 2017.

4. Even though inventories are still low, home sales ended 2016 at the highest levels since the 2008 recession, and demand from home buyers remains high.

5. There is also reason to be optimistic that home builders may pick up their pace as a December survey of home builders showed a surge in optimism since the election.

6. Single-family housing starts and building permits are also near multi-year highs.  Confident consumers and builders bode well for the future!

Rate Update

It was a quiet end of the year on the mortgage front with little economic news.  The 30 Year Fixed-Rate ended 2016 in the mid 4’s and about .25% higher than where it started the year.

This Week

The ISM National Manufacturing Index is due out on Tuesday, the minutes from the December 14th Fed Meeting on Wednesday, the ISM National Services Index on Thursday, and the next Employment Report on Friday.

January 2, 2017 by · Leave a Comment

Shelter Six:  Home Sales Highest Since 2007

1. November Existing Home Sales were up to the highest level since 2007 and also 15% higher than a year ago (thanks to TRID).

2. The November inventory of existing homes available for sale nationally was 9% lower than a year ago and down to a 4-month supply.

3. The November median existing-home price was 7% higher than a year ago.

4. Durable goods are products which are expected to last more than three years.  November Durable Orders declined 4.6% from October, but the decline was mostly due to a drop in aircraft orders.

5. The core Durable Goods indicator, however, excluding aircraft, showed a healthy increase of .9% from October.

6. In another sign that we have mostly recovered from the Great Recession, as of Dec 10, no appraisal is now required on some Conforming refinances when the Fannie Mae automated valuation model approves of the borrower’s estimate of value.

Rate Update

The economic data released last week had little impact on mortgage rates.  Tuesday’s Bank of Japan meeting also caused little reaction in U.S. markets and mortgage rates ended the week slightly lower.

This Week

It is a light week for economic data with only Pending Home Sales due out on Wednesday.  During the last couple of weeks in December, trading volume tends to be lighter than usual, which can lead to exaggerated price swings.  Mortgage markets will be closed on Monday in observance of Christmas.

December 26, 2016 by · Leave a Comment

Shelter Six: Conforming Limit Increases to $424,100

1. As announced in November, the maximum Conforming loan limit is increasing to $424,100 for 2017, but Shelter is able to begin originating loans at this limit immediately.

2. As widely expected, the Fed raised the Federal Funds rate by .25% last week.

3. Fed officials also raised their outlook for the pace of 2017 rate hikes and now forecast three rate hikes next year instead of two. The faster pace has negatively affected mortgage rates.

4. The U.S. Dollar is at the highest level since 2003 and stocks continue to hit all-time highs. This strong economic activity has also contributed to higher mortgage rates.

5. The December NAHB Housing Index showed that home builder confidence jumped to the highest level since 2005.  Much of this was due to optimism that costly regulatory burdens will soon be lifted.

6. Rising mortgage rates are not curbing demand but real estate inventory remains stubbornly low. Constrained supply is expected for at least four more years, according to NAR.

Rate Update

Wednesday’s Fed meeting turned out to be negative for mortgage rates. Recent economic data had little impact.  The net last week was slightly higher rates.

This Week

There will be a meeting of the Bank of Japan on Tuesday which could influence rates.  Domestically, U.S., Existing Home Sales will be released on Wednesday, Durable Orders and Core PCE on Thursday, and New Home Sales on Friday.

December 17, 2016 by · Leave a Comment

Shelter Six: Further Evidence of a Strengthening Economy

1. The economy continues to chug along evidenced by the November ISM National Securities Index, which increased to the highest level of the year.

2. The November ISM National Manufacturing Index also greatly exceeded expectations.

3. According to CoreLogic, 548K+ homeowners regained equity in just the Second Quarter of 2016, bringing the homes with positive equity to almost 93%.

4. Foreclosure inventory continues to dwindle. CoreLogic reports that foreclosure inventory was down 29.1% in July and 16.5% year-over-year.

5. The Shelter “Foreign National” Program now goes up to $1,000,000 with 35% down.

6. The program requires 24 months of payment reserves at closing with at least six months of to be held in a U.S. bank account. Funds to close must also be in a U.S. depository for 15 days prior to closing

Rate Update

Rate volatility last week was the lowest since the election. The main market mover was the European Central Bank (ECB) meeting.  Sunday’s referendum vote in Italy had little impact on U.S. markets, and the U.S. economic data also caused little reaction.  While it was another good week for the stock market, mortgage rates ended the week with little change.

This Week

The Federal Reserve meeting will take place on Wednesday, and it is widely expected that the Fed will raise the Federal Funds rate.  Also Retail Sales is due out on Wednesday, the Consumer Price Index on Thursday and Housing Starts on Friday.

December 11, 2016 by · Leave a Comment

Shelter Six: FHA Loan Limits Increase for 2017

1. Metro Atlanta FHA Loan Limits are increasing in 2017 to $358,800 for a 1 Unit, $459,300 for a 2 Unit, $555,200 for a 3 Unit, and $690,000 for a Quad.

2. Last week, 2017 Conforming Loan Limits were announced at $424,100 for a 1 Unit, $543,000 for a 2 Unit, $656,350 for a 3 Unit, and $815,650 for a Quad.

3. The Conforming Loan Limit is a national figure, whereas FHA assigns a limit to each county throughout the country. Fortunately, there are 20 counties around Metro Atlanta that all have the same limit.

4. Oil prices are up 9% after OPEC agreed on a deal to cut production. Increased oil prices can spark inflation, which is bad for mortgage rates.

5. November’s Employment figures were strong with 178K jobs added. The Unemployment Rate declined to 4.6%, the lowest level since August 2007, but was mostly due to workers leaving the labor force.

6. On average, home prices nationally increased 5.5% from the previous month. Prices now stand at an all-time high!

Rate Update

It was a volatile week for mortgage rates. A wide range of factors, including Italian politics, OPEC, and U.S. economic data, caused significant reactions. The net effect was small, however, and mortgage rates ended the week with little change.

This Week

An ISM Services Report is due out today. Also, the European Central Bank meets on Thursday with investors divided about the outcome. The Federal Reserve meets again on December 14.

December 5, 2016 by · Leave a Comment

Shelter Six: Conforming Loan Limit Increases for First Time Since 2006

1. For the first time since 2006, the maximum Conforming loan limit for Fannie Mae and Freddie Mac loans is increasing.  Effective Jan 1, the new limit will be $424,100, up from $417,000.

2. Per the Housing and Economic Recovery Act of 2008, the FHFA is in charge of setting this limit and does so by monitoring a national Home-Price Index (HPI).

3. It took over a decade to make it back, but the HPI has finally returned to a “pre-decline” level and is now 1.7% higher than the 3rd Qtr of 2007, enabling the FHFA to increase the limit.

4.  There is now an overwhelming consensus that the Federal Reserve will increase short-term rates in December and early forecasts have the Fed increasing rates at least three times next year.

5. Existing Home Sales rose in October to the highest levels in more than nine years.

6. New Home Sales were down slightly in October, but it’s expected to be only a temporary setback.  Sales were still 17.8% higher than the same time last year.


Rate Update

It was a slower week last week with the Thanksgiving holiday, but 30 year rates continued the post-election surge by pushing up further in the low 4’s.

This Week

Consumer Confidence figures are due out on Tuesday, ADP Employment and PCE Core Inflation on Wednesday, Weekly Jobless Claims and ISM Manufacturing Index on Thursday, and Employment figures on Friday.

November 28, 2016 by · Leave a Comment

Shelter Six: Fed Rate Hike Expected in December

1. Fed Chair Janet Yellen’s comments last week point to a Fed short-term rate hike in December. Economists almost unanimously agree that a hike is coming.

2. Adding to the case for a Fed rate hike, the labor market and consumer prices both continue to show strength.

3. New housing starts surged 26% in October to a 9+-year high with construction ramping up for both single and multi-family homes.

4. Builders remain optimistic and are planning for a strong finish to the year for housing. Market confidence among builders is at the highest level in 10 years.

5. Nationally, the October housing market showed the largest price increase in 10 months with the median home sale price increasing 7% over last year as inventory dropped 8%.

6. The FHFA is announcing the 2017 maximum loan limit for Fannie Mae and Freddie Mac next week and many experts are calling for the first increase to the $417k limit since 2006.

Rate Update

Mortgage rates surged last week to the highest levels of the year, mostly driven by expected policy changes under the Trump administration. Expected tax and regulatory changes are expected to lead to economic growth, which will then drive both inflation and rates higher.

This Week

New information about the plans of the Trump administration will likely continue to dominate the news and influence mortgage rates. Also, Existing Home Sales will be released on Tuesday and both New Home Sales and Durable Orders on Wednesday. Mortgage markets will be closed on Thursday for Thanksgiving.

November 21, 2016 by · Leave a Comment

Shelter Six: A Surge in First-Time Homebuyers

1. According to the National Association of Realtors, 35% of all buyers in 2016 have been first-timers (up 3% from last year).

2. Breaking it down, 58% of the first-timers are married, 18% single females, 14% unmarried couples, and 8% single males.

3. The median first-time buyer age is 32 (up from 31 each of the last five years).

4. Regarding source of funds, 24% of first-timers received a gift for their down payment (both Conforming and FHA loans now allow all of the down payment to come from a gift).

5. While most rented, 21% of first-timers lived with parents, relatives, or friends before buying.

6. Lastly, 67% said their primary reason for buying is the “desire to own a home.”


Rate Update

The unexpected results of the Presidential election drove both stocks and interest rates higher, both reaching high points of the year. Rates moved higher as investors pulled money out of the bond market and invested in stocks. Expect more rate movement as investors analyze every move of the new administration. In addition, the consensus at this point is that the Federal Reserve will raise short-term rates in December.

This Week

New information about the plans of the Trump administration will likely continue to influence mortgage rates. In addition, Retail Sales will be released on Tuesday and both Housing Starts and the Consumer Price Index (CPI) on Thursday.

November 14, 2016 by · Leave a Comment

Shelter 6: FHA Lower Owner-Occupancy Standard for Condo’s

1. Good news as FHA is lowering the required owner-occupancy standard for approved condominium developments effective immediately.

2. The 50% owner-occupied requirement is being lowered to 35% for existing condo developments provided the project meets certain conditions.

3. Three major central banks had meetings over the past week and none of them made any policy changes.

4. The U.S. Federal Reserve and the Bank of Japan were not expected to make any moves but the Bank of England disappointed investors by not taking any action as well as downplaying the likelihood of further rate cuts.

5. The economy added 161K jobs in October, a little below the consensus forecast of 175K.

6. Average hourly earnings were 2.8% higher than a year ago, which was higher than expected and the largest annual increase since June 2009.


Rate Update

Over the past week, a Bank of England meeting as well as news related to the U.S. election have been the main influences on mortgage rates, which have held pretty steady and actually dropped slightly.

This Week

The economic calendar is light this week with the election being the main focus.  The JOLTS report, which measures job openings and labor turnover rates, will be released on Tuesday and Consumer Sentiment on Friday.  While the stock market will be open, mortgage markets will be closed on Friday in observance of Veterans Day.

November 7, 2016 by · Leave a Comment

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