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!
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.
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.
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.
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.
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.
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.
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.
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.
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.”
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.
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.
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.
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.
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.
1. The Federal Reserve meets this week and will announce on Wednesday if there will be a rate increase.
2. Most experts think that the Fed will wait until December to make their next hike.
3. 3rd Quarter GDP surged 2.9%, much stronger than expected and more than twice as high as the previous quarter’s 1.4%.
4. Pending Home Sales were up 1.5% in September, reversing an August decline. First-time buyers represented the highest share of closed sales in four years.
5. New Home Sales also rose in September, close to a 9-year high. Sales increased 29.8% from a year ago, and demand for new homes remains strong.
6. Shelter closings are among the quickest in the industry because we have minimal funding docs that have to be reviewed at closing and we send the funding wire early in the day!
Last week, good economic news from around the world, including UK’s GDP stronger than expected and Spain’s unemployment rate lower than expected, caused bond yields and mortgage rates to rise. Rates are now at the highest level since the middle of June before the UK voted to exit the European Union.
The Core PCE Price Index is due out on Monday, ISM Manufacturing on Tuesday, and the Employment Report on Friday. In addition, the Bank of Japan is meeting on Tuesday and the U.S. Federal Reserve on Wednesday.
1. According to Zillow, 47% of the national home sales over the past year were to first-time homebuyers.
2. This is encouraging and, hopefully, an indication that more millennials are going to buy as they move into their 30’s.
3. Metro Atlanta homes “underwater” with mortgages greater than the home’s value have fallen from 33.6% of homes in 2013 to 14.3% of homes in 2016. (Attom Data Solutions)
4. The Metro Atlanta counties with the most homes seriously underwater (loan more than 125% of home’s value) are Clayton 41%, DeKalb 22%, Fulton 16%, Cobb 10%, and Gwinnett 9%. (Attom Data Solutions)
5. The European Central Bank (ECB) had a highly anticipated meeting last week but made no policy changes.
6. Both the ECB and the Federal Reserve meet during the second week of December, which will be a critical time period for rate direction in 2017.
Comments from the top two Federal Reserve officials caused some volatility to mortgage rates last week but had little net impact. Weaker than expected inflation data was favorable for rates causing mortgage rates to end the week a little lower.
New Home Sales will be released on Wednesday while both Durable Orders and Pending Home Sales will come out on Thursday. The first reading for third quarter GDP will be released on Friday.
1. Metro Atlanta residential real estate closings were up 8.7% for the first nine months of this year compared to 2015.
2. The average Metro Atlanta sales price is up 4.9% over last year and on track to beat the record level of 2006.
3. Metro Atlanta home values are now up 60% from the March 2012 bottom. (Case-Shiller Index)
4. After two months of declines, Retail Sales, minus the volatile auto component, rebounded nicely in September and were up .5% from August.
5. The Retail Sales figures are very important as consumer spending accounts for nearly 70% of U.S. economic activity.
6. The latest data on weekly jobless claims was also encouraging as the number of people applying for unemployment benefits matched the lowest level since 1973.
After increasing the week before, mortgage rates saw little net change last week. There were no surprises in the Fed minutes or from other central banks. The major economic data mostly matched expectations and had little impact.
Industrial Production is due out today, the Consumer Price Index (CPI) on Tuesday, Housing Starts on Wednesday, and Existing Home Sales on Thursday. The next European Central Bank (ECB) meeting will also take place on Thursday. Any guidance on future monetary policy could have an impact on global markets.
1. Metro-Atlanta home prices are up 5.4% over the past year, a little greater than the 5% pace of the other 19 largest cities around the country. (S&P Case-Shiller House Price Index)
2. Since hitting bottom in 2012, Metro-Atlanta prices are up 60.5%, but still 2.9% below the peak of 2007.
3. Friday’s Employment Report came in very close to expectations and caused little change in mortgage rates. Against a forecast of 170K, the economy added 156K jobs in September.
4. The Unemployment Rate increased to 5% from 4.9%. This was viewed as a sign of strength, however, because the increase was due to the entrance of 444K people to the workforce.
5. The labor force participation rate rose to 62.9%, up half a point from a year ago. Average hourly earnings matched expectations and were 2.6% higher than a year ago.
6. Early morning wires and minimal funding docs lead to quick closings. When you want it done right, use Shelter and get on with your day!
Comments from the European Central Bank last week were perceived as negative for mortgage rates and contributed to mortgage rates ending the week slightly higher.
The most significant report this week will be Retail Sales on Friday. The Job Openings & Labor Turnover Rate Report (JOLTS) is also due out on Wednesday, as are minutes from the September’s Fed meeting. The markets will be closed today in observance of Columbus Day.
1. There has been a lot of media focus on student loan debt, but MGIC reports that young homebuyers are more likely to buy a house and get a mortgage if they have student loan debt.
2. Conforming loan guidelines no longer require a Buyer to come up with 5% of their own funds when putting less than 20% down.
3. If a mortgage foreclosure was discharged through a bankruptcy, the shorter, more lenient bankruptcy period applies on Conforming loans.
4. For FHA financing, however, the foreclosure and bankruptcy events have to be looked at separately, so the longer, foreclosure timeframe will most likely apply.
5. Friday’s inflation data showed a slight uptick in August with the Core PCE Price Index 1.7% higher than a year ago.
6. While Core PCE remains steady and at levels below the Fed’s target of 2%, investors will be watching to see if the August data marks the start of a trend toward rising inflation.
A couple of global events caused a moderate amount of volatility for stocks and bonds over the past week, but the effects were offsetting and mortgage rates finished the week with little change.
Lots of economic reports due out this week with ISM National Manufacturing Index and Construction Spending out on Monday, ADP Employment Change, Factory Orders, and the ISM National Services Index out on Wednesday, and the Employment Report out on Friday.