Shelter Six:  Only a One Year Wait After a Bankruptcy or Short Sale

October Retail Sales figures were up a solid .3% from a slow September providing some strong momentum as we head into the important holiday shopping season.

Core inflation eased slightly from last month and was 2.3% higher than a year ago.

Federal Reserve Chairman Powell said there will be no more rate hikes if the economy performs as expected with modest growth and inflation near the Fed’s target levels.

The latest analysis by the Mortgage Bankers Association reveals that Jumbo mortgage lending standards are easing thanks to lower credit score requirements and more products.

Shelter’s SmartTrac program is designed for Buyers who have had a recent significant credit event or lapse and requires only 15% down and a 620-credit score.

SmartTrac requires only a one-year waiting period for a Bankruptcy or Short Sale, two years for a Foreclosure, and allows for multiple mortgage late payments over the last year.

Rate Update

Trade negotiations with China stalled again last week helping mortgage rates to drop slightly.

This Week

Due out this week are Housing Starts on Tuesday, the minutes from October’s Fed meeting on Wednesday, and Existing Home Sales on Thursday.

November 18, 2019 by · Leave a Comment

Shelter Six:  Rates Surge on Rumors of a Trade Deal with China

Optimism that the first phase of a trade deal with China will be signed was good news for the economy but caused mortgage rates to push to the highest level in three months.

After falling to a 3-year low, a national services sector report rose much higher than expected in October suggesting the economy is on the verge of expansion.

Shelter’s SmartEdge program is for Buyers who just miss out on qualifiying for a mainstream Jumbo loan.

Traditional Jumbo guidelines require a 680 credit score, but SmartEdge goes down to 620 and allows for a mortgage late payment over the last year.

Traditional Jumbo guidelines also cap a Buyer’s Debt Ratio at a maximum of 43%, but SmartEdge allows for an expanded Debt Ratio as high as 50%.

Lastly, traditional Jumbo guidelines require a down payment of 10%, but SmartEdge requires only 5% down, and allows for an interest-only feature.

Rate Update

Stronger than expected economic data along with promising news on the trade agreement with China influenced mortgage rates to the highest levels since late July.

This Week

CPI figures are due out on Wednesday with Retail Sales due out on Friday.  Speeches by Fed officials or news about the trade deal with China could also have an influence.

November 11, 2019 by · Leave a Comment

Shelter Six:  Home Sales Continue to be Stronger Than Last Year

September Existing Home Sales, which make up 90% of the market, fell a little more than expected from August but were up 4% over last year.

September New Home Sales, which make up the remaining 10% of the market, also fell a little more than expected from August but were up 16% over last year.

Unlike Existing Home Sales which are based on actual closings, New Home Sales are based on the number of contracts signed during the month and were probably adversely affected by mortgage rates jumping up about .5% over the course of the month.

September National Median Existing Home Prices were up 6% from a year ago.

September National Inventory was at 4.1-month supply, well below the 6-month level considered a healthy balance between buyers and sellers.

With the latest Brexit plan rejected by British Parliament, British and European Union officials continue to negotiate another extension to the October 31 deadline.

Rate Update

A light batch of economic data combined with an uneventful European Central Bank meeting contributed to mortgage rates ending last week nearly unchanged.

This Week

The next Federal Reserve meeting is on Wednesday and investors expect a .25% cut in short-term rates.   This week’s economic reports include 3rd Quarter GDP due out on Wednesday, Core PCE Price Index on Thursday, and Employment figures on Friday.

October 28, 2019 by · Leave a Comment

Shelter Six:  British Parliament Rejects Latest Brexit Proposal

Over the weekend, British Parliament rejected the latest Brexit proposal creating much uncertainty as the deadline for a deal with the European Union is now only ten days away.

Political and economic uncertainty around the globe, like exists now in England, China, and Spain, attracts money to the “safe” U.S. bond market which helps keep mortgage rates low.

The U.S. agreed to not implement some planned new tariffs while China agreed to purchase more U.S. agricultural goods in a limited trade deal announced last week.

September Retail Sales were down .3% from August, the first decline in seven months which generated a stir that consumers may be dialing back purchases.

It is important to keep the figures in perspective, however, as Retail Sales were still 4.1% higher than a year ago and most of the decrease was isolated to the automotive segment.

After spiking to the highest level in twelve years, September Housing Starts were down 9% from August, but the future still seems bright as Home Builder Confidence surged to a 20-month high.

Rate Update

Mortgage rates were flat and mostly unchanged last week as investors continue to keep a close eye on Brexit and China.

This Week

Existing Home Sales are due out on Tuesday, while both New Home Sales and Durable Orders will be released on Thursday.

October 21, 2019 by · Leave a Comment

Shelter Six:  Rates Move Higher as Trade Talks with China Turn More Optimistic

Trade talks between the U.S. and China resumed last week and comments from officials have suggested that the two sides are close to reaching a limited agreement.

The next step with China is a key meeting between President Trump and Chinese Vice Premier Liu He scheduled to take place this Friday.

The latest inflation data released last week revealed that core inflation continues to hold steady at the same 2.4% annual rate of increase as last month.

FHA’s new, more liberal condo approval rules go into effect this week and will allow for “Single Unit Approvals” on FHA loans even if the condo project is not FHA approved.

Single Unit Approvals will only be allowed if no more than 10% of the units carry FHA loans and if at least 50% of the units are owner-occupied.

With Single Unit Approvals, it is projected that an additional 20-60K condo units will become available for FHA’s more lenient mortgage financing.

Rate Update

Trade tensions with China are one of the main reasons rates have dropped so much this year.  Increased optimism of a trade deal influenced rates higher last week and rates will surely jump higher quickly if a trade deal is reached.

This Week

Retail Sales will be released on Wednesday and Housing Starts on Thursday.

October 14, 2019 by · Leave a Comment

Shelter Six:  Freddie Mac Forecasts Strong Housing to Continue

Reports monitoring Employment, Average Hourly Earnings, Manufacturing, and the Services industry all came in weaker than expected last week.

The Unemployment Rate, however, unexpectedly nosedived to 3.5%, the lowest level since 1969!

Although weaker than expected, the economy did add 136K new jobs in September, not bad historically.

Freddie Mac also released a very upbeat report forecasting strong housing over the next two quarters.

Freddie Mac predicts 5.98M units of residential real estate to be sold this year and 6.03M next year, while Housing Starts grow to 1.25M this year and 1.28M next year.

The report also forecasts a strong labor market, low unemployment, and job creation to all continue, but GDP to drop to 1.9% for the 2nd half of 2019 compared to 2.6% for the 1st half.

Rate Update

Weaker than expected economic reports released last week reduced the outlook for future inflation.  This is always positive for mortgage rates, which ended the week lower.

This Week

The Job Openings & Labor Turnover Rates Report (JOLTS) is due out on Wednesday with the Consumer Price Index (CPI) due out on Thursday.

October 7, 2019 by · Leave a Comment

Shelter Six:  New Home Sales Figures Surge

The latest inflation data matched expectations and had little impact as the key index was 1.8% higher than a year ago but continues to be below the Fed’s stated target level of 2.0%.

New Home Sales account for just 10% of the market but the monthly data is particularly important because the report is a predictor of future results as it reflects contracts signed.

Last week’s report revealed that August New Home Sales surged 7% from July to the second highest level since 2007 and were 18% higher than a year ago.

Non-warrantable condo financing is now easier than ever with Shelter’s SmartCondo program, which requires only 10% down with no PMI and a 660 credit score.

The program goes outside traditional guidelines to allow for up to 75% investor concentration, 50% commercial space, and 49% single-entity ownership.

SmartCondo’s pre-sale requirements also go down to as low as 30% of units sold or under contract.

Rate Update

Mortgage rates were flat last week as the 30-year fixed-rate continues to maintain levels in the high 3’s.

This Week

The ISM National Manufacturing Index is due out on Tuesday, the ISM National Services Index on Thursday, and the super important Employment report on Friday.

September 30, 2019 by · Leave a Comment

Shelter Six:  August Home Sales and Housing Starts Jump Higher Than Expected

As expected, the Federal Reserve cut short-term rates by .25% last week.  This cut was already built into mortgage rates and did not lead to them dropping further.

August Existing Home Sales shot up more than expected from July to the strongest level since March 2018.

The national median existing-home price is up 5% from a year ago and CoreLogic reports that U.S. total home equity is at an all-time high over the first half of 2019.

Inventory levels nationally are at just a 4.1-month supply and 3% lower than a year ago.

Additional supply may be on the way, however, as August Housing Starts jumped 12% from July and 7% from a year ago to the strongest level since June 2007.

Building Permits, a leading indicator of future construction, also surged up 8% from July to the best level since May 2007.

Rate Update

After moving lower each of the first eight months of the year, mortgage rates have ticked up slightly over the first half of September but remain in the 3’s.

This Week

New Home Sales will come out on Wednesday, Pending Home Sales on Thursday, and both the Core PCE Price Index and Durable Orders on Friday.

September 23, 2019 by · Leave a Comment

Shelter Six:  Mortgage Rates Shoot Up

U.S. consumer spending remains strong as evidenced by the August Retail Sales figures, which were up .4% from July and double the amount expected.

Although the manufacturing sector continues to struggle mostly due to increased tariffs, consumers have shown few signs of slowing down heading into the important holiday shopping season.

Mortgage rates spiked higher as last week’s inflation data came in higher than expected as the August Core CPI figures were at the highest level since 2008.

The news that the U.S. and China will be delaying tariffs also pushed rates higher as both countries expressed a willingness to work together on trade negotiations that will start back in early October.

To help stimulate economic growth, the European Central Bank cut rates last week and announced that it will resume a bond buying program which had ended in December.

The Federal Reserve meets again on Wednesday with most investors expecting a .25% rate cut.

Rate Update

Mortgage rates spiked higher last week as a result of stronger than expected inflation data, reduced trade tensions with China, and a mixed message from European Central Bank officials.

This Week

Housing Starts will also be released on Wednesday and Existing Home Sales on Friday.

September 16, 2019 by · Leave a Comment

Shelter Six:  U.S. Economy Continues to Show Strength

Last week’s Employment Report showed the economy adding 130K jobs in August, a solid gain but a little lower than the 150K new jobs expected.

Unemployment remained at 3.7% but Average Hourly Earnings rose more than expected and were up a strong .4% from July.

The U.S. economy is still clearly going strong with particular strength in the Services sector and Retail Sales, which have now been higher than expected for five straight months.

Around the world, however, there is a lot more uncertainty as business investment has slowed.

Manufacturing is also slowing down as the trade tensions with China continue to be a drag on the economy and a cloud over the future.

Encouraging news last week though as U.S. and China officials announced that additional trade talks will take place in early October.

Rate Update

Last week’s economic data contained mixed results and the net effect on mortgage rates was small.

This Week

The Consumer Price Index is due out on Thursday and Retail Sales on Friday.  The European Central Bank meets on Thursday and the U.S. Federal Reserve on September 18.

September 9, 2019 by · Leave a Comment

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