Shelter Six:  Potential Trade War Biggest Risk to Economy

1. According to Fannie Mae’s latest economic report, U.S. economic fundamentals remain strong with the stimulus from the tax cut and new federal budget working well.

2. According to the report, the biggest economic downside risk at this time is the potential trade war with China.

3. Fannie Mae expects the Fed to raise interest rates for the second time this year in June and then once more before the end of the year, for a total of three times this year and not four.

4. After three months of unexpected declines, Retail Sales figures rebounded in March up to a very healthy .6%.

5. Multi-family Housing Starts were strong but Single-family Housing Starts fell 4% in March.

6. Shelter’s new Smart Choice program allows for loan amounts up to $2M with only 10% down and no PMI with the flexibility of one mortgage late in the last year and up to a 50% debt ratio.

Rate Update

Despite no compelling economic news nor a clear reason, mortgage rates moved to the highest point in several years last week.

This Week

Existing Home Sales will be released on Monday, New Home Sales on Tuesday, and Durable Orders on Thursday.

April 23, 2018 by · Leave a Comment

Shelter Six:  Optimistic Survey Points to Healthy Spring R.E. Market

1. Fannie Mae’s March National Housing Survey painted a very optimistic picture with more respondents indicating that it is a good time to both sell and buy a home.

2. Detailed minutes from the Fed’s March 21 meeting gave insight that Fed officials expect US economic growth to be stronger than average for the next few years.

3. MGIC lowered its borrower-paid PMI rates by approximately 11% to reflect the lower corporate tax rates signed into law in 2017.

4. Self-employed buyers now have a mortgage alternative where they don’t need to provide tax returns or any income documentation.

5. Shelter’s “SmartSelf” program allows a self-employed buyer’s income to be calculated exclusively from the last 1-2 years of bank statements.

6. The program requires only 10% down with no PMI and a 620 credit score while allowing for a Bankruptcy or Foreclosure as recent as two years ago and up to 15 financed properties.

Rate Update

The stock market performed well last week causing investors to shift money from bonds to stocks.  This was negative for mortgage rates which finished the week a bit higher.

This Week

Retail Sales and NAHB Housing figures will be released on Monday while Industrial Production and Housing Starts will come out on Tuesday.

April 16, 2018 by · Leave a Comment

Shelter Six:  Mortgage Option for Buyers with Credit Problems

1. Buyers with significant credit problems can still get a mortgage up to $1M with 20% down.

2. Shelter’s SmartTrac program requires only a one year waiting period for a Bankruptcy or Short Sale, only two years for a Foreclosure, and even allows for multiple mortgage late payments over the last 12 months.

3. The program is available as either a fixed-rate or an ARM, includes an Interest-Only option, requires a 620 score, and allows for up to 15 financed properties.

4. Against a consensus forecast of 175K, the economy added only 104K jobs in March.

5. Even with this disappointing figure, the economy has added an average of 202K jobs per month during the first three months of 2018.

6. The bright side of March’s Employment Report was that the Unemployment Rate remained only 4.1% and Average Hourly Earnings were up a little more than expected.

Rate Update

Mortgage rates moved to the lowest levels in nearly two months in the aftermath of last week’s trade-war inspired market sell-off.  As panicked investors moved money out of the stock market and into the bond market, mortgage rates fell slightly.

This Week

Wednesday is the big day this week with the release of the latest Consumer Price Index figures as well as the latest minutes from the Fed’s March 21 meeting.

April 9, 2018 by · Leave a Comment

Shelter Six:  Pending Home Sales Up

1. After a disappointing January, Pending Home Sales rebounded nicely in February with contracts signed to purchase previously owned homes increasing 3%.

2. This is an important metric because contracts signed are viewed as a leading indicator of future closings.

3. Millennials, or people roughly between 23 and 37 of age, were the most active generation of homebuyers in 2017, according to NAR.

4. Based on a recent survey, NAR estimated that 36% of all home sales involved Millennials last year, up from 34% the previous year.

5. And here comes Generation Z!  The post-Millennial crop of kids born in 1995 and later are buying houses much earlier than the Millennials.

6. MarketWatch reports that just shy of 100K members of Generation Z have already purchased a home and have a payment record better than Millennials.

Rate Update

It was a relatively quiet holiday-shortened week.  The economic data contained no major surprises and caused little reaction, and mortgage rates finished the week a bit lower.

This Week

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

March 30, 2018 by · Leave a Comment

Shelter Six:  The Fed Bumps Up Short-Term Rates

1. As expected, the Federal Reserve bumped up short-term rates .25% last week.

2. .New Fed Chair Jerome Powell’s first press conference left investors divided about whether there will be three or four total rate hikes this year.

3. Also last week, the Trump administration announced about $50B in new tariffs on Chinese imports.  Although less than expected, fears of Chinese retaliation still remain.

4. A trade war with China would be bad for the economy and stocks, but it’s impact on mortgage rates is hard to predict.

5. February sales of previously owned homes increased 3% from January and would have been even higher if not for the severe weather around the country.

6. Inventory seems to be finally heading in the right direction and was up 5% in February to a 3.4 month supply, but 8% lower than a year ago.

Rate Update

After a major surge in January and February, mortgage rates have managed to hold remarkably steady in March.  Even with the rate and tariff announcements last week, mortgage rates remained flat despite large stock market losses.

This Week

Pending Home Sales will be released on Wednesday and the Core PCE Price Index on Thursday.  Mortgage markets will close early on Thursday and all day on Good Friday.

March 26, 2018 by · Leave a Comment

Shelter Six:  More Lenient Jumbo Product Helps More Qualify

Shelter is proud to launch Smart Edge, a new “Non-QM” product that will enable Jumbo customers to qualify even with a Bankruptcy, Foreclosure, or Short Sale only two years ago.

The product requires only 10% down, no PMI, a credit score of only 620, and up to a 50% debt ratio.

Smart Edge is also great for investors as it allows up to 15 financed properties and the terms are creative with interest-only ARM’s enabling a very reasonable payment.

February Retail Sales were unexpectedly down for the third straight month.

With consumer spending accounting for 70% of economic activity in the U.S., economists will be carefully monitoring future Retail Sales figures to gauge the economy.

February Single-family Housing Starts were up 3% from January with 510K single-family units under construction, the most since June 2008.

Rate Update

Bad economic news normally drives mortgage rates down and this was true last week as lower than expected retail sales helped mortgage rates finish the week slightly lower.

This Week

This week’s big news is Wednesday’s Fed meeting.  Investors widely expect a .25% increase in the Federal Funds Rate.  Existing Home Sales will also be released on Wednesday, New Home Sales on Friday, and Durable Orders on Friday.

March 19, 2018 by · Leave a Comment

Shelter Six:  Jobs Way Up in February

1. The economy gained an enormous 313K jobs in February, much higher than expected and the largest gain since July 2016.

2. Construction firms added 61K of the jobs, the highest monthly increase in 11 years!

3. As job growth continues to surge, wages continue to remain flat as average hourly earnings did not increase last month near as much as expected.

4. The Unemployment Rate remains remarkably steady though and is still at 4.1% for the fifth straight month.

5. A quick reminder that the 2018 maximum single-family loan limit is $453,100 for Conforming and $359,950 for FHA for the 29 county Metro Atlanta area.

6. In serving Metro Atlanta, Shelter continues to use only the very best local appraisers who know the areas they work and are always willing to go the extra mile.

Rate Update

Mortgage rates continued to move higher last week as a wide range of events, including important labor market data, a European Central Bank meeting, and government policy changes, all affected the markets in different ways.

This Week

The Consumer Price Index is due out on Tuesday, Retail Sales on Wednesday, and Housing Starts on Friday.

March 12, 2018 by · Leave a Comment

Shelter Six:  New Fed Chairman Paints Rosy Picture for Economy

1. New Federal Reserve Chairman, Jerome Powell, gave his first testimony to Congress last week and painted a rosier picture for the economy than expected.

2. Powell’s forecasts for higher inflation and wage growth as well as comments that the economy had “strengthened since December” caused mortgage rates to rise.

3. Investors now expect another .25% bump to short-term rates at the next Fed meeting on March 21.

4. Evidence of a strengthening economy, the ISM National Manufacturing Index climbed to the highest level since 2004 and Weekly Jobless Claims fell to the lowest level since 1969.

5. According to NAR, in the 4th Quarter of 2017 single-family home prices reached an all-time high in 114 of 177 (64%) U.S. metropolitan statistical areas.

6. The national median price was up to $247,800, up 5.3% from one year ago. Since 2011, home prices have risen 48% but, interestingly, incomes only 15%.

Rate Update

Mortgage rates remained flat last week as strong economic data and comments from the new Fed Chair were offset by concerns over new global tariffs on steel and aluminum.

This Week

ISM National Services Index will be released on Monday, Factory Orders on Tuesday, and Employment figures on Friday.

March 5, 2018 by · Leave a Comment

Shelter Six:  Inventory and Home Sales Both Down

1. Existing Home Sales were down 3% in January from December and 5% from last year.

2. The main reason for slower sales is a lack of inventory, which is down 10% from a year ago and now sits at a 3.4 months supply (6 months is considered healthy).

3. Fannie Mae now gives a discounted rate on a Conforming cash-out refinance if the cash is being used to consolidate student loans.

4. In the aftermath of the Great Recession, Congress voted to make Private Mortgage Insurance (PMI) tax deductible for the first time.

5. Over the last decade, Congress has continued to vote at the end of each year to make PMI tax deductible for the subsequent year.

6. Tax deductible PMI was not initially reinstated for 2017 taxes but Congress finally approved this deduction on February 9.

Rate Update

For the first time in 2018, mortgage rates did not increase last week but rather stayed flat after the economic data of the week came in as expected.

This Week

Investors will be focused on Jerome Powell’s first speech as Fed Chair on Wednesday.  Also, Durable Orders will be released on Tuesday, Core PCE Price Index on Thursday, and ISM National Manufacturing Index on Friday.

February 26, 2018 by · Leave a Comment

Shelter Six:  Expect Short-Term Rates to Increase by .25% in March

1. Federal Funds futures contracts imply an 83% chance of a rate-hike at the Fed’s March meeting.  The general consensus is that there will be three rate hikes this year.

2. Interest on second mortgages is still tax deductible if the proceeds from the loan go toward “substantial home improvements” and the combined 1st and 2nd mortgage balances do not exceed $750,000.

3. Good News:  Housing Starts were up 4% in January and are 8% higher than a year ago.

4. Not So Good News:  January Retail Sales figures were lower than expected while the Consumer Price Index was higher than expected.

5. Great News:  According to a released internal memo, the CFPB will pull back its enforcement actions and act with “humility and moderation” moving forward.

6. The memo also said that the CFPB will work toward “free, innovative, competitive, and transparent consumer finance markets where the rights of all parties are protected.

Rate Update

For the first time this year, it was a relatively quiet week for mortgage rates.  The major economic data was mixed and mortgage rates ended the week with little change.

This Week

It is a very light week for economic data.  On Wednesday, Existing Home Sales will be released as will the minutes from the January 31 Fed meeting.

February 19, 2018 by · Leave a Comment

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