Shelter Six:  Home Prices Continue to Surge

July 30, 2018 by · Leave a Comment 

1. The Metro Atlanta median sales price surged to an all-time high of $251,250 in June, 7.4% higher than a year ago, according to the AJC.

2. The number of homes listed for sale was down to only a 2.3 months supply in June, down from 2.9 months a year ago, according to the AJC.

3. Mortgage insurance giant MGIC is following a recent trend of tightening up the debt ratio and now will only insure loans with debt ratios over 45% when credit scores are over 700.

4. The U.S. and European Union (EU) agreed last week to not escalate their trade dispute as neither will impose tariffs while the two sides attempt to work out their differences.

5. If the U.S. and EU can come to terms, there would be tremendous optimism that the same could be done with other countries, notably China.

6. Shelter’s “Dream Big” Jumbo 30-year fixed-rate loan allows up to $3M in financing with as little as 10% down with a minimum 680 credit score.

Rate Update

Investors reacted to the reduced chance of a tariff trade war last week by shifting money from bonds to riskier stocks, which had the effect of pushing mortgage rates higher.

This Week

The Core PCE Price Index is due out on Tuesday, the ISM National Manufacturing Index on Wednesday, and Employment figures on Friday.  The Fed also meets on Wednesday but no change in rates is expected this time.

Shelter Six:  Retail Sales Remain Strong

July 23, 2018 by · Leave a Comment 

1. Retail Sales unexpectedly turned negative for 3 months during the winter creating doubts about the strength of the economy. Since then, however, sales have been very strong.

2. June Retail Sales were up .5% from May influencing the Atlanta Fed to bump up the 2nd Quarter GDP forecast to 4.5%, more than double the 1st Quarter’s 2%.

3. June Housing Starts fell 12% from May. Single-family starts reached a 10-year high in November 2017, but they have fallen steadily since.

4. Despite a huge need for more inventory of homes, higher labor, land, and material costs are some of the reasons cited by homebuilders for the slowdown in new construction.

5. The government agency formerly known as the CFPB is now officially known as the BCFP, which stands for the “Bureau of Consumer Financial Protection.”

6. Acting Director, Mick Mulvaney, recently changed the name to reflect the way the name officially reads in the 2010 Dodd-Frank Act, which created the agency.

Rate Update

Last week was relatively quiet for mortgage rates. The major economic data was mixed and rates ended the week a bit higher.

This Week

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

Shelter Six:  Strong U.S. Economy Only Getting Stronger

July 16, 2018 by · Leave a Comment 

1. The U.S. economy continues to be strong and resilient.  Some good info below that is very encouraging that the strength will continue.

2. In a recent interview, Warren Buffet and Jamie Dimon (CEO JP Morgan Chase) said the economy is strong and still has steam.  This quote from Dimon:

3. “Business sentiment is almost at the highest level it’s ever been, consumer sentiment is at its highest levels, markets are wide open, housing’s in short supply and my guess is mortgage credit will expand a bit.”

4. Evidence of ongoing strength in the labor market, last week’s JOLTS report revealed there were 6.1M unemployed people in the labor force seeking 6.6M open positions.

5. Last week’s CPI figures revealed that inflation continues to rise and the 2.3% increase in June was the highest since Jan 2017.

6. Easing regulations and a stronger economy are key reasons why 60% of economists surveyed by Wall Street Journal expect moderately stronger growth in the medium term.

Rate Update

Last week was one of the quietest of the year.  The major economic data generally matched the expected levels and mortgage rates ended nearly unchanged.

This Week

Retail Sales will be released on Monday, Industrial Production on Tuesday, and Housing Starts on Wednesday.

Shelter Six:  Economy Still Steaming Ahead

July 9, 2018 by · Leave a Comment 

1. The economy added 213K jobs in June, a little more than expected.

2. The economy has averaged 215K new jobs per month this year, up from 182K per month this time last year.

3. The Unemployment Rate now stands at 4%, up from last month’s 18-year low of 3.8%.  The main reason for the increase though was a surge of workers entering the labor force.

4. Minutes from last week’s Federal Reserve Meeting indicate that Fed members believe recent tax cuts will support economic growth over the next few years.

5. Fed members’ biggest economic concern is increased trade tensions slowing future investment activity.

6. An interesting fact that supports ownership, the Fed estimates that homeowners’ net worth has ranged between 31 and 46 times more than that of renters between 1998 and 2013.

Rate Update

After shooting up about .5% over the first quarter of the year, mortgage rates have been flat and mostly unchanged since.

This Week

The Producer Price Index (PPI) measures the price increase of “intermediate” goods used by companies to produce finished products and is due out on Wednesday.  The Consumer Price Index (CPI) looks at the price change for finished goods and is due out on Thursday.

Shelter Six:  Looser Mortgage Guidelines Leading to More Home Sales

July 2, 2018 by · Leave a Comment 

1. A recent CoreLogic analysis of Conventional loans revealed that looser Fannie Mae / Freddie Mac mortgage guidelines are leading to more loans being approved.

2. As Fannie and Freddie have promoted more 3% down programs, the share of Conventional purchase loans with < 5% down has surged from < 2% in 2014 to 9% in the 1st Qtr of 2018.

3. Also, as Fannie and Freddie have allowed for higher debt ratios, 20% of all loans in the 1st Quarter of 2018 had a debt ratio over 45%, up from only 5-7% in 2012.

4. Despite more loans being approved, the average Conventional credit score has remained unchanged at 755 from the 1st Quarter of 2018 compared to the previous year.

5. A big reason that the Federal Reserve has been raising short-term rates over the last year is that inflation has moved higher in recent months.

6. After holding steady around 1.5% for nearly a year, the Core PCE Price Index spiked up the last 3 months and in May was 2% higher than a year ago, the largest increase since 2012.

Rate Update

There were few surprises with last week’s economic data and mortgage rates fell slightly.

This Week

The mortgage markets will close early on Tuesday and all day Wednesday in celebration of Independence Day.  The ISM National Manufacturing Index will be released on Monday, the ISM National Services Index on Thursday, and Employment figures on Friday.