Shelter Six:  Partial Government Shutdown Temporarily Ends

January 28, 2019 by · Leave a Comment 

1. After 35 days, the longest US government shutdown in history ended on Friday but with only a temporary three-week agreement.

2. This is still great news for 800K government employees returning to work this week and finally getting paid, but plenty of uncertainty remains around what will happen past February 15.

3. The Mortgage Bankers Association (MBA) is optimistically forecasting purchase volume to increase 4% this year, followed by 3% in 2020, and 3% in 2012.

4. According to the MBA, keys to a solid spring market are rates staying low, housing inventory continuing to grow, and the job market maintaining its strength.

5. There is plenty of optimism early in the year with strong prequalification activity and mortgage purchase applications up 11% compared to last year.

6. According to the MBA, the biggest risks in 2019 will be ongoing political tensions, slowing global growth, Brexit, rising rates, higher home prices, and a volatile stock market.

Rate Update

Most major economic data was unavailable last week due to the government shutdown and mortgage rates ended the week nearly unchanged.

This Week

The Federal Reserve meets on Wednesday but no change in interest rates is expected.  Core PCE Price Index is due out on Thursday with both Employment figures and the ISM National Manufacturing Index due out on Friday.

Shelter Six: IRS Resumes Providing Income Verifications

January 21, 2019 by · Leave a Comment 

1. One key part of the government shutdown is over as the IRS has resumed providing tax transcripts for mortgage applications, thanks to efforts of the Mortgage Bankers Association (MBA).

2. MBA advocacy is also responsible for the resumption of flood insurance policies, which FEMA had halted at the beginning of the shutdown.

3. Last week was more notable for the economic reports that did not get released rather than the ones that did.  Retail Sales and Housing Starts were not released due to the partial government shutdown.

4. This month’s Retail Sales report was particularly important because it covered the holiday shopping season in December.

5. The lack of key economic data has left the Fed flying blind to a degree.  It is extremely difficult to monitor economic growth and missing data only compounds the problem.

6. As expected, the British Parliament rejected Theresa May’s Brexit deal last week.  The UK is scheduled to leave the EU on March 29 and much of the exit remains unresolved.

Rate Update

Due to the government shutdown, there was little major economic data released last week and mortgage rates ended the week slightly higher.

This Week

Existing Home Sales are due out on Tuesday, New Home Sales on Friday, and Durable Orders on Friday.  Mortgage markets will be closed on Monday in observance of MLK Day.

Shelter Six:  Mortgage Business as Usual Despite Government Shutdown

January 14, 2019 by · Leave a Comment 

1. As we enter the fourth week of the partial government shutdown, the mortgage business has been mostly unaffected but concerns around FHA, verifying income, and funding all loom.

2. The shutdown is causing delays in the release of some government economic reports, which are coming out more sporadically than normal.

3. Good news on the inflation front as the latest inflation figures indicate that inflation continues to track close to the Fed’s target level of 2%.

4. Minutes released from the Fed’s most recent meeting eased investor concerns that the Fed may increase short-term rates too aggressively or too quickly.

5. Mortgage denial rates are at the lowest point since 2004.  CoreLogic estimates that only about one in ten mortgage applications were denied in 2017, the most recent year reviewed.

6. Thanks largely to affordability issues, an excessive Debt Ratio is now the number one reason for mortgage denials (30.3% of all denials) surpassing poor credit.

Rate Update

There were few surprises in last week’s economic data and mortgage rates ended the week with little change.

This Week

Retail Sales will be released on Wednesday, Housing Starts on Thursday, and Industrial Production on Friday.

Shelter Six:  Despite Shutdown, Mortgage Business Still Closing Loans

January 7, 2019 by · Leave a Comment 

1. As the partial government shutdown enters its third week, the mortgage business continues to function and close loans.

2. Conforming and VA financing have not been impacted but FHA is working with a limited staff and, as things get busier, there could be delays with FHA closings.

3. Also, a prolonged shutdown could soon lead to more serious problems as lenders have growing difficulty verifying income and funding loans.

4. On a positive note, Employment figures came in much stronger than expected on Friday with a whopping 312K new jobs added to the economy in December.

5. The Unemployment Rate unexpectedly increased from 3.7% to 3.9%, but this was mostly due to additional workers entering the labor force, which is viewed as a sign of strength.

6. The Consumer Financial Protection Bureau’s plans to change its name to the Bureau of Consumer Financial Protection are dead in the water and the agency will continue to be known as the CFPB moving forward.

Rate Update

Strong Employment figures raised concerns about inflation and contributed to rates pushing higher on Friday after having dropped a good bit over the previous week.

This Week

The ISM National Services Index will be released on Monday, minutes from the latest Federal Reserve meeting on Wednesday, and the Consumer Price Index on Friday.