Shelter Six:  Mortgage Rates Down to Lowest Level in a Year

May 27, 2019 by · Leave a Comment 

Due to trade tensions with China and political upheaval in Britain, money flowed out of the riskier stock market and into the safer bond market last week pushing mortgage rates to the lowest point in over a year.

Economic news was mixed over the last week with New Home Sales and Housing Starts coming in stronger than expected, while Existing Home Sales and Retail Sales came in weaker than expected.

Shelter’s new Peak 100 Conventional loan requires no money down and no PMI through a creative combination of a 97% 1st mortgage and a 4% 2nd mortgage.

The Peak 100 1st mortgage is a traditional, fully-amortizing 30-year fixed-rate loan that requires only 3% down.  The rate is about 1% higher than prevailing rates.

The Peak 100 2nd mortgage is a 30-year interest-only, fixed-rate loan that provides the 3% down payment as well as an additional 1% toward closing costs.  The rate is the same as the 1st mortgage.

The program is for single-family purchases only and allows credit scores down to 660.  Homebuyer education is required and income can’t exceed 140% of the area median income.

Rate Update

Mortgage rates fell to the lowest levels in 16 months following increased international trade tensions, political uncertainty in the U.K., and weak manufacturing data in the U.S.

This Week

Pending Home Sales and the 2nd Estimate of 1st Quarter GDP will be released on Thursday and the Core PCE Price Index on Friday.

Shelter Six:  100% Conventional Loan Now Available

May 20, 2019 by · Leave a Comment 

Millennials now represent the largest generational group in the history of the U.S. with a population of nearly 84 Million.

The largest segment of Millennials will turn 30 over the next 1-2 years and are expected to dominate home purchases over the next decade.

Surprisingly, according to a recent Freddie Mac survey, many potential home buyers have misinformation regarding what it will take to buy a home.

Nearly a third of those surveyed falsely think a 20% down payment is required to buy a home and that all of the down payment needs to come from personal savings.

The reality is that there are many loan programs that require only 0-5% down and that the down payment can often come from a gift.  Real estate agents and mortgage professionals everywhere need to do a better job of getting this word out.

The Shelter Peak 100 is a Conventional purchase program that requires no money down, a 660 credit score, and income that doesn’t exceed 140% of the Area Median Income.

Rate Update

Weaker than expected economic data was modestly positive for mortgage rates last week. Headlines about the trade negotiations between the U.S. and China caused some volatility but had little net effect.

This Week

Existing Home Sales will be released on Tuesday, New Home Sales on Thursday, and Durable Orders on Friday. In addition, news about the status of the trade negotiations between the U.S. and China could influence mortgage rates.

Shelter Six:  Trade Tensions with China Actually Good for Rates

May 13, 2019 by · Leave a Comment 

Trade tensions with China escalated at the end of last week with the U.S. more than doubling a tariff on Chinese imports.

China retaliated this morning by increasing tariffs on U.S. imports, and the result was a huge drop in the stock market.

Trade restrictions reduce the outlook for inflation, so any escalation in a trade war will actually be good for mortgage rates pushing them lower.

Before the drama with China, last week’s inflation news was already very good as the April Consumer Price Index increased less than expected.  Inflation continues to be a non-issue.

The Mortgage Credit Availability Index published by the Mortgage Bankers Association (MBA) indicates that credit availability has more than doubled since late 2012.

The index, however, is still only one-fifth of where it was at the height of the market in mid-2006, but the MBA expects credit availability to continue to grow as we move forward.

Rate Update

Both a lack of progress in Chinese trade talks along with weak inflation data contributed to mortgage rates falling modestly last week.

This Week

Retail Sales and Industrial Production figures are both due out on Wednesday with Housing Starts due out on Thursday.  Investors will also be watching for more news about the trade negotiations between the U.S. and China.

Shelter Six:  Fed Leaves Rates Unchanged

May 6, 2019 by · Leave a Comment 

As expected, the Federal Reserve made no change to the Fed Funds Rate last week.

Inflation continues to run below the Fed’s target of 2%, which has stirred increased expectations that the Fed might actually cut rates before the year is out.

Fed Chair Powell addressed this speculation, however, by stating that Fed officials “don’t see a strong case for moving rates in either direction.”

The economy added 263K jobs in April, well above the 190K forecasted.  The Unemployment Rate unexpectedly declined from 3.8% to 3.6%, the lowest level since 1969!

Shelter has just launched a Temporary Buydown program, which allows for the reduction in the Borrower’s mortgage payment by 2% in the 1st year and 1% in the 2nd year of the loan.

This program can be invaluable for advertising listings as the Buydown fee can be paid for by the Seller.  This program is for Conventional Conforming Fixed-rate purchase loans only.

Rate Update

There was a lot of economic news last week that led to a lot of rate volatility, but the various influences were offsetting and mortgage rates ended the week nearly unchanged.

This Week

The JOLTS report will be released on Tuesday and the Consumer Price Index (CPI) on Wednesday. Investors also will be watching for news about the trade negotiations between the U.S. and China.