Shelter Six:  Rates Projected to be Cut in both U.S. and Europe

June 24, 2019 by · Leave a Comment 

Last week’s Federal Reserve Meeting brought no surprises.  As expected, the Fed left rates unchanged and its statement was right in line with investor expectations.

Nearly half of Fed officials now predict, however, that there will be a rate cut by the end of the year and some investors project a .25% cut on July 31 and another .25% in September.

The main catalyst for a rate cut is an uncertain economic outlook due to a weakening global economy as well as stalled out trade negotiations.

The European Central Bank also unexpectedly announced last week that it very well may start cutting rates as soon as next month.

Strong housing news for May came out last week showing Existing Home Sales up 3% from April and Housing Starts also higher than projected.

National housing inventory now stands at a 4.3-month supply, which is on the way up but still well less than the 6-month supply considered healthy.

Rate Update

Mortgage rates ended last week at the lowest levels in more than two years as more projections mount for rate cuts both in the U.S. and in Europe.

This Week

New Home Sales are due out on Tuesday, Durable Orders on Wednesday, and the Core PCE Price Index on Friday.

Shelter Six:  Don’t Count the Mortgage Payment for Home Buyer is Selling

June 17, 2019 by · Leave a Comment 

Conventional guidelines now allow Shelter to not count a mortgage payment for a Buyer’s current home if the home is under contract and financing contingencies have been cleared.

Shelter’s SmartEdge program allows self-employed borrowers to qualify using only one year of tax returns if the business is two or more years old.

Now that proposed tariffs with Mexico have been averted, focus has shifted to negotiations with China with talks expected to resume on June 28 at the G20 Summit.

May Retail Sales were very strong and up .5% from April.  Despite the strength in consumer spending, inflation continues to be lame and rose less than expected in May.

One of the main reasons housing has struggled recently is that home prices have risen twice as fast as inflation.  In the last 12 months, the S&P Corelogic Case-Shiller National Index is up 3.7%, double the 1.9% inflation rate.

Measured in real, inflation-adjusted terms, home prices today are rising at a 1.8% annual rate compared to a 1.2% rate since 1975.

Rate Update

Despite the volatility in the markets over the last week, the net effect was minimal for mortgage rates, which ended up just slightly higher and still near two-year lows.

This Week

Housing Starts will be released on Tuesday and Existing Home Sales on Friday.  The Federal Reserve will also meet on Wednesday with no change in rates expected.

Shelter Six:  Deal with Mexico Puts Upward Pressure on Rates

June 10, 2019 by · Leave a Comment 

The agreement reached between the U.S. and Mexico to avert higher tariffs has eased some of the tensions in the market causing both stocks and rates to push higher early this week.

Last week ended with some bad economic news as only 75K new jobs were added in May, much lower than the forecasted 180K new jobs.

Thanks to a softening economy, low inflation, and ongoing trade disputes, prevailing sentiment now points to at least one short-term rate cut by the Fed by the end of the year.

The VA has recently given updated appraisal process guidelines clarifying that a Certificate of Eligibility has to be requested before a VA appraisal can be ordered.

The guidelines also make it clear that a VA appraiser is required to make contact and schedule an appointment within two business days of receiving the order from the lender.

The VA appraiser is also required to give the lender an opportunity to provide additional comps before completing an appraisal where the value coming in lower than Sales Price.

Rate Update

Weaker than expected employment figures and dovish comments from Federal Reserve board members last week influenced mortgage rates to the lowest levels in nearly two years.

This Week

The Consumer Price Index (CPI) will come out on Wednesday and Retail Sales on Friday.  All eyes will also be on the U.S.’s ongoing negotiations with China.

Shelter Six:  Mortgage Rates Drop to Lowest Level in Over a Year

June 3, 2019 by · Leave a Comment 

Inflation continues to help keep mortgage rates low.  April’s Core PCE Price Index was just 1.6% higher than a year ago and well below the Fed’s 2% target.

Tame inflation, along with uncertainty on the trade front, have contributed to falling rates and inspired the Federal Reserve to now contemplate a rate cut by the end of the year.

A sign of economic strength.  According to the Mortgage Bankers Association, the overall mortgage delinquency rate is down to 4.42%, a very low number historically.

Traditional Conventional and FHA guidelines prevent many people who have the ability to repay from buying a home and that is where Shelter’s SmartEdge program comes in.

SmartEdge is an excellent financing alternative for customers who just miss out on Conventional or FHA loans and requires only 10% down (15% for an investment property).

SmartEdge allows for a higher debt ratio, has an interest-only feature, and is particularly helpful in situations where income from one borrower is very recent or difficult to document.

Rate Update

Mortgage rates dropped last week to the lowest level in well over a year mostly due to the increased trade tensions with China and Mexico, which could slow down global economic activity.

This Week

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