Shelter Six:  New-Home Sales and Consumer Spending Surge

June 29, 2020 by · Leave a Comment 

May Existing-Home Sales were down 10% from April but this is simply a reflection of the economic shutdown and shelter-in-place stipulations of March and April. 

May New-Home Sales reflect more current data and were up 17% from April.

Consumer spending surged by a record 8.2% in May as Americans started spending more freely again.

With parts of the economy potentially shutting down again, it is increasingly looking less like a “V” or “U” shaped recovery, and more like a series of “W’s.”

Self-employed borrowers are facing temporarily stricter guidelines and will need to provide YTD P&L’s and written business analysis to establish income stability.

Shelter Home Mortgage’s parent company, NewRez, jumped 12 spots to #8 on Scotsman’s Guide of the top residential mortgage lenders in 2019 based on overall volume.

Rate Update

The 30-year mortgage rate continues to hover around 3% and most investors anticipate this continuing as long as the pandemic and economic concerns continue.

This Week

ISM National Manufacturing Index will be released on Wednesday and Employment figures on Thursday.  Mortgage markets will be closed on Friday in observance of July 4.

Shelter Six:  Purchase Applications Soar to Highest Level in 11 Years

June 22, 2020 by · Leave a Comment 

The housing market continues to rebound stimulated by low rates, surging applications, and a gradual improvement in consumer confidence.

Mortgage purchase applications were up last week to the highest level in over 11 years and 21% higher than the same week last year.

Jobless claims continue to improve and have now dropped 11 straight weeks.

Forbearance figures have decreased three weeks in a row and now represent 8.7% of all mortgages, according to Black Knight’s June 16 report.

Mortgage products continue to gradually come back as lending opens back up and some of the restrictions recently put in place go away.

Anyone with a rate of 4% or higher who plans on staying in home 3+ years should look into refinancing right away.

Rate Update

30-year mortgage rates continue to hover around 3% thanks to tame inflation and the Fed’s ongoing commitment to buying bonds.

This Week

Existing Home Sales will be released on Monday, New Home Sales on Tuesday, and the Core PCE Price Index on Friday.

Shelter Six:  Fed Using All of Its Tools to Support Economic Recovery

June 15, 2020 by · Leave a Comment 

The Fed restated its commitment to keep buying bonds last week while announcing it will keep short-term rates close to zero for at least the next two years.

Fed officials now forecast that the economy will shrink 6.5% in 2020 and then grow by 5% in 2021.

Mortgage purchase volume was up 9.3% last week over the previous week and has now increased for the 9th week in a row.

Respondents who believe that now is a good time to buy a home increased by 11% in May, according to a Fannie Mae’s Home Purchase Survey.

An important difference in the current crisis and the Great Recession is how much more equity people have in their homes this time around.

A Black Knight report indicates that 80% of borrowers in forbearance have 20% or more equity, just 9% have less than 10% equity, and only 1% are currently upside down with no equity.

Rate Update

30-year mortgage rates fell below 3% last week for the first time.  The better things go with the economy reopening, the more upward pressure will be on rates, and vice versa.

This Week

Retail Sales are due out on Tuesday and Housing Starts on Wednesday.

Shelter Six:  Stronger Than Expected Jobs Reports Boost Optimism

June 8, 2020 by · Leave a Comment 

Strong economic data released last week suggests an economic recovery is off to a much faster start than anticipated.

On Wednesday, the monthly ADP Payroll Report was expected to show a loss of 9M jobs, however, only 2.76M jobs were lost.

Then on Friday, the Employment Report came in substantially stronger than expected.  Projections were for 8M jobs to be lost, but 2.5M jobs were actually added!

Unemployment was projected to surge to 20% but actually fell from 14.7% to 13.3%.  Unemployment claims have now decreased for 9 straight weeks.

Shelter’s Jumbo loan program is back, but the Jumbo world has very strict requirements right now such as 20% down, 700 credit scores, and few exceptions.

The Jumbo Blend 2-loan “piggyback” alternative remains a great solution and requires only 10% down while allowing lower credit scores and more moderate guidelines.

Rate Update

Mortgage Rates bumped up a small amount last week after the series of strong economic reports were released but still remain near all-time lows.

This Week

The Federal Reserve meets again on Wednesday and is expected to continue with a posture of watchful waiting with no changes to short-term rates. CPI figures are also due out on Wednesday.

Shelter Six:  NAR Upgrades Outlook for Home Sales and Prices

June 1, 2020 by · Leave a Comment 

The financial markets, including mortgage rates, have not had much reaction to the rioting going on within U.S. cities, and have opened flat on Monday.

Due to the surprising resiliency of the housing market in the midst of the pandemic, NAR has upgraded the outlook for both home sales and prices for the rest of this year.

Home Sales are now projected to decline only 11% in 2020 (had been 15%) and the Median Home Price is now projected to increase 4% (had been 0%).

April New Home Sales shocked experts and increased slightly from March, after forecasts called for a drop of as much as 20%.  April Pending Home Sales, however, slumped more than expected and were down 22% from March.

A Flash Survey from NAR indicates that 34% of Realtors have successfully completed nearly all aspects of transactions while adhering to social distancing procedures.

Only 7K new mortgages went into forbearance last week.  Mortgage in forbearance now represent 9% of all mortgages, according to Black Knight as of May 26.

Rate Update

The Conforming 30-year fixed-rate hit the lowest level since Freddie Mac began tracking it in 1971 and remains in the low 3’s.  Until things with the pandemic get measurably better, the Federal Reserve has said it will keep buying bonds, which should keep rates very low.

This Week

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