Shelter Six:  June Housing Starts and Retail Sales Figures Surge

July 20, 2020 by · Leave a Comment 

With record levels of mortgage volume clogging lenders’ pipelines, it is critical to set realistic expectations and deadlines with customers.

Appraisals are taking a solid two weeks right now, so best to put 20 days in the Appraisal Contingency, as it can take the lender a few days to order and review the appraisal.

It is also recommended to put in at least 25 days for the Financing Contingency and leave a solid 30 days for closing.

After plummeting in April, Builder Confidence has surged and more than doubled over the last 3 months. And, for good reason, as June Housing Starts were up 17% from May.

June Retail Sales rose 7.5% from May, well above the consensus of 5%, and are shockingly 1.1% above the June 2019 level.

According to Black Knight, forbearance figures decreased last week to the lowest level since the peak in May to 7.77% of all mortgages (4.12M borrowers).

Rate Update

Rates continue to trickle down to new lows as the 30-year is around or even under 3%.  Rates are projected to stay super low as long as the pandemic continues, and the Fed keeps buying bonds.

This Week

Existing Home Sales will be released on Wednesday and New Home Sales on Friday.

Shelter Six:  Mortgage Programs Continue to Come Back

July 13, 2020 by · Leave a Comment 

Service-related industries account for more than two-thirds of US economic activity, so last week’s higher-than-expected National Services Index figures seem to point to the economic recovery happening faster than expected.

Mortgage purchase applications were up a very strong 5% from the previous week and 33% from the same week a year ago.

The average purchase loan size increased to a record $365,700 as borrowers contend with limited supply and higher-priced homes.

Setting realistic expectations and deadlines is critical right now as turn-around times of lenders, appraisers, and closing attorneys are all stretched due to record volume levels.

Mortgage products continue to gradually come back as minimum credit scores drop back down, Debt Ratio ceilings creep back up, and Jumbo options expand.

According to Black Knight, forbearance figures decreased last week to 7.8% of all mortgages, which represents the smallest number of plans since April 28.

Rate Update

The Mortgage Bankers Association, Freddie Mac, and Mortgage News Daily all reported record-low rates last week.  30-year rates continue to hover around and even under 3%.

This Week

The Consumer Price Index will come out on Tuesday, Retail Sales on Thursday, and Housing Starts on Friday.

Shelter Six:  May Pending Home Sales Jump a Record 44.3%

July 6, 2020 by · Leave a Comment 

May Pending Home Sales increased an astounding 44.3%, representing the greatest single month increase since NAR started tracking this metric in 2001.

For the second straight month, Employment figures far exceeded expectations. Against a consensus forecast of 3M, the economy added 4.8M jobs in June.

The Unemployment Rate declined from 13.3% to 11.1%. Average hourly earnings were 5% higher than a year ago but down 6.7% from last month.

The ISM National Manufacturing Index unexpectedly jumped from 43.1 to 52.6, the highest level since April 2019 and significant because readings above 50 indicate expansion.

The weekly forbearance survey from the Mortgage Bankers Association showed that the total number of loans in forbearance decreased for the second straight week to 8.48%.

When rental income is being used to qualify, additional reserves now must be shown.  Rental income from an investment property being purchased can’t be used at all, nor can Airbnb income.

Rate Update

Despite the release of strong economic data, last week was a quiet holiday week for the mortgage markets and 30-year rates continue to hover around 3%.

This Week

The ISM National Services Index will be released on Monday. Beyond that, investors will continue to watch for news about medical advances, government stimulus programs, and plans for reopening the economy.