Shelter Six:  Federal Reserve Bumps up Rates .25%

June 18, 2018 by · Leave a Comment 

1. As expected, the Federal Reserve increased short-term rates by .25% last week.  The net effect on mortgage rates was minimal.

2. For the third straight month, Retail Sales were much higher than expected with solid gains in May.

3. After weak Retail Sales reports over the first quarter of the year, investors’ concerns about the economy have eased.

4. Self-employed buyers now have a mortgage alternative without the need for tax returns or income documentation.

5. Shelter’s “SmartSelf” program allows a self-employed buyer’s income to be calculated exclusively from bank statements.

6. The program requires only 10% down with no PMI and a 620 credit score while allowing for a Bankruptcy or Foreclosure as recent as two years ago and up to 15 financed properties.

Rate Update

Both Federal Reserve and European Central Bank meetings last week influenced rates slightly with mortgage rates ending the week a little lower.

This Week

It is a light week for economic reports with Housing Starts due out on Tuesday, Existing Home Sales on Wednesday, and the Philly Fed Regional Manufacturing Index on Thursday.

Shelter Six:  Free Credit Report Freeze Coming This Fall

June 11, 2018 by · Leave a Comment 

1. Thanks to recent legislation, this September Americans will be able to freeze their credit at all three credit bureaus free of charge.

2. This will be a great way to protect personal information from credit fraud and identity theft thanks to the Economic Growth, Regulatory Relief & Consumer Protection Act signed in May.

3. A credit freeze means no one can access credit to fraudulently open a new account in your name.  The charge has typically been $3-5 per credit bureau per person.

4. Since record keeping began in 2000, April is the first month ever where the number of job openings exceeded the number of job seekers.

5. The “JOLTS” report measures job openings and labor turnover rates, and the Fed closely monitors this data.

6. In April, job openings unexpectedly jumped to 6.7 million, a record high level, and there were just 6.3 million unemployed people in the labor force that month.

Rate Update

Mortgage rates moved up last week as a result of strong economic reports.

This Week

The next U.S. Fed meeting will take place on Wednesday, and investors widely expect a .25% drop in short-term rates.  The Consumer Price Index (CPI) will also be released on Tuesday and Retail Sales on Thursday.

Shelter Six:  Very Strong May Employment Report

June 4, 2018 by · Leave a Comment 

1. The U.S. added a very strong 223K jobs in May, much higher than expected.

2. The U.S. economy has now added an average of 207K jobs per month so far this year.

3. The Unemployment Rate is now down to 3.8%, the lowest level since 2000.

4. Fannie Mae’s Home Purchase Sentiment Index measures consumer confidence in the U.S. housing market and hit an all-time high in April.

5. The U.S. Energy Information Administration has forecasted gas prices to average $2.90/gallon this summer, almost 50 cents higher than last summer.

6. The higher forecasted gas prices are due to a tightening market, Iran sanctions, and other geopolitical concerns across the globe.

Rate Update

Mortgage rates dropped last week as investors bought U.S. bonds out of concern that Italy’s newly formed coalition government may eventually leave the European Union.

This Week

Factory Orders will be released on Monday, the ISM National Services Index on Tuesday, and the JOLTS Report on Wednesday.  News about Italy could also influence mortgage rates again this week.

Shelter Six:  Regulatory Relief Act Signed Into Law

May 29, 2018 by · Leave a Comment 

1. On Thursday, President Trump signed the Economic Growth, Regulatory Relief, and Consumer Protection Act into law.

2. This act represents the largest rollback of bank regulations since the financial crisis, improves consumers’ access to credit, and streamlines mortgage TRID requirements.

3. Italy formed a new government last week increasing uncertainty around whether the country will remain in the European Union (EU).

4. April Existing Home Sales fell a bit from March but were close to last year’s level, while New Home Sales also fell a little from March but were 11.6% higher than a year ago.

5. April’s inventory of Existing Homes was at a 4-month supply (6.3% lower than a year ago), while New Homes was at a 5.4-month supply (12.4% higher than a year ago).

6. Mortgage rates have now increased 15 out of the first 21 weeks of 2018, which is the most weeks with an upward increase since Freddie Mac began tracking this data in 1972.

Rate Update

Uncertainty with Italy forming a new government and the U.S. cancelling a summit with N. Korea influenced mortgage rates lower last week and down from recent 7-year highs.

This Week

The Core PCE Price Index is due out on Thursday while both the Employment Report and the ISM National Manufacturing Index are due out on Friday.

Shelter Six:  No Tax Returns Required for Investment Property loan

May 21, 2018 by · Leave a Comment 

Shelter’s new SmartVest program allows an experienced real estate investor to buy up to 15 financed investment properties with no income documentation or debt ratio calculation.

The qualification on a SmartVest loan is based on a property cash-flow analysis and allows investors to close in the name of an LLC with interest-only loan options.

Consumer spending accounts for about 70% of US economic activity and Retail Sales is the key economic report that investors watch each month that monitors spending.

Following the hurricanes last fall, Retail Sales showed strong gains for 3 months before posting 3 months of losses causing investors to worry that economic growth was slowing.

Last week’s Retail Sales report bucked the recent trend and showed a very healthy .3% increase in April spending from March.

The market is now pricing in a near 100% probability that the Fed will increase short-term rates by .25% in June with a 70% probability of another .25% hike in September.

Rate Update

A speech last week from the governor of the Bank of France hinting that a European rate hike might come sooner than expected was the catalyst for mortgage rates jumping to the highest level in seven years.

This Week

New Home Sales will be released on Wednesday, Existing Home Sales on Thursday, and Durable Orders on Friday.

Shelter Six:  Home Price Appreciation Continues to Surge

May 14, 2018 by · Leave a Comment 

1. Metro Atlanta home prices surged 6.5% in February outpacing the national average of 6.3%, according to the latest S&P CoreLogic Case-Shiller Index.

2. March Existing Home Sales were up 1% from February and were about the same as this time last year.

3. March New Home Sales were up 4% from February, were 9% higher than a year ago, and now make up 11% of the total market.

4. New Home Sales peaked as a percentage of the market at a high point of 17% in June 2003 during the building boom and bottomed out at 5.4% in 2010 during the foreclosure crisis.

5. Inventory was down to a 3.6 month supply in March with 1.67M homes for sale, down 7.2% from a year ago and at the lowest level since data was kept in 1999, according to NAR.

6. Despite a small pool of unemployed workers to choose from, March job openings jumped to a record level of 6.55M, a significant sign of strength for the labor market.

Rate Update

With little major news last week and not much reaction to the economic data, mortgage rates ended the week slightly higher.

This Week

Retail Sales will be released on Tuesday with Industrial Production and Housing Starts out on Wednesday.

Shelter Six:  Unemployment Drops to 3.9%

May 7, 2018 by · Leave a Comment 

1. The economy added 164K jobs in April.  Although 190K were expected, upward revisions added 30K jobs to results for prior months bringing net gains very close to expected levels.

2. The unemployment rate declined from 4.1% to 3.9%, the lowest level since December 2000.

3. The decline in Unemployment was mostly due to workers leaving the labor force rather than job gains, so it was not necessarily viewed as a sign of strength.

4. As widely expected, the Fed made no change to the Federal Funds rate on Wednesday and the meeting caused little change in investor expectations for the pace of future rate hikes.

5. The Census Bureau reports that the Homeownership Rate held steady at 64.2% in the 1st Qtr of 2018, unchanged from the prior quarter and still at the highest level since 2014.

6. The Homeownership Rate is up from 63.6% in the 1st Qtr or 2017 and is now higher than last year for the fifth consecutive quarter.

Rate Update

Despite a wide range of major economic news, it was a very quiet week for mortgage rates, which ended the week nearly unchanged.

This Week

The JOLTS report, which measures job openings and labor turnover rates, will come out on Wednesday while the Consumer Price Index (CPI) will come out on Thursday.

Shelter Six:  Credit Reports to No Longer Include Tax Liens

April 30, 2018 by · Leave a Comment 

Three years ago in the aftermath of a settlement with 31 state attorney generals, the three national credit bureaus launched the National Consumer Assistance Plan (NCAP) in an effort to make credit reporting more accurate and credit problems easier to fix.

Last year, as a key NCAP initiative, Equifax, TransUnion, and Experian removed all civil judgments and the majority of tax liens from consumers’ credit reports.

After a critical CFPB report earlier this year, the three bureaus are now ceasing to report all tax liens and have been actively removing them from credit reports.

Moving forward, the only public records that will remain on credit reports will be bankruptcies, which come with publicly identifiable information such as a SS#.

According to FICO, credit scores are going to rise up to 20 points for 11M borrowers and up to 40 points for 700K borrowers.  With less credit information and higher scores, lenders are anticipating the fallout to be greater default risk.

With judgments and liens not appearing on credit reports, it will also be harder for creditors to collect forcing them to resort to other tactics such as wage garnishment and seizing funds via court orders.

Rate Update

Mortgage rates moved higher over the first half of last week only to settle back down toward the end of the week and finish nearly unchanged.

This Week

The Core PCE Price Index is due out on Monday, the ISM National Manufacturing Index on Tuesday, and Employment figures on Friday.  The next Fed meeting will also take place on Wednesday and no change in policy is expected.

Shelter Six:  Potential Trade War Biggest Risk to Economy

April 23, 2018 by · Leave a Comment 

1. According to Fannie Mae’s latest economic report, U.S. economic fundamentals remain strong with the stimulus from the tax cut and new federal budget working well.

2. According to the report, the biggest economic downside risk at this time is the potential trade war with China.

3. Fannie Mae expects the Fed to raise interest rates for the second time this year in June and then once more before the end of the year, for a total of three times this year and not four.

4. After three months of unexpected declines, Retail Sales figures rebounded in March up to a very healthy .6%.

5. Multi-family Housing Starts were strong but Single-family Housing Starts fell 4% in March.

6. Shelter’s new Smart Choice program allows for loan amounts up to $2M with only 10% down and no PMI with the flexibility of one mortgage late in the last year and up to a 50% debt ratio.

Rate Update

Despite no compelling economic news nor a clear reason, mortgage rates moved to the highest point in several years last week.

This Week

Existing Home Sales will be released on Monday, New Home Sales on Tuesday, and Durable Orders on Thursday.

Shelter Six:  Optimistic Survey Points to Healthy Spring R.E. Market

April 16, 2018 by · Leave a Comment 

1. Fannie Mae’s March National Housing Survey painted a very optimistic picture with more respondents indicating that it is a good time to both sell and buy a home.

2. Detailed minutes from the Fed’s March 21 meeting gave insight that Fed officials expect US economic growth to be stronger than average for the next few years.

3. MGIC lowered its borrower-paid PMI rates by approximately 11% to reflect the lower corporate tax rates signed into law in 2017.

4. Self-employed buyers now have a mortgage alternative where they don’t need to provide tax returns or any income documentation.

5. Shelter’s “SmartSelf” program allows a self-employed buyer’s income to be calculated exclusively from the last 1-2 years of bank statements.

6. The program requires only 10% down with no PMI and a 620 credit score while allowing for a Bankruptcy or Foreclosure as recent as two years ago and up to 15 financed properties.

Rate Update

The stock market performed well last week causing investors to shift money from bonds to stocks.  This was negative for mortgage rates which finished the week a bit higher.

This Week

Retail Sales and NAHB Housing figures will be released on Monday while Industrial Production and Housing Starts will come out on Tuesday.

Next Page »