Shelter Six:  Strong Jobs Report Boosts Economic Recovery

August 10, 2020 by · Leave a Comment 

Employment figures again came in stronger than expected with the economy adding a massive 1.8M jobs in July (1.5M had been forecasted).

The Unemployment Rate dropped from 11.1% to 10.2%.  Average Hourly Earnings increased and were 4.8% higher than a year ago.

According to Black Knight, the average-priced home is now the most affordable it’s been since late 2016, despite home prices rising for the last 97 straight months.

Buying power is up 10% over last July, with buyers able to afford nearly $32K more home than they could last year.

The number of mortgages in forbearance dropped by 101K last week to 7.5% of all mortgages (4M total loans), according to Black Knight’s August 7th report.

A big reason for the drop is that most forbearance plans were initially set up for 90 days and a large number are expiring now at the end of each month (500K at end of July).

Rate Update

Mortgage rates slid lower again hitting an all-time low last week.  30-year rates continue to be under 3% for those who qualify for the best terms.

This Week

The Consumer Price Index will come out on Wednesday with Retail Sales released on Friday.

Shelter Six:  U.S. Homeownership Rate Surges to 67.9%

August 3, 2020 by · Leave a Comment 

June Pending Home Sales soared 16.6% from May and, in the space of two months, have catapulted from the lowest levels ever to the highest levels in over 15 years.

The May U.S. National Home Price Index rose 4.5% year-over-year, according to S&P CoreLogic Case-Shiller Index, and is now 18.6% higher from where it peaked in 2006.

Second Quarter GDP figures fell a record 32.9% but this was actually a little better than the 35% decline expected, and more recent data has had much better results.

The U.S. Homeownership Rate jumped significantly to 67.9% in the Second Quarter, up from 65.3% the previous quarter and to the highest level since 2008.

The Homeownership Rate peaked at 69% in 2004-2005 before beginning a steady decline to a low point of 62.9% in 2016.

Homeownership was strongest in the South at 71.1% and jumped to 40.6% for those under 35 (up from 36.4% the previous quarter).

Rate Update

The Fed met last week and reiterated that it will do “whatever it takes” to support the economy. 30-year rates reacted by dropping to new all-time lows.

This Week

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

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.

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.

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