Shelter Six:  Rates Move Higher as Trade Talks with China Turn More Optimistic

Trade talks between the U.S. and China resumed last week and comments from officials have suggested that the two sides are close to reaching a limited agreement.

The next step with China is a key meeting between President Trump and Chinese Vice Premier Liu He scheduled to take place this Friday.

The latest inflation data released last week revealed that core inflation continues to hold steady at the same 2.4% annual rate of increase as last month.

FHA’s new, more liberal condo approval rules go into effect this week and will allow for “Single Unit Approvals” on FHA loans even if the condo project is not FHA approved.

Single Unit Approvals will only be allowed if no more than 10% of the units carry FHA loans and if at least 50% of the units are owner-occupied.

With Single Unit Approvals, it is projected that an additional 20-60K condo units will become available for FHA’s more lenient mortgage financing.

Rate Update

Trade tensions with China are one of the main reasons rates have dropped so much this year.  Increased optimism of a trade deal influenced rates higher last week and rates will surely jump higher quickly if a trade deal is reached.

This Week

Retail Sales will be released on Wednesday and Housing Starts on Thursday.

October 14, 2019 by · Leave a Comment

Shelter Six:  Freddie Mac Forecasts Strong Housing to Continue

Reports monitoring Employment, Average Hourly Earnings, Manufacturing, and the Services industry all came in weaker than expected last week.

The Unemployment Rate, however, unexpectedly nosedived to 3.5%, the lowest level since 1969!

Although weaker than expected, the economy did add 136K new jobs in September, not bad historically.

Freddie Mac also released a very upbeat report forecasting strong housing over the next two quarters.

Freddie Mac predicts 5.98M units of residential real estate to be sold this year and 6.03M next year, while Housing Starts grow to 1.25M this year and 1.28M next year.

The report also forecasts a strong labor market, low unemployment, and job creation to all continue, but GDP to drop to 1.9% for the 2nd half of 2019 compared to 2.6% for the 1st half.

Rate Update

Weaker than expected economic reports released last week reduced the outlook for future inflation.  This is always positive for mortgage rates, which ended the week lower.

This Week

The Job Openings & Labor Turnover Rates Report (JOLTS) is due out on Wednesday with the Consumer Price Index (CPI) due out on Thursday.

October 7, 2019 by · Leave a Comment

Shelter Six:  New Home Sales Figures Surge

The latest inflation data matched expectations and had little impact as the key index was 1.8% higher than a year ago but continues to be below the Fed’s stated target level of 2.0%.

New Home Sales account for just 10% of the market but the monthly data is particularly important because the report is a predictor of future results as it reflects contracts signed.

Last week’s report revealed that August New Home Sales surged 7% from July to the second highest level since 2007 and were 18% higher than a year ago.

Non-warrantable condo financing is now easier than ever with Shelter’s SmartCondo program, which requires only 10% down with no PMI and a 660 credit score.

The program goes outside traditional guidelines to allow for up to 75% investor concentration, 50% commercial space, and 49% single-entity ownership.

SmartCondo’s pre-sale requirements also go down to as low as 30% of units sold or under contract.

Rate Update

Mortgage rates were flat last week as the 30-year fixed-rate continues to maintain levels in the high 3’s.

This Week

The ISM National Manufacturing Index is due out on Tuesday, the ISM National Services Index on Thursday, and the super important Employment report on Friday.

September 30, 2019 by · Leave a Comment

Shelter Six:  August Home Sales and Housing Starts Jump Higher Than Expected

As expected, the Federal Reserve cut short-term rates by .25% last week.  This cut was already built into mortgage rates and did not lead to them dropping further.

August Existing Home Sales shot up more than expected from July to the strongest level since March 2018.

The national median existing-home price is up 5% from a year ago and CoreLogic reports that U.S. total home equity is at an all-time high over the first half of 2019.

Inventory levels nationally are at just a 4.1-month supply and 3% lower than a year ago.

Additional supply may be on the way, however, as August Housing Starts jumped 12% from July and 7% from a year ago to the strongest level since June 2007.

Building Permits, a leading indicator of future construction, also surged up 8% from July to the best level since May 2007.

Rate Update

After moving lower each of the first eight months of the year, mortgage rates have ticked up slightly over the first half of September but remain in the 3’s.

This Week

New Home Sales will come out on Wednesday, Pending Home Sales on Thursday, and both the Core PCE Price Index and Durable Orders on Friday.

September 23, 2019 by · Leave a Comment

Shelter Six:  Mortgage Rates Shoot Up

U.S. consumer spending remains strong as evidenced by the August Retail Sales figures, which were up .4% from July and double the amount expected.

Although the manufacturing sector continues to struggle mostly due to increased tariffs, consumers have shown few signs of slowing down heading into the important holiday shopping season.

Mortgage rates spiked higher as last week’s inflation data came in higher than expected as the August Core CPI figures were at the highest level since 2008.

The news that the U.S. and China will be delaying tariffs also pushed rates higher as both countries expressed a willingness to work together on trade negotiations that will start back in early October.

To help stimulate economic growth, the European Central Bank cut rates last week and announced that it will resume a bond buying program which had ended in December.

The Federal Reserve meets again on Wednesday with most investors expecting a .25% rate cut.

Rate Update

Mortgage rates spiked higher last week as a result of stronger than expected inflation data, reduced trade tensions with China, and a mixed message from European Central Bank officials.

This Week

Housing Starts will also be released on Wednesday and Existing Home Sales on Friday.

September 16, 2019 by · Leave a Comment

Shelter Six:  U.S. Economy Continues to Show Strength

Last week’s Employment Report showed the economy adding 130K jobs in August, a solid gain but a little lower than the 150K new jobs expected.

Unemployment remained at 3.7% but Average Hourly Earnings rose more than expected and were up a strong .4% from July.

The U.S. economy is still clearly going strong with particular strength in the Services sector and Retail Sales, which have now been higher than expected for five straight months.

Around the world, however, there is a lot more uncertainty as business investment has slowed.

Manufacturing is also slowing down as the trade tensions with China continue to be a drag on the economy and a cloud over the future.

Encouraging news last week though as U.S. and China officials announced that additional trade talks will take place in early October.

Rate Update

Last week’s economic data contained mixed results and the net effect on mortgage rates was small.

This Week

The Consumer Price Index is due out on Thursday and Retail Sales on Friday.  The European Central Bank meets on Thursday and the U.S. Federal Reserve on September 18.

September 9, 2019 by · Leave a Comment

Shelter Six:  Mortgage Delinquencies at Historically Low Levels

Trade negotiations between the U.S. and China took a turn for the friendlier last week as both sides expressed more willingness to work with each other.

For the fifth straight month, inflation was lower than the Fed’s stated target level of 2% as the July Core PCE Price Index came in just 1.6% higher than a year ago.

July Pending Home Sales fell 2.5% from June but were still at approximately the same rate as a year ago.

In a startling new study just released by two U.S. Census Bureau workers, homeowners were found to have median net worth 80 times that of renters!

Mortgage Bankers Association reports that seriously delinquent mortgages (90 days past due) dropped to only 1.95% in the 2nd Quarter, the lowest level since the 2nd Quarter of 2006.

FHA mortgage delinquencies were down to 3.43%, the lowest level since the 3rd Quarter of 2000!

Rate Update

The final week of August was relatively quiet for mortgage rates but what a month it was as rates fell to and maintained the lowest levels seen since 2016.

This Week

The mortgage markets will be closed on Monday in observance of Labor Day.  The ISM National Manufacturing Index is due out on Tuesday, the ISM National Services Index on Thursday, and the Employment Report on Friday.

September 2, 2019 by · Leave a Comment

Shelter Six:  Fed Chairman Hints at Future Rate Cuts

Speaking from the Jackson Hole Global Economic Summit last week, Fed Chairman Jerome Powell said that the Fed will “act as appropriate to sustain the expansion.”

Powell noted the biggest risks to economic growth include trade tensions, slowing global economic activity, political unrest in Hong Kong, Brexit, and Italian elections.

Powell hinted that the Fed would continue to cut short-term interest rates to address these issues, but he did not pinpoint how many cuts or the specific timing of them.

July Existing Home Sales rose a solid 3% from June.  Inventory remains the primary trouble spot as the number of homes for sale is at just a 4.2-month supply nationally (6 months is considered normal).

July New Home Sales fell a shocking 13% from June, however, this was very misleading as there had been a massive upward revision in June.

June figures had been revised to the highest level since 2007, and the large decline in July simply brought New Home Sales back near levels seen for most of this year.

Rate Update

Despite a highly anticipated speech from Fed Chair Powell, ongoing tensions in trade negotiations with China, and a wave of economic data, rates ended last week unchanged.

This Week

Durable Orders are due out on Monday, the second estimate of 2nd Quarter GDP on Thursday, and Core PCE price index on Friday.

August 25, 2019 by · Leave a Comment

Shelter Six:  FHA Issues More Liberal Condo Eligibility Rules

FHA released new, more liberal condo approval rules last week, which are drastically needed as only 6.5% of 150K+ condo projects in the U.S. are currently FHA approved.

The old FHA rules were very restrictive because of the extremely cumbersome process that forced condo communities to submit a pile of paperwork that was thoroughly scrutinized.

The new rules, effective October 15, allow for the return of “spot” approvals where individual units can be approved for an FHA loan even if the condo project is not.

Spot approvals will be allowed if the condo project is not currently approved and if no more than 10% of the units carry FHA loans (max 2 FHA loans if project has less than 10 units).

FHA will require a minimum of 50% of units to be owner-occupied, insure no more than 50% of the total number of units, and restrict commercial space to no more than 35% of the project’s total floor area.

It is projected that an additional 20-60K condo units will become available for FHA’s more lenient mortgage financing.

Rate Update

Ongoing concerns about global economic growth led to a sell-off in the stock market last week which led to mortgage rates falling to the lowest point in three years.

This Week

Existing Home Sales are due out on Wednesday and New Home Sales on Friday.

August 19, 2019 by · Leave a Comment

Shelter Six:  Mortgage Rates Fall to the Lowest Point in Nearly 3 Years

The financial markets went on a wild roller-coaster ride last week after China retaliated to higher U.S. tariffs by allowing its currency to weaken.

Initially, there was a massive stock sell-off as money transferred into the safer U.S. bond market, which caused mortgage rates to drop to the lowest level in nearly three years.

As the week played out, however, investors concluded that the developments would not have as much of an impact as anticipated and the stock and bond markets reversed most of their movement.

Incredible news for self-employed buyers as there is now a mortgage alternative that does not require tax returns nor literally any traditional income documentation.

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

The program requires only 10% down with no PMI, credit scores as low as 620, up to 15 financed properties, and a Bankruptcy or Foreclosure as recent as only two years ago.

Rate Update

Trade negotiation developments with China led to mortgage rates plummeting early last week only to bump up later in the week but still finish with a small net decline.

This Week

The Consumer Price Index (CPI) will come out on Wednesday, Retail Sales on Thursday, and Housing Starts on Friday.

August 12, 2019 by · Leave a Comment

Next Page »