First Team’s Weekly Mortgage Watch (November 4th, 2018) This Week Highlights the Following Updates:
- While Freddie Mac’s mortgage survey showed mortgage rates moving downward, rates ended the week moving upward.
- In the current economic environment, we are likely to have occasional weeks with rates making a small step downward.
- However, until we have a significant shift in economic activity and outlook, rates are likely to continue moving upward.
- Last week, data once again revealed a solid economy. The ISM Manufacturing Index may have stepped down but continues to highlight strong growth.
- Consumer Confidence sits around an 18-year high with few signs of dropping much anytime soon. 250,000 new jobs were created last month, and we continue to see mixed signs as to whether or not the labor market is generating additional inflationary pressures on the economy.
- Much of this week’s focus will be on the Fed meeting. While most analysts are predicting no change in rates, there will be serious interest in the Fed’s post-meeting comments.
- The more the Fed expresses confidence in the economy and concern for inflation, the higher rates are likely to rise.
Big Buyers: Men, Women, or Couples?
The recently released Profile of Home Buyers and Sellers from NAR unsurprisingly has married couples as the largest percentage of buyers. But is it single men or single women that come in second? As a percentage, men comprised 9% of buyers while women doubled that with 18%. For the third year in a row, the percentage of first-time buyers decreased, dropping to 33% of buyers. The percentage of first-time buyers has not risen above 40% since before 2010.
First Team’s Weekly Mortgage Watch (October 7th, 2018) This Week Highlights The Following Updates:
- Mortgage rates marched higher as last week ended. Many experts have been waiting for markets to finally feel the convergence of a number of factors.
- We’re almost to a record for the longest economic expansion in recorded US history.
- The Fed has begun moving rates higher and providing less “forward guidance” to the market, which tends to create more uncertainty.
- Additionally, the US government will have to borrow significantly more money to finance its activities after the tax cuts.
- Data from last week only reinforced the need for rates to increase. Both ISM indices continue to show strong growth readings, consumers are taking on more debt, and the unemployment rate just matched a reading from 1969 – with adjustments to August’s reading that put it at 270K.
- Against this backdrop, rates are likely to continue moving upward this week.
- Both the Producer and Consumer Price Indices are due this week. If these reports show an unexpected flare-up in inflationary pressures, then it is very likely that all interest rates will continue to climb rather quickly.
Housing Affordability Hits A 10-Year Low
With all the factors at play in the housing market, it comes as no surprise that housing affordability has been difficult. US incomes have simply not risen as quickly as the combination of increasing prices and mortgage rates. We are now at the same level of affordability as we were during the 3rd quarter of 2018. Almost one-third of the population now lives in an area where an annual income of $100K is required to buy a median-priced home, according to ATTOM Data Solutions.
First Team’s Weekly Mortgage Watch (September 23rd, 2018) This Week Highlights The Following Updates:
- Mortgage rates were pressed upward last week as a number of macroeconomic factors pressed on the market.
- Rates were already moving upward in expectation of the Federal Reserve bumping the Fed Funds rate upward this week.
- The major tax bill may have goosed some additional economic growth, but as expected, the Federal government needs to borrow more money to cover its own bills.
- This means a bigger supply of treasuries coming into the market, competing for investment. This tends to drive all interest rates higher.
- While all of these factors can seem overwhelming at times, especially as housing prices move up and affordability gets crimped, rates remain at historically low levels.
- This week will have all eyes focused on the Fed. A rate increase is almost certain and completely baked into current mortgage rates. What is less known is what the Fed will say after the meeting and the contents of the policy announcement.
- The more it appears that the Fed is ready to adjust rates higher, the more likely we are to see mortgage rates continue a slow, steady march higher.
Freeze And Unfreeze Your Credit For Free
With the exception of a few states, credit bureaus routinely charged consumers when they needed to freeze or unfreeze. For real and potential victims of identity fraud and cyber theft, the charges were extremely frustrating. All of that has now changed. A new law requires that the bureaus provide credit freezes and unfreezes for all US citizens at no charge. No central location exists to request services from Experian, Equifax, and TransUnion, so they each must be contacted.
First Team’s Weekly Mortgage Watch (September 16th, 2018) This Week Highlights The Following Updates:
- As is often the case, mortgage rates are beginning to trend upward as we head toward a Federal Reserve meeting with strong expectations of a rate increase.
- However, economic and inflation data point to some mild deceleration in the factors that usually press rates upward.
- While the economy is motoring along nicely, Retail Sales did disappoint, coming in with only a 0.1% increase. Inflationary pressures also appear to be slowing.
- The core PPI pulled back -0.1% and the core CPI rose only 0.1%. If inflation continues to remain muted, then the Fed could consider ditching any more rate increases this year.
- In the coming weeks, we’ll also see how much impact hurricane Florence will have on the economy. Often short-term economic losses are recovered by the rebuilding process.
- This week is a lighter week for influential economic data with lots of housing data due.
- If we see evidence that housing is also slowing its growth pace, then rates will have more of a tendency to remain flat, but an unexpected surge upward in housing-related data could help press rates upward.
The Message Is Finally Sinking In!
A decade ago, a potential homebuyer would often contact an agent, see some homes, and then try to figure out whether they could qualify for a mortgage. According to a new survey by loanDepot and mellohome, 74% of buyers looked into their financial situation before shopping. For first-time buyers, 85% sought financing help first. The benefits for all parties in the transaction are greatly enhanced when potential buyers have a clear understanding of what they can afford.
First Team’s Weekly Mortgage Watch (September 9th, 2018) This Week Highlights The Following Updates:
- Last week saw strong economic data continue to reinforce the notion that the economy is powering along nicely.
- Both the ISM indices stepped upward, with the manufacturing index hitting a 14-year high. While June and July’s new jobs created numbers were adjusted downward, August saw 201,000 new jobs created.
- The unemployment rate remained steady at 3.9%, while weekly jobless claims plunged to 203,000! While we are seeing some increases in wages, it is being balanced by similar increases in worker productivity, which helps keep wage-driven inflation from rising.
- Even with all the positive economic news, mortgage rates moved upward only slightly for the week.
- This week features some big economic data points of both the Producer and Consumer Price Indexes, along with Retail Sales and Industrial Production.
- If both the inflation indices continue to show muted price pressures and the other two major reports comes in positive, rates are likely to continue moving upward, but if we see additional inflationary pressure, rates are likely to rise quickly.
Moving With Kids Is A More “Urgent” Prospect
According to NAR’s 2018 Moving with Kids Report, buyers and sellers with children younger than 18 have different real estate habits. When selling a home, 26% of parents tend to consider their need to sell as “very urgent” while on only 14% without children consider their needs “very urgent.” School district factors into over 50% of parents buying decisions, while only 11% of non-child buyers consider the school district and tend to buy homes with few bedrooms.
First Team’s Weekly Mortgage Watch (September 3rd, 2018) This Week Highlights The Following Updates:
- Even with the GDP estimate being adjusted upward and a spike in Consumer Confidence, mortgage rates remained very near the previous week’s levels.
- While second quarter’s GDP will be very strong, coming in over 4.0%, current data points to some slowing to around 3.0% for the third quarter.
- The strong Confidence reading was balanced against a decline in Consumer Sentiment.
- While we are very likely to set a record for the longest economic recovery, the pace of economic growth has been relatively steady, only spiking occasionally.
- Inflationary pressures have remained below levels that would concern the Fed, enabling the Fed to maintain an accommodative posture for an extended period of time. While we are moving toward “normal,” we appear to remain on a very gentle path.
- This week will be bookended by the ISM Manufacturing Index and the monthly employment data. If both the readings come in under expectations, rates are likely to remain flat.
- They simply don’t have much room to fall, especially given that the Fed’s next rate hike is expected in a few weeks.
Wildfires Don’t Stop Home Development
According to a study from UNLV, the risk of wildfires does not create a long-term risk for home sales. In 1990, an estimated 30.8 million housing units had been built in forested land, which is more prone to wildfires. By 2010 that number had grown to 43.4 million. The study’s authors used modeling techniques to compare high-risk vs. low-risk home development. Within two years following a fire event, homes home sales had completely rebounded in high-risk areas.
First Team’s Weekly Mortgage Watch (August 26th, 2018) This Week Highlights The Following Updates:
- Mortgage rates managed to mostly hold steady last week, with a little retreat brought on by the Fed. The meeting minutes did not reveal any real bias for the Fed to change its current course.
- Without some significant intervening factor, the Fed will likely raise its interest rates next month and then again in December.
- Inflationary pressures continue, as they have for some time, to give the Fed plenty of room to operate. While we saw some acceleration in pressure in the last year, it seems to be holding steady.
- Housing news was not as positive as many would have liked with both Existing and New Home Sales stepping downward. While some have pointed to tight underwriting, the majority of the constraint comes from tight inventories, increasing prices, and limited wage growth.
- This week wraps up the month with GDP and PCE Price data. If GDP remains unchanged or only moves a tenth of a point, then rates have a strong likelihood of continuing to remain flat. PCE Prices could influence that, but only if we got a big surprise of unexpected inflationary pressure.
Millennials Clean Up Your Financial Habits
In an evaluation of 60 million millennials financial habits, Experian discovered that only 39% of this age group, who did not have a mortgage, would have a prime or better credit score. Currently, only about 15% of US millennials have a mortgage. The study indicated that many of those without a mortgage often had early life financial mistakes. For many, improving their credit scores would be as simple as building a history of on-time payments and better credit balances.
First Team’s Weekly Mortgage Watch (August 19th, 2018) This Week Highlights The Following Updates:
- Mortgage rates were barely changed for the week as analysts pondered how much time is left in this period of economic growth.
- While many indicators, including the Leading Economic Indicators, point towards continuing growth, it will end at some point. Housing data, as of late, has been showing some signs of softness.
- While consumer moods have remained elevated, some of the data points in the various reports are giving experts pause.
- Given that housing inventories are low, rates are likely to increase, and wages have not kept up with median home prices, housing may show signs of retreating before other market segments.
- Also holding rates level are other mixed signals. Retails Sales moved upward 0.5%, but Industrial Production struggled to post a meager 0.1% increase.
- Markets may have a quiet week, next week, with a much lighter scheduled of economic data reports due.
- We could see some upward movement in rates if the minutes of the Federal Reserve’s last meeting reveal a stronger bias toward raising rates than the market is currently anticipating.
Top Affordable Metros For Outdoor Enthusiasts
The research scientists at Realtor.com evaluated the 150 largest metro areas seeking to find the most affordable areas for folks who love the outdoors. They factored in many data points, including homes with outdoor patios, kitchens, and decks, bike friendliness ratings; per capita kayaking, rafting, and outdoor stores. Spokane, WA came in #1 followed by Bakersfield, CA, Tallahassee, FL, Kalamazoo, MI, Tucson, AZ, Columbus, OH, and Virginia Beach, VA.
First Team’s Weekly Mortgage Watch (August 12th, 2018) This Week Highlights The Following Updates:
- Mortgage rates drifted slightly downward last week as markets digested inflationary data and dealt with a little international financial drama.
- While we’ve seen an occasional flare, the latest data is showing that inflationary pressures are staying right in line with the Fed’s speed limit.
- This means that the Fed continues to have ample flexibility to react to overall economic trends. If we continue to see the economy growing around its current rate, the odds will remain very high that the Fed will up its interest rates in December.
- Likewise, should the economy not produce as the Fed is predicting, the Fed will have the flexibility to leave rates untouched for the rest of the year.
- We did see an uptick in cash flowing into Treasuries follow revelations that Turkey may be headed for dire financial troubles.
- This week is likely to see rates mostly level or declining slightly. However, an unexpected increase in Retail Sales could help goose rates slightly higher for the week.
- That would be enhanced if we also get an Industrial Production reading that tops its solid 0.6% increase from last month.
Home Appreciates From $61K To $3 Million?
Here’s the story of a lovely lady. Who was bringing up three very lovely girls… If you recognize that tune, then you might understand how a house could appreciate from $61K at its last sale in 1973 to an estimated sale of near $3 million in recent days. HGTV has announced that it has acquired the second most photographed home in the USA, behind the White House. No news yet on their plans for the home, but if they launch a show about the home, it’s likely to be a hit!
First Team’s Weekly Mortgage Watch (July 29th, 2018) This Week Highlights The Following Updates:
- Housing and GDP dominated the news last week, with mortgage rates nudging slightly upward.
- Both Existing and New Home Sales moved downward again, creating some discussion that we may be at the peak for this cycle with some predicting a significant downturn to come.
- However, it is likely too early to predict any real dramatic future plunge according to experts.
- GDP for Q2 blasted to its highest level since 2014, leading some to predict years of supercharged growth. The majority of economists don’t share that view, and few are predicting an annual GDP rate over 3.0% for 2018.
- This week could be a huge week for financial markets. In addition to the ISM Indices, Consumer Confidence, and monthly employment data, the Fed meeting adjourns on Wednesday.
- The market is expecting no change in the Fed’s rates, but we could get hints as to whether this strong GDP report, coupled with a solid labor market and moderate inflationary pressure, are enough to shift Fed policy to signal the potential for the Fed to consider adding another rate increase in the near future.
FHFA Forced To Pause New Credit Score Decision
An estimated 7.6 million Americans may have the equivalent of a 620 credit score if a new model could be adopted for those lacking traditional credit scores. FHFA was due to issue an update on its process of developing that new score, but a bill that passed in May has taken precedent. The new law will undo some of the changes made by Dodd-Frank Wall Street Reform and Consumer Protection Act. A new credit score may still in the future, but no timeline is set.