ABBA First Mortgage News

Optimism abounds in the housing market

August 4th, 2017

Housing sentiment has increased for the third consecutive month after taking a dip in March. The latest Fannie Mae Home Purchase Sentiment Index (HPSI) reported a rise of 2.1 percentage points in June to 88.3 – up 5.1 percentage points year over year – due to an increase in four of the six HPSI components. “The June HPSI reading matches the previous record set in February and reflects the trend toward a sellers’ market that respondents indicated last month,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Consumers are also growing more optimistic about their ability to get a home loan, and lenders expect credit standards to ease further going forward, as shown in our Lender Sentiment Survey. “While consumer optimism on this metric is as high as we’ve seen in the survey’s seven-year history, it’s worth noting that this record is relative to the fairly tight standards in place post-crisis when we started collecting National Housing Survey data,” Duncan said. Source: Fannie Mae

Check out rates

August 1st, 2017

Rates moved lower for the second week in a row.  For the week ending July 27, Freddie Mac announced that 30-year fixed rates fell to 3.92% from 3.96% the week before.  The average for 15-year loans decreased to 3.20%, and the average for five-year adjustables moved down to 3.21%.  A year ago, 30-year fixed rates averaged 3.48%.  Attributed to Sean Becketti, chief economist, Freddie Mac — “The 10-year Treasury yield rose 5 basis points this week, while the rate on 30-year fixed loans dropped 4 basis points to 3.92%. Home loan rates in next week’s survey would depend on how the market reacts to the Fed’s balance sheet unwinding announcement.”

Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Rates holding steady with a minimal improvement last week

July 31st, 2017

Mortgage rates saw a slight decrease during the week as the Federal Open Market Committee decided to keep rates steady, according to Bankrate.com’s weekly national survey.

The survey found the rate for the benchmark 30-year fixed mortgage fall to 4.09% from 4.11% a week ago. On average, discount and origination points for this mortgage type was 0.24. The 15-year fixed mortgage saw its average rate unchanged from last week at 3.31%. It had 0.18 average discount and origination points.

While the rate for jumbo 30-year fixed mortgage rose to 4.08%, rate changes for adjustable mortgages were mixed. The rate for 3-year ARM climbed to 3.52%, the 5-year ARM rate slid to 3.50% and the 3.91% rate for the 10-year ARM was unchanged from a week ago.

According to Freddie Mac’s survey, rates saw decreases for the second week in a row. The rate was 3.92% for 30-year fixed-rate mortgages, with an average 0.5 point, for the week ending July 27. This compares to an average rate of 3.96% a week ago. The 15-year fixed-rate mortgage had an average rate of 3.20% with an average 0.5 point, a decline from last week’s 3.23% average. For the 5-year Treasury-indexed hybrid ARM, the average rate was 3.18% with an average 0.5 point, falling from 3.21% a week ago.

“The 10-year Treasury yield rose 5 basis points this week while the 30-year mortgage rate dropped 4 basis points to 3.92 percent. Mortgage rates in next week’s survey would depend on how the market reacts to the Fed’s balance sheet unwinding announcement,” said Sean Becketti, chief economist at Freddie Mac.

Bankrate.com said rates initially saw gains driven by strong corporate earnings and a rising stock market.  However, the rates slid back near last week’s levels following Fed’s concerns about low inflation.

Small swing towards better rates last week

July 25th, 2017

Rates moved back down last week after rising the previous two weeks.  For the week ending July 20, Freddie Mac announced that 30-year fixed rates fell to 3.96% from 4.03% the week before.  The average for 15-year loans decreased to 3.23%, and the average for five-year adjustables moved down to 3.21%.  A year ago, 30-year fixed rates averaged 3.45%.  Attributed to Sean Becketti, chief economist, Freddie Mac — “Continued economic uncertainty and weak inflation data pushed rates lower this week. The 10-year Treasury yield fell 5 basis points this week. The rate on 30-year fixed loans moved with Treasury yields, dropping 7 basis points to 3.96%.”

Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Does pulling your credit report hurt your scores?

July 18th, 2017

This is a reprint of an article that I find to be most useful when answering the question of credit scoring with multiple pulls of your credit report:

It seems that a leading objection borrowers have when you ask them to complete a full application is: “Don’t pull my credit, I don’t want my scores to drop.” I have had countless conversations about how multiple inquires for home loans affect the borrower’s FICO scores. Some have argued that you only have 14 days to shop, others say 30 days, and some even have indicated that every inquiry counts no matter what the bureaus say. Today I am not only putting the question to bed, I will give you a tool that you can send your borrowers when they disagree.

In short, consumers have 45 DAYS to shop for a home loan. FICO, the leading score provider and sole provider of scores for Fannie and Freddie has done extensive research in order to develop what is called the deduplication window, aka dedupe window, aka shopping window. What this means is that consumers can shop multiple lenders for home, auto and student loans within a 45-day period with the first inquiry being considered the only inquiry that impacts the scores. The information FICO provides on this topic is quite detailed and may confuse those that are not technical. –Dave Hershman

Rates continue to trend slightly upwards

July 18th, 2017

Although rates moved up for the second week in a row, ABBA First Mortgage is still holding the line on keeping them low.  For the qualified buyer, we offer the rate of 3.75% with no points.  At all times, we offer better than market rates for better than market people.  For the week ending July 13, Freddie Mac announced that 30-year fixed rates rose to 4.03% from 3.96% the week before.  The average for 15-year loans increased to 3.29%, and the average for five-year adjustables moved up to 3.28%.   A year ago, 30-year fixed rates averaged 3.42%.   Attributed to Sean Becketti, chief economist, Freddie Mac — “After fully absorbing the sharp increases in Treasury yields over the past couple of weeks, the rate on 30-year fixed loans has cleared the psychologically important 4 percent mark for the first time since May.  Today’s survey rate stands at 4.03 percent, up 7 basis points from last week.”

 

Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

When might mortgage rates begin to SPIKE up?

July 14th, 2017

Sometimes it is hard to explain why certain things happen in the markets. Much of the time the markets seem to have a mind of their own, and market analysts are reaching for explanations as to what happened after the markets moved in one direction or another. Of course, usually there are several factors affecting the markets at once and it is typically impossible to determine which is the dominant factor.

For example, let’s discuss the recent movement in interest rates. The Federal Reserve Board has raised rates three times in the past six months or so. To the public, this would indicate higher rates to borrow money to purchase homes or cars. But as we have indicated previously, the Fed controls short-term rates and they have an indirect influence on long-term rates. Indeed, the Fed has raised short-term rates by 1.0% overall, but as of a few weeks ago, long-term rates for home loans had barely moved half of that amount.

One reason long-term rates have not moved is the fact that the economy is not overheating and there is no sign of inflation. Job growth continues to be solid, but the economy grew by less than 2.0% in the first quarter. Then why did long-term rates start rising more recently? Remember Brexit and how the markets were worried that slow growth in Europe would affect our economy? Well, apparently Europe has shaken off the Brexit worries and growth is stronger than expected overseas. Like here, there are no signs of the European economies overheating. Thus, while rates remain low, the fact that Europe appears to be awakening from their slumber has put some pressure on the bond markets, and thus our long-term rates.

Owners continue to value their homes more than appraisers do

July 13th, 2017

The Home Price Perception Index (HPPI) found that across America, appraisals in July were an average of 1.70% lower than what homeowners thought they would be. But this also marked the first time in seven months that the gap between the two opinions of value narrowed.

“While a 1 or 2 percent difference in home value opinions may not seem like a lot, it could be enough to derail a mortgage.  A homeowner could be forced to bring more cash to closing in order to make a mortgage work if the appraisal is lower than expected. On the other hand, if an appraisal comes in higher, they could be surprised with more equity than they had planned.  Either way, if owners are aware of their local markets it will lead to smoother mortgage transactions.”

“As we get later into the spring and summer selling season there are less and less homes available for sale, driving prices higher,” Banfield of Quicken Loans said. “What’s clear is that the demand for housing is strong in much of the country. With interest rates remaining historically low, this could be the time for a homeowner to move on to the new construction home they had their eye on. If they do so, it would open home options for first time home buyers entering the market. The additional inventory could lead to more balanced prices, moving away from the spike in annual growth we have seen lately.”

Mortgage rates continue to rise

July 12th, 2017

Rates moved off their lows for the year for the first time in several weeks.  For the week ending July 6, Freddie Mac announced that 30-year fixed rates rose to 3.96% from 3.88% the week before.  The average for 15-year loans increased to 3.22%, and the average for five-year adjustables moved up to 3.21%.   A year ago, 30-year fixed rates averaged 3.41%.

Attributed to Sean Becketti, chief economist, Freddie Mac — “Global interest rates turned up sharply over the last week. The 10-year Treasury yield was no exception, increasing 10 basis points in a holiday-shortened week. The rate on 30-year fixed loans followed suit, rising 8 basis points to 3.96 percent.”

Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Is this a good time to buy rental properties?

July 8th, 2017

Renters made up a large share of those shopping for a home loan in the first quarter of 2017, which could put landlords under pressure. A new TransUnion analysis found that among the 55% of non-homeowners looking for a home loan, 3 in 10 were millennials. That share is up slightly from 2016 and continues the upward trend of recent years. The figures reveal that 34 million renters aged 25-44, a prime age for home purchase, were credit eligible for a home loan with two thirds of under 44’s having a VantageScore 3.0 credit score of 580 or above. While the report is good news for many in the housing market, landlords could be facing a slowdown following a period of growth. “The rental market has seen sustained growth for the last several years, but occupancy rates have flattened from their peak in the second quarter of 2016,” said Mike Doherty, senior vice president of TransUnion’s rental screening solutions group. Source: TransUnion