November 28, 2017
Busy December on Tap
As we approach December, we can see that we are in for a busy month with regard to the economy. With the recovery continuing from the Hurricanes, the Federal Reserve Board's Open Market Committee will also be meeting with the consensus pointing to another increase in short-term interest rates. Outside of major shocks, the only factor which seems like it has the potential to change the Fed's mind would be a very weak employment report. This report is due out in early December.
Meanwhile, all eyes will be on Congress as they continue to hash out details of the tax reform proposals. There is an overwhelming amount of media stories streaming from this effort and for good reason. This effort to enact such a radical change will have a profound affect upon businesses and consumers. No industry seems to be more in the cross-hairs than real estate -- one of the last remaining tax havens.
Just to make things more interesting, the markets will be watching reports from on-line and bricks and mortar retailers. Traditionally, Black Friday kicks off the buying frenzy for the holiday season. Sales made during this season will tell us much about the state of the economy moving into 2018. From there we will see speculation about how many times the Fed intends to raise rates in the coming year. They keep using the word "gradual," but that word is too nebulous and won't keep market analysts from speculating.
Rates were down slightly in the past week, with the survey being released one-day early because of Thanksgiving. For the week ending November 22, Freddie Mac announced that 30-year fixed rates fell to 3.92% from 3.95% the week before. The average for 15-year loans increased one tick to 3.32%. The average for five-year adjustables also increased one tick to 3.22%. A year ago, 30-year fixed rates averaged 4.03%, slightly higher than today. Attributed to Sean Becketti, chief economist, Freddie Mac -- "Rates dipped slightly in a short week leading up to the Thanksgiving holiday. The 10-year Treasury yield fell roughly 4 basis points, while 30-year fixed rates dropped 3 basis points to 3.92 percent. Rates on home loans continue to remain low." 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.
Current Indices For Adjustable Rate Mortgages
November 24, 2017
|6-month Treasury Security
|1-year Treasury Security
|3-year Treasury Security
|5-year Treasury Security
|10-year Treasury Security
|| 1.856% (Oct)
|| 1.063% (Oct)
|11th District Cost of Funds
|| 0.729% (Sep)
|| 4.25% (June)
| Trying to buy a home with bad credit is hard. But what about trying to buy a home with no credit at all? There's a name for these people: "credit invisibles." It means they don't have credit or a score with the three major credit bureaus (Equifax, Experian, and TransUnion), usually because they don't have a traditional credit trail such as a credit card or college loan. Far from being anomalies lurking on the fringes of society, credit invisibles are shockingly common. According to a recent report by the Consumer Financial Protection Bureau, roughly 45 million Americans are characterized as credit invisible. Meanwhile, 19.4 million are known by another equally ominous label: "credit unscorable." That means they have some credit history, but not enough to generate a score. Typically, invisibles and unscorables face a tough road if they want to buy a home, because lenders are reluctant to approve individuals with no traditional track record of paying back debts. But hope has arrived for these credit-challenged folks: A growing number of lenders are using alternative scoring methods to assess a home buyer's creditworthiness for a home loan—which means that many who have been shut out of home-buying might now have a shot. Alternative credit data can include rent payments, cell phone bills, insurance and more. The bottom line is that qualifying for a home loan when you have little or no credit history can be difficult, but it's doable today. You just need to be willing to dig up the documentation to prove your excellent alternative credit history. Source: Realtor.com -- Do you or someone you know need help to determine if you might qualify using alternative credit? Contact us for a free consultation.
Consumers trust real estate professionals and lenders more than online sources or family and friends when it comes to obtaining information about home loans, according to a new Fannie Mae survey based on 1,000 responses. Recent home buyers surveyed, including younger age groups, say they consulted multiple sources of information about the home finance process but found lenders and real estate agents to be more credible than mobile apps, websites, and social media. Though survey respondents say online sources are more convenient, they indicated a higher level of confidence in getting information through person-to-person interaction. However, home buyers do report using online sources to shop for a home much more often than to shop for a home loan, according to the survey. Source: Fannie Mae National Housing Survey
The availability of affordable rental units declined dramatically during the past six years, according to a report from Freddie Mac Multifamily. The report found that between 2010 and 2016, there has been a 60 percent reduction in the number of units deemed affordable to very low-income households. Freddie Mac’s research determined that increasing rents and stagnant household incomes is causing the problem, which could become more acute if the supply of affordable units is not expanded. Freddie Mac previously reported that a growing demand and rising costs of land and construction exacerbated the supply gap, with a nationwide annual shortfall of approximately 400,000 housing units. "Our analysis looked at the affordability of the same rental units at two close but different points in time. In a matter of just a few years, we found that a large number of units previously affordable to very-low income families could no longer be considered affordable," said Steve Guggenmos, Vice President of Freddie Mac Multifamily Research and Modeling. "This is a trend that is worsening, and Freddie Mac is working to better understand and develop offerings that meet the needs of this market." Source: National Mortgage Professional