Discussing mortgage rates, the latest foreclosure numbers, consumer confidence, changes at the CFPB, home prices, home flipping and much more!
Mortgage Rates Decreased in October
Nationally, interest rates on conventional purchase-money mortgages decreased from September to October, according to several indices of new mortgage contracts.
The National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders Index was 3.98 percent for loans closed in late October, down 2 basis points from 4.00 percent in September.
The average interest rate on all mortgage loans was 3.97 percent, down 2 basis points from 3.99 in September.
The average interest rate on conventional, 30-year, fixed-rate mortgages of $424,100 or less was 4.11 percent, down 3 basis points from 4.14 in September.
The effective interest rate on all mortgage loans was 4.01 percent in October, down 7 basis points from 4.08 in September. The effective interest rate accounts for the addition of initial fees and charges over the life of the mortgage.
The average loan amount for all loans was $307,500 in October, up $8,000 from $299,500 in September.
This is not as up to date as the mortgage rate reports I share each week from Freddie Mac and the MBA. But still good to see where we were and where we may be headed.
Foreclosures on the Decline
Sales of distressed properties accounted for four percent of sales in October 2017, a decline from a peak of about 50 percent in 2009, according to the October 2017 REALTORS® Confidence Index Survey. From October 2008-October 2017, NAR estimates that 5.31 million foreclosed existing homes have been sold to homebuyers, and another 2.94 million were sold to homebuyers as short sales, a total 8.0 million existing homes, or about half of the 14.4 million homes that went through foreclosure process or are in some form, based on Mortgage Bankers Association (MBA) data.
Nice to see the incredible improvement in the number of foreclosures. Still, we should never forget the painful lessons of the past.
If you are looking to buy, please remember to make sure you are truly ready for the financial commitment of owning a home! And do NOT buy more than you can afford!
Confidence in the U.S. Economy Remains Relatively Strong
Americans’ assessments of the economy remain relatively strong, with Gallup’s U.S. Economic Confidence Index at +9 for the week ending Dec. 3. This score is similar to the previous week’s +11 and slightly above the average weekly level of economic confidence during the year so far (+6).
Views about the current state of the economy remain much more positive than negative. Last week, 37% of Americans described the economy as “good” or “excellent,” while 20% characterized it as “poor.” This puts the current conditions component at +17 for the week, similar to the previous week’s +18, which is also the component’s best score since Gallup began tracking this question in 2008.
Meanwhile, 47% of Americans last week said the economy was “getting better,” while 46% said it was “getting worse.” As a result, the economic outlook component was +1 for the week, compared with +3 the week before.
While we will not see a correlation between home sales and consumer confidence, we need strong consumer confidence for a healthy economy. And we need a healthy economy for a healthy housing market.
And vice versa…
Financial Firms Pin CFPB hopes on Mulvaney
From The Hill:
Major players in the financial industry hope for sweeping change at the Consumer Financial Protection Bureau (CFPB) now that a staunch conservative is in charge. Office of Management and Budget Director Mick Mulvaney was cleared to begin reshaping the CFPB when a federal court last week blocked an attempt to depose him.
Will Mulvaney change the CFPB from an agency to protect consumers to a government agency representing large corporations, Wall Street and the banks? While I am not a betting man, I don’t think this is going to be good for the average hard working tax paying American…
US Home Prices Increase 7% YoY
CoreLogic just released their Home Price Index for October 2017 and they said:
Home prices nationwide, including distressed sales, increased year over year by 7 percent in October 2017 compared with October 2016 and increased month over month by 0.9 percent in October 2017 compared with October 2017.
Great news for home owners and CoreLogic is also predicting that US home prices will rise 4.2% in the next year. Rising home prices and the strong possibility of rising mortgage rates should motivate home buyers.
Chief Economist Frank Nothaft said:
Single-family residential sales and prices continued to heat up in October. On a year-over-year basis, home prices grew in excess of 6 percent for four consecutive months ending in October, the longest such streak since June 2014. This escalation in home prices reflects both the acute lack of supply and the strengthening economy.
Again, we hear about the lack of inventory causing home prices to rise. Home buyers must be properly prepared and professionally represented by a Realtor to be successful in today’s market.
Please remember this is a national report and not the local info that buyers and sellers must use to make informed decisions. If you are interested in what is happening in Anderson County SC, check out the Market Reports!
Home Flipping Profits Decrease to Two-Year Low
ATTOM Data Solutions just reported that the single family homes and condos flipped in the third quarter had an average gross profit of $66,448 per flip. This is the lowest average gross flipping ROI since Q2 2015.
The percentager of homes that were flipped in the US decreased from the previous quarter but was the same as the third quarter in 2016.
The high demand for rentals makes a buy and hold strategy a better option in some areas. Flipping is attractive but you better know the market, your target ARV and your rehab/holding costs.
CEO Economic Outlook Reaches Highest Level in Nearly Six Years
From Business Roundtable:
The Business Roundtable Q4 CEO Economic Outlook Index — a composite of CEO projections for sales and plans for capital spending and hiring over the next six months — increased to 96.8 for the fourth quarter of 2017, up from 94.5 in the third quarter.
The Index reached its highest level since the first quarter of 2012 (96.9). The Index has significantly exceeded its historical average of 80.3 for four quarters in a row and remains well above 50, suggesting that CEOs continue to expect the U.S. economy to expand at a healthy pace.
This isn’t too surprising since the tax reform appears to help businesses. Whether or not this will translate into helping the employees of these businesses is hard to say…
Service Sector Still Growing
Economic activity in the non-manufacturing sector grew in November for the 95th consecutive month according to the latest Non-Manufacturing ISM® Report On Business®.
Anthony Nieves, Chair of the ISM Non-Manufacturing Business Survey Committee, said:
The rate of growth has lessened in the non-manufacturing sector after two very strong months of growth. Comments from the survey respondents indicate that the economy and sector will continue to grow for the remainder of the year.
Good news and hopefully this trend will continue in 2018.
Mortgage Modifications: What Worked and What Did Not
JPMorgan Chase recently released studied mortgage modifications and they found that a 10 percent mortgage payment reduction reduced default rates by 22 percent. I always felt that reducing payments was the way to reduce defaults and this seems to confirm my feelings.
They found that reducing the principal was not as effective as reducing the payment and the principal.
Another finding that does NOT surprise me is that mortgage default closely followed a substantial drop in income. I always felt that people would keep making the payments if they could.
Hopefully, these findings will be used by JPMorgan as well as other banks in the future.
CMBS Delinquency Rate Inches Lower for Fifth Straight Month
The delinquency rate for US commercial real estate loans in CMBS is now 5.18%, an improvement of three basis points from the October level. This current five-month streak of rate drops is the second-longest in more than eight years, only bested by a 14-month winning streak that took place from June 2013 to July 2014.
Very nice! The last thing we need is for something to cause the economy to come off it’s tracks since it appears we may finally be getting close to where we need to be.
Bipartisan Bank-Relief Bill Wins Approval From Senate Panel
Bipartisan legislation advanced Tuesday by the Senate Banking Committee would revise many parts of the sweeping 2010 overhaul, particularly those pertaining to small and regional banks. It would free midsize lenders from some of the strictest post-crisis oversight and cut compliance costs for community banks. It also includes some tweaks that Wall Street has sought, including a change to how banks classify municipal bonds.
Good to see that some of the overzealous restrictions that have hurt smaller banks may finally be corrected.
How Corporate Power Killed Democracy
Last but not least is today’s must read from Counter Punch:
The rise of Corporate Power was the fall of democracy. Over the long haul, US politics has revolved around a deep tension between democracy and an unrelenting drive for plunder, power and empire. Granted that our democracy has been seriously flawed and only rarely revolutionary, yet the democratic movements are the source of every good thing America has ever stood for.
Corporate Power is so destructive to democracy and dangerous to the planet because it recognizes no limits other than those imposed upon it. Corporate Power has but one reason for being: the maximum possible profit and the maximum possible power. Corporations must grow or die but now their growth threatens ecocide, perpetual war and the death of democracy. Such a way of life cannot be sustained. There are but few possible outcomes: the internal contradictions of system will drive us to desperate crisis, or we intervene first, rebuild democracy, protect the planet, and overthrow the corporate dictatorship.
I hope you will read, think about this and share it with others!
That is all I have time for today but I hope you will check back tomorrow as I still have plenty of stuff to share, discuss, rant about etc etc…
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