Discussing this week’s reports on mortgage rates, the truth about down payment and credit required to buy a home, 2 reports on increasing rents, homes selling faster and for more money, Bank of America getting sued for housing discrimination, mortgage delinquencies and much more!
From Freddie Mac:
- 30-year fixed-rate mortgages averaged 4.55% with an average 0.5 point
- This is down from last week when it averaged 4.57%
- Last year at this time, 30-year fixed-rate mortgages averaged 3.88%
- 15-year fixed-rate mortgages averaged 4.04% with an average 0.5 point
- This is the same as last week
- Last year at this time, 30-year fixed-rate mortgages averaged 3.17%
It is good to see that rates have settled down a bit according to Freddie!
The Mortgage Bankers Association reported:
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to 4.84% from 4.83%, with points decreasing to 0.42 from 0.48 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) decreased to 4.70% from 4.79%, with points decreasing to 0.26 from 0.36 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
The average contract interest rate for 15-year fixed-rate mortgages increased to 4.29% from 4.27%, with points decreasing to 0.40 from 0.53 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
Not quite as good as the news from Freddie BUT neither one is reporting very big changes. Besides, these are just the average mortgage rates and what is possible varies from one buyer to the next.
You may be wondering what is making mortgage rates decrease after all of the recent increases. Part of the reason is that investors are REALLY spooked by the possibility of a trade war between the US and China.
When investors get spooked, they start putting their money into safer investments. Investors see Treasuries or bonds as being a safer place to invest.
When investors start putting money into lower risk stuff such as Treasuries or bonds, it normally means that mortgage rates will decrease. Whether or not mortgage rates will stay about the same or decrease because of political/economic uncertainty is hard to say.
You may notice that the MBA is quoting rates for someone putting 20% down. I must once again remind you…
You Do NOT Have to Put 20% Down to Buy a Home!
Many people keep an eye on mortgage rates as they save money to buy a home. But what many people still think they will need more money for down payment than what is actually required.
Laurel Road recently did a survey and found that consumers don;t always understand how much down payment they must have to buy a home.
Laurel Road found that 53% are concerned about being able to buy a home today. Plus, 35% think they could not afford a 20% down payment.
You do NOT always have to put 20% down to buy a home!
Some people may also think that they do not have the credit to buy a home. According to Ellie Mae’s Origination Insight Report for May 2018, closed FHA mortgages had an average FICO score of 676!
Check out this chart showing the FICO Scores of all closed mortgages in May 2018:
51% of the FICO Scores were between 600 and 749. How many people COULD buy a home but are unaware of this?
If you want to buy a home, my advice is to sit down with several lenders to see exactly what is possible for you.
The Economy in the Carolinas Expanded Moderately in June
From the Richmond Fed:
The Carolinas economy expanded moderately in June, according to the latest survey results from the Federal Reserve Bank of Richmond. The general business conditions index remained firmly in positive territory in June, while a greater portion of firms reported an increase in sales than a decrease. Both sales and business conditions are expected to continue to improve among Carolinas firms in the coming months.
Survey responses indicate strong growth in employment and wages in June, trends that are expected to persist in the near future. However, many firms were unable to hire workers with the skills they needed, as the index for available skills dropped to −16, its lowest reading since February 2008.
Spending growth continued in June, particularly for equipment and software, but results suggest that firms anticipate weaker expenditure growth in the next six months. Growth accelerated in both prices paid and prices received, with input prices continuing to rise faster than output prices. Firms expect this trend to end soon as they anticipate faster growth of output prices and slower growth of input prices.
Really good news for our area! Let’s hope this continues…
Rents Continue Growing
Nationwide, median rent rose 2.1 percent year-over-year in May, to a Zillow Rent Index of $1,440 per month. In May 2017, rent grew at just a 0.7 percent annual pace – one-third the current rate.
This a national report and we might be tempted to call it a Zestimate for rents. But this is not the only recent report on rising rents!
Overall, the national one bedroom median rent grew 1% last month to $1,209, while two bedrooms increased 0.4% to $1,442. On a year over year basis, one and two bedrooms are up 4% and 3.7% respectively.
The thing for anyone renting to remember is that home owners with a fixed-rate mortgage do not have to worry about their monthly housing payment increasing every year.
Homes Selling Faster and For More Money
Inventory decreased by 4 percent year over year and continued to sell at a rapid pace, moving 10 percent more quickly than in June 2017
The median age of properties on realtor.com in June reached 54 days, 6 days less than last June and 1 days less than May
The median listing price, reached $299,000, its highest point since realtor.com®’s inventory data series commenced in early 2012. Listing prices increased 9 percent over last June and do not yet show signs of slowing down, as they have increased on average 9 percent year over year for the last 12 months
Not really surprising but remember this is talking about the entire US. Buyers and sellers need to consult with a local experienced Realtor to determine what is happening in their area.
Bank Of America Sued for Housing Discrimination
From the National Fair Housing Alliance:
Today, the National Fair Housing Alliance (NFHA), 19 fair housing organizations, and two homeowners in Maryland filed a federal Fair Housing Act lawsuit against Bank of America, N.A., Bank of America Corp., and Safeguard Properties Management, LLC (“Bank of America/Safeguard”). The lawsuit alleges Defendants intentionally failed to provide routine exterior maintenance and marketing at Bank of America-owned homes in working- and middle-class African American and Latino neighborhoods in 37 metropolitan areas, while they consistently maintained similar bank-owned homes in comparable white neighborhoods.
Interesting but let me play Devils advocate for BofA. Banks often have no idea of the ethnic makeup of the communities that they own foreclosures in. And I do not think the banks care.
Banks will get reports about the surrounding properties, including the types of homes, the condition, the percentage of rentals, the recent sold prices and the homes currently for sale. But banks did not ask about the ethnic makeup of the community when I would list foreclosures for the banks.
This does not mean that BofA does not look at Census data or uses some other method to check the ethnic makeup of communities where they own foreclosures. But since banks only care about money and not the color of people’s skin, why would they?
Something that the article does not mention are the values or condition of the homes in question. Would a bank be wrong to spend more to maintain a more valuable home?
Were these homes worth less or in worse condition compared to the homes they properly maintained?
OK, enough of being a devils advocate for BofA. Everyone is innocent until proven guilty but when it comes to BofA, I tend to think they are evil.
It may be just a coincidence that BofA let homes in African-American and Latino communities get run down. But considering BofA’s history of being sneaky and evil, it does make me wonder if the accusations are true.
UofM Survey of Consumer Sentiment Decreases
Consumer sentiment retreated in late June to just above the May reading largely due to concerns about the potential impact of tariffs on the domestic economy. The falloff in confidence was minor, as the Sentiment Index has been virtually unchanged for the past three months.
The Consumer Sentiment Index decreased from the previous month BUT it is up compared to the same time last year. Once again we hear that the tariffs are causing concern…
CMBS Delinquency Rate Decreases Again
Thanks to the continued resolution of distressed legacy debt and the brisk pace of new loans being originated and securitized, the overall Trepp CMBS Delinquency Rate broke through the 4% level in June, setting another new post-crisis low. The overall delinquency rate for US commercial real estate loans in CMBS is now 3.95%, a decrease of 17 basis points from the May level.
While this is not tracking residential delinquencies, it is very good news for the economy. Any decrease in the number of delinquent loans is good news as it shows the economy is healthy.
But speaking of residential delinquencies…
Fannie Mae Delinquencies Decrease
From Fannie Mae:
The Conventional Single-Family Serious Delinquency Rate decreased 6 basis points to 1.03% in May. The Multifamily Serious Delinquency Rate remained flat at 0.13%.
Here is your good news for residential delinquencies! In case you missed it, Freddie already said that their delinquency rate decreased earlier this week.
Robots Don’t Destroy Jobs?
The reality is that today, the world population has grown to 7.5 billion, and we have more work despite the technology revolution. Global unemployment is at historic lows, 5%, global poverty has fallen to unprecedented levels, from 80% in 1820 to 10% today. Infant mortality has been reduced to less than half, from 64.8 deaths per thousand births in 1990 to 30.5 in 2016.
Automation does not destroy jobs. It leads the economies -especially the developed ones- towards an acceleration of the migration of workers from the manufacturing sector to the service sector; while digitalization addresses breakthrough market opportunities based on the digital ecosystem and the data business, which have already been dubbed the oil of the 21st century. That is, it makes the economies stronger, improves the wage bill and reduces risky jobs.
A must read about one of my what if subjects…
Well that is all I have time for today! You may notice a decrease in my posts next week as I am planning on building another swing set for the rug rats.
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