Discussing the deficit increasing, very good news about jobs and incomes, the number of originations increases, home values increase, and nonbank mortgage lending increases!
Today may be the calm before the storm as we are waiting on Hurricane Florence to make her way to the Anderson area. I have no idea how or what will happen so it could be that posts may be late or sparse in the coming days.
Now let’s dive in!
Deficit Increases Again
The federal budget deficit was $895 billion for the first 11 months of fiscal year 2018, CBO estimates, $222 billion more than the shortfall recorded during the same period last year. Revenues were 1 percent higher than in the same period in fiscal year 2017, but outlays rose by about 7 percent.
Not good and certainly not sustainable…
Refinancing Decreases BUT Purchase Originations Increase
More than 2 million (2,087,455) loans secured by residential property (1 to 4 units) were originated in Q2 2018, up 15% from the previous quarter and up less than 1% from a year ago. Purchase loans were up 39% from the previous quarter and up 1% from a year ago. Refinance loans were down less than 1% from the previous quarter and down 2% from a year ago to the lowest level since Q1 2014.
Not really surprising that the number of people refinancing has decreased since most home owners would have already taken advantage of the low rates. The fact that the overall number of originations increased is very positive news.
Jobs Opening Little Changed in July
The number of job openings was little changed at 6.9 million on the last business day of July, the U.S.
Bureau of Labor Statistics reported today. Over the month, hires and separations were little changed at
5.7 million and 5.5 million, respectively. Within separations, the quits rate was little changed at 2.4
percent and the layoffs and discharges rate was unchanged at 1.1 percent.
A strong report because jobs openings are at a record level AND the number of quits increased YoY. Pretty positive news especially since the Census Bureau reported this week that median household income increased in 2017 for the 3rd consecutive year!
Also, the NAHB reported:
The count of unfilled jobs in the construction sector increased in July, reaching yet another post-Great Recession high level. The rate of open construction sector jobs also matched a prior cyclical high.
This is an indicator that many home builders are still having problems finding qualified workers. How many more homes would be built if home builders could find more qualified workers?
Still, this is pretty encouraging stuff with increasing incomes and a strong JOLTS report.
Home Values Increase 5.79%
The National Quicken Loans Home Value Index (HVI) showed appraisal values increased 1.08 percent since July and jumped 5.79 percent since August 2017. The average appraisal was 0.28 percent lower than homeowners expected in August, according to the National Quicken Loans Home Price Perception Index (HPPI).
Bill Banfield, Executive Vice President of Capital Markets at Quicken Loans, said:
It’s important for homeowners to look at their local housing market, and their home, objectively before estimating its value. Real estate experts can help them properly estimate their home’s value to make the process easier – whether they are selling, or refinancing.
I could not have said it better than Banfield! You may hear national reports that are very different from what is happening in your local market.
Nonbank Mortgage Lending Increasing
Nonbanks originated about half of all mortgages in 2016, up sharply from 20 percent in 2007.
The share of mortgages issued by nonbanks grew, in part, because banks pulled back from extending mortgage credit to borrowers with lower credit scores in the aftermath of the financial crisis. Nonbanks may also have been quicker to take advantage of technological innovations in mortgage origination.
OK but is this bad? Well it could be since nonbanks are mainly making mortgages that are backed by the FHA or the VA. If the nonbanks run into problems, it could be a painful repeat of the past…
Nonbanks serve a critical and important segment of the market since some banks decreased or stopped their mortgage lending. Let’s just hope the increase in nonbank mortgage lending does not turn into a problem!
Well that is all I have time for today! Please stay safe and think about those that are dealing with the impact of Hurricane Florence this weekend!