Rates
What the heck, everyone expected rates to be in the high 4’s by this time…well we are not. Currently rates are hovering around the 4.00%ish for conventional, and the 3.75%ish for government.
If it was up to the US economy, we would definitely be in the high 4’s, but with all of the war talk with North Korea, lots of investors are putting their money into bonds, thus keeping mortgage rates down. Very Nice!
Upcoming events that will affect rates, not including a missile strike on N. Korea:
-Federal Reserve is talking about unwinding their balance sheet, remember they have been purchasing TRILLIONS, yes that is a “T” of bonds and mortgage bank securities since 2008. And now they are wanting to “undo” that balance sheet. So, we will be watching the Fed Speak very carefully, if the Fed start to sell off or at least at minimum not reinvest proceeds from the Bonds, we will finally see mortgage rate not being influenced by the Federal Reserve. Thus, rates will increase.
-Trump, watch for tweets, they seem to be influencing rates depending upon what drug Trump is on, any given day. But what we are really going to look for is Tax Reform, if Tax Reform gains some traction and a bill starts to look like it will pass Congress, then investors will flee bond and drop their money it the stock market. Thus, rates will spike, and could spike dramatically.
We do have a pretty strong floor of 3.875% for conventional (the top red resistance line) and 3.625% for government loans, so I do not anticipate pushing through those, although that is as long as we do not go to war with Korea. Definitely not floating, all it is going to take is 1 statement from the Fed or Congress starting to work on Tax Reform, and we will see rates jump.
Appraisal
Have you had an appraisal come in low lately, if not, good for you. But watch out, they are coming in low. In speaking with appraisers, quite a few of them, the market is just not catching up to the prices, due to limited number of houses on the market, and thus limited number of closings.
It is anticipated that low appraisals will plague our market for a while for a while.
Also, speaking of appraisal, we are starting to see more and more delays, in some cases, for rural areas, we are starting to see 15 day+ turn times.
And in conjunction with delays, we are seeing appraisal prices go up as well. VA released a memo, specifically for Idaho, increasing minimum appraisal fee from $450.00 to $600.00, how cow jump. But the VA did indicate that appraisal are suppose to be completed with in 7 business days.
New underwriting Guidelines:
- -July 29 Fannie Mae allowed up to a 49.999% debt to income ratio, up from 44.999%, squeezing more people into homes.
- -Beginning September 1st, Freddie Mac is going to allow Automated appraisal through their system, and in some case, no appraisal at all. I am sure this for thore 800+ FICO and 20% down. But it could save hundred of dollars in expesnes, and 10+ day in appraisal turn time.
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- -IHA HOME department ran out of funds last month, so no more $14,999 down payment assistance. They anticipate on getting more money after new Federal Fiscal year, which begins October 1st.
- -Conventional Streamline loans are coming, in October, Fannie/Freddie are going to release a new streamline refinance program, similar to FHA’s Streamline, which will allow for higher loan to values, no appraisal, and hopefully lower fees.
- -Want to know where rates are, well most lenders keep them super secret, but not IHA, they published them each and every day on the web, for all to see. So here is the link, check them out: https://www.idahohousing.com/lenders-realtors/rate-sheet/