2017 Mortgage Rates
Well what a year, mortgage rates bounced all over the place, but when it came down to it. Rates actually improved by .26 from the beginning of 2017 to the end.
Our High for the year was March 15, when we hit the 4.28% mark, and our low for the year was in September 7th, when we ticked down to the 3.625% mark. Meaning we had about a .50, roughly, swing in mortgage rates in 2017. None of which was because of the Federal Reserve.
The largest indicator of mortgage rates was Geo-Politics. And to narrow that down even more, our #1 influence of mortgage interest rates was North Korea, with a little sprinkling of the Tax Reform Bill in there coming up as a strong 2nd place.
As we roll into 2018, the stock market continues gaining on new highs, thus bring investors to Stocks and out of Bonds, thus increasing mortgage rates.
2018 mortgage rates should follow the same trend as the news trends, with North Korea being forefront to influencing rates, followed by US economic news that would be influenced by the US Government.
We do have the Brexit happening this year, that will have a little influence. The talking heads are anticipating mortgage rates to increase by .25 to .50 in 2018. Thus making rate 4.25 to 4.50 by the end of the year.
Two charts below, showing the mortgage back securities, which I tend to quote a lot and use this chart. And then the Average 30 year Fixed Rate chart, average across the US. Idaho tends to be more aggressive on rates, and thus slightly lower than the US.
Other Items coming in 2018, we think:
-Back to those goofy mortgages, such as interest only, State Income. Now we have some of these loans already, but you are going to hear more and more about Non-QM or Non-Qualified Mortgage loans coming around. These mortgage are, legally, allowed to circumvent the Frank-Dodd rules. Lenders are just put more at risk when the loans do not perform. Watch for these loans.
-Guidelines loosen up, more lenders will allow for more challenged credit. Now I don’t know how much more, since we have lenders that will go down to a 500 FICO score on FHA, VA, and Rural Development loans.
-New loosen of rules for Appraisers getting into the business. Looks like the governing body for appraisers will loosen up requirements to get appraisal license, allowing for more people to get into the business, and hopefully resolving the shortage.
-Zillow big lawsuit should be coming to the end, which will have Zillow writing a nice big fat check to the government. Now the big question is what is going to happen to all of the Realtors & Loan Officers who advertised on Zillow.
-1st Time Home buyers are going to be non-existent, mainly due to home prices in the Treasure Valley growing so fast, that none of the FTHB will be able to afford homes. This is going to put a squeeze on the market, because 2nd time buyers are not going to be able to sell their homes, and this is going to cause home prices to plateau a little…and dare we state, fall? Well probably not fall too much, because the out of starters will still be buying.
-Builder are going to have to change what they are constructing. To get home prices down for the FTHB, we are probably going to see 2 bed 1 bath, very entry level homes, and maybe just 1 garage also. 2017 I did more manufactured homes that ever, and the main reason, people could afford them, more so than a regular stick built home.
Local News
If you ever wonder why we have so many rules and regulations, it is due to people not doing the right thing. Typically, the rules are because of something that happens in California or Florida, but last month, Idaho has one of its own. Check out this story out of Nampa, we will have to see what becomes of this and what is found out in the investigation: http://www.ktvb.com/news/investigations/7-investigates/dozens-say-they-were-duped-in-a-carefully-planned-ponzi-scheme/502527417
Lead Generator
This will probably be the last time you can use this lead generator, but it is time to send all of your clients a copy of their Closing Disclosure for the home you helped them buy or sold in 2017. Reminding them that there could be potential tax deductible items on the Closing Disclosure and they should consult their CPA. AND don’t forget to ask them for referrals!