Rates flat this week
Mortgage rates were pretty volatile this week with some pretty big swings on Wednesday and Friday. Is this just another “step” in mortgage rates, check out this blog to see the “step” theory.
Rates on Monday and Tuesday were pretty tame, due to the anticipation of the Consumer Price Index (CPI) or inflation numbers that came out on Wednesday. And as expected Wednesday was not a pretty day, with the Fannie Mae Bond selling off by .43 basis points, which equates to almost a .125% in rate.
CPI numbers were not as expected, and showed increase inflation in the US economy:
Core CPI 1.8% vs est. of 1.7%, thus showing more inflation at the consumer level.
Then on Thursday, PPI or Producer Price Index came out, showing inflation at the Producer Level:
Core PPI 2.2% vs est. of 2.1%, ouch. Even though it was 0.1% higher, it is still showing inflation is coming back.
Both of these caused the bonds to sell off, and thus rates worsened again this week for the 7th straight week.
Today, we are getting some reprieve, but it is mainly due to Holidays, the Chinese New year and the US holiday on Monday. So investors are parking money in safety over the very long weekend. This is definitely not a reversal in interest rates, the trending lines are all pointing to higher and higher rates.
At current trend, pending some unforeseen news, we are anticipating 30 year mortgage rates to be in the 5’s by mid March, and 6’ by June/July, and yes, can you say it, 7’s by end of the year. WOW, that could mean that interest rate are going up by 3+ points in a 12 month period? Is this possible? And the answer is YES!
Back in the 80’s when big hair and parachute pants were a thing, rates jumped significantly due to inflation. From July 1980 to October 1981, so in a 16 month time period, rates jumped from 12.38% to 18.45%, thus 6.07%. Now obviously different times and different economy, but there are some talking heads starting to do some comparison.
There is also a feeling that if rates do get into the 7-8%, that it could through the US economy into a recession, which would cool off the market, and thus drive rates back down. And we are also assuming that the government and Federal Reserve would step in.
Moral of the story is, there is nothing in the cards, pending something dumb from North Korea, that is going to cause rates to drop, we might see minor pauses, but hang on for this ride.
Jail for a Judge
And onto the reason why we have so many lending rules and regulations, a Judge in California was convicted of a $1.4 Million mortgage fraud scheme. This reads as a pretty typical scheme with straw buyers, you can find the complete article here: Link to article here
NEW TRID Rules
Well for once, there is a bill that passed the House that is gaining my 100% support, H.R. 3978, called the TRID Improvement Act is on its way to the Senate, and here is what the House did:
-Right now, on a Loan Estimate, we have to disclose a full title policy for a borrower, even though, the seller is paying their portion of the policy. As an example, for a $100,000 purchase, we have to disclose on the buyers side a Title Policy fee of $865.80, and then at closing, the buyer’s get a “credit” of $666. But until you get to closing, that large sum is always disclosed. With this new bill, if passed, lenders will only have to disclosure the “Lender’s Title Policy” for the buyer, which in this case is $199.80.
-Next, the bill will allow for a transitional Loan Officer’s license. Right now, if a Loan Officer is working for a bank or a credit union, they have a pretty tame license and don’t have to go through all of the paperwork, criminal checks, back ground checks, financial checks, take 20 hours of training and pass a test. Basically, bank LO’s fog a mirror to get a job when compared to other Loan officers.
So, if a bank LO was to get a regular lender’s LO license, they would have to quit their job, and then get all of this stuff completed, and then get hired, which can take up to 60 days. Now with the new law, there is a transitional period, and the LO could start working for the Broker, and then have up to 120 days to get all of their licensing completed. Pretty darn nice of Congress.
There are some more tweaks, but we will have to see what comes out of the Senate, crossing my fingers!
Realtor marketing
Well hopefully all of you sent your past clients their Closing Disclosure from their homes last year. Here is you next Marketing Objective: Give out 300 cards in 30 days.
Business Cards are the cheapest and most efficient way to get your name out. And 300 you say, well lucky March is a 31 day month, so that means you need to give out 9.68 cards per day. How you say, to everyone you come into contact with:
- -Cashier at Walmart, did you know minimum wage at Walmart is now $11/hour.
- -Server/Waitperson when you go out.
- -When you gas up, leave a card on the pump, or if you go in, give one to a gas attendant.
- -Baby Sitters
- -Urber Driver
- -Ushers at BSU Stadium/Pavilion
- -You child’s teachers, and if you have a kid in High School or Jr. High, send a thank you gift to each of the teachers with your card.
- -Police officer, after he/she gives you the ticket.
Good luck and happy marketing!!!!