Rates
For the most part, since February 15th, rates have been trading pretty much flat, raising and falling in a VERY narrow trading band. These have been adjusting based on what Trump spouts off each day and a little on economic news, but mainly the focus is TRUMP.
This weeks economic news was all pretty lame and really didn’t affect rates too much. We did have the biggie come out this week, which was unemployment.
Non Farm payroll came in at 103,000 new jobs vs est. of 193,000. This was a pretty big miss, but what traders really look at is 2 other items in the report. 1st is the revision of previous months numbers. February was revised from 313,000 to 326,000, the revision was small, but that was still a HUGE number. January was revised downward, from 239,000 to 176,000, now that was a pretty big revision downward, but still a nice number.
Overall, the traders were looking at the 3 month moving average, which stayed at 202,000, above a critical 200,000 mark. Next month traders will focus on if March’s numbers are revised and if February is revised again.
The 2nd thing traders were looking for in the data, and what the Federal Reserve is following is wages, to see if there is wage inflation. Month over month, wages were up 0.3% vs est. of 0.2%, showing inflation, but the Year over Year was inline with expectation of 2.7%. This is going to be one of the keys that the Fed looks to on whether or not they are going to raise rates again to prevent inflation.
And now for a new report to really watch out for, Personal Consumption Expenditures, or PCE. This indicates changes in average personal income and expenditures, i.e a person’s personal profit and loss statement. This is a KEY indicator for the Federal Reserve on inflation, and is the Federal Reserves preferred measure of inflation.
This report come out April 30th, a hot reading will indicate inflation at the consumer level and thus Bonds will sell off and mortgage rates will increase, we could see a significant jump in mortgage rates, as we saw in January.
A lower reading of the PCE will just stall the inevitable rate jump, but for how long, that is a GREAT question.
Moral of this story, we have been fortunate that mortgage rates have settled in an nice trading rage for the last 3 weeks, but it is just a temporary stall. With the Federal Reserve unwinding their purchase of Mortgage Back Securities and inflation coming up, we anticipate another jump in mortgage rates in the next 30 days. Keep locking those rates.
Source and Seasoning of assets
So you may ask why lenders ask for so much documentation on a borrower deposits and where all their earnest money and down playment comes from, and the answer is: Purchase a home and refinancing a home is the #1 way of laundering drug money.
That is a common phrase we use with all of our clients, and here is the proof in the pudding, take a look at this article, a pretty amazing read: https://www.yahoo.com/news/us-seizes-pot-growing-houses-191400069.html
Appraisal Waivers
We are seeing more and more appraisal waivers on files. What is an appraisal waive, well when we input all of the borrowers application into the Underwriting System, whether it is Fannie Mae or Freddie Mac, we can get an appraisal waiver.
This means that the system has enough data on file, that they accept the value of the contract, and then DO NOT require an appraisal to be complete, pretty sweet!!!
All of our lenders are accepting appraisal waivers, totally awesome to tell borrowers that they don’t have to spend $550 on an appraisal, and this also means we can close a long in 10 days or LESS!
So, watch out for more and more appraisal waivers, but keep in mind, some lenders and credit unions do NOT accept the waivers and still charge the clients and make them do an appraisal.
Rule of thumb, if you have a solid client, with good credit, and are going conventional, ALWAYS ask the loan officer if there are eligible for an appraisal waiver!
Marketing Idea for Realtor
With only 1 week away from the Home Owner’s Exemption Deadline, I would recommend that you call all of your clients from 2017, who bought a new home, and ask them if they filed for their Home Owner’s Exemption. Sure most have, but it give you a good reason to follow up with them and also ask if they have any questions….and for referrals!
AND
Don't forget to check out these new web pages on my web site:
-Doctor/Physican loans, super cool: http://www.375loan.com/loan_products/doctor_s_loan/
-Information about Good Neighbor Next Door HUD Program: https://www.375loan.com/loan_products/good_neighbor_next_door/
Rates from long ago
I thought this was a pretty interesting piece that is going around the mortgage world, it is a rate sheet, from October 28, 1981, and it shows what interest rates were. A conventional rate with minimum 5% down payment, was 18.625%, and that was with 2 points!!! And a VA loan was 16% with 6 ½ points.
