Rates
As expected, rates were not very pretty this week, as we are testing new highs for mortgage rates.
Rates this week was all about economic data, specifically Jobs Data:
- PCE or Personal Consumption Expenditures, a gauge of inflation, was tame.
- ADP Employment was HUGE, showing an increase in the private sector of 227,000 new jobs.
- Private Sector wages and salaries rose 3.1%
- Initial Jobless Claims came in 214,000
- Government Jobs report came in at 250,000 new jobs>
- Unemployment rate stable at 3.7% (lowest number in 50 years)
- Year over Year wage increase from 2.8% to 3.1%, largest jump in 9+ years.
- Weekly earnings up 0.5%.
What did all of this data show, employment in the US is VERY strong and employers are having to increase wages in order to find workers. This is VERY bad for mortgage bonds and thus rates.
With wages increasing, production costs are increasing, and companies either need to eat the cost or increase the price of their item, and that is inflation. As I have taught, inflation is the worst thing for mortgage bonds.
Couple of things about the chart this week. We need to watch that 99.713 Line, I indicated it as the 5.00% mark, if we trade below this line, say for a couple of day, the next floor is WAY, WAY below this line, into the 5.625% interest rate range….ouch.
Underwriting Guidelines tightening up
On December 8th, Fannie Mae is going to tighten up Debt to Income (DTI) Ratio guidelines for all loans. Although we don’t know exactly what is going to happen, it is expected that anyone over a 44.99% will need additional reserves and/or stronger FICO scores in order to get approved. We won’t know exactly what they have tweaked until it comes out.
Some take a way for Realtors:
- If you have a borrower who is not pre-approved and/or the lender has not run their file in Fannie Mae’s system, GET IT DONE prior to December 7th. If a file is ran in Fannie’s system, that finding, is good for 90 days.
- This could be the beginning of some lending tightening for Prime borrowers. We are not seeing a rise in delinquencies at this time, but we are seeing more and more people “squeezed” into loans, and we think Fannie is front running potential issues.
This might be a good time to re-contact some of your fence post sitters, getting splinters, and say NOW IS THE TIME!
Keep in mind, we still have FHA & VA down to 500 FICO scores, and Non-Prime Loans, which could become more prevalent as Conventional starts to tighten up.
Manufactured Homes making a come back!
With Fannie tightening up on Conventional loans, they are loosening up on Manufacture Homes. We now have conventional financing on Manufactured Homes up to 97%. AND if we go through Idaho Housing, there is even down payment assistance!!!
Realtor take a way: Don’t be afraid of listing or helping buyer’s with Manufactured Homes.
Couple of other Notes about mannies:
- We have FHA, VA, and Conventional One Time Close Loans, so if someone want to put a mannie on a piece of land in Parma, we can help!
- VA does, I repeat, does allow for a 2nd more manufacture home, they are the only type of lending that does.
You can find a bunch more information and resources on a whole web page I have set up just for manufactured homes. Manufacture Homes Information Link Here