Rates
Well we actually say rates improve just a little this week, Government pricing is still in the 4.25% range, but conventional has fallen from 4.875 (we actually almost hit that 5.00% mark) down to 4.50% this week.
So what was up, well a majority of it was Syria and war mongering again, with worries that if we attach Syria, it will draw Iran and Russia into the mix.
Next, these is some chatter that maybe the Fed will not remove the QE3 on September 18th, and may stall it into late this year or 2014.
No matter what, the Fed is going to remove their pushing of rates down, so the risk of interest rates going higher is just stalled for a month or town.
This week economic numbers:
-Whole sale inventories were down, indication that wholesalers are not stocking up.
-Retail sales, 0.2% vs est of 0.3, consumers starting to slow down, big concern.
-Michigan Consumer Sentiment, 76.8 vs. est 81.7, big drop, reading above 50 is positive.
So kind of some negative economic news this week, along with Syria drove rates down a little, but should have been more if we didn’t have the Federal Reserve meeting on the 18th, we will defiantly be holding our breath when that report comes out.
I suspect rates will stay in a holding pattern for the next few days, until the 18th, when all heck will break loose. If Fed announces they are going to stop purchasing bonds, watch out, I suspect we will see a .25 point jump in rates, depending upon when they are going to start. But if they are going to hold steady, then I think we will see more of the same and all eyes will focus on Syria 1st and then economic reports 2nd.
So, I am still in a locking mode, too much risk coming on the 18th.
Word for the Month
Well if you haven’t head of this new catch phrase, you will soon:
Surfacing Homeowners: a previous underwater homeowner whose home is not equal to or just slightly more than what they owe.
QM and QRM
I am truly surprise that more Real Estate Offices have not informed their agents about QM and QRM, this is HUGE, HUGE, we are talking about a whole new way to underwriter homebuyers.
AND this will result in less people getting qualified.
Last week I spoke about types of loans no longer eligible.
This week we talk about Reserves: Buyers will now need to have “X” amount of assets for mortgage reserves, the “X” has not been determined, but the number that has been going around is 2.5 months.
This will be in addition to downpayment, and whatever the borrower has to pay in closing costs.
So if you have a 780 FICO score buyer, putting 3.5% down, perfect on job, low debt, but does not have 2.5 months of reserves, DENIED!
I can’t stress it enough; January 14, 2013 will be a day that changes our industry as we know it.
P.S. no grandfather clause in this, person may be qualified on January 13th for a loan, but come January 14th they may NOT.