Rates and 2014
Rates will probably close 2013 at their 2nd highest levels, not too much happening this week to affect rates but the economic numbers that did come in all were positive for the economy:
-Personal spending up 0.5%, in line with estimates.
-Consumer Sentiment at 82.5, high number, good for economy.
-Durable goods up 3.5% vs est. of 2.0, very good for economy.
-New home sales 464K vs est. of 445K.
-Jobless claims 338K vs 345K
So this week we saw all economic news good for the economy, but rates were pretty much flat. To be expected for the last week of the year, not many traders working.
Next week is also pretty light, so it is a good time to lock.
Now the BIG question, my all-important predictions for 2014:
-Home prices will stabilize, with only modest increases in the valley, I would say somewhere between 5-8%
-Rates, oh boy, this is a tough one, but I suspect we will see 5% in the next 2-3 months. And if the Fed keeps drawing down their QE3 all year, I suspect Mid 5’s by late spring and early summer, and high 5’s by the end of the year.
As I have stated before, 6% is not a bad rate. If the Fed continues with their set amount, they will be out of the business in 9 months, which is September. Once they are out of the market, rates will flow naturally, and that is when we will be in the 6% range.
But I suspect that the Fed will hold back 1 or 2 months, which will put us into 2015.
6% is not a bad rate.
-New home construction, we will continue to see weakness here, as home prices continue to rise and more and more people are able to sell. We will see the builders in the “move up” category do pretty well, while the 1st Time Home Buyer Builder will see a dramatic slowdown due to higher rates, had tougher lending guidelines.
-Existing home sales, here is where I see the spike and more and more owners “surface” from their underwater prices. These people are sick of their home, which they have been “Stuck” in for the last 5 years. Here is where we will see the biggest jump. Thus builders of “move up” homes will take advantage.
-Lending guidelines, it is definitely going to be significantly tougher to get loans for 1st time home buyers or people with challenges. But when a need is created, it is filled. I foresee the rise of Sub-Prime mortgages, and I also see lenders releasing HELOC’s and 2nd mortgage more and more.
G-Fee update
Well the government has decided to delay the G-Fee increase, until Rep. Watt gets into office and takes over the HFA.
This fee would of increased rates anywhere from .125 to .25 in March. So good for him. This fee was specifically to increase profit for Fannie and Freddie, which by my last account made BILLIONS in profit last quarter. Sometimes capitalism really sucks.
HUD Condo Approval
This come up about each and every quarter. In order for a Condo to get any type of Government Financing, i.e. FHA, VA or RD. The Condo association needs to be HUD approved. Without HUD approval, the loan is a NO GO.
You can look up to see if the Condo is HUD approved by going to the link below, easy to use, and will save you quite a bit of head ach down the road:
https://entp.hud.gov/idapp/html/condlook.cfm
If the Condo is not approved, it takes about 3 months and lots of paperwork.
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