Rates
Well Happy New Year! And Happy it is!
Rates have seen some of their best improvements in 2014 last week, and have rolled into 2015.
Now we have to be a little cautious, because rates improved on very limited trading, but have kept that trading into today, where once again rates have improved.
We are seeing Conventional rates into the high 3’s and FHA/VA/RD starting to tick into the low 3’s
Now will we see Government rates tick into the High 2’s, yep that is right, HIGH 2’s. It will take plenty of pressure, but as of right now, I am not going to say no way.
Last week news:
-Consumer Confidence dropped to 92.6 vs est. of 93.0, not a major drop.
-Jobless claims last week 298,000 vs est. 290,000, still below that magical 300K mark.
-Chicago PMI 58.3 vs est. of 60.1, key reading, still above 50 mark, but weaker.
-Pending home sales +0.8% vs est. +0.5%
-Construction spending -0.3% vs est. 0.3%, traders were concern about this number
-ISM manufacturing 55.5 vs. est. of 57.6, another huge report, reporting less than stellar numbers.
So the US numbers were a mix bag, but the ISM was of concern and traders took advantage of that and sold off stocks on Friday and bought bonds.
Today, we are still seeing some trading positive for bonds, even though there is really no economic news coming out.
But we do have GREECE! Ah yes, the Greek Tragedy is coming up again. It seems the Greeks are going to vote on a new Prime Minister, and it is expected that the new PM is going to give the European Union the middle finger, So why do we really care about a country so small, well…
-If Greece pulls out of the EU, will this weaken the EU and cause more countries to get out of it?
-What does this say about the Euro, their currency, is it flawed?
-How about all the $360Billion bailout that Greece took, will they default?
-Will Italy, Spain, Portugal, Ireland follow suit?
These questions have caused, and will continue to cause European investor to place their money into the US, and specifically into US Bonds, thus reducing rates even further.
I think this is going to be the biggest story for the next 60-90 days; the election is towards the end of this month.
Then Oil is going to be a HUGE impact on rates as well, with oil starting to tip down to the $40’s range, this is going to put huge pressure on US oil companies, and we will/are starting to see layoffs. Which will put pressure on US economy?
The first wave we will see is in weekly jobless claims, current running under 300K.
I am totally neutral to floating rates right now, I feel that the Greek elections are going to put more pressure on the EU and more money is going to flood the US bond market if Greece elects a PM that doesn’t want to stay in the EU.
Other items this week:
-US unemployment numbers on Friday.
-Federal Meeting Notes on Wednesday.
Say Good Bye to the GFE and the HUD-1
With less than 8 months before the new LE (Lending Estimate) replaces the GFE/TIL and the CD (Closing Disclosure) replaces the HUD-1, be on the lookout for LOTS of information coming your way. I will definitely be updated you with information and a CE training class in the near future.
We will probably wait until March for the training class, the CFPB still could tweak some items and lenders are having LOTS of Questions!!!
But start referring to “Closing” and “Consummation”.
Lending Guidelines Changes to Remember:
-Most lenders will now do FHA/VA/RD loans down to 600 FICO Scores.
-Some lenders will do FHA/VA/RD down to 530 FICO Scores.
-You still need to be 3 years out of short sale and foreclosures.
-Almost ALL lenders will do conventional financing to 97%
-Idaho Housing will do Conventional/FHA/VA/RD at 100% with down payment assistance, down to 620 FICO scores.
-As of 1/1/2015, FHA flip rules are back, seller has to be on the title for 90+1 days.
FHA pressure
Congress, along with a whole alphabet soup of Associations is putting HUGE pressure on FHA & HUD to change the Mortgage Insurance requirements on FHA loans.
I would suspect that we will see some sort of news from FHA later in the year with regards to reducing the FHA upfront MI and the monthly MI.