Rates
What a WILD 10 days, rates fell to 18 month lows last week, and then this week gave back some of it, we are still an 2014 lows, with Conventional rates in the High 3’s and Government rates in the Mid 3’s, off from low 3’s of last week. We actually locked 1 FHA loan last week at 3.25%, no fees, no points!
Monday and Tuesday this week, rates continued to fall, whereas Wednesday and Thursday they rose, and today we are back to Wednesday’s Close.
So what happened this week, let’s talk about the US first:
-Factory orders -0.7% vs est. of -0.4%, not a great number for the US economy.
-ISM service, or 75% of US economy 56.2 vs est. of 58.5, remember anything over 50 is expansion in the US economy, so still a positive number.
-Thursday saw ADP private payroll in at 241,000 vs est. of 226,000 and last month was revised up 19K. Good numbers, rates went up on these numbers.
-Weekly Jobless claims, still below 300K @ 294K.
-And the biggy for the month, unemployment numbers, 252,000 new jobs vs est. 240,000. And the larger news was that November HUGE number was actually revised up from 321,000 to 353,000.
So if you take out the ISM #, all the numbers this week were pretty good, and should of caused rates to climb even more, but then lets look overseas.
Still lots of concern about Greece, and if they will stay in the EU, the consensus is they will not, which will cause them to default on a few Billion Dollars of debt, no direct affect to the US, but lots of shock to Europe.
I think this is the #1 story right now that is going to affect our mortgage rates, if they do get out of the EU and default, watch for the 10 year bond to drop, from what some people say, into the 1.50% range (Currently today at 1.96%) which would cause Conventional rates to drop into the Mid 3’s and Government Rates to drop into the LOW 3’s.
I also watch a talking head today, saying that oil is going to continue to fall, thus causing increased unemployment in the US and with the US dollar strengthening, we could see EU inventory shuffle their money into US treasuries.
If this happens, he indicates that the US 10 year could fall into the 1.00% range, and that would put 30 Year Mortgage rates into the High to Mid 2’s and believe it or not, the Government Rates into the LOW 2’s!!!!!
He also anticipate home prices to be flat, if not decline this year, but not by much!
I am neutral to maybe gambling a little bit on floating, especially with the Greece election going to happen at the end of the month.
FHA Big Announcement
Obama announced yesterday that FHA will be dropping their monthly MI from 1.35% to .85% sometime “by the end of January”.
This would be HUGE! It means on a $100,000 loan amount, the monthly MI would fall from $112.50 per month to $70.83 per month, a saving of $41.67, each month!!!!
Now what we don’t know:
1-When it will go into effect?
2-Will they grandfather in say people who got mortgage since 1/1/2015?
3-How this will affect refinances?
My gut feeling, based on what they have done in the past is:
-Affect 2/1/2015
-They will not grandfather in anyone.
-If you refinance they will give you the lower rate.
So people who already have a FHA case number, you will be stuck with the higher MI, sorry.
Most lenders will hold off ordering FHA case numbers until they have to order the appraisal, so if you have a transaction already going on, and you haven’t ordered the appraisal or FHA case number, HOLD OFF UNTIL THE VERY LAST MOMENT!!!
Stay tuned, more info I am sure is going to be coming out!!
Lead Generator
It is time, THIS WEEK, to send all of your clients you closed a home for in 2014 a copy of their HUD-1, which you HAVE TO keep a copy of for 7 years, for their 2014 Tax return.
Remind them that certain items may be tax deductible and that they need to consult their CPA.
And then thank them again, and ASK FOR A REFERRAL!!!