Rates
Another wild week for rates, lots of bouncing around, but overall, rates again ended up for the week.
Lots of US data this week, lets hit the highlights:
-April New housing starts 1.135M vs est. of 1.019M, WOW nice number.
-Building permits 1.143M vs est. of 1.065M, another HUGE number!
-Fed meet this week, although we knew they wouldn’t come out with a rate increase, and looks like June has been ruled out, but September is now in play.
-April existing home sales 5.04M vs est. of 5.24M, a miss, but really it is still 5 MILLION!
-April CPI or consumer inflation, 0.2% vs est of 0.1%, Fed is really wanting inflation, but if it start to come back too strong, Fed will increase rates faster.
-Weekly jobless claims 274K vs est. of 270K, still below magical 300K. And FYI, last weeks # of 264K was the 2nd lowest number since 1973.
All of the numbers this week all point to the Federal Reserve starting to increase their Fed Funds rate sooner rather than later, and a couple more good economic reports, especially employment, and we will definitely see it happening in late 3rd quarter or early 4th.
No new out of Russia or Greece, although it seems Greece is on a downward spiral to destruction, but most traders feel that it is a foregone conclusion and most traders have already positioned themselves for the default…i.e. when it does happen, probably won’t affect rates too much.
No gambling, lock them as soon as you can!
Student loan changes
Back in March of this year Fannie/Freddie came out and changed guidelines on Student Loans, stating that no matter if they are in deferment or forbearance, we have to count the student loans as a monthly debt.
Well FHA announced that starting in September, they will also now count all student loans towards the monthly debt.
This means for that Borrower how has $50,000 in student loan current, and doesn’t have to start repaying them for, say 2 years, right now we don’t have to count that debt.
But beginning September, we will have to apply a monthly payment of 2% towards their monthly debt, or 2% of $50K = $1000.00.
This is a pretty significant change.
Moral of this story is, if you have a FHA borrower, with student loans, and they qualify with the deferment/forbearance close their home BEFORE September!
Mortgage Interest Deduction
Once again, Congress is looking at scaling back or removing the mortgage interest deduction.
Now there are going to be lots of people opposed to this, it is one of the largest selling features in our industry.
But in reality, very few people, whose income is <$100,000 take that deduction, and only 77% of people making over $100K take it as well.
I am sure that this is going to get quite a bit more play in the coming months, and will probably be sent to Congress before the next Presidential election in 2016.
Have a GREAT Memorial Day weekend, and remember those who served and thank those who are currently serving!