Rates
WOW a crazy week for mortgage rates and how we are now starting to see a true trend in rates going up.
Rates last week were all about economic news, and the hangover continues this week from US Unemployment numbers. The US added 271,000 new jobs on an expectation of only adding 180,000. This, and the fact that September was revised up from 137,000 to 142,000 caused the stock market AND the bond market to sell off. But what added additional fuel to the fire was wages.
Wage inflation has pretty much been the crux of what the Federal Reserve wanted to see in order to starting raising the Fed Funds Rate. And October didn’t disappoint, wages increased by 0.4%, up from an estimated 0.2%.
With wages AND unemployment improving, there is really nothing that is going to prevent the Federal Reserve from starting to increase interest rates.
This charge is a pretty good indicator on what the Federal Reserve has done in the past:
And if you go back quite a few blogs, we mentioned that when wage inflation starts to increase, so will rates.
ADP private payroll also increased by 182,000 vs est. of 180,000.
Federal Reserve is set to meet 12/15 – 12/16, with decision on 16th. The bet right now is for a .25 increase in the Fed Funds Rate. Keep in mind that the Fed Fund rate doesn’t have a direct correlation to mortgage rates, so if the Fed goes up .25, that doesn’t mean mortgage rates will go up .25. Mortgage rates could actually go up further.
You can see by the charge below that mortgage rates have actually gone up by about .25 to .375 of a point in 13 days.
Not pretty, lock, lock, lock.
FHA news
FHA announced that their pool of money that they have to keep aside, may actually reach their Congressional Mandate 2% by the end of the year.
Now we are starting to hear some whispers that FHA should reduce their MI from the current .85% per month to .55%, where it was back before the Great Recession. Which would save roughly $30 per $100,000 borrowed.
There is also some chatter that FHA could get rid of the "lifetime" requirement for the mortgage insurance, I don't belive that.
Stay Tuned!
Also in FHA news…
Appraiser are now required to do more and more inspections on homes going FHA financing, and thus, more and more of the FHA appraisers are asking for more money to complete the home inspection. We are starting to see FHA appraisal to come in at the $650 to $700 range…OUCH!
In speaking with a FHA appraiser, they feel slighted, because FHA makes them inspect lots more items, and certify them. Appraiser feel that not only are they Appraisers, but home inspectors as well. And the reports are taking quite a bit more time to inspect and write up.
So be on the look out, and prepare buyers and sellers that appraisals are getting really EXPENSIVE
Speaking of Apprisal, don't forget I have a web site page dedicated on how to overcome appraisals that come in too low: http://www.375loan.com/resources/appraisal_reconsideration/