Mortgage Rates
It has been a very volatile 10 days for mortgage rates, with big swings happening, mainly due to speculation to what the Federal Reserve will do next week.
The betting man is forecasting a .25 increase in the Federal Reserve Rate, which means that the rate will be in the .50% range. If this happens we anticipate rates to keep their slow but steady rise. But what we are all waiting for is what the comments from the Fed will be. Any indication that the Federal Reserve will accelerate rate increases will cause chaos in the markets.
The talking head I am believing is .25 next week, nothing for the rest of the year, letting market’s digest, and then solid rate increased in 2017. Or maybe a small increase in December, say .125%.
Since the 6th, we have seen rates worsen almost .25%, taking 30 year conventional into the high 3’s and governments ticking into the mid 3’s.
I would totally be locking loans as it comes available, too much risk to float right now.
Trending Data
Well it is here, Fannie and Freddie will be making determination of lending based on Trending Data on credit reports. This will go into affect the weekend on September 25. And why are they doing this, well here is their data:
- A credit card holder who never exceeds their limit are 75% less likely to become delinquent on their mortgage, compared to a person who exceeds their credit limit in the last 12 months.
- A credit card holder who pays off their credit card every month is 60% less likely to become delinquent on their mortgage, compare to a person who only makes the minimum payments.
So what does this mean, well 2 examples.
Sponge Bob, has a 750 FICO scores, but his credit cards are maxed or atleast >80% of the limit and he only makes minimum monthly payments each month. He could be denied a loan.
Sandy Cheeks, has a 680 FICO score, only charges her credit cards a couple times a month, but pays them off each month, even though she might have a lower FICO score, she will be more likely to get a home loan than Sponge Bob.
Below is some actual examples of Trending Data with my comments on them.
A Good Trending Data Report:
A Bad Trending Data Report
How will this affect home buyers, well less people are going to get conventional loans, and more and more people will need to go FHA. Or people wanting to go conventional will have to have larger down payments.
Don’t forget I made web pages on some GREAT topics check the out:
House Flipping rules: Link Here
How to really screw up a loan: Link Here
What happens if appraisal comes in low: Link Here
Properly Gifting for Down Payment: Link Here