Rates
We had a nice, albeit it, small improvement last week on rates, mainly caused by some chaos happening over in Europe and oil falling.
All of the news out of the US as GREAT:
Core inflation was at 2.2%, vs est. of 2.3%
New home starts 1.047M vs est of 1.175M, close enough.
Building permits 1.225M vs est. of 1.175M
Weekly jobless claims 260,000 vs est. of 250,000, still way below the magic 300K
Existing home sales 5.47M vs est. of 5.35M, very nice numbers.
After a week of rates going up, we say a little simmering, as expected. We will probably see a slow and gradually increase of rates, with small hiccups of dropping, up until the Fed’s expected announcement in December of raising the Fed Funds rate.
I am still in a locking mode, might get a little lucky here and there with a rate drop hiccup, but the trending lines are all pointing to rates increasing….unless….
Watch for that December 4th Italy vote, if the 3rd largest economy in the EU votes to exit the EU, we will probably see the collapse of the EU, which means the US will get flooded with money from Europe to buy bonds, and thus we could see US bonds, i.e. mortgage backed securities, test all time lows.
The Big Election Question
Lots of people have been asking me about what will happen if one of the two turds get elected as President. Well as of today, unless WikiLeaks can pull something out of their hat, it is going to be a Clinton in office.
We do not anticipate any changes in the rate policy by the Federal Reserve, whether it is Clinton or Trump. What do anticipate is with a Clinton Administration and her right hand man…er woman…Senator Elizabeth Warren, we expect a significant increase in government regulation. Sen. Warren was the architect of the CFPB. With more government regulation, comes more expense. More expense will be passed down to the borrowers in the way of higher fees and interest rates.
We will know more once Clinton announces her cabinet, especially Sec. of Treasury and Chairman of the SEC.
New UW guidelines for investors!
Fannie last week announced that they will allow investors to put down as little as 15% for investment properties. Now this will carry mortgage insurance, but a small amount, and you have to have a 680 FICO score, but pretty good news, taking the minimum of 20% to now 15% down payment requirement.
Personal Items on Purchase and Sales Agreement.
Fannie & Freddie in September re-iterated their 2010 rule, if there is personal items on the contract, we (loan officer/Realtor) need to assign a value for those items. If the value of those items exceed $500, this could be look upon as an enticement, and the value of the home could be reduced by that amount.
I would highly recommend that you get with your brokers and have them go through personal property rules and take care of any personal property outside of the purchase and sales agreement via a private contract.