Mortgage rates & the election
Mortgage rates raised almost .375 this week along, all based on the election of Trump. So what the heck happened, well to put it simply, everyone got it wrong.
All of the poles, talking heads, experts, Wall Street and media all had Clinton winning the election. And they had her winning since the beginning of the year. So traders all had their bets that it would be status quo, with GDP hanging around 2.9%, stock market hanging around the 18,000 mark, unemployment in the 4.9% range, and bonds moving up, ever so slightly.
Well they were WRONG, and the consequences were pretty darn dramatic.
The Stock market rallied to all time high, Bond Market sold off, in a HUGE WAY, why you might ask, well put simple, Trump is a businessman 1st and foremost, and it is expected with him as President and the Republicans controlling both Houses, things are going to get done, and the economy is expected to significantly improve.
As you can see, it was red for the bond market, which is obviously bad. We say the Fannie Mae bond, which is directly affecting mortgages sell off 1.79 BPS in 2 days. This is the largest 2 day drop in I don’t know how long, probably since 2009.
This drop in pricing, pushed Yields up, thus increasing interest rates by almost .375 of a point. We are seeing some signs of conventional running in the VERY high 3’s, but I suspect next week, we will see the 4’s. Government bonds, for FHA/VA/RD have held pretty steady in the low to mid 3’s still, but I suspect we will see them creep above 3.50% next week as well.
There are still a couple it items that could bring them back down a little, like Italy and Greece’s financial situation. And believe it or not, we could actually see the expected Federal Reserve rate increase in December bring rates DOWN, by cooling off the market.
Here is how I see it: If you are closing in the next 30-45 days, lock them next week, let’s see if we get a bounce off the bottom a little.
If you are closing in the next 90 days, watch those rates closely, you might get some benefit from the Federal Reserve.
If you are closing 90+ days, crap shoot, crystal ball is way too fuzzy.
But in this market, I have already have 1 lender that shut off 180 day locks, because of the uncertainty.
More news from the CFPB:
What is your companies policy on providing interpreters when doing purchase contracts. Say you are representing a Hispanic couple that only speak very little English, or Bosnian, or Russian. Can you provide a RE-21 in one of these languages…Might want to check on that, because the CFPB is.
FHA & Condo Rules:
FHA is trying to loosen up guidelines on Condos, and recently did so:
-Owner Occupied ratio have been dropped from 50% to 35%.
BUT… they will require that the Condo Association now have 20% financial reserves, up from 10%, and no more thatn 10% of the units can be in arrears on their HOA dues. And to show this, the HOA must provide 3 years of “acceptable” financial documents, i.e. done by a CPA and certified.
Pot and Idaho
Idaho is surrounded by 6 states, 5 of those states now allow for the growth and sale of recreational Marijuana. So you can grow pot in say Nevada, each pound, as of last week was valued at $1393.00.
It takes about 6 plants to produce 1 pound of pot, average of 12-16 weeks for harvest.
Follow me here….
If you were to purchase a $150,000 home, and needed 20% down to avoid MI, you would need $30,000.
Or you would need 22 pounds of pot x 6 plants or 132 plants.
You need approximate 100 square feet to grow that many plants.
Now I didn’t take into account overhead and start up costs, but if you are harvesting every 16 weeks, you can get 3 harvest in a 52 week period.
Thus after 52 weeks, your Gross profit will be $91,938.00.
AND YOU CAN NOT USE ONE RED CENT OF THAT MONEY TO PURCHASE A HOME IN IDAHO!!!!!!!!!!!
Reason for this little math/agriculture lesson is to give you all a heads up that lenders are going to be asking more and more for source and seasoning of assets and verifying that funds are coming from legitimate sources. And no I am not agreeing or disagreeing with the laws legalizing pot…but…only 132 plants every 16 weeks…hmmmmmmm