What can cause mortgage rates to go up?

Federal Reserve Chairman Jerome Powell testified in front of the House Financial Service Committee on the State of the U.S economy.  Wages have increased 2.9% year over year in January (after a dismal 2.5% average in 2017) and as wage growth continues, businesses will need to fund this growth with higher product prices.  This will contribute to inflation.  Inflation hurts bond values and when bond prices go down, rates go up. 

The Mortgage Bankers Association (MBA) continues to predict that there will be four short term borrowing rate increases this year (what the government charges banks for overnight loans).  These rate changes will create ongoing volatility in mortgage rates.  The MBA has also predicted an average rate of 4.80% in the 4th quarter, 2018.

According to S&P Case Shiller, December saw home prices increasing and February consumer confidence hit the highest level since November, 2000.  Wage increases, higher product prices, home value increases and consumer confidence at a multi year high predict increasing mortgage rates. 

Here's where all of this information took me this morning:

This morning, I calculated an increase of $47/mo in house payment at a future 4.8% interest rate versus what we have available today.  My client this morning was wondering if buying now or waiting until the end of the year made the most sense considering they are locked into a rental contract until year end? 

Mortgages with Marty in Utah!
 

Something else to consider would be home value appreciation and a higher sales price of $15,600 (considering a 6% home value appreciation per year).

With higher rates and higher sales prices at year end, my client is now wondering if it makes sense to break their lease early and purchase now?

If you would like to review your options to purchase or refinance, give me a call at 801-540-5108. 

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Today's rates and what it means for January 2018?

Today's Rates Mortgage rates today have opened unchanged, as investors ignored this morning's financial reporting and continued to wait for Friday's Employment Report. The Institute For Supply Management released its ISM Manufacturing Index for December. The index tracks where production managers in the US feel their business is heading -- anything over 50 means business is increasing. Experts anticipate that the index will drop slightly from last month's 58.2 to 58.0. We got a rise, however, to 59.7. This could hurt rates if anyone pays attention to it -- the report is known to be volatile.

Manufacturing and production output (as well as the feeling business has about the future of the economy) is a predictor or WHEN inflation will start.  In my experience over the years, I have seen this increase in the ISM a preview of increasing rates (inflation). 

Purchase or Refinance:online application

Marty Qualls
801-540-5108
mqualls@primeres.com


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Rate forecast for January 2018

 

It's a new year, but a similar story from years past is on repeat. Mortgage rates are low, but not for long. Just about every analyst out there is calling for higher rates in the new year. The economy is breaking records, and a freshly minted tax code could induce economic expansion, but also inflation. All these factors are bad for mortgage rates. The good news, though, is that rates are surprisingly steady in the face of overarching changes like the new tax law. A golden opportunity still exists for those who are looking to buy or refinance a home in 2018.

 

Marty Qualls  801-540-5108 mqualls@primeres.com

Conforming Mortgage Loan Limits for 2018 increasing!

New Conforming Loan Limits in 2018

The Federal Housing Finance Agency (FHFA) announced new maximum loan limits effective January 1, 2018 for conforming loans.

In most of the U.S., the 2018 maximum conforming loan limit for one-unit properties will be $453,100, an increase from $424,100 in 2017. Higher loan limits will be in effect in higher-cost areas. New loan limits, however, will not take effect in 71 counties or county equivalents around the country.

What prompted this change? The Housing and Economic Recovery Act (HERA) requires that the baseline conforming loan limit be adjusted each year to reflect the change in the average U.S. home price.

On November 28, FHFA published its third quarter 2017 House Price Index report, which included estimates for the increase in the average U.S. home value over the previous four quarters. According to the report, house prices increased 6.8 percent, on average, between the third quarters of 2016 and 2017. Therefore, the baseline maximum conforming loan limit in 2018 will increase by the same percentage.

With home prices on the rise, the conforming loan limit increase opens up opportunities and helps keep home loans more affordable for more Americans.

If you'd like to learn more about these new loan limits or other loan products, please get in touch with me today. I'm happy to help!


801-540-5108

When are mortgage rates going to go up?

For the fourth straight month, the Rasmussen Reports Consumer Spending Update shows confidence in the economy trending upward - with an amazing 25-point overall increase in economic confidence and a 26-point increase in confidence in the direction of the economy since the 2016 presidential elections.

#1 wealth accumulator in America is to own real property!

What does this mean for interest rates?  Are they REALLY on the way up like everyone is talking about? 

Because the economic cycle predicts what will happen with interest rates relative to growth of wages, consumer confidence, Wholesale price escalation, etc., we have data which supports what will be happening in the future of the mortgage industry in 2017. 

Okay, so what is going to happen? 

As consumer confidence increases, our economy is expanding and workers (consumers) will buy more products, increasing demand which at a certain point, creates inflationary pressure (From our old days in Econ 101-Demand and Supply lecture). 

Mortgage bonds HATE inflation!  So, If bond prices go down, because they don't like inflation, rates go up.  Really, from my vantage point and from what I read from experts that are a whole lot smarter than I am, it's just a matter of time before the rates go up. 

Then you might be wondering by how much will the rates be increasing?  That's for another post. 

But for now? Our rates continue to hover at historic lows.  Great news for purchasing, building and refinancing.  

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Marty  801-540-5108

Home Values Increasing Along With Ownership

It was an exciting time for home ownership growth in 1992 as Bill Clinton became our 42nd President.  President Clinton PUSHED for homeownership in America!  It made sense for America because there would be less public assistance needed because there would be fewer divorces because that's the good thing about owning a home, it provides stability.  Statistics supported family formation AND home ownership to stop the drain on financial assitance. 
President Clinton knew his numbers. 
He knew his facts.
He knew that welfare and other public assistance costs associated with a single parent home would decrease, IF he could get what he wanted...
His goal was that 67% of American households would be home owners!

President Clinton came close to reaching his wishes of American homeownership as the housing industry BOOMED!  But it wasn't until June, 2004 when then President #43, George W Bush, reaped the rewards of a fully engaged economy working WITH mortgage rates and home ownership to create a country where...
69.2% of American Households owned a piece of the rock!

Agenda's change, the economy lags, goals for homeownership fall away and twelve years go by and on July 28, 2016 American household home ownership FELL to the lowest level since 1965...
62.9%.  :(  Boo! 

19 months later we now see the percentage of American Households owning their own home increasing, ever so slightly, but increasing every quarter!  :) Yay!
As we closed out 2016 and were on the verge of swearing in our 45th President, we now see...
63.24% of American's OWNING!  

These are households who are not renting or living with relatives and are enjoying the current home value appreciation of 3-7% annually (depending on the state you live in and/or the neighborhood you live in-YES, the neighborhood in UTAH makes a 3% difference in annual home value appreciation, just ask your Realtor!).

Marty Qualls
Professional Mortgage Services since 1991
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801-540-5108

When is the "perfect" time to lock your mortage rate?

Know How To Recognize A Good Mortgage Rate

Mortgage lenders are often asked if there is a best time of day, day of the week, or period of the year when a prospective borrower should lock in a mortgage interest rate. 

The truth is, no one can tell with any degree of accuracy what rates will do.
In fact, the best time to lock a mortgage is when the unexpected happens.

Case in point: Brexit
Recently, Britain voted to exit the European Union. “Brexit,” as it is known, caused an international "flight to quality," meaning investors worldwide sought perceived safe assets like U.S. mortgage bonds. Mortgage rates fell dramatically.
These unforeseen shifts are the best time to lock a mortgage. But what if you’re not fortunate enough to be rate shopping during a period of mortgage rate upheaval?
Then, you go into the process knowing how to recognize a good rate, and being ready to lock it in.

Locking The Perfect Rate Is Like Hitting A Moving Target

Purchasing a home could be the most impactful financial decision you will make in your life. You want to capitalize on the lowest possible rate.
In an ideal world, you would know when to pull the trigger on a rate lock with perfect timing -- assured in the knowledge that rates have hit their relative lowest point. But with interest rates subject to change daily and even hourly, choosing the right time to pull the trigger on a rate lock can be difficult.
This is a matter best discussed with experienced mortgage expert who can review your unique situation and suggest relevant options.

Condo Certs are difficult to obtain!

Is it any wonder nobody wants to originate a mortgage for a condo these days? Not only are there exceptionally stringent guidelines to adhere to as far as whether the project is eligible for financing, but it costs the donation of your left kidney to obtain the documents required to determine this. For a good while the trend has been for Property Management companies to steer us to an automated website in order to obtain the elusive condo questionnaire, Master Insurance Policy, Budget, CCRs, Litigation Information, and Bylaws. In order for one to gain access to these all important items, it is required to pay upwards of $250! After waiting a few days, time that can barely be spared, the documents are available to download, at which point you discover the Master Insurance Declaration Page is expired, or the project is non-warrantable, which sees your $250 go up in flames as your money was spent on a project that is not worthy of a regular loan.

It's fast and furious when deciding to Lock or Float

Mortgage Rates at 3.5 Percent, until Noon yesterday

 

Mortgage rates were widely available at 3.5 percent for some of the day yesterday.  At any other time from the middle of 2013 through the end of 2015, that's not something that very many people thought they'd be able to say (or read, or think!).   


As is often the case with financial markets, the biggest, quickest moves demand an occasional pause. The bounce prompted most lenders to revise rate sheets higher in the afternoon.

Still, it's a good wake-up call as to the potentially temporary nature of the long-term lows we have been enjoying.  Markets run hard.  Sometimes they can surprise you as to how hard and how fast they change.  And then at some point, the running is over, or worse: we run in the other direction.  

There's no telling whether that's the case with yesterdays intraday bounce, but it's always a risk that can factor into one's decision-making process when it comes to locking or floating.
 
                    Call me for help with your purchase or refinance mortgage questions. 
  

Grant money is available!

Purchasing a home in Clearfield city limits and also in all of Davis County just got a whole lot easier!  Grant money for 2015 (loan closing must happen before December 31, 2015) is currently available and on January 1, 2016, MORE grant money will be announced and available. 

Grant Money available!

Income limits are generous and the Grant money is forgiven (doesn't need to be paid back) after 7 years!  FREE money to be used for down payment or closing costs in conjunction with any fixed rate mortgage loan program!

I have the Grant application forms, reserve your Grant money today by calling me today!

Rate Lock recommendation continues after Fed announcement

Lock!

Rates moved up quickly today causing lenders to increase rates by .125%-.25% (FHA and Conventional loans respectively).  Much of the information released today was misleading because what happens on Thursday and Friday isn't reflected in their reports.



For options and rates call me.  The move up could be something temporary and as the markets settle, December's most likely target identified by the Fed yesterday could be the new line in the sand and best rates in 28 weeks could still be available for awhile longer.  :)

Here's the link to the excellent article to explain more about why it's important to have a close relationship with your loan originator who can call you BEFORE rates go up and you can lock your rate BEFORE the markets change: Reports are too slow, too late