Caliber Home Loans out of Irving, Texas wants to close your mortgage faster than anyone else, and thinks it can accomplish the feat in less than 10 days. Yes, you heard that right. Less than 10 days.
So just how does Caliber plan to reduce the typical mortgage funding timeline of 30-45 days down to less than 10 days?
Finance Your New Home in Just 10 Days?
With their new “Ultimate Homebuying Experience” of course, which they tout as a “streamlined application, approval and closing experience.”
To start, the full application will take “only minutes,” at which point a Caliber loan officer and/or account executive will guide through the rest of the loan process.
In short, Caliber will rely on electronic verification, a growing trend in the mortgage world that has yet to be fully embraced by all lenders. Think Quicken’s Rocket Mortgage.
This includes verifying key income, asset, and employment information without having to send paperwork back and forth with a fax machine.
Instead, borrowers can grant the lender access to these documents using third-party verification tools and/or services to greatly speed up the process.
As a result, the loan officer can order all the documents it needs, instead of waiting on the borrower to get around to sending them.
However, borrowers must sign off to provide access, something that could still prove elusive if they go on vacation during the loan process (this is a common, hilarious problem in the mortgage industry).
First and foremost, this only applies to home purchase loans, not refinancing. Refis take longer and aren’t as time-sensitive. They often also include a 3-day right of rescission, making it difficult (next to impossible) to close them in a week and change.
But if you have a purchase you must close ASAP, this program could be just the ticket. And I’d reckon it has become more and more important to close quickly, what with all the competition in the housing market today.
Perhaps you can sweeten your financing offer by letting them know you plan to close in a couple weeks as opposed to a month. You’ll just need to make sure things actually work out.
One thing I’ll caution with programs like this is that it really depends on the loan file.
Caliber notes that “an approval and closing that can take less than 10 days on eligible mortgages,” but doesn’t seem to guarantee it.
Additionally, they refer to a so-called “eligible mortgage,” which is probably a really clean file that can be pushed through without any major delays.
For the record, this program can be utilized with conventional, government (FHA/USDA/VA), and Caliber portfolio loans, which is a nice touch.
That means you’re not limited in your financing options, despite the extremely fast turn times.
But again, you have to be a pristine borrower to close as quick as they claim they can close.
If you’re self-employed and have a complicated business structure, or questionable credit that requires lots of explaining, or anything else that’s a huge red flag, you probably won’t close in 10 days.
Caliber Home Loans is the 12th largest mortgage lender in the nation and growing. They increased origination volume 106% from 2014 to 2015.
Well, were about halfway through the year and mortgage rates seem to have settled in around the high 6% range.
While averages vary based on the source, Freddie Mac last posted a rate of 6.67% for the popular 30-year fixed.
This rate began the year 2023 around 6.50% and has yo-yoed a bit since, falling as low as 6.09% and climbing as high as 6.79%.
So it appears mortgage rates have become somewhat range-bound, hovering around double what they were in early 2022 (3.25%).
The question is when will they drop again? Or could they even rise higher from here?
New Forecasts Put Mortgage Rates Back in the 5s by 2024
First the good news. Several economic forecasts predict that 30-year fixed mortgage rates will return to the 5s.
The bad news is this might not happen until the second half of 2024. In other words, another full year of rates in the high 6s could be in store.
Fannie Mae’s June 2023 Housing Forecast expects the 30-year fixed to peak at 6.6% in the third quarter of 2023, then fall to 6.3% in Q4.
Thereafter, rates are forecast to trickle down to 6.1% in Q1 2024, 5.9% a quarter later, and eventually 5.6% by year-end.
So that’s something to be excited about if you’re in search of a lower mortgage rate.
Similarly, Goldman Sachs pegs the 30-year fixed at 5.9% in 2024, with a little bit of relief coming in the second half of 2023.
But not a whole lot – we’re talking an average rate of 6.6% in Q3 and 6.4% in Q4, compared to 6.7% in the second quarter of this year.
Then there’s the latest forecast from Wells Fargo, which puts the conventional 30-year fixed at 5.81% in 2024.
That’s down from an average of 6.57% in 2023 and represents about a .75% improvement. It would also push the average mortgage rate closer to the 2021 average of 5.38%.
Higher Mortgage Rates for Longer, But Some Relief Is in Sight
It seems most economists are now on the same page regarding mortgage rates.
For a while, there was a real fear we could push 8% and even double-digits, but there appears to be more clarity now.
Perhaps the Fed is close to wrapping up its many rate hikes, which can help guide long term rates like mortgages lower.
If the worst is truly behind us, with respect to inflation, those forecasts might come to fruition.
But as noted, it could take time. And even then, we’re still looking at an average mortgage rate that is about double recent lows.
Per Wells Fargo economists Charlie Dougherty and Patrick Barley, “Until inflation is fully tamped down, however, the Fed is likely to keep a restrictive policy stance and mortgage rates will likely remain elevated.”
They add that the recent widening of mortgage rate spreads “adds another layer of uncertainty to the outlook for mortgage rates.”
Still, after staring at 7% mortgage rates for a year or so, an interest rate in the mid-5% range won’t look so bad, right?
It could even allow recent home buyers to refinance their mortgages to a lower rate. And make home buying a bit more affordable for those yet to dive in.
How to Navigate Mortgage Rates in the Meantime
If there’s an expectation that mortgage rates will gradually improve over the next 12 months, here are a few things to consider.
One, paying points. It doesn’t make sense to pay discount points if you expect to refinance in the near future. The same is true for those who expect to sell in the short term.
Simply put, you pay a lot of money upfront for monthly savings spread out through the loan term.
If you only keep the loan for a year or less, you won’t actually realize those savings. But you’ll still pay for them. And there aren’t any refunds on points.
A better alternative, assuming mortgage rates go down in 2024, is a temporary buydown.
These provide payment relief for the first couple years of the loan before reverting to the full note rate.
In that sense, you can actually get the full benefit if you keep the loan for only 12-24 months.
Then you can refinance to a lower rate at or around the time the interest rate is due to move higher.
Another thing to look at is mortgage type. While adjustable-rate mortgages aren’t widely available at the moment, or heavily discounted, a 5/1 ARM or 7/1 ARM could potentially save you money.
These loan products are fixed for five or seven years, respectively, before the first adjustment. So if you expect lower mortgage rates in 2024, you could use one until rates come back down.
As an example, Wells Fargo is advertising a 7/6 ARM for 6.375% and a 30-year fixed for 6.625%.
Not a huge spread between the two products, but savings nonetheless.
On a $600,000 home loan, we’re talking about $100 in savings per month. Keep it for five years and it’s $6,000.
Ideally, you shop around and find an even bigger discount.
Lastly, it could make sense to take on a slightly higher rate in exchange for no closing costs, if offered.
The same argument applies. If you only expect to keep the mortgage for a short period of time, you won’t want to pay a lot to obtain it.
In short, the mortgage rate doesn’t carry as much weight if it’s going to be short-lived anyway.
So be sure to explore all your options when shopping for home loan. Consider interest rates, closing costs, loan types, temporary buydowns, and more.
And be prepared to refinance in 2024 if mortgage rates do indeed fall by nearly 1% from current levels.
Mortgage rates are moving higher thanks to some strong economic data over the past few days. If you’re considering buying a home or refinancing your current mortgage, we strongly recommend that you take action sooner rather than later to avoid the risk of locking in a higher rate. Read on for more details.
Where are mortgage rates going?
Rates spike in Freddie Mac PMMS
A sell-off in the bond market this week has put some upward pressure on mortgage rates.
This is evident in today’s Freddie Mac Primary Mortgage Market Survey, which has the average rate on a 30-year fixed up to a seven-year high. Here are the numbers:
The average rate on a 30-year fixed rate mortgage moved up six basis points to 4.61% (0.4 points)
The average rate on a 15-year fixed rate mortgage rose seven basis points to 4.08% (0.4 points)
The average rate on a 5/1-year adjustable rate mortgage ticked up five basis points to 3.82% (0.3 points)
Here is what Freddie Mac’s Economic and Housing Research Group had to say about rates this week:
“After plateauing in recent weeks, mortgage rates reversed course and reached a new high last seen eight years ago.
The 30-year fixed mortgage rate edged up to 4.61 percent, which matches the highest level since May 19, 2011.
Healthy consumer spending and higher commodity prices spooked the bond markets and led to higher mortgage rates over the past week. Not only are buyers facing higher borrowing costs, gas prices are currently at four-year highs just as we enter the important peak home sales season.
While this year’s higher mortgage rates have not caused much of a ripple in the strong demand levels for buying a home seen in most markets, inflationary pressures and the prospect of rates approaching 5 percent could begin to hit the psyche of some prospective buyers.”
It’s always important to note that the data for the survey is mostly collected early on in the week and therefore doesn’t necessarily reflect current market conditions.
That being said, we’ve seen rates stay fairly level since mid-day on Tuesday, so the PMMS isn’t far off what what national averages currently are.
Rate/Float Recommendation
Lock before rates move even higher
With mortgage rates heading higher it makes sense that you’ll want to lock in a rate soon. The longer you wait, the more likely it is that you’ll wind up locking in a higher rate.
Of course, everyone’s situation has its own unique factors, which is why it’s so incredibly important to go discuss your options with an experienced mortgage professional.
Learn what you can do to get the best interest rate possible.
Today’s economic data:
Jobless Claims
Applications filed for U.S. unemployment benefits for the week of 5/12/18 rose 11,000 from the previous week to 222,000. That puts the four-week moving average at 213,250.
Philadelphia Fed Business Outlook Survey
The Philly Fed General Business Conditions Index surged up to a 34.4 in May. With new orders up to a 45-year high, this is one of the most robust reports to date.
Bloomberg Consumer Comfort Index
This report is currently being delayed at the source
Fedspeak
Minneapolis Fed President Neel Kashkari at 10:45am
Dallas Fed President Robert Kaplan at 1:30pm
Notable events this week:
Monday:
Tuesday:
Retail Sales
Empire State Mfg Survey
Business Inventories
Housing Market Index
Wednesday:
Housing Starts
Fedspeak
Industrial Production
Atlanta Fed Business Inflation Expectations
EIA Petroleum Status Report
Thursday:
Jobless Claims
Philadelphia Fed Business Outlook Survey
Bloomberg Consumer Comfort Index
Fedspeak
Friday:
*Terms and conditions apply.
Carter Wessman
Carter Wessman is originally from the charming town of Norfolk, Massachusetts. When he isn’t busy writing about mortgage related topics, you can find him playing table tennis, or jamming on his bass guitar.
You may have considered a large commercial bank for your home loan needs, but what about a boutique commercial bank?
That’s how CFBank describes itself, a Columbus, Ohio-based retail mortgage lender that recently converted from a savings and loan (S&L) into a national bank.
Despite being a publicly-traded company worth about $100 million dollars, they say they offer concierge banking services via a “high-touch relationship style.”
So if you’re the type who wants to use a big bank to get your mortgage, perhaps because you’re old school, but don’t want to get lost in the bureaucracy, CFBank might be for you.
Let’s discover more about them to see if they’re the right fit.
CFBank Mortgage Quick Facts
Full-service commercial bank founded in 1882
Publicly-traded company headquartered in Columbus, Ohio
Offer mortgages, checking and savings accounts, and other consumer loans
Originated roughly $1 billion in home loans last year
Appear to specialize in mortgage refinancing with limited or no lender fees
Licensed to lend in all 50 states and D.C.
They’re probably one of the oldest mortgage lenders around, given the fact that they were founded all the way back in 1882.
Of course, they don’t just offer home loans – they’re a full-service bank with all types of products including checking and savings accounts, credit cards, and business banking services.
But we’ll focus on the mortgage part. Last year, they funded nearly $1 billion in home loans, with over $100 million coming from their home state of Ohio, and another $100 million or so from far away California.
Roughly 80% of their overall volume was made up of mortgage refinances, with the remainder home purchase lending. So they appear to be the go-to bank for refinancing.
They are licensed to lend in all 50 states and the District of Columbia, meaning there are no geographical limitations.
How to Apply for a Mortgage with CFBank
You can apply for a home loan directly from their website in minutes
They use a digital mortgage application powered by fintech company Blend
Or request a mortgage rate quote instead and discuss pricing with a loan officer
They also have branch locations throughout the state of Ohio if you prefer face-to-face interaction
If you’re interested in applying for a home loan, simply visit the CFBank website and hit the “Apply Now” button.
From there, you’ll be sent to their digital mortgage application powered by Blend, which allows you to complete the form from anywhere on any device.
You can link financial accounts, scan and upload necessary paperwork, and eSign documents.
You’ll also be able to see what you can afford, compare loan options, and get personalized mortgage rates.
And of course, a dedicated lending team will be with you along the way should you have any questions or require assistance.
All in all, they provide a digital, hands-off loan process, but are there to step in if and when you need them.
Types of Loans Offered by CFBank Mortgage
As you can see, they offer an absolute ton of different home loan programs.
And you can get financing on all types of properties, whether it’s an owner-occupied condo, vacation home, or multi-unit investment property.
You can even get financing for a lot, a new construction loan, or a renovation loan if you’re working with a fixer-upper.
Additionally, CFBank offers non-QM loan products including interest-only loans, along with zero down financing and high-LTV loans without PMI.
Unlike a lot of smaller mortgage lenders, they’re also able to offer home equity lines of credit (HELOCs), and jumbo loans if your loan amount exceeds the conforming loan limit.
In summary, they’ve got basically everything under the sun, though it’s unclear if they offer USDA loans.
With regard to loan types, you can get a fixed-rate mortgage or an adjustable-rate mortgage in a variety of different loan terms.
CFBank Mortgage Rates
You can see their mortgage rates if you click on “Check today’s rates,” at which point you’ll need to fill out a fairly lengthy lead form.
It’d be nice if they just listed their mortgage rates right on their website so you didn’t have to go to all that trouble, but that’s their prerogative.
Ultimately, advertised mortgage rates don’t mean a whole lot unless you actually qualify for them and the loan assumptions they make match up with your unique loan scenario.
But it would be helpful to at least see where they stand rate-wise. However, it is possible to see their mortgage rates on the Zillow mortgage platform if comparing lenders there.
From what I saw, they offered one of the lowest rates on a conventional 30-year fixed with just $1 in lender fees.
Some of their other listed rates came with lender credits as well. In other words, they appear to offer no cost refinances if that’s what you’re looking for.
CFBank Mortgage Reviews
On SocialSurvey, they have a 4.74-star rating out of 5 based on more than 4,000 reviews. That’s a pretty impressive rating given the large number of reviews.
On Zillow, they have a 4.41-star rating out of 5 at last glance, based on nearly 200 customer reviews.
Many of the reviewers indicated that the interest rate they received was lower than expected.
While CFBank is not Better Business Bureau accredited, they do have an A+ rating at the moment, which is based on customer complaint history.
In summary, they might be a good option if you’re an existing homeowner looking to refinance to a lower rate, or if you want to take advantage of one of their more unique loan programs.
CFBank Mortgage Pros and Cons
The Good
Licensed to lend in all 50 states
Offer a ton of different home loan programs
Can apply for a mortgage directly from their website
A lack of existing homes for sale and robust demand are fueling a rally in homebuilder stocks, according to Citigroup.
The sector gauge outperformed the S&P 500 Index last week, rising as much as 3% compared with a 1.4% decline in the broader gauge. Both indexes slipped about 0.5% on Monday as traders weighed the Federal Reserve’s next move on interest rates this year. The housing supply shortage is lifting homebuilders, despite a strong May housing starts that led investors to wonder if the market is in the early stages of overbuilding, Citigroup said in a note on Monday.
Single-family inventories are still down 19% in April, below pre-pandemic levels, and under-building after the global financial crisis has caused a significant deficit of more than 1 million homes in the U.S., Citigroup analysts led by Anthony Pettinari wrote. As it currently stands, most measures suggest “the market does not have a path to close the housing deficit in the near-term,” the note said.
Adding to the crunch, current homeowners are locked into their lower mortgage rates, and it doesn’t appear they’ll be “unlocking” from that anytime soon, according to Citi. Tight resale inventory is in part due to a large group of potential move-up buyers opting not to sell their current properties, as to not lose their highly favorable mortgage rates.
The tight supply “may provide a multi-year tailwind for builders,” the note said. The bank remains positive on homebuilders, with buy-ratings for PulteGroup Inc., D.R. Horton Inc. and Lennar Corp., citing favorable net order growth as a near-term catalyst in the second half of 2023.
Citi estimates that benchmark Fed interest rates would have to fall to about 5% before total supply could reach pre-pandemic levels, and rates would need to fall to roughly 3% before supply could reach pre-global financial crisis average levels. The analysts view the latter scenario as highly unlikely.
Last week, the Fed unanimously voted to hold the benchmark rate in the target range of 5% to 5.25%, its first pause since it began aggressive rate hikes in early 2022.
“We expect that as mortgage rates fall, some of this pent-up supply may come to market; however, it would require a significant decline in benchmark FRM rates before supply normalizes to pre-pandemic levels,” the analysts wrote.
Last month’s sales of newly constructed single-family homes rose to the highest level since February 2022. The report from the U.S. Census Bureau and the Department of Housing and Urban Development put the seasonally adjusted annual rate for May at 763,000 units, an increase of 12.2 percent compared to the April. That rate of 680,000 was revised down from an original estimate of 683,000 units. On a non-adjusted basis, there were 73,000 homes sold during the month, up from 60,000 in April.
Analysts had expected a much smaller number. Those polled by Econoday had a consensus estimate of 667,000 while Trading Economics had a forecast of 675,000 units.
The increase in sales, however, was a negative for new home inventory. At the end of the reporting period, there were 428,000 homes available for sale, down 4,000 from the prior month. This was a 6.7-month supply at the current sales pace. Only 69,000 of these units are ready for occupancy.
Economist Robert Dietz of the National Association of Home Builders commented, “Demand for new homes is strengthening because of a lack of existing home inventory. There is only a 3-month’ supply of existing single-family homes on the market. New home inventory was 31 percent of total inventory in May. Historically it is typically 10 percent to 15 percent. As a result, the pace of resales is down 20 percent from a year ago, while the rate of new home sales is up 20 percent from a year ago.
Thus far in 2023, there have been 308,000 new homes sold, down from 323,000 in the first five months of 2022. This is a decline of 4.7 percent.
There was more good news for potential homebuyers. The median price of homes sold during the month was $416,300, significantly lower than the $450,700 in May 2022. The average price fell from $521,500 to $487,300.
Dietz continued, “While builders continue to grapple with elevated construction costs, an encouraging sign is a big gain in home sales priced in the $200,000 to $300,000 price range. In May 2022, just 5,000 homes sold in this range. That total increased to 12,000 in May 2023.
Sales during the month rose in all four major regions and annual sales were higher in three of them. In the Northeast, in fact, they soared 110.5 percent year-over-year and rose 17.6 percent for the month. The Midwest saw a monthly increase of 4.1 percent and a 40.0 percent gain compared to the prior May. The South saw sales up 11.3 percent for the month and 22.0 percent for the year. While the West saw an increase of 17.4 percent from April, annual sales were lower by 0.6 percent.
Bank of England raises interest rates by a half point to 5%Read more
The number of residential mortgage products on the markets has risen, though, to 4,483 from 4,444 on Friday.
Analysis released by the Labour party show that homeowners in Britain are paying thousands of pounds more than Europeans for new mortgages, even before last Thursday’s half-a-percentage point rise in UK interest rates.
Rishi Sunak says he will take ‘responsible’ decisions on public sector pay and borrowing ‘will make inflation worse’ – UK politics liveRead more
So, time for a quick recap….
The squeeze on UK mortgage-holders has tightened, with the average cost of two and five-year fixed mortages hitting the highest since last November today.
Financial data provider Moneyfacts reports that the average 2-year fixed residential mortgage rate has risen to 6.23%, up from 6.19% on Friday, while 5-year fixeds now cost 5.86%, up from 5.83% on Friday.
The financial markets predict UK interest rates will have risen to at least 6% by early next year….
… although City economists forecast a peak of 5.5%, according to a new poll.
Savings rates have also risen today, Moneyfacts reports.
Rising prices have helped Primark’s owner, Associated British Foods, to lift its profit guidance for this year.
Cruise operator Carnival has recorded a record quarter for bookings, as demand for sailings picks up and prices rise…
Pakistan’s central bank has raised its interest rates from 21% to 22% at an emergency meeting.
The UK’s post-Brexit border strategy risks further pushing up food prices, according representatives of Britain’s fresh produce industry.
Shares in defence companies dipped this morning, as the abortive mutiny by fighters of the powerful Wagner Group raised doubts over president Vladimir Putin’s position. Gas prices rose, but have now dipped back.
And Wall Street is remarkably calm today.
In other news….
June 26, 2023
After days of talks with the IMF, Pakistan agreed to change its budget for the next fiscal year, by raising taxes and cutting spending in a bid to cut its fiscal deficit. Restrictions on imports are also being lifted.
The MPC says:
The Committee views that additional tax measures are likely to contribute to inflation both directly and indirectly, while the relaxation in imports may exert pressures in the foreign exchange market.
import checks on goods entering the country from the EU and the rest of the world, due to be introduced in the new year.
Estimated additional annual costs of more than £10m, stemming from import charges, would have to be passed on to consumers, fuelling food inflation, just as prices are thought to have peaked.
Industry body the Fresh Produce Consortium (FPC) – which claims to speak for 70% of the UK’s fresh produce supply chain, including businesses that produce, package, move and sell fresh fruit, vegetables, cut flowers and plants – has written to ministers to share its members’ concerns about the UK’s post-Brexit border strategy.
In a highly critical submission to the government, the FPC accused ministers of adopting “an outdated and highly inefficient border solution which fails to meet the needs of a modern progressive industry and simply adds cost for consumers”.
More here.
chaired by former UK chancellor George Osborne – has increased its stake in online supermarket and robotics company Ocado to above 5%.
Lingotto, which is owned by Italian family Agnelli’s holding company, has disclosed the position in a regulatory filing today, showing it crossed the threshold on Friday.
Last Thursday, shares in Ocaco jumped 40% amid speculation that the company could be a takeover target for Amazon:
mortages rates, have risen today.
Based on savers with £10,000 to invest, they say:
The average 1-year fixed savings rate today is 4.61%. This is up from an average rate of 4.55% on the previous working day.
The average easy access savings rate today is 2.36%. This is up from an average rate of 2.35% on the previous working day.
The average 1-year fixed Cash ISA rate today is 4.31%. This is up from an average rate of 4.26% on the previous working day.
The average easy access ISA rate today is 2.47%. This is the same average rate as the previous working day.
UK banks have been under growing pressure to pass on interest rates increases to savers, with MPs concerned that this has not kept pace with rising rates for borrowers.
Mortgage Advice Bureau, has sent over some advice for borrowers worried that mortgage deals are being withdrawn, and repriced higher.
1) Don’t panic
Whether you’re a first-time buyer or remortgaging, the mortgage market can be daunting. With the recent disappearance of mortgage products making homeowners and first-time buyers feel anxious, it’s important not to panic. Instead, at the beginning of your mortgage journey, make sure to set time aside to thoroughly research the products still available, and which of these meet your needs and criteria. If you’re midway through the application process, regardless of the changes a lender may make, it’s likely they’ll honour the interest rate you’ve agreed to for six months.
2) Speak to a mortgage adviser
An adviser can help you to navigate the mortgage market, supporting you throughout the process right up until you seal the deal. Finding the right mortgage offer for you can be both confusing and overwhelming, particularly with all the different terms and jargon. Knowing the industry inside out, a mortgage adviser’s job is to use their knowledge to help you find and secure a deal that suits your circumstances. Whilst we’re seeing deals being pulled, there are still plenty available. What’s more, mortgage advisers often have exclusive access to additional deals.
3) Get ready early
There are many steps with the mortgage application process, and it’s easy to feel bogged down in paperwork. Although this might seem boring, it’s crucial to have everything ready to go, along with a clear understanding at all times of where you stand within the process. A mortgage rate is considered ‘locked in’ once an offer has been made by the lender, and that ‘Decision in Principle’ can last up to six months. However, if you’re still sifting through the paperwork and are yet to submit your mortgage application, the sudden removal of your deal by the lender is a possibility.
4) Shop around for the right deal
Although we’re seeing some products being pulled from the market, there are others available. With higher interest rates, it’s important that first-time buyers and current homeowners who are looking to remortgage shop around. A mortgage adviser can help you find the most suitable deal for your circumstances and factor in true costs. It’s also important to not only think about headline rates, but also assess any additional fees that may be involved. Our online mortgage finder can also help you to quickly and easily find available deals, filtering offers based on your circumstances (for example, the value of your property).
5 Remember there’s always a plan B
If you find yourself in the stressful situation whereby your mortgage product has been withdrawn, or is about to be, it’s time to take a step back and review your options. In some cases, mortgage advisers will be notified a few hours before a deal is pulled off the market, giving you a small window of opportunity to get your application over the finish line. Whilst this isn’t always the case nor possible, it’s worth checki
$SPX $SPY $ES $MES_F pic.twitter.com/UHxAOw36Qv
— SaralTrader_Pragati (@SaralTrader) June 25, 2023
Rupert Thompson, chief economist at Kingswood, explains:
Almost certainly, the MPC will raise rates again in August. The only question is whether it is by 0.25% or 0.5% which will depend on the wage and inflation numbers released in the meantime. As to where rates peak, the market is now pricing in them reaching as high as 6%.
Once again, this looks on the high side but this is said with some humility. The market has recently been rather more accurate on the path for UK rates than most economists, particularly those at the Bank of England.
hemeets the heads of the energy, water and telecoms regulators on Wednesday.
Unite general secretary, Sharon Graham said:
“Here we have a tacit acknowledgment from the chancellor that Britain is in the grip of a profiteering crisis. But to be honest, we need to go way beyond talking shops with regulators before we can be convinced the chancellor is serious about tackling Britain’s epidemic of profiteering.
“Tinkering at the edges is just not enough. Unite’s own research has shown that if domestic energy had been in public ownership at the time the crisis hit we could have saved every household £1,800 and cut inflation by 4%. Tinkering at the edges, and talking shops about the crisis are just not enough.”
UK retailers have denied accusations of ‘greedflation’ – the practice where firms take advantage of high inflation to ramp up their prices higher than is justified by rising costs.
But, as Primark showed this morning, many companies have been able to maintain or increase profits through price increases.
losses more than doubled last year to almost £500m, has struck a cash and shares deal valued at £182m in which Lucid will take a 3.7% stake in London-listed Aston Martin.
The carmaker, which sold 6,400 luxury vehicles last year and has spent heavily on new models, said it would select powertrain components from Lucid for initial and certain future battery electric vehicle (BEV) models.
The company said the deal, which involves a minimum spend of £177m with Lucid, would help drive its plan to launch its first BEV in 2025.
“Combined with our internal development, this [deal with Lucid] will allow us to create a single bespoke BEV platform suitable for all future Aston Martin products, all the way from hypercars to sports cars and SUVs.”
Primark’s owner lifting its profit forecast this morning.
The poll found that more retailers reported a drop in sales volumes, rather than a rise, and that orders have also dropped. With sales weak, inventories have swelled.
The CBI says:
Retail sales volumes continued to decline in the year to June (weighted balance of -9% from -10% in the year to May) but are expected to be unchanged next month (0%).
Orders placed upon suppliers declined in the year to June, but at a slower pace than last month (-10% from -30% in May). Orders are expected to fall at a broadly similar pace next month (-9%).
Retailers reported the firmest stock positions since May 2020 (+33% from +25% in May). Stock volumes look set to remain elevated relative to expected sales next month (+26%).
With the national default deadline looming, the federal government reached an agreement to raise the debt ceiling.
The economy’s resilience and uncertainty surrounding the debt ceiling negotiations caused mortgage rates to climb, according to Freddie Mac Chief Economist Sam Khater.
Many homeowners and potential home buyers hope this means lower interest rates as we head into summer. Read on to learn more about the debt ceiling and its impact on the housing market and mortgage rates.
What is the debt ceiling?
Also known as the debt limit, the debt ceiling represents the maximum amount of money that the United States Treasury can borrow to pay the nation’s bills.
The U.S. hit its current borrowing limit of $31.4 trillion in January. That means the federal government cannot currently increase the amount of its outstanding debt, and paying the nation’s bills becomes more complicated.
In a letter to Congress, Treasury Secretary Janet Yellen said the U.S. could be incapable of paying its debt as early as June 1. If so, the federal government is at risk of defaulting for the first time in U.S. history.
She goes on to say the U.S. defaulting on its bills could cause “irreparable harm” to the U.S. economy. Interest rates on credit cards, auto loans and mortgage rates could skyrocket.
By increasing the debt ceiling, the Treasury can borrow funds to pay for government obligations, such as Social Security and Medicare benefits, tax refunds, military salaries, and interest payments on national debt.
What is the relationship between the debt ceiling and mortgage rates?
Although the debt ceiling itself doesn’t directly determine mortgage rates, its impact on the overall economy could wreak havoc on rates. The potential consequences and uncertainty associated with reaching the debt ceiling could impact investor confidence and lead to changes in interest rates, including mortgage rates.
“The debt ceiling debate can have a direct impact on the economy and mortgage rates. Continued delays will lead to increased uncertainty and result in upward pressure on mortgage rates,” said Shane Spink, regional manager for Acopia Home Loans.
What happens to mortgage rates if the debt ceiling is raised?
With a resolution reached and the debt ceiling raised, things should mostly return to normal. The U.S. never hit the ceiling before — although it’s gotten close in a few instances and those came with minor economic repercussions.
With the fear of a default removed and stability reestablished, consumer confidence will likely be restored and interest rates should slowly start coming down over the next 60 days.
What happens if the federal government does not raise the debt ceiling?
Not raising the debt ceiling could lead to dire consequences for the U.S. economy.
If the debt ceiling isn’t raised in time, the added uncertainty in our nation’s economy could negatively affect financial markets and interest rates across many sectors, including mortgage rates. This is because a debt default would force the Treasury Department to pay higher interest on its bonds to convince investors to stay the course.
Mortgage rates typically move in lockstep with yields on 10-year Treasury notes. Unless Congress moves quickly, yields could rise as the demand for Treasury notes could temporarily halt if investors worry that Treasuries are now a risky investment. Additionally, bondholders could seek higher rates to balance the increased exposure.
In either of these scenarios, rising yields could push mortgage rates higher. Higher mortgage rates can have several effects on the housing market and potential homebuyers.
First, higher rates increase the cost of borrowing, making mortgages less affordable for many buyers. This could also reduce overall demand for homes and potentially slow down an already struggling housing market.
Second, higher mortgage rates can impact the ability for existing homeowners to refinance their mortgages. When rates rise, refinancing becomes less popular, as the potential savings from refinancing decrease. This can impact a homeowner’s ability to access lower rates and potentially reduce their monthly mortgage payments.
Higher mortgage rates can also result in a ripple effect within other sectors of the economy. The housing market is deeply linked to a number of industries, such as construction, real estate and home improvement. Slower housing activity due to higher rates can dampen all these sectors, leading to job loss and decreased economic growth.
What happens to the housing market if US defaults on debt?
Any default, whether its short-lived or a lengthy road to recovery, could trigger a recession. The potential for job loss is massive, leading to an interruption in income for millions of Americans.
Consumers and workers could be hurt almost immediately as the federal government may be forced to cut back benefits and paychecks. As interest rates rise, so do borrowing costs. Rising rates in addition to withheld paychecks, could seriously impact housing, both in the short-term and long-term.
Investor sentiment would be impacted negatively, as it raises concerns about the government’s ability to repay its debts.
Not only would it add to an already struggling housing market that’s suffering from a lack of inventory and rising mortgage rates, getting a mortgage loan would become even more challenging. Small businesses would also struggle as getting a small business loan would become more difficult.
“We are already seeing what higher rates are doing to the overall housing market,” Spink says. “If the debt ceiling isn’t raised in time, this could be an unnecessary addition to already higher rates in a time where we would typically see accelerated applications during peak summer months”.
The bottom line
The debt ceiling has long been a contentious issue in the United States, with debates and political battles often becoming a major topic when the government nears its borrowing limit.
Whenever the risk of defaulting on the nation’s debt looms over the U.S economy, it’s important to keep a close eye on the debt ceiling debate, as well as its potential effect on mortgage rates and the housing market.
Whether you’re considering a new home purchase or a refinance, mortgage borrowers should speak with a lender about the available options for locking in a favorable rate prior to a potentially drastic jump in interest rates.
There’s a better chance you’ll experience foreclosure if your math isn’t up to snuff, according to a new research paper from the Atlanta Fed.
Three researchers studied the effect of borrower’s financial literacy and cognitive ability to see what type of role, if any, they played in the mortgage crisis.
They surveyed subprime borrowers who took out mortgages between 2006 and 2007, and found foreclosure starts were approximately two-thirds lower in the group with the highest measured level of numerical ability compared with the group with the lowest measured ability.
Additionally, borrowers in the lowest numerical ability group spent, on average, about 25 percent of the time in delinquency, while borrowers in the highest group were only late on average 12 percent of the time.
The lowest group also missed nearly 15 percent of mortgage payments on average, while the highest group only missed six percent of payments.
Here’s a sample of some of the questions asked:
1. In a sale, a shop is selling all items at half price. Before the sale, a sofa costs $300. How much will it cost in the sale?
2. If the chance of getting a disease is 10 per cent, how many people out of 1,000 would be expected to get the disease?
3. A second hand car dealer is selling a car for $6,000. This is two-thirds of what it cost new. How much did the car cost new?
The researchers said a borrower’s inability to perform simple mathematical calculations likely impacts their ability to manage a budget and may lead to the selection of an unsuitable loan type.
Of course, socioeconomic issues could also be at play; for example, a borrower with poor numerical ability may experience less success in the labor market, and subsequently make less money and be more susceptible to default.
There’s also the thought that borrowers with poor numerical ability may be burdened with debt before even applying for a mortgage.
A new California state law enacted at the eleventh hour allows residents to immediately exclude forgiven mortgage debt from their taxable income.
The measure, “SB 401,” permits most taxpayers to exclude canceled mortgage debt up to $500,000 on their primary residence resulting from a foreclosure, short sale, or loan modification.
The limit is $250,000 for married/registered domestic partner individuals filing separately.
It applies to debt forgiveness in 2009 through 2012, and mainly brings California into conformity with federal debt relief laws.
“California has been particularly hard hit by the housing crisis,” said State Controller and FTB Chair John Chiang, in a release.
“This is a critical tax change that will help people in our state who already are suffering the loss of their homes.”
Previously, such forgiven mortgage debt would have been considered taxable income in the state of California and reported on tax form 1099-C.
Had it not been amended, many struggling, former homeowners would be without a home and burdened with a huge tax bill to boot.
If you’ve already filed your tax return, but believe you qualify based on the new law, you can file a Form 540X (amended individual income tax return), and subtract the amount of debt relief from income.
“To expedite processing, write “Mortgage Debt Relief” in red across the top of the amended tax return. Taxpayers must attach a copy of their federal return, including Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment), with their state tax return.”
It is estimated that approximately 100,000 residents may benefit from the mortgage debt relief for tax years 2009 to 2012. More info at taxes.ca.gov