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Apache is functioning normally

June 9, 2023 by Brett Tams
Associated Press

The Associated Press
Updated June 9, 2023 at 5:11 AM

McCLEAN, Va. (AP) — U.S. long-term mortgage rates jumped to their highest level since June, though still remain near historic lows.

Mortgage buyer Freddie Mac reported Thursday that the average rate on the 30-year fixed-rate home loan rose to 3.17% from 3.09% the previous week. One year ago, the benchmark rate stood at 3.5%.

The average rate on 15-year fixed-rate loans, popular among those seeking to refinance their mortgages, increased to 2.45% from 2.40% last week. It was 2.92% a year ago.

Economists have expected modest increases in home-loan rates this year, though they likely will remain low while the Federal Reserve keeps interest rates near zero until the economy recovers from the coronavirus pandemic.

Record-low lending rates have prodded buyers into the housing market, which has been one of the strengths of the U.S. economy. But a shortage in the supply of homes remains a problem and has pushed prices higher.

Also Thursday, the government reported that the number of people seeking unemployment benefits fell sharply last week to 684,000, the fewest since the pandemic erupted a year ago and a sign that the economy is improving. It is the first time that weekly applications for jobless aid have fallen below 700,000 since mid-March of last year.

Originally published March 25, 2021 at 12:07 PM

Source: aol.com

Posted in: Renting Tagged: 15-year, 2, 2021, 2023, 30-year, 30-year mortgage, aid, Applications, average, Benefits, buyer, buyers, coronavirus, Economy, Federal Reserve, Financial Wize, FinancialWize, fixed, Freddie Mac, government, historic, home, home loan, homes, Housing, Housing market, in, interest, interest rates, jump, lending, lending rates, loan, Loans, low, market, Mortgage, Mortgage Rates, Mortgages, one year, pandemic, Popular, Prices, rate, Rates, Refinance, rose, shortage, The Economy, time, Unemployment, VA, will

Apache is functioning normally

June 9, 2023 by Brett Tams

A bank run is one of those rare financial terms that’s exactly what it sounds like. Source: Giphy.com, Paramount Pictures It literally starts with a crowd of people sprinting to the bank. And while that may sound like a mere nuisance to bank tellers trying to go home at 5:30, even the smallest bank runs can … [Read more…]

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Apache is functioning normally

June 9, 2023 by Brett Tams

Mortgage rates are rising, refinances are trending, and older news is looming. Let’s cover all of it in this week’s Mortgage Monday update!

Rates Update

Last week, mortgage rates hit their highest since October 2019 – but let’s rewind a bit. For the week ending February 3, Freddie Mac actually reported generally stable rates from the average lender. Like many experts, they believe our economic recovery following Omicron will result in rate increases; what their weekly survey didn’t account for, however, was last Friday’s market changes.

On February 4, the US Bureau of Labor Statistics released their monthly jobs report for January. In short, things are looking up – there were significant job increases last month even in the face of Omicron – and markets were forced to respond. A return to a better economy will also inevitably mean a return to higher rates, and last week’s mortgage rate increases are already reflecting that.

We’ll likely see Freddie’s PMMS catch up with last week’s rate spike on Thursday. But for now, get in touch with your Total Mortgage loan officer if you’ve been considering a home purchase or refinance. Rates are rising faster than ever and are projected to continue doing so, especially after the Fed’s recent hinting at further increases in March.

Refinances are Trending as Rates Rise

Because rates are rising, refinance numbers are up and trending. In late January, mortgage refinancing accounted for 57.3 percent of applications in The Mortgage Bankers Association’s Refinance Index. As rates rise, the window to refinance at something lower naturally closes; we predict that refi numbers will continue along this trend through February until mortgage rates hit pre-pandemic levels.

In the meantime, our door is always open if you’re looking to refinance. The opportunity to do so is certainly dwindling, so be sure to act fast and get in touch with us. Find your mortgage banker today!

Older, But Still Important News

The Federal Housing Finance Agency (FHFA) announced upcoming fee increases for certain Fannie Mae and Freddie Mac home loans. Effective April 1, 2022, upfront fees for these options will have the following increases:

  • Upfront fees for high-balance loans will increase between 0.25 and 0.75 percent.
  • Upfront costs for second home loans (non-primary residence) will increase between 1.125 and 3.875 percent.

These increases will ultimately depend on each product’s loan-to-value ratio. “High-balance” loans qualify as any that go above the conforming baseline limit introduced on January 1 – more information on that below.

Last month, the borrowing limits for Conventional and Federal Housing Administration (FHA) loan options saw significant increases to help buyers combat rising market prices. The conforming limit for single-unit home loans is now $647,200 – an 18.05 percent increase from last year’s limit. To learn more about these changes and your new borrowing options, get in touch with your Total Mortgage loan officer.

In Closing

So far, 2022 has shown us just how reactive the markets (and mortgage rates) can be. In just a couple of months, rates have gradually shifted to their highest in years – meaning that the historic lows we’ve been used to seeing are now behind us. If homeownership is one of your goals for the year, it would be best to act sooner than later. Contact us at any time to get started!

As always, we’ll continue to monitor mortgage rates, industry news, and more to keep you informed. Enjoy the rest of your week!

Source: totalmortgage.com

Posted in: Refinance, Renting Tagged: 2022, About, Administration, All, Applications, average, balance, best, borrowing, Bureau of Labor Statistics, buyers, closing, couple, economic recovery, Economy, experts, Fannie Mae, Fannie Mae and Freddie Mac, fed, Federal Housing Finance Agency, Fees, FHA, FHFA, Finance, Financial Wize, FinancialWize, first-time home buyer, Freddie Mac, get started, goals, historic, home, home loans, home purchase, homeownership, Housing, housing finance, in, index, industry, Industry News, job, jobs, jobs report, Learn, loan, Loan officer, Loans, LOWER, market, markets, More, Mortgage, Mortgage Bankers Association, mortgage loan, mortgage monday, MORTGAGE RATE, Mortgage Rates, mortgage refinancing, new, News, opportunity, or, pandemic, percent, PMMS, Prices, Purchase, rate, Rates, Refinance, refinancing, return, rise, second, second home, short, single, stable, statistics, survey, the fed, time, trend, update, value, will

Apache is functioning normally

June 9, 2023 by Brett Tams

Depending on which rate tracker you look at, mortgage rates decreased, moved sideways or increased on a week-over-week basis.

Since June 1, the yield on the benchmark 10-year Treasury moved up 18 basis points to close at 3.78% on Wednesday.

But the spreads remain abnormally wide, and that likely contributed to the divergent movements among different trackers that use different methodology. The normal spread between the 10-year Treasury and the 30-year fixed-rate mortgage is between 150 and 200 basis points; no matter which tracker is used, they currently are in the 300 basis point range.

Freddie Mac’s Primary Mortgage Market Survey, which takes in rates on submissions to its Loan Product Advisor automated-underwriting system, reported an 8 basis point decline in the 30-year fixed-rate mortgage to 6.71% for June 8 from 6.79% one week prior. For the same week in 2022, the 30-year FRM averaged 5.23%.

NMN060823-Freddie Mac rates.png

The 15-year FRM fell to 6.07% from 6.18% week-to-week but rose from 4.38% on a year-over-year basis.

“Mortgage rates decreased after a three-week climb,” said Sam Khater, Freddie Mac’s chief economist, in a press release. “While elevated rates and other affordability challenges remain, inventory continues to be the biggest obstacle for prospective home buyers.”

Optimal Blue, a division of Black Knight, reported the 30-year conforming mortgage at 6.746% as of June 7, based on data submitted to its product and pricing engine. That compared with 6.719% on May 31; on June 1 it fell to 6.649% before tracking higher over the following days.

Zillow’s rate tracker, based on offers, was at 6.61% on Thursday morning, unchanged from the morning of June 1, and down one basis point from the previous week’s average.

“After some mild oscillations, mortgage rates are right where they were this time last week as investors await more conclusive signs of progress on inflation and monetary policy,” said Orphe Divounguy, senior macroeconomist at Zillow Home Loans, in a statement issued Wednesday night. “Last week’s stronger-than-expected employment report caused Treasury yields — and mortgage rates that follow them — to increase.”

But the services sector slowed down in May, according to the Institute for Supply Management purchasing managers’ index report. The price component had its weakest reading in two years, which is likely to be seen in the next Consumer Price Index reading.

“Cooling inflation and a general economic slowdown would put downward pressure on long-term interest rates like the 10-year Treasury yield,” Divounguy said.

On Wednesday, the Mortgage Bankers Association reported a 10 basis point decline in the 30-year FRM to 6.81%.

“The housing market has gotten off to a slow start this summer due to higher mortgage rates, low inventory and economic uncertainty,” a Thursday morning statement from MBA President and CEO Bob Broeksmit said. “The labor market continues to be exceptionally strong, which could bring more buyers back into the market once rates move away from their recent highs.”

Divounguy forecasts that mortgage rate movement should remain muted over the next seven days, “but upward bias remains as investors await next week’s CPI inflation report and Federal Open Market Committee forward guidance.”

Source: nationalmortgagenews.com

Posted in: Mortgage Rates, Refinance, Renting Tagged: 15-year, 2022, 30-year, advisor, affordability, average, before, black, Black Knight, blue, Bob Broeksmit, buyers, CEO, Consumer Price Index, cooling, data, Economy, Employment, Federal Open Market Committee, Financial Wize, FinancialWize, fixed, Forecasts, Freddie Mac, General, home, home buyers, home loans, Housing, Housing market, in, index, Inflation, interest, interest rates, inventory, investors, labor market, loan, Loan Product Advisor, Loans, low, Low inventory, market, MBA, Monetary policy, More, Mortgage, Mortgage Bankers Association, mortgage market, MORTGAGE RATE, Mortgage Rates, Move, offers, Optimal Blue, or, Originations, Other, points, president, Press Release, pressure, price, PRIOR, rate, Rates, right, rose, Sam Khater, sector, summer, survey, time, tracking, Treasury, Underwriting, Zillow

Apache is functioning normally

June 9, 2023 by Brett Tams

At least not yet…

As you probably know, the Fed slashed the federal funds rate to near-zero yesterday afternoon to prop up the economy as it contends with the growing coronavirus pandemic.

If you read the headlines, you might falsely assume the Fed just slashed mortgage rates by a full percentage point.

Combined with the half-point cut two weeks ago, you might be led to believe that mortgage rates are now truly rock bottom.

But in reality, those actions had nothing to do with consumer mortgage rates.

Those rate cuts were intended to help banks borrow from one another to ensure they maintain minimum reserve requirements.

When that key rate is lowered, the money supply rises and lending to businesses and consumers increases, thereby spurring economic activity.

That’s the whole point.

Didn’t the Fed Just Lower Mortgage Rates?

  • The Fed rate cuts have no direct impact on mortgage rates
  • They can serve as a guide for long-term rates, but the federal funds rate isn’t your mortgage rate
  • Your mortgage rate didn’t just drop by 1%
  • But the MBS buying program known as QE4 should lead to lower mortgage rates for consumers over time

Ok, great, so how does this affect mortgage rates?

Well, the Fed also announced the purchase of at least $200 billion in agency mortgage-backed securities (QE4), which is intended to bring down mortgage rates.

However, and this is a biggie, long-term fixed mortgage rates weren’t anywhere close to zero when they announced the news.

They actually hit record lows two week ago, which set off a refinance frenzy, and in turn caused an oversupply in the market.

Simply put, mortgage lenders were over capacity, and when there’s too much supply and not enough demand, prices must be adjusted.

In the case of mortgage rates, prices went up to stem demand.

This phenomenon is also driven by the fact that most mortgage lenders bundle and sell off their mortgages almost immediately after origination to investors.

If there are too many of these bundles of mortgages, known as mortgage-backed securities (MBS), floating around, prices must go down.

Or, mortgage rates must go up to make them more attractive to investors seeking higher yields.

And that’s why mortgage rates shot up after hitting record lows.

It also explains why the Fed took direct action to buy MBS, which will level the supply/demand imbalance.

In short, the Fed has agreed to be a major buyer of MBS, allowing mortgage lenders to lower mortgage rates again.

When Will Mortgage Rates Fall to 0%?

  • Mortgage rates probably won’t ever go to 0% or anywhere close
  • Despite European banks offering 0% rates or even negative rates
  • The Fed’s QE4 program should stabilize and lead to lower mortgage rates
  • Whether they return to record lows depends on what else goes on in the world over the next several months

Now remember, mortgage rates weren’t anywhere near 0% last week.

In fact, many lenders had raised rates so rapidly that the near-3% 30-year fixed rates were now actually closer to 4%.

If you’ve been following mortgage rates recently, you’ll know that a 4% 30-year fixed mortgage rate is nothing to get excited about.

Not only does it feel very average, it probably is high to a lot of homeowners. And it’s not just emotional.

There are plenty of homeowners out there with sub-4% interest rates, so for these millions of borrowers, there will be no financial incentive to refinance.

When lenders collectively raised rates last week, they effectively reduced the refinanceable population by millions of individuals.

The good news is that should also work to limit MBS supply, and when coupled with the Fed buying MBS, push mortgage rates lower.

The problem is mortgage rates are nowhere close to zero, as they are in European countries, where they are even being offered below zero (negative rates).

So really, the Fed’s move is intended to keep the secondary market for mortgages intact, first and foremost.

To ensure that mortgage rates don’t rise further, crushing an industry that seemed primed for a windfall.

In other words, the first step here is stabilizing mortgage rates and erasing some of last week’s damage.

The next step is trying to rally back down to the record lows seen two weeks ago.

From there, the 30-year fixed would still be perched at/above 3%, so a rate of zero or anywhere close to it would still be worlds apart.

And if you believe the head of the nation’s largest retail mortgage lender, Quicken Loans, we won’t even see 30-year fixed mortgage rates fall below 3%.

So regardless of what the Fed is doing, you might want to temper your expectations.

That being said, we could test new all-time lows eventually, but it’s probably going to take some time to play out.

Lenders have no intention of getting caught out twice, so they’ll be very hesitant to lower rates significantly at the moment.

If we’re able to resolve the coronavirus in the meantime, that could actually work against interest rates, assuming the economic damage is less than what’s baked in and we get back into gear.

In summary, yesterday’s Fed announcement is excellent news for mortgage rates, but it’s going to take time and favorable conditions for mortgage rates to even get back down to 3% again.

Source: thetruthaboutmortgage.com

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Apache is functioning normally

June 8, 2023 by Brett Tams

Cosigning A Loan - Read This Before Being A Cosigner

Cosigning A Loan - Read This Before Being A CosignerRecently, the topic of cosigning a loan came up in a conversation I was having with a friend. Someone I know of cosigned a loan for another person, and now the original borrower isn’t paying any of the monthly payments. They are doing this on purpose – to get back at the person who cosigned a loan for them because of a recent falling out.

The above may sound crazy, but I have heard many stories where a person cosigned a loan and it went badly. Being a cosigner can have many consequences.

I did some research to see if there were any others who had shared crazy cosigning stories. I came across Learnvest’s article The Mistake That Plunged My Credit Score 200 Points. If you don’t believe me after reading today’s post that cosigning a loan, in general, is a bad idea, I recommend you read that article plus all of the comments on it.

Here’s a little snippet from that article:

It wasn’t until the fall of 2009, when I was thinking about getting satellite television, that I checked my credit report and discovered $10,000 in past due payments. My friend had missed not one, not two, but three mortgage payments!

Another interesting post is one I found on Reddit titled Co-Signing on a loan mistake.

As you can see, there are many who have an unfortunate story to share.

Here’s what you need to know about cosigning a loan.

What is a cosigner?

A cosigner is someone who agrees to be on a loan with another person so that they are more likely to be approved. For example, if your friend can only get a car with a cosigner (either due to them having a low credit score, not making enough money, etc.), then they may ask you to cosign so they can get approved.

However, a cosigner is agreeing to pay off the debt if the original borrower is unable to pay it in the future. So, even if the original borrower doesn’t pay a penny, the cosigner would have to make all of the payments or risk being sued, credit report damage, and more.

Related: Paying Off Debt And Budgeting: Tricks For Staying Motivated

Cosigning a loan may prevent you from being approved for future loans.

If you are thinking about buying a house, car, or something else soon that will need to be financed, you should think long and hard before you decide to be a cosigner on someone else’s loan.

This is for multiple reasons.

One, if the person doesn’t pay the monthly bills on time then you may be rejected for a loan in the future. Missed payments can damage your credit score and your credit report.

Two, your debt-to-income ratio will increase. So, even if your friend/family member pays every single bill on time, your debt to income ratio will increase and this may prevent a lender from approving your loan because they will think you have too much debt on your plate.

Being a cosigner isn’t something you can easily get rid of.

There’s not much you can do to remove yourself from a loan that you cosigned on. If the person isn’t making payments, you are stuck with it for the most part.

The loan would have to be refinanced to get your name off of it in most cases and there are many horror stories out there where the original borrower refused to refinance because then they wouldn’t be able to force the cosigner to continue to pay the monthly bill.

Plus, there are instances in which refinancing is impossible because of values tanking, the economy changing, and so on. So, while the original borrower may want to get you off the loan and refinance, it’s entirely up to the lender.

Cosigning a loan can ruin relationships.

Many cosigning relationships go sour. I have heard of many stories where someone cosigned a loan for someone else and then didn’t talk to them for decades because of a falling out of some sort.

I have always been a firm believer that money and relationships do not mix well. If you are going to cosign or lend money to someone then you should consider it a gift because there is a chance that you will never see that money again.

Cosigning a loan is up to you.

Everyone always feels like all of the cosigning horror stories out there would never happen to them. However, isn’t that how you think all cosigners felt at one time as well?

It’s up to each individual person to decide if they will cosign. However, I want you to remember that if you cosign then you should make sure that you can afford to make the monthly payment.

You never know – one day you may be making them. The original borrower may be a great person, but they may lose their job, have an unexpected expense come up, or something else that prevents them from paying their bills.

Cosigning a loan may not always be bad. However, I believe it’s better to realize what the consequences may be. It’s always better to be prepared!

Would you ever try cosigning a loan and being a cosigner? Why or why not?

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Source: makingsenseofcents.com

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Apache is functioning normally

June 8, 2023 by Brett Tams
<img data-lazy-fallback="1" data-attachment-id="263090" data-permalink="https://www.housingwire.com/articles/more-proof-that-rent-is-getting-cheaper-across-the-u-s/the-concept-of-falling-real-estate-market-reduced-interest-in-the-mortgage-a-decline-in-property-prices-and-apartments-low-interest-rates-on-mortgage-loans-reduced-demand-for-home-purchase/" data-orig-file="https://www.housingwire.com/wp-content/uploads/2020/07/rent-falling.jpeg" data-orig-size="1200,675" data-comments-opened="1" data-image-meta=""aperture":"0","credit":"u0410u043du0434u0440u0435u0439 u042fu043bu0430u043du0441u043au0438u0439 – stock.adobe.com","camera":"","caption":"The concept of falling real estate market. Reduced interest in the mortgage. A decline in property prices and apartments. Low interest rates on mortgage loans. Reduced demand for home purchase.","created_timestamp":"1548806718","copyright":"u00a9u0410u043du0434u0440u0435u0439 u042fu043bu0430u043du0441u043au0438u0439 – stock.adobe.com","focal_length":"0","iso":"0","shutter_speed":"0","title":"The concept of falling real estate market. Reduced interest in the mortgage. A decline in property prices and apartments. Low interest rates on mortgage loans. Reduced demand for home purchase.","orientation":"0"" data-image-title="The concept of falling real estate market. Reduced interest in the mortgage. A decline in property prices and apartments. Low interest rates on mortgage loans. Reduced demand for home purchase." data-image-description data-image-caption="

The real estate market is cooling down, observers say.

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The real estate market is cooling down

Reports released this week by several respected market observers point to less good and increased bad and ugly ahead for the housing market.

For some of the good, a U.S. Census Bureau report released late last week spurred a bout of optimism when it revealed that new-home sales jumped by nearly 11% month-over-month in May on a seasonally adjusted basis, after declining by 12% in April. 

Moody’s Investors Service, in a housing-market report released this week, puts some ugly back into the home-sales figures for May, however.

“At 696,000 units, May new home sales were around 17% below the recent peak of 839,000 units in December last year,” the Moody’s report notes. “[On June 21], the National Association of Realtors said that existing-home sales declined for the fourth consecutive month. 

“Existing-home sales fell in May by 3.4% on a seasonally adjusted basis to 5.41 million, the lowest since June of 2020 and similar to pre-pandemic levels.”

Those figures, along with “sharp recent increases in mortgage rates” and other supporting data, lead Moody’s to conclude that the “U.S. home-price boom is over.” The firm, which rates securitization offerings and provides other capital-market services, predicts “material declines” in both new- and existing-home transactions this year, compared with 2021.

Supporting the ugly outlook for the housing market is the release today, June 29, of the quarterly CFO Survey, conducted jointly by Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta. The survey of more than 300 U.S. financial executives conducted between May 25 and June 10, shows optimism about the broader U.S. economy continuing to decline.

The average index score for the current survey was 50.7, compared with 54.8 in the prior quarter and 60.3 two quarters ago.

“Price pressures have increased, real revenue growth has stalled and optimism about the overall economy has fallen sharply,” said John Graham, a Fuqua finance professor and the survey’s academic director. “Monetary tightening [by the Federal Reserve] is one of several factors dampening the economic outlook.” 

The CFO Survey’s findings are echoed by a revised first-quarter 2022 gross domestic product (GDP) estimate released Wednesday by the U.S. Department of Commerce’s Bureau of Economic Analysis (BEA). It shows that a drastic economic slowdown is already underway.

“Real gross domestic product [a measure of all goods and services produced in the economy] decreased at an annual rate of 1.6 percent in the first quarter of 2022 …,” the BEA report states. “In the fourth quarter of 2021, real GDP increased 6.9 percent.”

The BEA’s first-quarter GDP estimate, it’s third to date, was revised downward from -1.4% and -1.5% in the two prior estimates. The grim data led Mortgage Capital Trading (MCT), a San Diego-based capital market software and services firm, to broach the “R“ word in its daily market-overview report.

“Concern over a slowing economy and aggressive interest rate hikes from the Fed are beginning to dominate market sentiment,” the MCT report states. “This morning’s GDP release [on June 29] came with a downward revision for the last reading, further supporting views that a recession is either in progress or coming soon.”

What does all this mean for the housing market in the months ahead? The Moody’s report attempts to frame some of the expectations.

“We expect some increases in existing-house prices over the next 18 months, though for appreciation to be well below the general rate of inflation,” the Moody’s report states. “After that, we expect home appreciation to settle in at levels somewhat lower than the rate of overall U.S. inflation.”

The report even indicates that there “is risk that existing home prices will have a minor correction over the next two years, similar to housing markets in many other developed counties facing risks after recent booms.” 

The “moderation” in the U.S. housing market is ongoing and the full effects of recent rate increases have yet to be fully realized, the Moody’s report adds, especially with respect to housing prices.

Moody’s predicts that housing demand will “dampen significantly” in the months ahead due to the doubling of rates for 30-year fixed mortgages since the start of the year, which is fueling a huge jump in monthly mortgage costs. Freddie Mac’s most recent Primary Mortgage Market Survey shows the average 30-year fixed rate mortgage at 5.81% as of June 23. 

“The monthly costs of new mortgages on existing homes sold at median transaction prices [are] more than 60% higher than a year ago,” the Moody’s report states. “Although higher mortgage rates do not always drive home prices lower, they typically affect sales activity and drive down the rate of price appreciation. 

“We also expect higher rates to restrict for-sale supply because current homeowners will be reluctant to lose low-rate fixed borrowing costs.”

So, in effect, moderating or even declining home prices could be neutralized by rising borrowing costs, leading the housing market toward stagnation — the doldrums — in the worst-case scenario.

There is some good news mixed in with all this bad and ugly, however. Moody’s points out that some “fundamental housing strengths” will likely help to mitigate the degree of any market correction, at least over the next 12 to 18 months.

Those strengths include “favorable demographic trends, solid underwriting of outstanding mortgages and lingering housing supply constraints from a period of underbuilding,” according to the Moody’s report. Also on the bright side, according to Moody’s, is that a moderate decline in housing prices could be good for the market longer-term. That’s assuming the Federal Reserve wins the fight to tame inflation, now running at 8.6%,  without causing a major spike in unemployment, which was at 3.6% in May for the third month in a row, according to the Bureau of Labor Statistics.

In short, the housing market has reached a fork in the road, based on the Moody’s analysis — with one path leading to the doldrums, or even decline, and the other toward resurgence and a new normal.

“If U.S. home prices were to decline modestly, it would increase affordability for potential homebuyers and improve demand, including for individuals who were priced out of the market in the recent months because of rapidly rising interest rates,” Moody’s reasons in its report. “However, sustained large increases in mortgage rates or a material weakening in the labor market could lead to sharper declines in housing activity and prices.”

Source: housingwire.com

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Apache is functioning normally

June 8, 2023 by Brett Tams

With some recent upward pressure on mortgage rates, a lot of folks are beginning to wonder if home prices are going down? And if this is the end of the housing boom.

The thought is further compounded and perhaps supported by the fact that the housing market has been absolutely bonkers lately.

After all, property values are up something like 20% over the past 12 months, and easily at all-time highs.

Surely there has to be a respite following such impressive growth, especially if financing is now more expensive too. Right?

Unfortunately, for you prospective home buyers out there, this might be little more than wishful thinking.

The Fundamentals That Made the Housing Market Red Hot Are Still at Play

  • Home prices were up 18.1% in August 2021 compared with August 2020, per CoreLogic
  • There are still not enough homes for sale and far too many buyers
  • This has created an enduring seller’s market that is expected to persist through at least 2022
  • But home prices are only forecast to rise 2.2% from August 2021 to August 2022

Typically, you need a catalyst for a trend to reverse course. With regard to home prices, this might be a big increase in mortgage rates, a growing housing stock, or some other negative event.

In the prior housing downturn around 2008, the issue was massive oversupply. Home builders simply constructed way too many homes.

Many of these communities were built on the outskirts of metropolitan areas where nobody really wanted to live.

And while that was happening, lots of homeowners took out unsustainable mortgages that they eventually defaulted on.

Home prices didn’t just magically fall one day because they had gone up too much. There were clear drivers that preceded the decline.

You can argue that higher mortgage rates could be a catalyst, but that alone probably isn’t enough, especially when you consider how cheap they still are.

The monthly payment on a $350,000 loan amount rises from $1,429 (at 2.75%) to $1,523 (at 3.25%) on a 30-year fixed. That’s not a huge difference considering the dollar isn’t what it used to be.

Sure, interest rates can go even higher than that, but I don’t know how much that dampens the rally.

Ultimately, there hasn’t been a clear, inverse correlation between mortgage rates and home prices. That is to say that if one goes up, the other goes down.

There have actually been times when both have risen in tandem, or both have fallen together.

This is possible if the economy is improving, which pushes interest rates up to stem inflation, while also boosting wages and generating a larger number of higher-paid home buyers.

Home Price Gains May Moderate, Especially During Fall and Winter

2022 home price forecast

It’s important to point out the distinction between falling home prices and decelerating home price gains.

They are two very different things. For example, home prices probably won’t go up 20% in 2022.

However, they may still rise another 5-10% from 2021 levels. This means home prices are still going up, just not as much as they once were.

One also has to consider the time of year – it’s pretty common for the housing market to slow down during the colder months in fall and winter.

Simply put, fewer people are looking to purchase homes during these months, and most homeowners aren’t looking to sell either.

It probably tips more toward a buyer’s market during these months, so you might see some negative headlines regarding the housing market.

If mortgage rates also rise during this time, you could see some outright fearmongering about the housing market.

But then spring hits, the housing market gets back into gear, and all of a sudden you’ve got bidding wars again.

There could even be more pressure to buy a home next year before the low mortgage rates are really gone forever.

Where Have Home Prices Risen the Most Lately?

home price gainers

When attempting to spot a correction, you might look at where home prices have risen the most. While it isn’t necessarily sound logic, it’s something to consider nonetheless.

Leading the pack was Phoenix, which experienced an insane 30.9% increase in home prices from August 2020 to August 2021, per the CoreLogic HPI.

The next biggest gainer was San Diego, CA with a 23.2% gain, followed by Las Vegas with a 22.2% jump.

Rounding out the top five were Denver (+19.5%) and Los Angeles (+14.9%). But similar to the stock market, the rich often get richer.

Just look at a Tesla or Apple or Amazon stock, which just keep going up and up while the laggards, well, lag.

These cities might just even more expensive until eventually hitting a wall at some point.

As an example, San Diego home prices are expected to increase an additional seven percent over the next 12 months.

What Housing Markets Are Most at Risk of Falling Home Prices?

home price decliners

Again, similar to the stock market, the big brands seem to weather storms better than the mid-market players.

So even during a crisis, they’ve got a buffer that keeps them somewhat insulated. As such, the top five metros most at risk of a home price decline aren’t on CoreLogic’s top gainers list.

They include Springfield, MA, Chico and Merced, CA, Norwich-New London, CT, and Worcester, MA-CT.

The CoreLogic Market Risk Indicator (MRI) provides a monthly update of the overall health of housing markets across the nation.

It currently predicts the metros of Springfield, Massachusetts, Chico, California, and Merced, California to be at a high risk (50-70% probability) of a home price decline over the next 12 months.

Meanwhile, Norwich-New London, Connecticut and Worcester, Massachusetts are at a moderate risk (25-50% probability) of a price decline during that time.

Ultimately, there isn’t strong evidence of widespread home price declines at the moment, only moderating home price gains in most parts of the country.

Keep an Eye on Housing Supply and Mortgage Quality

If you want to determine when the next housing market crash will take place, it might be wiser to keep an eye on housing supply, along with mortgage quality.

For me, these two things can have the greatest impact on the direction of the housing market.

The supply/demand thing is pretty basic. When you have too much of something, prices generally need to go down.

We’ve had too little of something for a while now, which explains why home prices have surged in the past decade. When that changes, expect home prices to drop.

The other piece is mortgage loan quality. Today’s home loans are pretty darn boring. Just about everyone has a 30-year fixed or 15-year fixed mortgage.

They’ve also got ridiculously low mortgage rates on these super boring loans. And they were underwritten using real income, asset, and employment documentation.

If and when that changes, I’ll start getting nervous. But so far, the credit box remains pretty tight.

Even if it were to loosen, the competitive housing market makes it difficult for the lesser-qualified borrowers to win a bidding war.

This has created a rather pristine batch of mortgages, unlike the ones we saw in 2006, a year or two before the wheels came off.

Source: thetruthaboutmortgage.com

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Apache is functioning normally

June 8, 2023 by Brett Tams

Homebuyers these days are facing much higher costs of ownership compared to a year ago, pushing most to the sidelines. Mortgage rates and home prices are high and inventory is paltry, resulting in a largely frozen housing market.

Nearly two-thirds of Americans say they are waiting for mortgage rates to drop before entering the market, according to a survey released this week by BMO Financial Group, the eight-largest bank in North America. Among those who plan to purchase a home soon, only 6% expect to do so this summer, which is supposed to be the high season for real estate agents. Refinancing plans are also on hold: among those planning to refinance, 81% said they are waiting until rates drop.

The survey also found that 68% of Americans plan on using loans from their financial institution and/or lines of credit to help finance their home purchase. BMO said that 46% of Americans plan on using some of their personal savings to help pay for their home purchase, such as a down payment. Nearly a quarter of people surveyed said they expect financial help from family or friends when they purchase a home.

Mortgage rates have remained stubbornly high for virtually all of 2023. On Thursday, rates were recorded at 6.94%, just below the recent high of 7.14% in late May. The Mortgage Bankers Association on Wednesday said that mortgage applications for the week ending June 2 were down about 30% from the year prior, a direct consequence of 10 consecutive rate hikes from the Federal Reserve. 

Still, there is optimism that the housing market is at the bottom and will gradually improve.

“If we can achieve a true soft landing [for the economy], which it looks like we might be able to pull off, then … rates will start to kind of slowly go down,” said John Toohig, the head of whole loan trading at Raymond James. “For the housing market, this is the bottom; we’ll get past this. But it’s not a slam dunk, don’t get me wrong. Nobody’s doing backflips here. Nobody’s doing high-fives. Nobody’s saying, “Hey, let’s break out the steaks and put away the hotdogs.” You know, it’s just incremental. … We need to see a 200 basis-points drop [in rates] before you see any meaningful refinance business.”

Source: housingwire.com

Posted in: Mortgage, Mortgage Rates, Real Estate, Refinance Tagged: 2, 2023, About, agents, All, Applications, Bank, before, business, Buying, Buying a Home, Credit, down payment, Economy, estate, Family, Federal Reserve, Finance, financial help, Financial Wize, FinancialWize, hold, home, home prices, home purchase, Homebuyers, homeownership, Housing, Housing market, Housing Market Tracker, in, inventory, john toohig, loan, Loans, market, Mortgage, mortgage applications, Mortgage Bankers Association, Mortgage Rates, Mortgage Rates Center, new, or, Origination, ownership, Personal, plan, Planning, plans, points, Prices, PRIOR, Purchase, rate, Rate Hikes, Rates, Real Estate, Real Estate Agents, Refinance, refinancing, savings, summer, survey, The Economy, trading, will, wrong

Apache is functioning normally

June 8, 2023 by Brett Tams

Heading out on vacation can be fun, but what happens when you have pets at home? Whether it’s a beloved cat or the family dog, leaving them behind can leave you with more stress than it’s worth.

Thankfully, there are a number of airlines that’ll allow you to travel with your pets, whether that’s in the cabin or as cargo. Alaska Airlines is one of these — and it’s one of the best options out there for those traveling with pets.

Let’s take a look at the Alaska Airlines pet policy, what it looks like to fly with pet cargo and requirements for bringing your pet in the cabin.

Video preview image

Alaska Airlines pet cargo policy

There are two ways Alaska Airlines allows you to bring your pet as cargo: traveling on the same flight as you or separately — and the requirements are different for each.

Traveling on the same flight

If you’re going to be flying at the same time as your pet, you’ll need to check your pet to travel within the climate-controlled baggage compartment.

Here are the criteria for doing so:

  • Pet and carrier combined cannot exceed 150 pounds. 

  • The fee is $150 one way.

  • Accepted animals include cats, dogs, ferrets, guinea pigs, hamsters, household birds, nonpoisonous reptiles, potbellied pigs, rabbits and tropical fish.

  • You must have a health certificate issued by a veterinarian. 

For travel within the state of Alaska or active duty military (and their dependents) the cost to check a pet is $100.

🤓Nerdy Tip

Recent NerdWallet analysis found the average pet fee to be $113 across major U.S. airlines.

In order to book your pet’s travels, you’ll want to either call Alaska Airlines at 800-252-7522 or use its website’s chat feature to secure a reservation.

This can be done after booking your own flight, but it’s better to do so sooner rather than later as the number of pets allowed in the baggage compartment is limited.

There are some restrictions for breeds and younger animals. For example, pets with snub noses, such as bulldogs and Persian cats, are unable to travel in the baggage compartment.

Finally, there are some limitations when it comes to traveling during certain periods of the year.

Those on Alaska flight numbers 2000-2999 or 3300-3499 are unable to check pets in the baggage compartment from Nov. 15 to Jan. 10 each year due to weather.

Shipping separately

If you won’t be traveling on the same flight as your pet, it’s still possible for them to catch their own flight. Alaska Airlines’ Pet Connect service is available on specific flights subject to weather conditions and destination.

Like checking your pet as baggage, you’ll need to meet a series of requirements, including providing access to food and water, a comfortable and sturdy carrier and a health certificate.

For unaccompanied pets, Alaska only allows travel during periods when the temperature is between 45 and 85 degrees. It’s possible to make an exception provided you have a vet letter stating that your pet is acclimated to more extreme weather types.

Pet Connect reservations can be made between 30 days and 24 hours prior to travel, though there are different requirements if some of the travel takes place on another airline.

The same breed restrictions apply for Pet Connect flights as for checking your pet as baggage, so be sure to double-check before booking.

Alaska Airlines in-cabin pet options

If your pet is small enough to fit under an airline seat, they’ll be able to travel in the cabin with you. Alaska Airlines doesn’t specify a weight requirement for pets, though they must be able to stand up and turn around in their carrier under the seat.

  • The fee is $100 one way. 

  • Acceptable animals include cats, dogs, rabbits and household birds. 

  • You must be 18 or older to travel with a pet in the cabin. 

  • Your pet counts toward your carry-on allotment. 

  • You can travel with a maximum of two pet carriers in the main cabin if you also purchase an adjacent seat. 

  • Dogs and cats must be at least 8 weeks old. 

  • The pet must stay in the carrier at all times. 

  • Up to two pets of the same species can travel in one carrier provided they fit comfortably. 

There is a limited number of pets allowed in the cabin on each flight. In first class, up to three pets can be accommodated. In the economy cabin, up to eight pets are allowed per flight.

How flying with pets on Alaska compares to other airlines

It beat out all other competitor airlines to take the top spot for those traveling with pets. This is thanks to a number of factors, including how many animals you’re allowed to bring, the cost of traveling with a pet and the types of animals allowed.

Other things that were considered include whether the airline offers cargo services, if you’re allowed to bring your pet to the lounge and how well they handle pet transport.

Final thoughts on Alaska Airlines pet cargo

Alaska Airlines’ pet policies are some of the best in the business, with great options for those looking to travel with their pets.

This is true whether you’re planning to bring them in the cabin or check them as cargo. Its prices are among the lowest for airline pet travel and the variety of animals it accepts is more generous than most.

However, you’ll want to note that there are still some restrictions involved with the breed of animal that can fly, as well as dates during the year when traveling with pet cargo is unavailable.

Before you book, do your research to ensure that your pet meets all the requirements of traveling on Alaska Airlines.

How to maximize your rewards

You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2023, including those best for:

Source: nerdwallet.com

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