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Apache is functioning normally

Apache is functioning normally

HELOC, Manufactured, Technology, Marketing, and Digital Tools; Central Banks and Inflation

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HELOC, Manufactured, Technology, Marketing, and Digital Tools; Central Banks and Inflation

By:
Rob Chrisman

7 Hours, 56 Min ago

If you want something sobering, almost mesmerizing, here’s a short drone video of the flood damage in Libya (at the 15 second mark you can see how it tore through the city). Fortunately not so sobering are some stats out of the United States. The U.S. homeownership rate in 2022 was even higher than before the COVID-19 pandemic at 65.8 percent compared to 64.6 percent in 2019. That rebound was driven largely by those aged 44 and younger. And who says Millennials aren’t buying homes? Homeownership continued to climb from the foreclosure crisis (2004) and Great Recession (2008), when rates dipped as low as 63.4 percent in 2016. Homeownership rates recovered approximately half of the 5.6 percent decrease from 2004 to 2016. In Hawai’i the homeownership rate is 59 percent, I bring up the Aloha State because American Savings Bank, First Hawaiian Bank, and Central Pacific Bank joined Hawaiʻi Community Lending, a Hawaiʻi-based nonprofit community development financial institution, in pledging to provide mortgage forbearances to Maui families impacted by the recent wildfires. (Today’s podcast can be found here and this week’s is sponsored by the Trade-In Mortgage powered by Calque. Homeowners can buy before they sell, make non-contingent offers, and tap their home equity to fund the down payment on their next home. Lenders can help their clients negotiate a lower purchase price, reduce their interest payments, and eliminate PMI. Today’s podcast features Greg Korn and Ben Petit in an interview from the New England Mortgage Bankers Conference.)

Lender and Broker Software, Products, and Services

In an era defined by technological advancements, Dark Matter Technologies LLC emerges as a transformative force in the mortgage origination landscape, marking its evolution from Black Knight Origination Technologies. Under the Perseus Operating Group of Constellation Software Inc., Dark Matter Technologies remains steadfast in its commitment to pioneering innovation. CEO Rich Gagliano aptly sums up the company’s vision: “Dark Matter Technologies is on a mission to revolutionize the mortgage origination business by supporting, growing, and aggressively innovating new and existing products.” With over 1,300 dedicated mortgage technology experts and a portfolio that includes Empower, AIVA, Exchange, and more, Dark Matter Technologies is poised to lead the industry into a new era of unparalleled transformation. Learn more about Dark Matter Technologies and their mission, here.

There is approximately $9T in agency or government MSR outstanding. Billions of dollars are being transacted daily and this volume requires disciplined loan accounting processes to record loans accurately, produce investor reporting, and power business decisions. SBO from SitusAMC is a comprehensive loan accounting and master servicing platform that reconciles daily and monthly servicer cash collections down to the penny, aiding in the discovery of potentially misplaced funds and enhancing the financial integrity of the entire process. Servicers using SBO produce accurate and timely details providing confidence that their investor reporting obligations are being met. Schedule a demo of SBO with SitusAMC’s client-focused experts.

“Did you hear Capacity’s big announcement at TMC Fall? We’ve acquired Denim Social! Together, we’re building a support automation platform that helps you automate support, connect more authentically with your borrowers, and close more loans, faster. Read the press release to learn more! We also gave away a personalized AI Assessment worth $10,000 to help mortgage lenders identify opportunities for improving their business with AI. Plus, our new GSE Search feature pulls accurate, up to date GSE regulations within seconds using generative AI. Want to join the AI in mortgage revolution? Meet the Capacity team today.”

A new era in loan origination has arrived. Mortgage Machine Services, an industry leader in digital origination technology to residential mortgage lenders, announced the launch of its namesake platform Mortgage Machine™, an out-of-the-box, all-in-one LOS designed to accelerate lenders’ operational velocity and support an end-to-end digital origination process. Developed by digital mortgage pioneer and industry veteran Jeff Bode, Mortgage Machine utilizes intelligent automation, configurable business workflows and a cloud-based infrastructure to optimize the entire loan lifecycle and create a seamless lending experience. Key platform features include AI-powered task automation, a scalable cloud-based infrastructure, flexible APIs, pre-configured workflows for retail and TPO channels, integrated document management and POS functionality. Mortgage Machine also offers all-in-one eClosing capabilities, including an eClose room, eNotes, eVault and RON, and utilizes MISMO SMART Doc® data and security standards. Visit here to get started on your digital transformation journey.

Blend Labs continues to be the mortgage industry’s leading technology platform. Core to the platform is Blend’s unique integration with Desktop Underwriter® (DU®) and LPA. These integrations help streamline your approval process for borrowers, with all the conditions lined up for your fulfillment team. Add in intelligent and automated follow-ups and you’ll get to the closing table faster and more efficiently. Putting this information at the loan officer’s fingertips creates a streamlined process and eliminates manual work which equals lower costs, higher pull-through, and increased revenue. See more ways that Blend is committing to innovation and continues to lead the way.

Looking for timely advice on how to capture more loan volume and improve your bottom line in a down market? Now is the time to explore ways to tap into new markets. Expanding your mortgage footprint through new products and channels or by reaching new geographies insulates your business against economic and interest rate volatility by diversifying your sources of volume and revenue. By setting the groundwork to connect with new borrower markets now, you’ll open new revenue possibilities for when the market inevitably recovers, positioning your business to hit the ground running and beat out the competition. Download this informative eBook from mortgage solutions provider Maxwell for actionable advice, including how to create your expansion plan and choose the offerings best suited to the markets you want to pursue. Click here to download Growing Your Mortgage Footprint: How to Launch New Loan Products, Channels & Geographic Expansions.

Broker and Correspondent Products

Build your book with AFR Wholesale® (AFR)! Now, get the chance to listen from and ask questions directly to AFR and Freddie Mac to turn those prospects to active pipeline at the next Why Wait webinar series covering Manufactured Home Financing on Wednesday, September 20th at 1 PM EST. Register here today! Have you and your borrowers looked into Manufactured Housing as an option? With unbeatable affordability, customization options that are very tailored, quick installation and trusted quality, manufactured homes are worth exploring. Especially with a top lending partner in AFR who has been an industry leader for over 25 years. This is a live webinar, and a recording will not be provided so make sure to join and get great insight and have the opportunity to ask questions and listen to scenarios! Visit AFR Wholesale, email [email protected], or dial 1-800-375-6071. AFR Wholesale® – Don’t wait. Register today!

“With Cash-Outs on the decline during this high interest rate environment, it is important to present your borrowers with different cash-out options. That is why Vista Point is announcing a brand new HELOC product coming soon, in addition to our existing Closed-End Second. Our HELOC product is being designed as a complement to our Closed-End Second to provide a full suite of Equity Solutions. Our HELOC will provide a specific solution for borrowers that want the optionality of an interest-only payment, or the ability to draw up and buy down their line during the 5-year draw period with no Appraisals up to $250k. Just like on our Closed-End Second offering, with HELOC loan amounts up to $550K and combined lien amounts up to $2.5M, your borrowers can get the cash they need without sacrificing their advantageous 1st mortgage rate. HELOC will be available for full doc and bank statements on OO and 2nd homes. For more information, reach out to us, or meet us at the Philly MBA to discuss.”

Capital Markets

We learned last week that prices in August rose by the largest monthly percentage in 15 months. However, that month-over-month inflation was widely expected due to a surge in gasoline prices. Underlying oil prices are also pointing towards further increases in September. Meanwhile, core prices were up 0.3 percent and core goods prices declined by 0.1 percent. Over the last three months core prices have increased at an annualized pace of 2.4 percent, the lowest three-month pace since March 2021. Retail sales rose faster than analysts’ expectations in August, also due to higher gas prices. Many analysts expect consumer spending to slow as excess savings built up over the pandemic have materially declined and credit is increasingly costly and difficult to obtain. Additionally, the resumption of student loan payments is expected to cut into discretionary spending. It will take more than expectations of slower spending before the Federal Reserve feels inflation is firmly under control.

What could move mortgage rates this week? The U.S. Federal Reserve, Bank of England, Bank of Japan, and the central banks of Norway, Sweden, and Switzerland are all announcing rate decisions after a spate of recent inflation data shows that price increases are alive and well. The Fed’s Federal Open Market Committee (FOMC), the action arm of “the Fed,” is not expected to raise rates. It’s unlikely that the commentary around the commitment to keep fighting inflation and higher rates for longer will change either, but it could tilt a little more to the hawkish side after a stronger-than-anticipated inflation report for August.

The week could also see some extra drama on the political front as the countdown continues toward a potential government shutdown on October 1 in addition to the battle between the United Auto Workers (UAW) union and Detroit automakers. The auto worker strike could complicate Fed Chair Powell’s bid for a soft landing. Union leaders are asking for a 36 percent wage increase over four years, to match the similar recent pay increase for top executives. The union also wants pay to rise automatically with inflation in the future, as it did before the financial crisis.

This week brings the aforementioned FOMC meeting that begins tomorrow and concludes on Wednesday with the Statement, updated SEP (where fed funds projections will be closely scrutinized), and Chair Powell’s press conference. The treasury will also be in the headlines with more coupon auctions scheduled: $13 billion reopened 20-year bonds tomorrow and $15 billion reopened 10-year TIPS on Thursday. The only scheduled, probably non-market moving, news out today is the NAHB Housing Market Index for September. We begin the week with Agency MBS prices roughly unchanged from Friday, the 10-year yielding 4.34 after closing last week at 4.33 percent, and the 2-year is at 5.00 percent.

Employment

Are you more energized, more encouraged, and more motivated to succeed today than yesterday? Zig Ziglar famously stated, “People often say that motivation doesn’t last. Well, neither does bathing; that’s why we recommend it daily.” “As an industry leader, Thrive knows that motivation, discipline, and belief in your ability to succeed is critical,” stated Randell Gillespie, National Sales Leader for Thrive Mortgage. “There is no better time than now to find ways to continually motivate your team, which is why we put so much focus on daily opportunities like these at Thrive. Through our weekly High-Performance Coaching Calls, our very own nationally-recognized Marketing Master, James Duncan, leads these motivating and educational experiences for results. The biggest names in the mortgage industry and thought-leadership have been part of our Thrive Nation broadcasts. We want everyone to be better today than yesterday. Start a conversation with us and find out how.

“The fall season is here, and now more than ever is the time to build rapport with your referral partners and clients to maintain a steady stream of business. At Guaranteed Rate Affinity, not only do we have the greatest number of products, but we have the tech platform for our loan officers to do business from anywhere. With PowerVP, you can do anything from creating loan applications to sending pre-approval letters all from your mobile phone. Anything you could do from your desk, you can now do on the go with PowerVP. Gone are the days of being chained to your desk and missing out on important moments. Primarily, it gives you a work-life balance you never thought possible. Luckily, we’re hiring the best of the best loan officers to leverage our tech platform to grow their business. Ready to learn more? Contact Tim McGraw to get started.”

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Source: mortgagenewsdaily.com

Apache is functioning normally

The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.

Some people collect luxury goods such as investment pieces. Think of a Birkin bag, art by the legendary Jean-Michel Basquiat or a Rolex. Anything considered timeless or high-quality and that appreciates in value can be called an investment piece.

The luxury market tends to be more resilient than other sectors during economic instability because of high demand, among other factors. That said, is this inflationary period a good time to invest in luxury goods?

Buying luxury goods amid inflation

The U.S. Federal Reserve has raised interest rates 11 times since March 2022 in an attempt to cool inflation. Interest rates are the highest they’ve been in 22 years, and consequently, we’ve seen the cost of borrowing increase and spending on nonessential goods decrease.

While Americans have cut back on spending, the demand for luxury goods is still strong. Research by J.P. Morgan shows a 7% year-over-year increase in the luxury goods market in the fourth quarter of 2022, despite significant price hikes.

Luxury brands raised the prices of their products by almost 17% in 2020 and early 2021 in response to lower sales during COVID-19, according to a 2022 study by KPMG International. This change is significant considering typical price increases are 5% to 10%. These price increases didn’t only benefit luxury brands; people who invested in these goods in prior years may have also seen gains.

Gloria H. Gill, a retiree who we spoke to on Facebook Messenger, said the value of her large classic Chanel bag has more than doubled in about seven years. Gill purchased the bag for $4,800 in Paris in 2016. It now has a market value of around $10,000.

“I have sold bags before, but I doubt I’ll sell this one,” Gill said. “It’s listed in my will, and my sons are aware of its high value.”

Luxury goods can sometimes hedge against inflation when they appreciate in value, says William Huston, founder of Bay Street Capital Holdings, which has offices in Los Angeles, New York and Fremont, California.

“These luxury goods, they do protect against inflation, but they don’t outperform the general stock market,” he says.

As with any investment, there are risks. As Huston points out, your money could potentially earn a higher rate of return elsewhere. Also, your item could get lost or destroyed, or it may be difficult to resell.

Assess your financial foundation first

Before investing in anything, assess your financial situation. For instance, is your emergency fund well stocked? Keep in mind that possessions are considered “illiquid assets” — not quickly convertible to cash if you need it in a pinch.

Also, saving for retirement comes before investing in luxury goods, says Dora Meyer, a certified financial planner at WellAcre Global Wealth Advisors in Santa Monica, California.

“Make sure you are taking advantage of any tax-advantaged accounts, so your 401(k), your Roth IRAs, before you look at investing in something like this. [And] your HSA,” she says.

Meyer also advises, “Be careful [with] buying on credit, especially in this environment when interest rates are a little bit higher.” And she recommends buying from a reputable source to avoid knockoffs.

Investing in timeless pieces

Valerie Schwank owns the Fashionista Consignment Boutique in Coconut Grove, Florida, where she buys and sells luxury goods. Schwank has seen a significant boom in her business since the pandemic began and is an advocate for investing in luxury pieces. She recommends buying timeless and high-quality pieces, as they tend to hold their value.

“I always recommend that you buy a staple,” she says. And by staple, Schwank means “the Chanel classic double flap, no-nonsense handbag, which has been around forever.”

Think about factors like the color and materials of items, too. That often differentiates timeless luxury goods from ones that won’t hold as much value over time. Keeping your items in good shape, especially if you plan to resell, is also important, Schwank says.

Calculating your potential returns

Research how an item has historically performed before purchasing to ensure it’s a worthwhile investment. You can go to luxury resale sites such as Vestiaire Collective, The RealReal and Rebag and check how pieces have appreciated over time.

Huston advises having a financial plan before making a luxury investment. “With the financial plan, you’d be able to see, ‘I’m 30 years old, I’m gonna save $300 a month,’” he says, as an example. That plan can give you context to decide, “’That’s a meaningful amount of money to me and I can afford that $300, and it’s better for me to save $300 in my 401(k) than to buy a watch,’” he says.

You can also improve your investment returns by negotiating when it comes to items like art, he adds.

“A lot of this luxury stuff is negotiable because again, it’s illiquid” and not easily converted to cash, he says. “So if you find the right person selling the right thing at the right time, you can get it for a really good value because they just want to get some of their money back.”

This article was written by NerdWallet and was originally published by The Associated Press.

Source: nerdwallet.com

Apache is functioning normally

“It can be easy to think that the decisions made by central banks don’t impact the daily lives of normal people, however, the reality is they’re very much likely to,” James McManus, chief investment officer at Nutmeg, told CNBC Make It.

Damircudic | E+ | Getty Images

The U.S. Federal Reserve, euro zone’s European Central Bank and U.K.’s Bank of England have all announced monetary policy moves in recent weeks — and interest rates have once again taken center stage.

The world of central banks and their policies, which include interest rates, may seem abstract — but they affect everyone.

“It can be easy to think that the decisions made by central banks don’t impact the daily lives of normal people, however, the reality is they’re very much likely to,” James McManus, chief investment officer at Nutmeg, told CNBC Make It.

On a very basic level, interest is charged when you borrow money, and paid out when you save money. Interest rates — the rate at which you are charged or rewarded — are set by central banks, like the Fed or Bank of England.

These central banks often raise rates in an effort to cool inflation, and then cut them when inflation is closer to their target. A shift in interest rates affects retail banks and lenders, which then pass them on to consumers.

Pros and cons

How consumers are affected by interest rates varies according to whether rates are higher or lower.

“As a rough rule of thumb, when rates are high, the banks will charge us more for borrowing, and pay a better return on savings. When rates are low, borrowing gets cheaper, but saving gets less rewarding,” Sarah Coles, head of personal finance at Hargreaves Lansdown, told CNBC Make It.

“Borrowing” includes mortgages, student loans, credit card repayments and more. Having higher interest on these payments ultimately means they cost you more.

A real-life example of this is playing out in the U.K., where an ongoing mortgage crisis saw mortgage rates hit a 15-year high in July. Many homeowners are unsure if they can afford the higher payments, while prospective buyers are being put off by the higher cost of borrowing.

This is to be expected, said Russ Mould, investment director at AJ Bell.

“Interest rate rises are supposed to hurt by raising interest bills on mortgages, car loans, credit cards and other finance for borrowers, as those higher bills crimp cash flow and disposable income,” he said.

On the flip side, higher interest rates can boost your savings, Mould added.

“They are, however, potentially good news for savers, as they should, in theory, get higher interest on the cash they have in the bank. That will boost their spending power,” he told CNBC Make It.

Interest rates versus inflation

Interest rates often go hand in hand with inflation (rising prices). Central banks hope that higher interest rates will help bring prices down.

“The theory here is that if more money is spent on borrowing (such as mortgages) and saving is more appealing, people will buy less – therefore reducing demand,” McManus said. “As demand reduces, prices should come down to encourage competition for the reduced level of demand.”

Falling prices might sound like good news, especially in the context of the ongoing cost-of-living crisis.

But interest rate hikes from central banks around the world have also triggered fears of a recession and job losses — both of which are linked to the economic slowdown brought on by higher rates.

Despite these risks, higher inflation can be even more damaging, according to Mould.

“High inflation has not been an issue since the early 1980s so many will have forgotten – or never encountered – its ravages,” he pointed out.

“It does far more damage to far more people that higher interest rates because it hurts the value of everyone’s money by reducing its purchasing power and it affects those who are least well off the most.”

How worried should you be?

Ultimately, the question of how people will be affected depends on their individual situations, Coles said. For example, those with large mortgages will likely be more severely affected by high interest rates, she added.

“However, for someone with no mortgage, inflation feels more painful, and for someone with plenty of savings, higher rates are a bonus,” she said.

Although central bank monetary policy decisions affect everyone’s life in one way or another, it’s important not to worry too much about them, according to McManus.

“Central bank monetary policy goes in cycles, there will be times when interest rates are higher and times when they are lower, the most important thing can often be to plan ahead for both scenarios,” he added.   

Source: cnbc.com

Apache is functioning normally

Homeowner Marie Cantu, 35, lives just outside of Seattle, and has been looking to buy a single-family home outside of Boston to be closer to her family.

The mom-of-five has been “seriously looking” for three-bedroom homes for the last six months. Cantu is hoping to rent her home in Washington, and move roughly before the school year starts, so that her children can adjust better to the new neighborhood. Cantu, a stay-at-home mother, homeschools her children. 

Higher rates make housing more expensive — and less affordable — for aspiring homeowners. They have also been a major factor in keeping would-be home sellers out of the housing market.

On Wednesday, the U.S. Federal Reserve raised the benchmark rate by 25 basis points in line with most Wall Street economists’ expectations, making it the 11th rate hike among the last 12 Fed meetings. The benchmark rate has now reached a 22-year high of 5.25%-5.5%. 

Cantu is fortunate in that she isn’t in a position where she has to sell her home. Her home, which she bought for $700,000, is fully paid off.

She is looking to buy with cash and a partial mortgage at the prevailing mortgage rate. She said that her “ideal” rate would be 3% to 4%, but acknowledges that those rates were historic lows seen during the pandemic. But Cantu said she has accepted higher rates as the new normal, given that the 30-year mortgage interest rate is now hovering just over 7%, more than double what it was two years ago. 

But the house search recently hit a major speed bump. Cantu told MarketWatch that she put an offer in a couple of weeks ago on a home — the only time she got close to buying a home she really wanted — she was outbid. “It was listed at $699,000,” Cantu said, and she offered $715,000. “And someone outbid us,” she said.

Cantu’s brush with the hot post-pandemic housing market — where inventory has been so low that home buyers are once again competing with each other to buy homes — reveals how mortgage rates have pushed the U.S. housing sector into a fundamental supply-and-demand problem.

Demand continues to remain steady as home buyers adjust to the new normal of higher rates. But housing inventory is at a record low, with under a million single-family homes listed for sale on the market. 

The lack of homes is due to the fact that the vast majority of homeowners currently have a 30-year mortgage — well below today’s rate of 7%. They have little reason to sell, as doing so may require them to purchase another home with a much higher mortgage rate. 

“‘I don’t think people should expect mortgage rates to go back to the 3% range. We have short-term memories when it comes to where rates were before COVID.’”


— Melissa Cohn, regional vice president at William Raveis Mortgage.

The 30-year was averaging at 7.04% as of Wednesday morning, according to Mortgage News Daily. Mortgage purchase applications, which gives insight into how many people bought a home with a mortgage, fell 2.5%, according to the Mortgage Bankers Association. 

According to the Atlanta Fed, high rates and home prices across the nation have pushed the cost of homeownership up sharply since the same period last year. For a family earning a median annual income of around $76,000, purchasing a median-priced home of $357,000, they would have to spend 41% of their income on housing, the Fed calculated.

Experts advise home buyers to forget what they saw during the pandemic when it came to rates. “I don’t think people should expect mortgage rates to go back to the 3% range,” Melissa Cohn, regional vice president at William Raveis Mortgage, told MarketWatch. “We have short-term memories when it comes to where rates were before COVID.”

For those who are keen to sell their home or buy three years after a pandemic pushed rates to record-low levels, they should temper their expectations. “We’re not going to see mortgage rates back down to 3% ever in our lifetimes — it’s simply not in the cards,” Lisa Sturtevant, chief economist at Bright MLS, told MarketWatch. “Unless something catastrophic happened again.” 

The good news: rates are expected to fall over the next few years, just not to the most recent low of 2.71% in December 2020. In its July housing forecast, Fannie Mae said it expects the 30-year to go below 6% at the end of 2024. While many homeowners and homebuyers may feel discouraged by that forecast, experts said people will likely acclimatize to a higher interest-rate environment, as people’s circumstances change and selling becomes more imperative. 

What’s a ‘normal’ mortgage rate for home buyers?

Just how low do rates need to go to push people to get back to the property market? 

Americans will have to adjust their expectations, Cohn said. “A buyer will say to you that the rate has to be 3% — but that’s not the reality,” she added. “We have to take the rate during the pandemic out of the equation in order to go back to a healthy real-estate market.” 

A healthy real-estate market would look much like the U.S. housing market between 2015 and 2019, she added, when rates were between 3% and 5%. “That was at a point when rates were low enough that people were like, ‘It’s a good deal. I can afford this,’” Cohn explained.

A more realistic range for the 30-year fixed rate that could be helpful for home buyers would be between 4.75% to 5.25%, Matthew Ricci, a Rhode Island-based home-loan specialist at Churchill Mortgage, told MarketWatch. Within this range, “you will start to see an increase in inventory,” he added.

Recent research suggests that the 30-year falling to a “magic” rate of 5.5% would be enough to push more home buyers to purchase homes, according to John Burns Real Estate Consulting in April.

The company surveyed over 1,300 homeowners and renters, and found that 71% of prospective buyers who plan to buy their next home with a mortgage said they are not willing to accept a rate of over 5.5%. In fact, 62% said that they believe a “historically normal mortgage rate” is less than 5.5%.

What mortgage rate will encourage homeowners to sell — and buy again?

On the flip side, what will it take for homeowners — who are not going to buy another house with all-cash — to sell their homes and for the number of new listings to increase? 

Sturtevant said that a fixed rate below 6.5% for the 30-year could tempt homeowners to start selling, particularly if they are leveraging the significant rise in house prices over the last three years and using equity in their home to reduce the size of their next mortgage.

Many homeowners who sell may be able to tap the proceeds from the sale of their current home to pay for a new one. A first-time buyer, on the other hand, will have to borrow a six-figure mortgage at 7%.

So as rates approach 6%, “I think we’re going to start to see new listing activity begin to increase here in the second half of the year,” she added. 

Sturtevant noted that homes — like Cantu’s home in the Seattle metro area — have appreciated considerably in value over the last few years. Homeowners can, therefore, use that equity if they choose to sell. 

“‘Nobody’s going to be thrilled about trading in their super low mortgage rate for something above 6%, but their home buying and selling is about more than just finances.’”


— Lisa Sturtevant, chief economist, Bright MLS

What’s more, finances and interest rates are just part of the equation. “Nobody’s going to be thrilled about trading in their super low mortgage rate for something above 6%, but their home buying and selling is about more than just finances,” Sturtevant said.

“There are a lot of families and individuals out there living in homes right now that just aren’t right for their families,” she added. Empty nesters, for example, are more likely to be focused on retirement, and may want to downsize to a smaller property with a small mortgage or, indeed, no mortgage at all. In that case, selling up might make sense. 

Others, like Cantu, are renting their current home and buying another, Cohn said. Some “have very low rates, so they can make a very good margin on rental income,” she added.

Ricci said the majority of his clients are either first-time home buyers, people relocating for work, or landlords who are cashing out. “Most people aren’t going to sell unless they have a need to sell,” he said. “Or they’re in a situation where they have multiple properties.”

Cantu, the homeowner from Washington, bought her current home with her husband — who passed away in 2021 — for $700,000. She said that real-estate brokerages estimate that her house is now worth close to $1.2 million. But she still isn’t keen on selling. 

“I don’t want to just cash out to a developer for $1.2 million. I would love to just rent my house for a reasonable price to a family who needs it,” Cantu said. What kind of tenant would she like to get? “Someone who is just priced out of here because it’s gone crazy the last four years,” she said.

But being outbid on her first offer forced Cantu to reckon with the tough housing market. “It was a little crushing because I realized I’m probably gonna have to get a place that needs some work,” she said. 

“It was discouraging,” Cantu said, ‘but I’m going to keep looking.” 

Source: marketwatch.com

Apache is functioning normally

Yes, we’ve all heard it. Buying a home today might seem like the most unaffordable, and therefore impossible, it’s ever been. Home prices are near record levels, pushed up by bidding wars erupting on anything well-situated and move-in ready. Plus, mortgage rates are nearing 7%.

But here’s the thing: The baby boomers had it worse.

In May of this year, the typical buyer spent just under a third of their household income, about 32.8%, on housing. As uncomfortable as that might be, it’s not even close to how much buyers plunked down in the early 1980s.

In 1981, the same year the AIDS virus was identified, the Iran hostage crisis came to an end, and “Raiders of the Lost Ark” topped the box office charts, homebuyers that September and October spent 51.3% of their household income on their mortgage payments.

Let that sink in for a moment.

Furthermore, that percentage doesn’t even include what they paid for utilities, property taxes, insurance costs, and homeowners association fees.

Buying a home is “not as unaffordable as it’s ever been,” says Realtor.com® Chief Economist Danielle Hale. But, “in the grand scheme of things, housing is pretty unaffordable right now.”

To figure out how affordable buying a home has been over the past 50 years, the Realtor.com data team analyzed data going back to 1973. We looked at monthly existing single-family home prices from the National Association of Realtors®, weekly mortgage interest rates for 30-year fixed loans from Freddie Mac, and median annual household income from the U.S. Census Bureau. Then we calculated the typical mortgage payment of a buyer taking out a loan on the median-priced home and what percentage of their household income that would eat up.

The analysis doesn’t factor in regional price differences, new construction, or the percentage of income that individual buyers spent on homes.

“If you go back in history, you can find a period where housing is more unaffordable than it is now,” says Hale. “But you have to go back almost 40 years.”

Why today’s buyers wouldn’t want to purchase a home in 1981

In the fall of 1981, homes were cheap by today’s standards.

The typical single-family home cost just $66,125—about six times less than the cost this past May, according to the most recent data from NAR.

However, the typical household was bringing in only about $19,074 in 1981, according to U.S. Census Bureau data. And mortgage rates topped 18% that fall. (And you thought 7% was rough.)

Those turbo-sized rates meant that 99.5% of a buyer’s first year of mortgage payments was going toward just the towering amount of interest on the loan. The buyer didn’t pay down 10% on the principal of the balance until the 18th year of the loan, assuming the buyer didn’t refinance—which most buyers did. (This calculation includes a 20% down payment.)

Today’s average family is earning about $73,505 a year. But in May, they were contending with median existing-home prices of $410,100 and mortgage rates hovering in the mid-6% range and which have since risen to the high 6% territory. About 85% of their first year’s mortgage payments is going to interest.

One important difference is that instead of waiting nearly two decades to have 10% of their principal paid off, they achieve that milestone by year seven.

“Mortgage rates play a really substantial role in how affordable housing is at any time, especially since so many buyers buy with a mortgage,” says Hale.

Uncomfortable similarities between 1981 and 2023

There are a few similarities between then and now. Inflation was soaring in the early ’80s, causing the U.S. Federal Reserve to hike interest rates. (Sound familiar?) The nation was also in a full-blown recession in 1981. Fast-forward 42 years, and the nation appears to be flirting with another downturn.

The number of home sales slowed in the early 1980s as well as in this post-pandemic housing market as fewer folks can afford to buy due to higher mortgage rates.

Then, as now, most of those purchasing homes earn more than the median income—unless they had very generous family members, stock options, or trust funds. Or they’re existing homeowners who can put the equity they built in their last home into their new one.

“Boomers have been saying things were harder when we were young for a long time. And in some respects, they are right,” says Hale. “But in other respects, they don’t have the same amount of student loan debt and child care costs that young people have today.”

Plus, once mortgage rates fell, most folks who purchased homes in the early 1980s had refinanced their loans to lock in the new rates and “drastically” lower their monthly mortgage payments. By 1986, rates had fallen back down to the single digits.

Recessions and pandemics may be good times to buy homes

As counterintuitive as this may seem, recessions may be financially advantageous for buyers to purchase homes—if they remain employed and have the funds to do so. That’s because interest rates usually (but not always, as the early 1980s demonstrated) fall during economic downturns. That makes homebuying more affordable.

Over the past 50 years, homes were the most affordable as the country climbed out of the Great Recession. In early 2012 and 2013, buyers were spending about 14%—or less—of their income on a home. That’s because mortgage rates were below 4%.

The same thing happened in the early days of the pandemic. The economy ground to a halt as stay-at-home orders proliferated and mass layoffs ensued. To stimulate the economy, the Fed cut interest rates and mortgage rates fell below 3%—for the first time ever.

Those low rates triggered the big run-up in prices and offset those gains. Since buyers were spending less on interest, they could afford to purchase more house. The result? In spring 2020, buyers were spending just under 18% of their income on housing.

“Affordability is one of the factors that kicked off the buying frenzy that we saw in the early part of the pandemic,” says Hale.

It wasn’t until mortgage rates climbed above 4% in March 2022 that buyers began to get priced out. That month they spent just under 25% of their income on housing. As rates ticked up and affordability worsened, more buyers left the market and fewer homes went up for sale (as sellers didn’t want to give up their low rates).

The situation has only gotten worse, with buyers spending nearly a third of their income on housing in May.

“When housing is unaffordable, it’s very tempting to stretch your budget,” says Hale. But with inflation, rising property taxes, and high energy bills, “now’s probably not a good time to do that.”

Source: realtor.com

Apache is functioning normally

The U.S. Federal Reserve this week slashed interest rates for the first time since the Great Recession in 2008, but experts say the move is unlikely to improve what is already a very favorable borrowing environment for home buyers.

The federal funds rate, which governs the rate banks charge each other for short-term borrowing, will now fluctuate around the 2% to 2.25% market, the New York Times reported.

The Federal Reserve said it had decided to lower interest rates in order to avert the threat of an economic downturn. It did so following months of pressure from U.S. President Donald Trump to do just that, though it didn’t say whether or not this actually impacted its decision.

But the rate cut is unlikely to mean the majority of home buyers will benefit from additional mortgage savings. Lawrence Yun, chief economist of the National Association of Realtors, said that as interest rates for a 30-year home loan already hover below 4%, the move may actually provide more benefit to borrowers who use non-traditional types of financing.

“Many borrowers will benefit, especially those with adjustable-rate mortgages and commercial real estate loans,” Yun said. “The longer-term 30-year fixed-rate mortgages will see little change in the near future because they had already declined in anticipation of this latest move by the Fed.”

However, Yun said the lower rates may help with housing affordability in the short-term, as both home prices and rents have consistently outperformed incoming growth in recent years.

“The only way to mitigate housing-cost challenges as a long-term solution is to bring more supply of both multifamily and single-family homes to the market,” the economist added.

At least, the lower cost of borrowing should help buyers to manage rising home prices better, said Danielle Hale, chief economist at realtor.com.

She explained that buyers who spend $1,500 per month on their mortgage can now afford to buy a home worth $402,500 this year, compared to just $367,500 last year, when mortgage rates hovered around 4.57%.

“Last year, buyers would have needed an additional $145 a month on top of the $1,500 to afford a $402,500 home,” Hale said.

In some places, home buyer’s money may stretch even further, Hale said. “An extra $35,000 in purchasing power, depending on where you are in the country, can really make a difference to buyers today. It still counts, even with home prices up 6% nationally. That increase in purchase power is greater than the national price increase,” she added.

Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected]
Latest posts by Mike Wheatley (see all)

Source: realtybiznews.com

Apache is functioning normally

The U.S. Federal Reserve just gave stretched-thin homebuyers a rare break.

The Fed held interest rates steady on Wednesday, declining to jack them up higher this month in its fight to tame inflation. That’s expected to nudge mortgage interest rates down a little by year’s end, potentially saving buyers some money. (While mortgage rates are separate from the Fed’s rates, they often move in the same direction.)

“Mortgage rates have likely peaked,” says Realtor.com® Chief Economist Danielle Hale. “But we’re not going to see a sudden or sharp decline. It’s going to be gradual.”

By year’s end, mortgage rates nationally could drop to the low 6% range as long as inflation continues to slow, predicts Hale. She expects they will eventually head back down to around 5% over the next few years.

Mortgage rates averaged 6.71% for 30-year fixed-rate loans in the week ending June 8, according to Freddie Mac. They averaged 6.95% as of Wednesday, according to Mortgage News Daily. They had fallen below 3% in 2020 and 2021.

“Activity in the housing sector remains weak, largely reflecting higher mortgage rates,” Fed Chair Jerome Powell said during a Wednesday press conference. “Certainly, housing is very interest rate-sensitive, and it’s the first place, really, or one of the first places, that’s either helped by lower rates or is held back by higher rates. And we certainly saw that over the course of the last year. We now see housing putting in a bottom and maybe moving up a little bit. We’re watching that situation carefully.”

Slowing inflation likely helped the Fed decide against jacking interest rates up any further this month. In May, inflation rose 4% year over year. While inflation is roughly double the Fed’s 2% target, inflation isn’t rising as much as April’s 4.9% year-over-year jump, according to the government’s consumer price index. And it’s far below the 9.1% surge of last June.

Plus, the cost of housing, which makes up about a third of the goods and services that are used to measure inflation, is expected to come down this year. That will mostly be a result of falling rental prices, although moderating homeownership costs could also help bring inflation down as well.

The Fed also doesn’t want to put any additional pressure on the banking industry, after several banks recently failed.

“We’ve still got a ways to go, but we’ve made some substantial progress in inflation,” says Hale.

However, the Fed indicated it will likely raise rates next month if inflation doesn’t fall further and the economy continues on its hot streak. Another hike could also happen later this year.

That would likely boost mortgage rates higher than Hale originally anticipated.

“We’ll still be under 6.5%,” she says. “We just won’t get as close to 6%.”

Falling home prices could also help cash-strapped homebuyers. Nationally, the median home list price dipped for the first time year over year since Realtor.com began collecting weekly data in mid-2017. Prices slipped 0.9% for the week ending June 10, according to the most recent data.

Sellers have been forced to adjust their prices to a reality where buyers’ budgets can’t stretch quite as high anymore. Sale prices have been dropping for existing homes, which excludes new construction, since February, according to the National Association of Realtors®. Now, asking prices are catching up.

“There will be some relief,” says Hale. “The number of homes for sale is still pretty limited, so we don’t expect to see big price declines.”

Source: realtor.com

Apache is functioning normally

Apache is functioning normally

MSR Valuation, Non-QM, DPA, Mobile Property Valuation Tools; What’s the Fed Chair Up To? New-Home Housing Market List

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MSR Valuation, Non-QM, DPA, Mobile Property Valuation Tools; What’s the Fed Chair Up To? New-Home Housing Market List

By:
Rob Chrisman

Thu, Jun 22 2023, 10:16 AM

“So, HBO Max is now just ‘Max.’ Your move, Peacock.” Lenders continue to cogitate on their next moves as rates remain stubbornly high and inventory available for sale stubbornly low, and neither appears ready to change much any time in the near future. As I continue to visit with groups of lenders and vendors, lender’s overhead, and how comp figures into that, continues to be a hot topic. STRATMOR’s current blog is titled, “Compensation: Ever Changing,” and I asked STRATMOR CEO Lisa Springer about what lenders are doing in that area. “Lenders in increasing numbers are reaching out to STRATMOR to advise on compensation strategies from a holistic point of view, seeing how changes fit within the entire company. Management teams are thinking about structural changes and capitalizing on the opportunity to create win-win comp programs for both the employees and the companies.” In housing and inventory news, a recent real estate report from Zillow predicts 5% growth in home values this year. Housing inventory remains limited, which in turn continues to push property prices skyward and inflate home value appreciation. And sure you can read this list of hot new-home markets, and may even have branches in them, but do you have the products to offer those buyers? (Today’s podcast can be found here and this week’s is sponsored by MCT and its Hedge Advisory division. Download their recently released whitepaper, Mortgage Pipeline Hedging 101, for more information on hedging in today’s market. Today’s has an interview with Optifunder’s Carmel York that goes through a comprehensive overview of the warehouse lending space and current environment.)

Broker and Lender Services, Products, and Software

“Home equity lenders need fast, reliable, and objective property valuations to streamline processes, lower origination costs and deliver a better borrower experience, all while mitigating risk. This is a tough balancing act, but Black Knight can help. Our innovative mobile app – Validate – simplifies the property valuation process for home equity loans and lines of credit. Validate combines artificial intelligence, a condition-adjusted AVM and up-to-date property data with borrower-supplied property photographs to automatically determine a property’s value and the available equity. With Validate, lenders can save time and money, increase valuation accuracy, manage risk, and provide a better consumer experience. Learn more by scheduling a demo today.”

For many people, homebuyer assistance programs can make the difference between building wealth by making fixed mortgage payments or being subject to the ever-increasing cost of rent. This National Homeownership Month, Jackie, a single woman in the greater Tampa area, shared the story of how mortgage broker Pam Marron of Innovative Mortgage Services helped make her homeownership dreams a reality by pairing Pasco County Community Development’s DPA offering with Freddie Mac’s BorrowSmart program. Down Payment Resource made it easy for Pam to identify best-fit programs, understand requirements upfront and maximize the assistance she could provide Jackie. Learn how Down Payment Resource can help you be a community hero while filling your pipeline with eager first-time homebuyers.

“The Newrez Correspondent team would like to thank all of our lenders and industry partners who took the time to meet with us in NYC for the annual Secondary and Capital Markets Conference and Expo. It is a testament to the team and industry as we came together and discussed ways to navigate this fluctuating market. As a top-tier aggregator, our offering provides the product, pricing, and service our clients need to succeed and grow their business. Looking for Non QM? Our industry-leading Smart Series products are now available through LoanNEX. This product and pricing eligibility platform is available at no cost to our correspondents. Contact your regional sales manager to learn more! Believe it or not, we are only a little over 120 days from the National MBA Convention in Philadelphia. Save the date – We will have meeting space at the Loews Hotel – Stay tuned for more details as we prepare to take on the city of brotherly love! As always, thank you to our customers for their time, business, and partnerships!

Do you have a servicing portfolio? Do you understand how it is valued? With the decline in overall production, the MSR asset has become more critical than ever and effectively managing that asset demands ongoing oversight. MCT offers portfolio valuations that are accurate and easy to understand, with built-in safeguards focused on client and borrower data security. MCT’s fair value analysis and reports are customized to support servicer’s internal requirements and objectives, and extensive number of clients and MSR market knowledge keep your valuations timely, accurate, and reliable. Schedule a phone call with the MCT MSR experts to discuss a customized approach for valuing your MSR portfolio.

Non-Agency and Non-QM News

Sure, non-Agency production remains far below 10 percent of overall volume. But many programs are an important part of an LO’s offering to potential borrowers, and no LO wants to tell a client, “I can’t help you. But this other lender may be able to.” Let’s take a random look at what’s new out there.

Skip the pay stubs with Bank Statement Loans from the Industry’s Leader in Non-QM Solution Lending, Carrington Correspondent. Self-employed borrowers can use 12 or 24 months of bank statements to verify income and secure loans up to $3.5 million.

Summer Specials are in season at LoanStream. BPS’ off on some Government products and Non-QM: Full Doc, Alt Doc & DSCR.

Are your borrowers’ tax returns leaving them with too little income to qualify? Large amounts of tax write-offs can disqualify your borrowers from standard agency and Jumbo transactions. Champions Funding’s Activator loan option may be the perfect fit for those situations without the hassle of submitting tax returns. Now offering ITIN loans for non-U.S. Citizens.

Unite Mortgage, a DBA of Home Mortgage Alliance Corporation (HMAC), is offering the perfect program for borrowers looking to take cash out of their home but don’t want to refinance their 1st mortgage due to having a low-rate locked in. Mortgage Brokers… The 2ND Mortgage Program from Jet Mortgage is here. Contact Aaron Hilton at 623-252-0606 or send an email to [email protected]. Need a Bank Statement income analysis done? Click here and choose Aaron Hilton as your AE. Interested in learning more? Check out the Prime Seconds Matrix and Rate Sheet.

Champions Funding is 100% Non-QM with a dedicated underwriting team to move your files from submission to funding with ease – and GREAT communication. In a recent product update, Champions increased the Max LTV/CLTV by 5% on the Accelerator No Ratio (DSCR <.75) loan products at Champions Funding. Minimum 700 FICO to qualify with maximum loan amount up to $1 Million.

Capital Markets

In an about-face move, markets are seemingly succumbing to the Fed’s “higher rates for longer” projections to reduce U.S. growth to below its long-term trend and contain price pressures, with pricing in fed funds futures suggesting one additional 25 basis points hike at the July Federal Open Market Committee meeting and then holding firm at that level through the end of the year as the most likely outcome. Echoing his comments at the post-FOMC press-conference, Fed Chairman Powell delivered the first part of his two-day semiannual Humphrey-Hawkins testimony on monetary policy to Congress yesterday, telling the House Financial Services Committee in prepared remarks that “there is still a long way to go” in reducing inflation and that most FOMC members expected that further rate hikes are needed this year to thwart persistently high inflation.

Which all reminds me… The semiannual testimony of the U.S. Federal Reserve Chairman to Congress is commonly referred to as the Humphrey-Hawkins testimony in reference to the Humphrey-Hawkins Full Employment Act (the Full Employment and Balanced Growth Act of 1978). The bill was named after its primary sponsors, Senator Hubert Humphrey and Representative Augustus Hawkins, and was enacted with the goal of promoting full employment and stable prices in the U.S. It mandated the Federal Reserve to pursue maximum employment and stable prices as part of its monetary policy objectives.

Additionally, the Act required the Chairman of the Federal Reserve to provide regular reports and testify before Congress on the state of the economy (including the outlook for inflation, unemployment, and economic growth), discuss the central bank’s monetary policy decisions, and answer questions from members of Congress. The term “Humphrey-Hawkins testimony” became popularized as a shorthand way to refer to these semiannual appearances by the Federal Reserve Chairman to discuss the economy and monetary policy with Congress, in accordance with the requirements of the Humphrey-Hawkins Act. And Powell certainly put the “hawk” in Hawkins yesterday.

Fed Chair Powell’s main points were threefold. The inflation target of 2 percent is the goal the central bank intends to get back to, and though inflation has declined over the past year, we have a long way to go to get back there. The Summary of Economic Projections (“dot plot”) sees no rate cuts this year while market forecasts are (still, and likely wrongly) calling for a chance of one at the December meeting. Price stability comes first as a lousy currency negates all the work on the employment part of the Fed’s dual mandate. As Powell said in a recent presser, “Without price stability, the economy doesn’t work for anyone. In particular, without price stability, we will not achieve a sustained period of strong labor market conditions that benefit all.”

Today’s calendar contains three central bank decisions where more rate hikes are expected: the Swiss National Bank (SNB), Norges Bank, and the Bank of England (+ 50 basis points). The (busy) U.S. calendar is under way with the Chicago Fed National Activity Index for May, as well as weekly jobless claims (264k, roughly as expected and unchanged from last week, 1.759 million continuing claims: the labor market is still tight). Later today brings May existing home sales, May leading indicators, KC Fed manufacturing for June, a Treasury auction of $19 billion reopened 5-year TIPS, and Freddie Mac’s Primary Mortgage Markets Survey. Today is also loaded with Fed speakers including Chair Powell’s visit before the Senate Banking Committee, but also Governor Waller, Governor Bowman, Cleveland President Mester, and Richmond’s Barkin. The narrative since last week’s meeting is that the FOMC is trying to figure out whether it has done enough and how much more tightening is needed. After yesterday’s seesaw of rates rallying hard after selling hard, which eventually took us back to flat on the day, we begin Thursday with Agency MBS prices unchanged from Wednesday night, the 2-year at 4.71, and the 10-year unchanged 3.72 percent.

Employment

“Behind the scenes at Sagent! As we continue building the team to propel our vision and mission for the industry, it’s important to also recognize the existing (and powerful) team that have been supporting us since the beginning of our future-of-servicing journey. Meet Greg Lane (Director, Financial Analysis), finance + accounting aficionado, and according to him, “It doesn’t matter what the numbers are supposed to do, whether it’s investments, foam pricing (you’ll have to read to find out why this is relevant), or fintech software FP&A, it’s what I like to do.” But there is so much more to Greg than pricing and forecasting revenue. Greg is a loving husband, father, pet owner, golfer. While in college, he scored an internship in Beijing for 3 months supporting a sole distributor for European beverage brands. Check out our latest employee spotlight piece for a glimpse into Greg’s world and what it’s like to be a part of Team Sagent.”

Are you frustrated as a retail loan officer or mortgage banker with the lack of flexibility to provide custom loan options? Take control: follow the lead of thousands of MLOs like you who have joined the wholesale channel in the last year. Whether you open your own independent mortgage brokerage or join a team as a loan officer, you’ll have the ability to provide your clients with the personalized solutions they need. Contact our team at BeAMortgageBroker.com today and you’ll be well on your way to a more fulfilling tomorrow.

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Source: mortgagenewsdaily.com