WASHINGTON — Inflation and uncertainty surrounding the direction of federal policy on trade, spending and other issues are banks’ top financial stability concerns, the Federal Reserve Board said in a report released Friday.
For its semiannual report on financial stability, the Fed surveyed a range of financial professionals — including broker-dealers, investment fund managers, research and advisory professionals as well as academics — about the top issues facing the financial system. Policy uncertainty emerged as a major new source of anxiety for industry experts — it was cited by 60% of respondents, up from the just 24% of respondents who cited it as a top concern in the Fed’s last survey in October 2023.
Since 2019, the Fed has issued two reports on financial stability per year, usually releasing one in the spring and another in the fall.
Persistent inflation and high interest rates remained the top concern across the board, with 72% of respondents listing it as their primary concern — the same percentage as in the October report. The report indicated that interest rates may remain elevated above current market expectations for an extended period and that persistent inflation could prompt a more stringent monetary policy, causing increased volatility in financial markets and adjustments in asset valuations.
But the rise of policy uncertainty — including unpredictability stemming from fluctuating trade policies, influenced by geopolitical tensions such as the conflict in the Middle East and Russia’s war against Ukraine that has lasted more than two years — was an unexpected source of market disruption for many survey respondents. Respondents also flagged the upcoming U.S. elections in November as a source of stress.
“Further escalation of geopolitical tensions or policy uncertainty could reduce economic activity, boost inflation, and heighten volatility in financial markets,” the report said. “The global financial system could be affected by a pullback from risk-taking, declines in asset prices, and losses for exposed U.S. and foreign businesses and investors.”
Concerns about the credit quality of commercial real estate — which was the No. 2 concern cited in the October report — was cited as a top concern among 56% of the survey’s respondents. But that fell from 72% in the October report. The Fed noted that prices across all sectors of CRE continued to decline in the second half of 2023, and the report makes clear the full impact of CRE price drops have yet to be reflected in the data.
“These transaction-based price measures likely do not yet fully reflect the deterioration in CRE market prices because, rather than realizing losses, many owners wait for more favorable conditions to put their properties on the market,” noted the report. “Capitalization rates at the time of property purchase, which measure the annual income of commercial properties relative to their prices, moved modestly higher but remained at historically low levels, suggesting that prices remain high relative to fundamentals.”
Banking sector instability continued to feature prominently despite the report noting high levels of liquidity and low funding risks in the sector since the October report.
While the Fed’s emergency lending facility, the Bank Term Funding Program, ceased operations on March 11, the report noted the BTFP continues to reduce liquidity pressures for depositories. The report said mostly small institutions with under $10 billion of assets — representing 95% of beneficiaries — benefited from the program.
HELOC, 2nd Mortgage, Pre-Qual, LOS, QC Tools, Dept. of Labor, PrimeLending, and Whistleblowing
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HELOC, 2nd Mortgage, Pre-Qual, LOS, QC Tools, Dept. of Labor, PrimeLending, and Whistleblowing
By: Rob Chrisman
Thu, Mar 28 2024, 11:50 AM
Here’s a tip of the day for anyone manning a conference booth: instead of a pen, or mouse pad, how about a locally made treat? Hats off to Aimee, Bobby, and Mark from Byte Software who earlier this week at the TMC event had chocolate-covered Oreos from a local bakery. Technology was a big topic at TMC… Technology thoughts from 50 years ago? Here you go. (There’s definitely a school of thought which believes that the iPhone changed tech overnight. Almost 20 years later, nothing else has come close.) Vendor news seems to be at every conference, and capital markets staff are certainly big users of tech. At the TMC enclave secondary marketing folks often gravitate toward each other, “shooting the breeze” about odds and ends. For the most part, no one thinks they earn a living by making predictions, instead providing accurate information to other managers and owners, and acting as an advisor about loan profitability, leakage, concessions, and margins. Capital markets staff are also involved in LO and executive recruiting efforts, and in developing strong product offerings to help the company be successful. (Found here, this week’s podcasts are sponsored by Stavvy. Stavvy offers a flexible and fully customizable loss mitigation solution. Servicers can easily adapt to regulatory updates and market conditions, providing a seamless, customer-centric digital experience. Today’s has an interview with AmeriCatalyst’s Toni Moss about the Extreme Climate, Housing and Finance Leadership Summit on April 18-19, in Washington, DC.)
Lender and Broker Services, Products, and Software
“Real estate valuations continue to be complex and ever-evolving, especially today with proposed regulatory changes and unpredictable market dynamics. Creating an effective valuation strategy is vital for lenders to manage risk and streamline operations. Attend our complimentary webinar to learn all about the world of automated valuation models (AVMs). You’ll find out why AVMs are considered a credible, objective option for collateral risk management, how they can help your business (from lead generation and portfolio management to cost reduction and more), and when to use an AVM to address challenges in the current valuation landscape. The webinar hosted by ICE is “When, Why and How AVMs Drive Business Performance” and will be on Wednesday, April 10, at 2 p.m. ET. Save your seat now: register today.
“Step by Step Quality Control Plan Checklist: Comprehensive Guide for Financial Institutions. By following this guide, financial institutions can not only enhance their operational excellence but also strategically minimize their risk exposure. Throughout this comprehensive guide, we dissect each facet of the QC plan, providing valuable insights, practical recommendations, and actionable steps. Our checklist aligns with industry requirements and best practices, ensuring lenders remain steadfast in their commitment to quality within the ever-evolving landscape of financial services. Access Guide.
Many industry vendors talk a good game when it comes to partnering with lenders, but there is a difference between treating a client like a partner and making them feel like a prisoner. Restrictive long-term contracts and financial penalties for not going live or for trying to exit failed implementations are hurting lenders and servicers. These developers make it difficult or impossible for the lender to move to a new, modern system. Lenders deserve better. You won’t get treated that way by MortgageFlex, the creators of the industry’s first cloud-native, unified system for origination and servicing. A re-engineered LOS built by developers that lenders have trusted for 40 years and the industry’s best new software platform operating on the same database makes this the must-see software. See it today.
Why do those in the mortgage space watch the 10-year U.S. Treasury note? Historically, the 10-year U.S. Treasury yield has been considered a key benchmark for mortgage rates. Mortgage rates, however, are not actually based on the 10-year U.S. Treasury note (as is commonly believed). MCT released a blog, “How the 10-Year U.S. Treasury Note Impacts Mortgage Rates” that serves as an excellent primer for how mortgage interest rates respond to moves of the benchmark U.S. Treasury note. The piece discusses why mortgage rates and Treasury yields move together and how bonds are influenced by Treasury yields. With a trusted capital markets partner like MCT, you can rest assured that you will be notified of how economic trends could have the potential to impact your business. Sign up for MCT’s newsletter to receive educational articles like this one and learn more about variables that impact mortgage rates.
Sending your borrowers off on their home search hoping they reach out when they need you is one way to do things. Sending them with a QuickQual that lets them run payment scenarios and generate a letter when they’re ready to submit an offer is another. Check out a sample QuickQual if you’re interested in the latter.
Correspondent and Broker Products
“With spring in the air, Newrez Correspondent is springing into action by adding many exciting enhancements to our product line. We now offer a Closed End Second Mortgage program, Delegated Non-QM for our Smart Series products, and Fannie Mae HomeReady® and Freddie Mac Home Possible® affordable lending mortgage programs including the recent $2500 credits added for qualifying homebuyers. Take advantage of our expansive menu and become a valued customer at Newrez Correspondent by signing up here. You can also reach out to Sarah Johanns to set up a meeting at the Iowa Mortgage Association Conference in Coralville, IA, on April 1 and 2, and Beverly Jordan, Patty Devita, Rebecca Yonaka or John Dubisky at the Great River Conference in Memphis, TN, April 16 through 18. Don’t forget, we would love to meet at the MBA Secondary in New York in May. Set up a meeting here.”
“At Button Finance, we say YES. That is why more and more brokers and correspondent lenders are choosing to fund their HELOANs and HELOCs with Button Finance. Is it the lighting quick turn-times and aggressive pricing, or the limited UW overlays? Can you make up to 5% compensation as a broker or 8% as a correspondent on HELOCs or even originate to our bank statement and investment property programs? The answer is YES, YES, YES, YES, and YES. Available equity is at historical levels, so now is a great time to offer your past and prospective borrowers Button Finance HELOAN or HELOC to pay off high-interest revolving debt. Button Finance programs allow FICO scores as low as 660, CLTVs to 90%, and debt ratios to 50%. We have excellent correspondent offerings as well. Correspondents typically make $18,500 on a $250k HELOC closed in 10 calendar days without an appraisal. Contact us today.”
Department of Labor and Whistleblowers
The U.S. Department of Labor has ordered a former senior vice president and two managers employed by PrimeLending to pay $35,000 in emotional damages and the legal fees of two California employees who the company fired illegally after they reported a branch manager pressured them to pass on fees to loan applicants caused by the company’s internal processing delays.
“Investigators with the department’s Occupational Safety and Health Administration found the nationwide lender violated whistleblower provisions in the Consumer Financial Protection Act by terminating the employees who raised their concerns with a regional manager and senior vice president of Human Resources.
“’Employees who report potential consumer fraud are protected by federal law against retaliation of any kind. Under the Consumer Financial Protection Act’s whistleblower provisions, managers can be fined personally for retaliation,’ explained OSHA Regional Administrator James D. Wulff in San Francisco. ‘In this case, OSHA fined three PrimeLending managers for trying to prevent workers’ concerns from coming to light. The U.S. Department of Labor will not tolerate retaliatory actions against workers exercising their rights and those responsible for such actions will be held accountable.’”
“In addition to payment of personal damages, OSHA ordered PrimeLending to pay an undisclosed amount in lost back wages and interest to the employees. The company must also expunge the employment records of both employees, post an anti-retaliation notice at all its branches and train its employees about their rights under the Consumer Financial Protection Act.
“The company and the managers sanctioned may appeal OSHA’s order to the department’s Office of Administrative Law Judges.
“OSHA enforces the whistleblower provisions of the Consumer Financial Protection Act and 24 other statutes protecting employees who report violations of various motor vehicle safety, commercial motor carrier, airline, consumer product, environmental, financial reform, food safety, healthcare reform, nuclear, pipeline, public transportation agency, railroad, maritime, securities, tax, antitrust, and anti-money laundering laws and for engaging in other related protected activities. For more information on whistleblower protections, visit OSHA’s Whistleblower Protection Programs webpage.”
Capital Markets
Not a whole lot to report from yesterday. Consumer confidence was little changed in March with consumers remaining concerned about elevated price levels, according to the Conference Board. Consumers expressed more concern about the U.S. political environment compared to prior months. The market saw a bit more buying than in previous days in reaction to a strong $43 billion 7-year note offering.
Since we can’t go a day without talking about the Fed, you’ve probably noted that some Federal Open Market Committee voters ratcheted back their estimates to two rate cuts in 2024 from the group consensus of three 25 basis point rate cuts. However, of potentially more interest to the mortgage industry is the central bank’s massive balance sheet of Treasuries and Agency mortgage-backed securities (MBS) that remains from the past 15-ish years of aggressive experimental monetary policy.
The Fed has been open about wanting to eventually get back to an all-Treasury balance sheet, so it is expected that the central bank will not halt the run-off of Agency MBS that has averaged about $16 billion per month over the last six months. The central bank is expected to reinvest those proceeds into Treasuries, so where will demand for Agency MBS come from? Hopefully, domestic banks. U.S. domestically chartered commercial banks’ total holdings of securities as a percentage of their balance sheet, and Agency MBS in particular, has ticked up over the last six months. This trend should continue as long as the relative value of Agency MBS remains favorable compared to investment-grade corporates and Treasuries.
Tomorrow the markets are closed, and today brings a busy schedule in terms of data ahead of a SIFMA recommended early close, which also happens to be month and quarter-end, ahead of Good Friday. There will be a commentary tomorrow that includes the PCE reading, the Fed’s preferred measure of inflation. This morning we’ve had the final look at Q4 GDP (3.4 percent, higher than previously but viewed as old news) and weekly jobless claims (210k, 1.819 million continuing claims). The core PCE deflator was (3.3) versus an expectation of unchanged at 2.1 percent. Later today brings Chicago PMI for March, Michigan sentiment, pending home sales for February, KC Fed manufacturing, several Treasury auctions of short duration bills, and Freddie Mac’s Primary Mortgage Market Survey.
We begin the day with Agency MBS prices little changed from Wednesday, and little changed all week! The 10-year is yielding 4.23 after closing yesterday at 4.20 percent and the 2-year is at 4.62… little movement after a salvo of news.
Jobs
Canopy Mortgage in National spotlight: Massive sales growth, onboarding an average of 1 producing loan officer every other day! What’s attracting LO’s to move in droves? Canopy is “Giving Loan Officers the Power to Grow” – read full article on forbes.com. Canopy’s magnetic growth is coming from relationships, referrals and jaw-dropping tech demos. If you haven’t heard about Canopy yet …ask a friend! Canopy is building the future of mortgage lending through relationships and innovative mortgage tech, and is hiring producing LOs nationwide (except NY). Don’t miss out! Schedule a Tech Demo, or simply look at your numbers with Josh Neumarker today 888-696-9076.
Planet Home Lending, a national mortgage lender, servicer, and asset manager, has hired Andy Insua as Regional Sales Manager for the Southeast. Congratulations!
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Investors can look at a company’s price to earnings ratio, among many other metrics, to help determine if a stock is a worthy investment. This figure gives an investor a quick read on how much a stock costs compared to that company’s profitability — the earnings.
However, the price to earnings ratio alone does not tell investors everything they need to know about a stock and whether it is a sound investment. But the price to earnings ratio is a helpful tool available for all investors when analyzing stocks.
Table of Contents
What Is the Price to Earnings Ratio?
The price to earnings ratio (sometimes written as the P/E ratio, PER, or P/E) is a ratio of a company’s current share price relative to the company’s earnings per share (EPS). This ratio provides investors with an understanding of how the market feels about a company (stock price) compared to the company’s profitability (EPS).
One of the main benefits of the P/E ratio is that it gives investors and analysts a way to compare different companies on a more level playing field. The stock price or earnings alone may not be adequate to compare investments, but the P/E ratio can be used to compare the valuations of companies in similar sectors. 💡 Quick Tip: When you’re actively investing in stocks, it’s important to ask what types of fees you might have to pay. For example, brokers may charge a flat fee for trading stocks, or require some commission for every trade. Taking the time to manage investment costs can be beneficial over the long term.
P/E Ratio Formula
The formula for calculating price-to-earnings is fairly simple:
Price to Earnings Ratio = Current Stock Price ÷ Earnings per Share
The price to earnings ratio is calculated by dividing a company’s current stock price (P) by the company’s earnings per share (E).
An investor can find the company’s current share price by looking up the stock’s ticker symbol on any search engine or financial website.
The EPS of a company can also be found on a financial website, but investors should be aware that there are different ways to calculate this figure.
Generally, the EPS is calculated by using a company’s earnings over the previous year, usually called the trailing 12 months (TTM). It is also possible to calculate EPS using the earnings guidance that a company provides in its quarterly earnings release. These are called forward earnings or forward-looking earnings.
These different versions of EPS determine the trailing and forward P/E, respectively.
If a company has yet to report earnings or is reporting losses, then its P/E ratio will be N/A, or not applicable.
Recommended: The Ultimate List of Financial Ratios
Examples of P/E Ratio Calculation
Company XYZ has a current stock price of $10 per share. The company’s earnings per share was $2 for the previous twelve months. In this example, Company XYZ would have a P/E ratio of 5, which is $10 per share divided by $2 per share.
$10 per share ÷ $2 per share = 5 P/E
With the data related to earnings and stock prices, an investor can calculate P/E with relative ease.
Interpreting the Results of P/E Ratio
Being able to calculate P/E ratio is one thing – being able to interpret it and put it to use as a part of an investment strategy is another.
What is a Good P/E Ratio?
There is no “good” P/E ratio, and the current P/E ratio of a company doesn’t provide much information alone. In the examples above, a high or low P/E ratio does not necessarily make one stock a more attractive investment over the other.
To determine if a P/E ratio suggests a good investment opportunity, an investor should compare it to similar stocks, the overall market, or a company’s past performance.
High P/E Ratio
If the current P/E ratio of a company is high relative to its past P/E ratio or compared to similar companies, it could be an indication that the stock is overvalued. An overvalued stock could mean that investor exuberance boosts the stock price, especially if earnings remain low, thereby representing poor value.
However, a high P/E ratio may indicate widespread investor confidence in a company’s position to grow and expand. This high ratio can indicate a growth stock, where investors believe the company’s future earnings will be higher than current profitability.
Low P/E Ratio
If the current P/E ratio of a company is low, it could indicate that the company’s stock is underpriced and represents a good value. Some analysts believe that stocks with relatively low P/E ratios present buying opportunities, allowing investors to purchase an undervalued stock that still has strong earnings. Investors seeking out these value investments expect a potential for share price growth.
On the other hand, the low P/E ratio may also indicate that investors are actively selling shares and driving the price down. Such a wide-scale selloff would suggest that investors are losing confidence in the stock, and a low P/E is an alarm.
Recommended: How to Evaluate a Stock Before You Buy
Types of P/E Ratios
There are two main P/E ratios: the trailing P/E and the forward P/E. These ratios use different measures of EPS depending on whether an analyst is interested in the past performance of a company (trailing P/E) or the future earnings of a company (forward P/E).
Trailing P/E
The trailing P/E relies on examining the past performance of a stock. It is calculated by dividing the current share price by the earnings per share over the past 12 months (TTM). Some analysts prefer the trailing P/E because it’s based on actual earnings performance rather than guidance that a company may provide.
However, the trailing P/E may be a misleading indicator because a company’s past earnings performance doesn’t necessarily predict future results. Investors want to put their money where they expect future earnings power, not the past.
Forward P/E
The forward P/E uses future earnings guidance rather than a company’s previous earnings. This forward-looking ratio can be helpful because investment decisions are generally better made based on future expectations than past results.
But this doesn’t mean the forward P/E is a flawless indicator. The forward P/E can be problematic because companies may miscalculate earnings expectations, and external analysts may miss on earnings forecasts for a company.
P/E Ratio Comparison
Though popular, the price to earnings ratio is just one of many indicators that investors use when analyzing stocks.
P/E Ratio vs P/S Ratio
The price-to-sales ratio (P/S ratio) is calculated by dividing a company’s current stock price by the company’s revenue per share. Another way to determine the P/S ratio is by dividing the company’s market capitalization by the company’s total revenue. So, while the P/E ratio looks at a company’s bottom line, the P/S ratio is concerned with a company’s top line.
The P/S ratio provides an alternative to the P/E ratio that can be useful when analyzing companies that are young and yet to make a profit. When a company shows negative earnings, they do not have a P/E ratio. The P/S ratio fills that void.
In general, a lower P/S ratio suggests that a company is a more attractive investment.
P/E Ratio vs EPS
Earnings per share (EPS) is the denominator of the P/E ratio equation. EPS is the bottom line of a company, indicating its profitability. It is calculated by dividing a company’s net profit by the number of its common shares. By looking at a company’s EPS over time, an investor can see how the company’s profitability is changing.
Though the EPS metric is good for comparing a company’s profits over time, it can also be misleading when a company repurchases or issues new stock. Those moves could raise or lower the EPS, respectively, even if the net income stays the same.
When analyzing a stock, it is wise to examine both the P/E Ratio and the EPS. 💡 Quick Tip: Did you know that opening a brokerage account typically doesn’t come with any setup costs? Often, the only requirement to open a brokerage account — aside from providing personal details — is making an initial deposit.
Pros and Cons of Using P/E Ratio
As mentioned above, there are benefits and drawbacks to using the P/E ratio to evaluate stocks. Here are some of the pros and cons of using the P/E ratio.
Pros and Cons of Using P/E Ratio
Pros
Cons
Easy to calculate
Based on earnings from the past, or potentially misleading forecasts
Widely used by investors and analysts
Can be manipulated with share buybacks
Helps investors compare stocks
Can’t be used for companies that have no net income
Can indicate undervalued and overvalued stocks
Doesn’t factor in other financial metrics, like debt
The Takeaway
The P/E ratio is a useful metric for investors when evaluating stocks. The ratio can help an investor wrap their heads around the value of a stock and how it compares to similar companies. However, the metric is just a starting point, and investors shouldn’t make decisions based on a stock’s P/E ratio alone.
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For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.
FAQ
What does PE ratio tell you?
P/E ratio tells investors how a company’s revenue relates to its share price, and can be used as an indicator that a stock is either over or undervalued.
What does a PE ratio of 10 mean?
A P/E ratio of 10 means that a stock is trading at ten times the company’s annual profits.
What does a PE ratio of 120 mean?
A P/E ratio of 20 means that a stock is trading at 20 times the company’s annual profits.
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The Hilton Honors American Express Aspire Card is a premium card that comes with a number of benefits, including Hilton Honors™ Diamond Status, a $400 Hilton resort credit, a $200 airline credit and more. Terms apply.
Hilton and American Express recently updated the Hilton Honors American Express Aspire Card benefits so that cardholders can earn free Hilton award nights. Below we’ll dive into whether it’s worth taking advantage of this new benefit.
How to earn free hotel nights with the card
In the first year of your card membership and every year at renewal.
New: After making $30,000 in purchases on your Hilton Honors American Express Aspire Card in a calendar year.
New: After making $60,000 in purchases on your Hilton Honors American Express Aspire Card in a calendar year.
Terms apply.
While you’ll continue to earn at least one free award night each year with your Hilton Honors American Express Aspire Card, is it worth spending up to $60,000 for extra free nights?
Spending $30,000 to earn a free reward night
If you’re able to maximize the value of the free award night, it may very well be worth spending $30,000 on the Hilton Honors American Express Aspire Card to earn an extra free reward night. Terms apply.
14 points for every $1 spent at a Hilton property.
7 points for every $1 spent on flights booked directly with airlines, travel booked on amextravel.com, on select car rental companies and at U.S. restaurants.
3 points for every $1 spent on everything else.
Terms apply.
This means that, at a minimum, you’ll earn 90,000 Hilton Honors points by spending $30,000 on your Hilton Honors American Express Aspire Card.
Those 90,000 points would be worth approximately $450, given NerdWallet valuations. This comes out to be a 1.5% return on that $30,000 spend. That said, you have the potential to earn even more points if your $30,000 in spend includes money spent on a Hilton stay or on the 7x categories listed above.
The opportunity cost
This comes out to a minimum return of 2.8% if you spend that $30,000 on the Capital One Venture X Rewards Credit Card.
When it could still make sense
Even though the points you earn from the Hilton Honors American Express Aspire Card may be worth less than the amount you’d earn with other cards, this doesn’t take into account the value of the free Hilton award night you’d get after spending $30,000 on your card in a calendar year. If you’re able to maximize the value of your free award night with Hilton, the math can change completely. Terms apply.
For example, you could use your free award night to book a standard room at the Waldorf Astoria Maldives Ithaafushi — when we checked, the cheapest stay cost $2,735 after taxes and fees.
🤓Nerdy Tip
Hilton award stays waive resort fees.
If you take the $2,735 for the free award night and add the $450 in value you’d otherwise earn from spending $30,000 on the Hilton Honors American Express Aspire Card, this comes out to $3,185 worth of earnings on the card, or an impressive return of 10.6% for every $1 spent on the card. (Keeping in mind that you probably wouldn’t fly to the Maldives for a one-night hotel stay.)
The math is very different if you use your free award night for a less expensive hotel. For example, if you used the free award night at the Hampton Inn Dalton in Georgia, the cash price of the same night would only be around $123, including taxes and fees.
If you take the $123 for the free award night and add the $450 in value you’d otherwise earn from spending $30,000 on the card, this comes out to $573 worth of earnings, or a return of 1.9% for every $1 spent. This is less value than if you had the same spend on the Capital One Venture X Rewards Credit Card.
The bottom line is that it’s only worth spending $30,000 on your Hilton Honors American Express Aspire Card if you can maximize the value of the free award night by booking a stay at an otherwise expensive property.
Spending $60,000 to earn two free reward nights
You’ll want to do similar math to determine whether it’s worth spending $60,000 on your Hilton Honors American Express Aspire Card to earn two free award nights (since you earn one free award night after $30,000 in spend and a second free award night after you hit $60,000 in spend).
If you spend $60,000 on your Hilton Honors American Express Aspire Card, you’ll earn a minimum of 3 points per $1 spent, or 180,000 points worth $900 per NerdWallet’s valuation — a return of 1.5% for every $1 spent on the card. Terms apply.
If you’re able to maximize your free award nights at high-value Hilton properties, it could again make sense to spend $60,000 on your Hilton Honors American Express Aspire Card.
When should you skip it?
Below are some scenarios where spending $30,000 (or $60,000) on your Hilton Honors American Express Aspire Card to earn free award nights may not make sense:
You may not use the award night, since they generally expire within one year.
You may not use the award night at a high-cost property.
You are instead putting that spend toward a credit card that offers a high sign-up bonus.
You’d rather get a credit card that includes airline or hotel status.
You have The Hilton Honors American Express Business Card, where you earn a free award night after spending only $15,000 in a calendar year. Terms apply.
Since there’s no one-size-fits-all solutions, you’ll want to think about how you’ll use your Hilton free award nights compared to how you’d earn points used on another credit card before deciding to commit to the $30,000 or $60,000 spend requirements on the Hilton Honors American Express Aspire Card.
The bottom line
Hilton and American Express updated the Hilton Honors American Express Aspire Card so that you can now earn an additional free award night after spending $30,000 on the card in a calendar year, or earn two additional free award nights after spending $60,000 on the card in a calendar year. It’s only worth taking advantage of this benefit if you plan to redeem the Hilton free night awards at a high-value Hilton hotel.
Given that, you should carefully think about how you’ll use the free award night certificates before committing to spending the $30,000 or $60,000 needed to get the free Hilton award nights on your Hilton Honors American Express Aspire Card. Terms apply.
All information about Hilton Honors American Express Aspire Card has been collected independently by NerdWallet. Hilton Honors American Express Aspire Card is no longer available through NerdWallet.
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 2024, including those best for:
Fun with numbers: Did you know that, at age 22, Billie Eilish has won twice as many Oscars (2) than 80-year-old Martin Scorsese (1)? (And yes, Samuel L. Jackson, Tom Cruise, and Johnny Depp have won a cumulative total of 0.) Lenders and vendors didn’t have a lot of fun with numbers in 2023, with overall production dropping from $4.4 trillion in 2021 to $1.6 trillion last year, a drop of 63 percent in dollar volume, even more in units since average loan amounts have gone up. Yes, this is an over-simplification, but have you cut your staffing and expenses by 63 percent? (The MBA is predicting $2 trillion this year.) Lenders and vendors who want to stay in business aren’t sitting on their hands, and many are out there adding related businesses (title, insurance), avoiding overly competitive markets or low margin products, monitoring branches or LOs taking advantage of pricing concessions, engaging in aggressive cost-cutting and renegotiating contracts and compensation packages, and tweaking their business models and channels. All easier said than done. (Found here, this week’s podcast is sponsored by Lender Toolkit. With Lender Toolkit’s AI-powered AI Underwriter and Prism borrower income automation tools, you’ll be able to get loans approved in under two minutes. Hear an interview with money manager Vijay Marolia on the affordable housing shortage.)
Lender and Broker Services, Products, and Software
Revolution Mortgage, a nationwide lender, partners with OptiFunder for end-to-end warehouse automation. “We’ve been using OptiFunder to help us manage our warehouse allocations for years. The optimization savings, easy platform, and customer service made us instant fans of OptiFunder,” said Revolution CEO and Founder Tony Grothouse. “We have recently expanded our use of the system to automate our entire funding process. Our team leverages technologies every day to boost efficiencies in the loan process.” Founded in 2019 to bring optimization and automation to the mortgage industry, OptiFunder has automated over a half million processes for originators, including funding, wire data checks, collateral shipping, purchase advice reconciliation and writeback to the LOS, paydown requests and more. With connections to over 150 warehouse lenders and investors, OptiFunder offers the most comprehensive automation from funding through loan sale. Schedule a demo or meet with us at ICE Experience 24 to learn more about our robust automation.
Mortgage capital markets tech leader Polly launches Lender Intelligence platform, leveraging robust data and analytics to drive margin expansion and cost reduction. Lender Intelligence provides a holistic view of a lender’s business and the wider competitive landscape via granular data visualizations that illustrate enterprise, market, and competitor benchmarking data and indices. “Polly has already established an unmatched reputation by reinventing the PPE to prioritize flexibility, granularity, and scalability. In 2024 and beyond, we will only continue to advance this innovation-focused approach and its application to mortgage data and analytics,” noted Founder and CEO Adam Carmel. Learn more about Polly and Lender Intelligence next week, March 18-20, at ICE Experience 2024. Schedule a meeting here, or visit Polly in #X24 booth 221.
This week, Floify launched Lender Edition, a newly badged version of the popular point-of-sale configured to give IMBs, credit unions and banks best-in-class tools at an accessible price point. While some vendors are squeezing lenders on pricing during market hardship, Floify is committed to being a supportive partner by offering flexible per-loan pricing without compromising access to product features or quality. Floify is popular for its intuitive interface for borrowers and lenders, and efficiency-driving features, such as automated document management workflows, free native eSign, verification of income and employment waterfall functionality, and loan progress transparency. The Floify team will be out in force at ICE Experience. Click here to schedule a meeting or visit booth 418.
“We know that not all property data is equal, and it certainly shouldn’t be viewed as a commodity. With data playing such a critical role in virtually every aspect of a mortgage (underwriting decisions, risk management, property, and asset valuation), it makes sense that you would get your data from a trusted provider. That’s why we wanted to highlight First American Data & Analytics and their industry-leading repository of recorded property document images. It’s true: more than 8 billion and growing! As a nationwide single-source solution, they are proud to provide property document images that are current, complete, and accessible. Feel confident in your ability to know where and how to locate the data, documents, and reports you need. Sound good? Learn more and get a sample of their data.”
“Hey credit union mortgage lenders, we have a webinar specifically tailored for you! As you know, unique challenges can arise when valuing new construction for your members. To help you navigate these complex projects, Class Valuation has assembled an expert panel with deep background knowledge of credit union lending, new construction, valuations, and the intersection of all three. Join our veteran panelists for insights on selecting appropriate comparable sales, selecting qualified appraisers, valuing the site, understanding ANSI standards, managing inspections, timing, and more. Titled “Successfully Navigating the Challenges of New Construction Valuation,” this webinar will equip you to do just that. This webinar is a valuable opportunity for credit union mortgage lenders to gain essential knowledge and strategies for navigating the complexities of new construction valuation. Don’t miss out – register today!”
Correspondent and Servicing-Released Options
Discover unparalleled expertise in multifamily servicing with Planet Management Group and Planet Loan Servicing at the IMN Texas Middle-Market Multifamily Forum in Dallas. As industry leaders, we’re ready to showcase our innovative solutions and expert advisory that empower investors to optimize their portfolio value. Join us for a convergence of trailblazers and gain insights that will shape the future of multifamily living in Texas. To secure your spot now with Samantha Manfer and Caitlin Moynihan, reach out or call (585) 512-1030. Elevate your investment strategy with us at the forefront of multifamily evolution.
If you read this column regularly, you know AmeriHome is the 2nd largest correspondent investor in the country and backed by the strength of Western Alliance Bank. There’s no better time than now to speak to an AmeriHome sales representative about everything from AmeriHome’s industry leading correspondent acquisition platform for Delegated and Non-Delegated lenders to Western Alliance’s specialty services such as Warehouse financing for lenders of all sizes, MSR financing, specialized Treasury Management Services, and corporate credit cards! AmeriHome continues to evolve its product offerings, having recently removed cash-out restrictions on VA loans and announcing that they will now purchase HomeReady and Home Possible loans with the $2500 grant for Very Low Income (VLIP) borrowers. Don’t miss them this month at the MCT Exchange in San Diego or the Houston MBA Golf Classic! Check Upcoming Events for details, find your sales representative, or email them to learn more about connecting with AmeriHome.
Agency News and Updates
Fannie Mae spread the word that lenders now will be able to validate assets, income, and employment with a single 12-month asset report in Desktop Underwriter®. That same asset report will also identify the borrower’s positive rent payment history and cash flow history. This could be a boon for both lenders and homebuyers – think faster cycle times, less paperwork, and enhanced access to credit, not to mention the ability for lenders to get Day 1 Certainty®, which can help improve loan quality and reduce the risk of repurchase. The enhancement goes into effect in DU on March 29. Reach out to your Fannie Mae representative for help getting started.
So yes, on March 29, Fannie Mae will update Desktop Underwriter® (DU®) validation service to allow for the digital verification of income and employment for casefiles submitted to DU which reference an eligible third-party asset verification report. Refer to the following resources to learn how DU validation service can help simplify your processes. Validation Using a Single Data Source. Read Release Notes. View the integration impact memo.
Freddie Mac Single-Family Seller/Servicer Guide Bulletin 2024-3 announces updates pertaining to: Uniform Loan Delivery Dataset (ULDD). Implementation notes that provide updates to existing ULDD data points, New ULDD Phase 4a valid values related to automated collateral evaluation (ACE), ACE+ PDR (property data report) and ACE+ PDR upgrade to hybrid, ULDD Phase 5 requirements for specific property data, mortgage products and data points, Manufactured homes closing protection letters.
Fannie Mae remains committed to expanding opportunities for those who are ready to purchase a home and maintain a mortgage. Recent innovations include: an enhanced pre-qualification experience through the DU early assessment to help lenders determine homebuyer preparedness and mortgage options earlier without the impact of a hard credit check on the consumer. An income calculator to help mortgage lenders automate the calculation of self-employment income streams during the underwriting process for homebuyers who don’t have traditional sources of income. A down payment assistance tool to help homebuyers find the down payment and closing cost assistance they need. Fannie Mae’s award-winning HomeView® and HomeView en Español, providing consumers and first-time homebuyers with educational tools and information about financial literacy and homeownership.
In March, the Fannie Mae Selling Guide has been updated to expand the DU validation service to allow income and employment validation using an asset verification report. Details can be found in Fannie Mae SEL-2024-02.
Fannie Mae is committed to promoting servicer awareness of fair servicing best practices. In 2023, Fannie conducted outreach with servicers and consumer advocacy groups to capture their efforts to ensure fair servicing. Refer to this resource as you develop and/or enhance your best practices.
Fannie Mae issued the following reminder: Use of the Uniform Property Dataset (UPD) will be required for value acceptance + property data offers as of April 1, 2024, when Fannie Mae’s proprietary Property Data Standards V6 will be retired. Explore the UPD page for more information including the current list of UPD service providers.
Pennymac updated Conventional LLPAs, effective for all Best-Efforts Commitments taken on or after Tuesday, March 05, 2024. View Announcement 24-19 for details.
Pennymac confirmed FHA’s non-borrowing spouse requirement and updated its guidelines accordingly. Refer to Pennymac Announcement 24-40 for examples.
As part of its commitment to maintain the highest quality and security of client data, Pennymac has finalized implementation of Multi-Factor Authentication (MFA) Technology in the P3 client portal with enforcement effective Friday, March 8, 2024.
“CMG is aligning with Fannie Mae and Freddie Mac regarding F&F’s announcement of a temporary enhancement to their HomeReady and HomePossible products. This enhancement includes a $2,500 credit for very low-income borrowers (VLIP) that can be used for down payment and closing costs. The loan must meet all of the guidelines and requirements defined by Fannie Mae and Freddie Mac in order for the loan to be eligible for purchase. This grant will be effective immediately for all new applications submitted. This is a temporary credit and CMG Corporate Credit will advise clients on the closing date for applications next year. If incorporating a HomeReady or HomePossible Very Low-Income Purchase (VLIP) within your Bulk Commitment, please contact our CMG Secondary [email protected] to let us know how you are labeling your VLIP loans.”
Arch MI announced a new second-lien product for its first-lien customers. Arch MI Equity Secure℠ provides mortgage insurance (MI) coverage on eligible home equity loans through Arch Mortgage Assurance Company (AMAC).
PHH Mortgage has made several modifications to the Seller Guide to adhere to agency guidelines and incorporate advancements.
Capital Markets
Interested in learning more about moving from best efforts to mandatory loan sales? Maybe you’ve already moved to mandatory and are looking for even more pickup and ways to mitigate risk? Join MCT’s Moving to Mandatory Loan Sales webinar on April 4th at 11am PT to learn how mandatory loan sales is helping lenders improve profitability while reducing risk. In this webinar, MCT’s Scott Holtz, Vice President of South Regional Sales, will discuss how to leverage mandatory loan sales to improve profitability, manage risk with pipeline hedging, and operational changes needed for the transition. Register for the webinar or join MCT’s newsletter to receive the latest educational content.
As far as the bond market is concerned, investors yesterday continued to digest the February CPI data, in which consumer prices rose more than analysts anticipated. And despite excellent demand as the U.S. Treasury reopened $22 billion in 30-year bonds, selling was the “trade of the day.” That selling added to post-CPI losses ahead of today’s release of PPI (expected 0.3 percent month-over-month) and Retail Sales (expected 0.7 percent month-over-month) for February.
Today’s busy economic calendar is already under way with retail sales (+.6 percent, somewhat less than expected, ex-auto +.3 percent), PPI (+.6 percent, twice what was expected, core +.4 percent), and weekly jobless claims (209k, little changed from 210k; 1.811 million continuing claims). Later this morning brings January business inventories, a series of Treasury auctions that include 20-year bonds and 10-year TIPS, and Freddie Mac’s Primary Mortgage Market Survey. We begin Thursday with Agency MBS prices worse about .125 from Wednesday evening, the 10-year yielding 4.22 after closing yesterday at 4.19 percent, and the 2-year yielding 4.66 after the reminder that inflation is not going down and the labor market continues to be strong.
Jobs
A mid-sized, Mid-West lender is looking for a Wholesale Underwriting Manager to join its leadership team. As a key player in a growing organization, you’ll be responsible for overseeing and elevating the wholesale underwriting process. If you’re looking for a role with a seat at the table and the ability to make a difference, this position may be for you! Remote applicants will be considered. Interested parties should contact Chrisman LLC’s Anjelica Nixt to forward your resume.
Don’t forget that anyone displaced from their position can post their resume for free on www.lendernews.com and potential employers can view resumes for several months for the nominal charge of $75.
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In remarks made Thursday to the Senate Banking Committee this week, Federal Reserve Chair Jerome Powell said he expects some U.S. banks to fail in the coming months because of declining values and defaults in their commercial real estate loan portfolios.
According to reporting by multiple outlets, including The Hill, Powell indicated that the risk is tied to small and midsized banks, and there is no systemic risk to the banking sector posed by the potential collapse of major institutions.
“We have identified the banks that have high commercial real estate concentrations, particularly office and retail and other [property types] that have been affected a lot,” Powell said. “This is a problem that we’ll be working on for years more, I’m sure. There will be bank failures, but not the big banks.”
Powell’s remarks came about a month after U.S. Treasury Secretary Janet Yellen expressed similar concerns to the Senate Banking Committee. Yellen told lawmakers that bank regulators are working to address risks tied to rising vacancy rates and lower valuations for office buildings in major cities.
These stressors are tied to the post-pandemic increase in remote work, as well as higher interest rates that have made it difficult to refinance commercial real estate debt.
“I hope and believe that this will not end up being a systemic risk to the banking system,” Yellen said in February. “The exposure of the largest banks is quite low, but there may be smaller banks that are stressed by these developments.”
Although commercial mortgage debt is propelling these concerns, the possibility of failure for a federally insured bank has implications for the residential mortgage sector. According to the Federal Deposit Insurance Corp. (FDIC), banks held $2.78 trillion in residential mortgage debt as of first-quarter 2023.
Community banks — commonly defined as those with less than $10 billion in assets — accounted for nearly $477 billion (or 17%) of the total debt. And the FDIC reported that home loans are the largest lending segment by dollar volume at more than 40% of community banks.
New York Community Bancorp (NYCB) is one institution that is facing a “confidence crisis” related to commercial real estate, primarily multifamily loans. NYCB, one of the largest U.S. residential mortgage servicers, received an equity investment of $1 billion earlier this month that is designed to strength the bank’s balance sheet.
In the wake of last year’s failures of First Republic Bank, Silicon Valley Bank and Signature Bank, smaller U.S. banks moved away from commercial real estate lending. Data from MSCI Real Assets showed that after originating a record-high 34.2% of all commercial mortgages in Q1 2023, regional and local banks trimmed their share of originations to 25.1% in Q2 2023. The latter figure represented a 53% year-over-year decline.
Still, small banks are more exposed to commercial mortgage debt than larger banks. Federal Reserve data from September 2023 showed that commercial real estate accounted for an average of 44% of the portfolios at small banks, compared to 13% at the country’s 25 largest banks.
Funding a potential bailout could be another concern for banks. When the FDIC rescued Silicon Valley Bank and Signature Bank in March 2023, the price tag was $22 billion. The regulator recouped $16 billion of that through a special assessment on more than 100 of its institutions.
Many or all of the products and brands we promote and feature including our ‘Partner Spotlights’ are from our partners who compensate us. However, this does not influence our editorial opinion found in articles, reviews and our ‘Best’ tables. Our opinion is our own. Read more on our methodology here.
Comparing mortgage rates is key to keeping your mortgage costs lower. It’s also why you should shop around if you’re looking for a new mortgage deal. Whether you’re ready to compare mortgages right now or want to keep tabs on the latest mortgage rates in the UK, everything you need is here.
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How to get the best mortgage rates and deals
Mortgage rates vary depending on the type of mortgage you’re looking for, your financial situation and your credit score. But when we talk about getting the best mortgage rate, it’s important to find the best rate among the mortgage deals that suit you and your circumstances.
Mortgage fees and the features you want in a mortgage should always be considered alongside the mortgage rate when making mortgage comparisons and shopping around for any mortgage deal.
If you’re in any way unsure or want help finding the best mortgage deal for you we recommend you seek mortgage advice.
Are mortgage rates going down?
Mortgage rates have mainly been rising in the past week, continuing the upward trend seen during much of February. The average rate on two-year fixed-rate mortgages increased to 5.15% in the week to 28 February, rising from 5.08% a week earlier, according to Rightmove. At the same time, the average rate on five-year fixed-rate mortgages increased to 4.80%, up from 4.72%.
Many of the big UK lenders have increased the cost of their fixed-rate mortgages in recent weeks. However, average rates remain lower than at the beginning of the year, due to the significant rate cuts seen during the mortgage rate price war in January.
Some experts are predicting that more mortgage rate rises may be on the way. This is mainly because of expectations that the Bank of England base rate may need to stay higher for longer, to get inflation down.
What are current UK mortgage rates?
The average two-year fixed-rate mortgage rate, if you have a 25% deposit or equity, increased to 4.99% over the past week, up from 4.90%, while the average rate on a similar five-year fixed-rate mortgage rose to 4.70%, from 4.61%. If you have a smaller deposit or equity of 5%, the average two-year fixed rate remained unchanged at 5.79%, while the average five-year rate increased to 5.38%, from 5.35%. All rates are according to Rightmove as at 28 February 2024.
Latest average two-year fixed-rate mortgage rates
Loan to value (LTV)
21 February 2024
28 February 2024
Week-on-week change
⇩ ⇧
60% LTV
4.50%
4.62%
+0.12%
⇧
75% LTV
4.90%
4.99%
+0.09%
⇧
85% LTV
5.08%
5.14%
+0.06%
⇧
90% LTV
5.31%
5.38%
+0.07%
⇧
95% LTV
5.79%
5.79%
No change
⇔
Latest average five-year fixed-rate mortgage rates
Loan to value (LTV)
21 February 2024
28 February 2024
Week-on-week change
⇩ ⇧
60% LTV
4.19%
4.30%
+0.11%
⇧
75% LTV
4.61%
4.70%
+0.09%
⇧
85% LTV
4.67%
4.73%
+0.06%
⇧
90% LTV
4.86%
4.93%
+0.07%
⇧
95% LTV
5.35%
5.38%
+0.03%
⇧
Data sourced from Rightmove/Podium. Correct as at 28 February 2024.
Average rates are based on 95% of the mortgage market and products with a fee of around £999.
What mortgage do I need?
If you’re looking for a mortgage, you’ll usually fall into one of the following categories of mortgage borrower.
If you’ve never owned a home before, you’ll usually need a first-time buyer mortgage. Knowing that you’re just starting out, the deposit requirements on most first-time buyer mortgages are generally small. You should also be able to find mortgage deals where upfront fees are kept to a minimum. However, mortgage rates for first-time buyers tend to be higher than if you’re already on the property ladder. This is because you’re likely to require a larger loan relative to the value of your property – so borrow at a higher loan-to-value (LTV) – making you a riskier proposition in the eyes of lenders. As it’s your first mortgage, lenders also have less to go on when trying to assess your reliability as a mortgage borrower.
If you already have a mortgage but want to switch to a new one, you are looking to remortgage. You may want to remortgage because your current fixed-rate or discounted term is at an end and you don’t want to move on to your lender’s standard variable rate (SVR), which may be higher. Other reasons you may remortgage include to raise funds to pay for home improvements, or because falling interest rates or a rise in the value of your home means remortgaging could save you money. If you’ve built equity in your property since taking out your current mortgage, it may be possible to borrow at a lower LTV for your new mortgage – and the lower your LTV, the lower mortgage rates tend to be.
If you already have a mortgage but are moving home, you may be able to take your current mortgage with you – this is called porting. Alternatively, you may want to arrange a new mortgage altogether, either with your current lender or a different one. Whichever option you’re considering, it’s important to weigh up the costs of either porting or exiting your existing deal, along with any potential fees you may need to pay on a new mortgage deal.
If you’re buying a property to rent out to tenants, you’ll be looking for a buy-to-let mortgage. You’ll normally need a larger deposit for a buy-to-let mortgage than you would for a residential mortgage, and buy-to-let mortgage rates tend to be higher too. Lenders will also want to see that the rental income you expect to receive will more than cover your monthly repayments.
How mortgage rates work
Mortgage rates are the interest rate you pay to a lender on the mortgage balance you have outstanding. The lower your mortgage rate, the lower your monthly mortgage repayments tend to be, and vice versa.
Different types of mortgage
The type of mortgage you take out can affect the mortgage rate you pay, and whether it may change going forward.
Fixed-rate mortgage
A fixed-rate mortgage guarantees that your mortgage rate, and therefore your monthly repayments, won’t change during the set fixed-rate period that you choose.
This can help with budgeting and means you are protected against a rise in mortgage costs if interest rates begin to increase. However, you’ll miss out if interest rates start to fall while you are locked into a fixed-rate mortgage.
Variable rate mortgages
With a variable rate mortgage, your mortgage rate has the potential to rise and fall and take your monthly repayments with it. This may work to your advantage if interest rates decrease, but means you’ll pay more if rates increase. Variable rate mortgages can take the form of:
a tracker mortgage, where the mortgage rate you pay is typically set at a specific margin above the Bank of England base rate, and will automatically change in line with movements in the base rate.
a standard variable rate, or SVR, which is a rate set by your lender that you’ll automatically move on to once an initial rate period, such as that on a fixed-rate mortgage, comes to an end. SVRs tend to be higher than the mortgage rates on other mortgages, which is why many people look to remortgage to a new deal when a fixed-rate mortgage ends.
a discount mortgage, where the rate you pay tracks a lender’s SVR at a discounted rate for a fixed period.
Offset mortgages
With an offset mortgage, your savings are ‘offset’ against your mortgage amount to reduce the interest you pay. You can still access your savings, but won’t receive interest on them. Offset mortgages are available on either a fixed or variable rate basis.
Interest-only mortgages
An interest-only mortgage allows you to make repayments that cover the interest you’re charged each month but won’t pay off any of your original mortgage loan amount. This helps to keep monthly repayments low but also requires that you have a repayment strategy in place to pay off the full loan amount when your mortgage term ends. Interest-only mortgages can be arranged on either a fixed or variable rate.
» MORE: Should I get an interest-only or repayment mortgage?
How rate changes could affect your mortgage payments
Depending on the type of mortgage you have, changes in mortgage rates have the potential to affect monthly mortgage repayments in different ways.
Fixed-rate mortgage
If you’re within your fixed-rate period, your monthly repayments will remain the same until that ends, regardless of what is happening to interest rates generally. It is only once the fixed term expires that your repayments could change, either because you’ve moved on to your lender’s SVR, which is usually higher, or because you’ve remortgaged to a new deal, potentially at a different rate.
Tracker mortgage
With a tracker mortgage, your monthly repayments usually fall if the base rate falls, but get more expensive if it rises. The change will usually reflect the full change in the base rate and happen automatically, but may not if you have a collar or a cap on your rate. A collar rate is one below which the rate you pay cannot fall, while a capped rate is one that your mortgage rate cannot go above.
Standard variable rate mortgage
With a standard variable rate mortgage, your mortgage payments could change each month, rising or falling depending on the rate. SVRs aren’t tied to the base rate in the same way as a tracker mortgage, as lenders decide whether to change their SVR and by how much. However, it is usually a strong influence that SVRs tend to follow, either partially or in full.
» MORE: How are fixed and variable rate mortgages different?
Mortgage Calculators
Playing around with mortgage calculators is always time well-spent. Get an estimate of how much your monthly mortgage repayments may be at different loan amounts, mortgage rates and terms using our mortgage repayment calculator. Or use our mortgage interest calculator to get an idea of how your monthly repayments might change if mortgage rates rise or fall.
Can I get a mortgage?
Mortgage lenders have rules about who they’ll lend to and must be certain you can afford the mortgage you want. Your finances and circumstances are taken into account when working this out.
The minimum age to apply for a mortgage is usually 18 years old (or 21 for a buy-to-let mortgage), while there may also be a maximum age you can be when your mortgage term is due to end – this varies from lender to lender. You’ll usually need to have been a UK resident for at least three years and have the right to live and work in the UK to get a mortgage.
Checks will be made on your finances to give lenders reassurance you can afford the mortgage repayments. You’ll need to provide proof of your earnings and bank statements so lenders can see how much you spend. Any debts you have will be considered too. If your outgoings each month are considered too high relative to your monthly pay, you may find it more difficult to get approved for a mortgage.
Lenders will also run a credit check to try and work out if you’re someone they can trust to repay what you owe. If you have a good track record when it comes to managing your finances, and a good credit score as a result, it may improve your chances of being offered a mortgage.
If you work for yourself, it’s possible to get a mortgage if you are self-employed. If you receive benefits, it can be possible to get a mortgage on benefits.
Mortgages for bad credit
It may be possible to get a mortgage if you have bad credit, but you’ll likely need to pay a higher mortgage interest rate to do so. Having a bad credit score suggests to lenders that you’ve experienced problems meeting your debt obligations in the past. To counter the risk of problems occurring again, lenders will charge you higher interest rates accordingly. You’re likely to need to source a specialist lender if you have a poor credit score or a broker that can source you an appropriate lender.
What mortgage can I afford?
Getting an agreement or decision in principle from a mortgage lender will give you an idea of how much you may be allowed to borrow before you properly apply. This can usually be done without affecting your credit score, although it’s not a definite promise from the lender that you will be offered a mortgage.
You’ll also get a good idea of how much mortgage you can afford to pay each month, and how much you would be comfortable spending on the property, by looking at your bank statements. What is your income – and your partner’s if it’s a joint mortgage – and what are your regular outgoings? What can you cut back on and what are non-negotiable expenses? And consider how much you would be able to put down as a house deposit. It may be possible to get a mortgage on a low income but much will depend on your wider circumstances.
» MORE: How much can I borrow for a mortgage?
Joint mortgages
Joint mortgages come with the same rates as those you’ll find on a single person mortgage. However, if you get a mortgage jointly with someone else, you may be able to access lower mortgage rates than if you applied on your own. This is because a combined deposit may mean you can borrow at a lower LTV where rates tend to be lower. Some lenders may also consider having two borrowers liable for repaying a mortgage as less risky than only one.
The importance of loan to value
Your loan-to-value (LTV) ratio is how much you want to borrow through a mortgage shown as a percentage of the value of your property. So if you’re buying a home worth £100,000 and have a £10,000 deposit, the mortgage amount you need is £90,000. This means you need a 90% LTV mortgage.
The LTV you’re borrowing at can affect the interest rate you’re charged. Mortgage rates are usually lower at the lowest LTVs when you have a larger deposit.
What other mortgage costs, fees and charges should you be aware of?
It’s important to take into account the other costs you’re likely to face when buying a home, and not just focus on the mortgage rate alone. These may include:
Stamp duty
Stamp duty is a tax you may have to pay to the government when buying property or land. At the time of publication, if you’re buying a residential home in England or Northern Ireland, stamp duty only becomes payable on properties worth over £250,000. Different thresholds and rates apply in Scotland and Wales, and if you’re buying a second home. You may qualify for first-time buyer stamp duty relief if you’re buying your first home.
» MORE: Stamp duty calculator
Mortgage deposit
Your mortgage deposit is the amount of money you have available to put down upfront when buying a property – the rest of the purchase price is then covered using a mortgage. Even a small deposit may need to be several thousands of pounds, though if you have a larger deposit this can potentially help you to access lower mortgage rate deals.
Mortgage fees
Among the charges and fees which are directly related to mortgages, and the process of taking one out, you may need to pay:
Sometimes also referred to as the completion or product fee, this is a charge paid to the lender for setting up the mortgage. It may be possible to add this on to your mortgage loan although increasing your debt will mean you will be charged interest on this extra amount, which will increase your mortgage costs overall.
This is essentially a charge made to reserve a mortgage while your application is being considered, though it may also be included in the arrangement fee. It’s usually non-refundable, meaning you won’t get it back if your application is turned down.
This pays for the checks that lenders need to make on the property you want to buy so that they can assess whether its value is in line with the mortgage amount you want to borrow. Some lenders offer free house valuations as part of their mortgage deals.
You may want to arrange a house survey so that you can check on the condition of the property and the extent of any repairs that may be needed. A survey should be conducted for your own reassurance, whereas a valuation is for the benefit of the lender and may not go into much detail, depending on the type requested by the lender.
Conveyancing fees cover the legal fees that are incurred when buying or selling a home, including the cost of search fees for your solicitor to check whether there are any potential problems you should be aware of, and land registry fees to register the property in your name.
Some lenders apply this charge if you have a small deposit and are borrowing at a higher LTV. Lenders use the funds to buy insurance that protects them against the risk your property is worth less than your mortgage balance should you fail to meet your repayments and they need to take possession of your home.
If you get advice or go through a broker when arranging your mortgage, you may need to pay a fee for their help and time. If there isn’t a fee, it’s likely they’ll receive commission from the lender you take the mortgage out with instead, which is not added to your costs.
These are fees you may have to pay if you want to pay some or all of your mortgage off within a deal period. Early repayment charges are usually a percentage of the amount you’re paying off early and tend to be higher the earlier you are into a mortgage deal.
Government schemes to help you buy a home
There are several government initiatives and schemes designed to help you buy a home or get a mortgage.
95% Mortgage Guarantee Scheme
The mortgage guarantee scheme aims to persuade mortgage lenders to make 95% LTV mortgages available to first-time buyers with a 5% deposit. It is currently due to finish at the end of June 2025.
Shared Ownership
The Shared Ownership scheme in England allows you to buy a share in a property rather than all of it and pay rent on the rest. Similar schemes are available in Scotland, Wales and Northern Ireland.
Help to Buy
The Help to Buy equity loan scheme, designed to help buyers with a smaller deposit, is still available in Wales, but not in England, Scotland and Northern Ireland.
Forces Help to Buy
The Forces Help to Buy Scheme offers eligible members of the Armed Forces an interest-free loan to help buy a home. The loan is repayable over 10 years.
First Homes Scheme
Eligible first-time buyers in England may be able to get a 30% to 50% discount on the market value of certain properties through the First Homes scheme.
Right to Buy
Under this scheme, eligible council tenants in England have the right to buy the property they live in at a discount of up to 70% of its market value. The exact discount depends on the length of time you’ve been a tenant and is subject to certain limits. Similar schemes are available in Wales, Scotland and Northern Ireland, while there is also a Right to Acquire scheme for housing association tenants.
Lifetime ISAs
To help you save for a deposit, a Lifetime ISA will see the government add a 25% bonus of up to £1,000 per year to the amount you put aside in the ISA.
How to apply for a mortgage
You may be able to apply for a mortgage directly with a bank, building society or lender, or you may need or prefer to apply through a mortgage broker. You’ll need to provide identification documents and proof of address, such as your passport, driving license or utility bills.
Lenders will also want to see proof of income and evidence of where your deposit is coming from, including recent bank statements and payslips. It will save time if you have these documents ready before you apply.
» MORE: Best mortgage lenders
Would you like mortgage advice?
Taking out a mortgage is one of the biggest financial decisions you’ll ever make so it’s important to get it right. Getting mortgage advice can help you find a mortgage that is suitable to you and your circumstances. It also has the potential to save you money.
If you think you need mortgage advice, we’ve partnered with online mortgage broker London & Country Mortgages Ltd (L&C) who can offer you fee-free advice.
Key mortgage terms explained
Loan to value (LTV)
Your loan-to-value ratio is the amount you wish to borrow through a mortgage expressed as a percentage of the value of the property you’re buying.
Initial interest rate
This is the interest rate you’ll pay when you’re still within the initial fixed-rate period of a mortgage deal.
Initial interest rate period
This is the period of time your initial interest rate will last, before your lender switches you over to its SVR.
Annual Percentage Rate of Charge (APRC)
The APRC is a single percentage figure designed to help you compare the annual cost of different mortgage deals.
Annual overpayment allowance (AOA)
This is the amount a lender will let you overpay on your mortgage each year without being charged a fee.
Early Repayment Charge (ERC)
This is a charge you may need to pay if you want to pay off some or all of your mortgage earlier than you agreed with your lender.
Mortgage term
A mortgage term is the full period of time over which the mortgage contract is taken out for – it should not be confused with the deal term. At the end of the term you will have paid off the full debt or all of the interest depending on what type of mortgage you took.
The current average rate on a five-year fixed-rate mortgage for a 10% deposit or equity is 4.93%, up from 4.86% a week earlier. For an equivalent two-year fixed-rate mortgage, the average rate of 5.38% has increased from 5.31%. If you have a 40% deposit/equity, the average five-year fixed rate is 4.30%, up from 4.19% a week earlier, while the average two-year fixed rate is 4.62%, rising from 4.50%. All rates are according to Rightmove as at 28 February 2024.
A mortgage rate is the interest rate a lender charges on the mortgage amount that you borrow. Mortgage interest rates may be fixed, guaranteeing that they will remain the same for a certain length of time, or variable, meaning it may fluctuate.
Mortgage providers regularly review the mortgage rates that they offer to take into account the costs involved with funding its lending activities, their latest priorities in terms of target borrowers, and wider conditions in the market. As a result, when searching for a new mortgage, it’s always a good idea to consider various lenders and take the time to compare different mortgages. Crucially, you need to bear in mind that a deal offering the best mortgage rate may not necessarily be the one that is most suitable for you. The mortgage rate is important, but at the same time, you need to consider other factors, such as the charges and fees attached to a mortgage, the type of mortgage that you need, and the mortgage term that you want.
While mortgage rates have been rising in recent weeks, many commentators still expect to see mortgage rates fall across 2024 as a whole.
The next move in the Bank of England base rate, which currently sits at 5.25%, is widely forecast to be down. But with inflation remaining unchanged in January, and wage growth easing by less than expected, some experts predict the first rate cut may not be made until September. Towards the end of 2023, some believed the rate could begin falling in March.
The uncertainty makes it even more difficult than usual to predict what may happen to mortgage rates next.
The interest rate is the percentage of a loan amount that a lender charges for borrowing money, whereas the APRC, or annual percentage rate of charge, is a calculation expressed as a percentage that takes into account both the interest rate and associated costs of a mortgage across its lifetime. The aim of the APRC is to help borrowers make meaningful comparisons between mortgage deals.
Taking the time to compare mortgage rates and deals, making sure your credit score is in good shape, saving for a larger deposit and paying off existing debts can all help improve your chances of getting a good mortgage deal.
When looking for a mortgage it is vital that you compare mortgage lenders and the rates and deals on offer. Taking the time to carry out a mortgage comparison can improve your chances of finding the best mortgage for your circumstances.
A mortgage is a loan you take out to help you buy a property you don’t have the money to pay for up front. You may be a first-time buyer, remortgaging, securing a buy to let, or moving to your next home. The amount you need to borrow will depend on the purchase price of the property, and how much you can put down as a deposit or already hold in equity in your current property. The mortgage is secured against the property, which means your home is at risk if you don’t meet the repayments.
With a capital repayment mortgage, your monthly repayments pay off your interest and some of your original loan amount each month, so that everything should be paid off by the time you reach the end of your mortgage term. The alternative to a repayment mortgage is an interest-only mortgage, where you will repay only the interest each month before needing to pay off your original loan amount in its entirety at the end of the mortgage term.
A mortgage term is the period of time you agree with a lender over which you intend to entirely pay off your mortgage and interest. A typical mortgage term in the UK is usually considered to be 25 years, but you may opt for a shorter period or a longer one, if allowed. Some lenders offer mortgage terms of up to 40 years. If you have a longer term, your monthly repayments will be lower, but you’ll pay more interest overall.
The cost of your mortgage will depend on many factors, including how much you borrow, the size of your deposit, the length of your mortgage term, the mortgage rate you’re paying, and whether you can afford to make overpayments. Your mortgage lender must provide you with the full cost of the mortgage before you apply.
» MORE: How much could your mortgage cost you?
Besides making sure your monthly repayments are affordable, there are many other costs associated with arranging a mortgage. These may include arrangement, survey, valuation and mortgage broker fees.
If you’ve previously owned a home and the property you’re buying is worth more than £250,000, stamp duty will be payable as well; if you’re a first-time buyer, stamp duty only becomes payable on properties worth over £425,000.
To get a mortgage as a first-time buyer you’ll usually need at least a 5% deposit and a regular income. Most lenders offer first-time buyer mortgages aimed primarily at those with smaller deposits. First-time buyers may also be able to secure a mortgage with the help of close relatives through a guarantor mortgage.
Some lenders offer buy-to-let mortgages that can be arranged on a property you want to rent out to a tenant, rather than live in yourself. You’ll usually need a larger deposit for a buy-to-let mortgage than for a residential mortgage, and interest rates are often higher. You may also need to already own your own home or have a residential mortgage on another property.
It may be possible to get a mortgage with bad credit but you’ll probably have fewer mortgage deals to choose from and need to pay higher mortgage rates.
You may want to consider remortgaging if your initial fixed-rate period is close to ending and you want to avoid moving on to your lender’s SVR. Choosing to remortgage has the potential to save you money if you find the right mortgage deal.
» MORE: How remortgaging works
It’s always important to think about your plans, particularly when it comes to choosing the type of mortgage that will suit you best. For instance, if you plan to move in perhaps two years, choosing a five-year fixed-rate mortgage may mean you have to pay early repayment charges if you need to get a new mortgage.
Getting an agreement in principle, or AIP, from a lender will give you an idea of how much you may be able to borrow for your mortgage without needing to formally apply. Getting an AIP usually involves a soft credit check, which shouldn’t affect your credit score. However, having an AIP does not guarantee that a lender will offer you a mortgage. An agreement in principle is also sometimes referred to as a decision in principle or a mortgage promise.
Yes, some providers offer halal or Islamic mortgages in the UK. These are compliant with Sharia law and allow people to borrow but not pay interest.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a loan or any other debt secured on it.
Information on this page is a guide. It does not constitute advice, recommendation or suitability to your needs or financial circumstances. Seek qualified mortgage advice before proceeding with a mortgage product.
NerdWallet strives to keep its information accurate and up to date. This information may be different than what you see when you visit a financial institution, service provider or specific product’s site. All financial products and services are presented without warranty. When evaluating products, please review the financial institution’s Terms and Conditions.
After attorneys made their cases for both the U.S. government and former Live Well Financial CEO Michael Hild regarding a restitution amount owed to the company’s creditors, a magistrate judge overseeing the issue has recommended that Hild pay more than $46 million.
The final amount will be determined by the trial judge. The funds will ultimately go to companies including Mirae Asset Securities, Industrial and Commercial Bank of China Financial Services (ICBC), Flagstar Bank, Customers Bank and the bankruptcy estate of Live Well itself, according to court filings reviewed by RMD.
Restitution amounts
Defense attorneys have argued in court filings — and in a recent hearing — that Hild should not, in some cases, be obligated to pay any restitution. Prosecutors for the government initially argued that he should owe $69 million to the companies that lent to Live Well and the defunct lender’s estate based on — what was determined in court to be — inflated valuations of interest-only bonds backed by Home Equity Conversion Mortgages (HECMs).
Attorneys for Hild and the government have been at odds for the better part of a year over restitution. After a January evidentiary hearing that included testimony from representatives of the impacted companies, the government revised its sought restitution amount to about $46.5 million.
Magistrate Judge Katharine Parker, who has submitted her recommendations to trial judge Ronnie Abrams in the U.S. District Court for the Southern District of New York, recommended that Flagstar receive $13.36 million; Mirae receive $7.4 million; ICBC receive nearly $17.8 million; Customers Bank receive $7.64 million; and the Live Well estate receive $253,850.
Each figure is broadly in line with the government’s revised calculations following January’s evidentiary hearing but are not exact in each case.
Hild objections
Counsel for Hild objected to each of the government’s recommendations for restitution on different grounds while broadly arguing that each of the companies “did not receive a competitive price for the bonds,” according to Parker.
Flagstar contended that it should be compensated for expenses it incurred by enlisting BlackRock to independently value HECM bonds, which Hild challenged, and Parker found Hild’s argument persuasive. That reduced Flagstar’s recommended restitution payment by roughly $102,000.
But most of Hild’s arguments were not persuasive, according to Parker.
“Whether or not the bonds were sold under ideal market conditions for the best possible price is irrelevant to the restitution calculation,” Parker said. “Fluctuations in the market value of the bonds was foreseeable — even if direction and degree of change was not.”
Since the fluctuation was influenced by the scheme for which Hild was convicted, Parker did not seriously entertain an argument for $0 in restitution in her final decision, she said.
Hild argued that in the case of Mirae, the company made “numerous revisions to their restitution submissions” which “renders the final submission not credible.” Parker found the contention out of place and inappropriate considering the types of cases cited to make his argument. His counsel argued based on civil cases, not criminal ones, Parker said.
Hild objected to ICBC’s proposed amount by saying the company did not receive a “fair market value” for the bonds they purchased, which Parker said is “irrelevant for the purposes of restitution.” But Parker agreed with Hild and the government in limiting ICBC’s claim for legal fees.
Impacts on restitution
As for Hild’s objections about restitution for Customers Bank — again based on bond pricing — Parker said his contention “is a slight reworking of Hild’s long-running argument that the victims actually benefited from holding on to the criminally inflated Live Well assets, or that the victims knowingly sold their assets at below market rates in order to ‘lock in’ an eventual award of restitution.” Parker characterized this argument as “based on conjecture and unavailing.”
For the Live Well estate, Hild argued that there is proof it communicated with the government in a manner not previously disclosed, and that it “was a beneficiary of settlement agreements that should have eliminated Hild’s restitution liability.”
Parker explained that any communications between the estate and the government had no bearing on a restitution amount owed, and that for the beneficiary argument, “it was Hild’s burden to provide evidence that those settlements completely offset his restitution obligations. […] He did not provide such evidence and, instead, the Estate provided testimony that the settlements do not offset any portion of the amount sought in restitution.”
Next steps
Final determination on restitution is now awaiting a decision from Abrams, the trial judge. As of March 1, she had not yet ruled on the matter, and it remains to be seen how a final amount will be divided between Hild and co-conspirators who have previously cooperated with the government and have avoided prison time as a result.
Hild remains free pending an appeal of his 44-month prison sentence, which is slated to play out in the Second Circuit Court of Appeals.
Why should lenders and vendors care about servicing? (STRATMOR’s current blog is titled, “It’s 2024: Do You Know Where Your Servicing Is?”) Not only do servicing values fluctuate, which impacts the prices that borrowers see, but servicing is a huge touchpoint with consumers and therefore garners the attention of regulators like the CFPB, headlines, and the courts. The latest example is a California couple suing Specialized Loan Servicing, LLC for negligence that led to a “lost home and destroyed life.” Of course, anyone can sue anyone at any time, but the multi-count lawsuit against Specialized Loan Servicing, LLC alleges breach of contract, theft, and several other counts, accusing SLS of negligence as the mortgage servicer added a quarter of a million dollars to the couple’s mortgage, leading to their “financial and personal ruin.” (Today’s Commentary podcast can be found here and this week’s is sponsored by Lender Toolkit and its AI-powered AI Underwriter and Prism borrower income automation tools. By providing lightning-fast underwriting decisions, your market reputation with borrowers and Realtors will soar, which means more repeat and referral business. Hear an interview with Jeremy Potter and Marvin Chang on broader and more flexible tools for homeowners to navigate our fast-paced and modern economy.)
Lender and Broker Software, Products, and Services
What’s better than a free consultation from a mortgage tech expert? Getting the advice of six. That’s what’s in store if you join “Strategies to Master the Market Now with the Right Mortgage Technology,” next Wednesday, Feb. 21 at 2 pm ET. This free webinar, co-sponsored by Floify and Truv, Christy Soukhamneut, chief lending officer at UFCU; Raven Johnson, VP business systems at Legacy Mutual Mortgage; Craig Ungaro, COO AnnieMac Home Mortgage; features Jodi Hall, founder & CEO of DandaRoad, LLC; Richard Grieser, vice president of marketing at Truv; and Sofia Rossato, president & GM of Floify. Click here to register.
Shake it up + flashback to the 80s with Sagent at MBA Servicing! Be part of the most EPIC MBA Servicing party and shake it up with Sagent on Wed. 2/21 at 7PM ET at Jo Jo’s Shake Bar. Join the team and top industry players for some boozy milkshakes + throwback jams, where you’ll be dancing ‘All Night Long’… Don’t forget to pack your best 80s attire (think Member’s Only jackets, parachute pants) because this party is one you don’t want to miss. Click the link here reserve your spot and we’ll see you there!
“Tired of messy or late closings? LOs know that even if they provide the most amazing customer service, it won’t mean anything if there are delays in getting their borrower’s mortgage approved and closed. The biggest lenders are offering same-day approvals, and so can you. Lender Toolkit’s AI-powered AI Underwriter™ and Prism™ income automation help streamline underwriting so that you can get loans approved faster than ever. By providing almost-instantaneous underwriting decisions, your market reputation with borrowers and Realtors will soar, which means more repeat and referral business. Notes Mark Workens, CEO Mortgage 1: “My company’s ability to be profitable in any market condition is largely due to Lender Toolkit’s Maas™ Platform, including AI Underwriter and Prism.” So why get left behind? Schedule a demo here, or meet us in person for a live demo at EXP24 next month by booking here. We can’t wait to show you what’s possible with our high-tech solutions.”
New: Maxwell’s Q4 2023 Mortgage Lending Report Shows Signs of Market Recovery. Wondering what to expect from 2024’s market? Maxwell’s brand new Q4 2023 Lending Report shows powerful signs of market recovery. In a major reversal, loan volume in Q4 grew year-over-year for the first time since 2021. Plus, the report reveals areas where lenders are finding opportunity, such as through outside-the-box offerings like HELOCs. To gain exclusive data, charts, and advice on how to get ahead of the market reset, click here to download Maxwell’s Q4 2023 Mortgage Lending Report.
Get a Sweetheart Deal with Loan Stream’s February Specials on FHA/VA and Non-QM Price Improvements! Get 37.5 BPS Price Improvement on all FHA and VA, Low Balance, and High Balance >=680 FICO, excludes DPA and 25 BPS Price Improvement on FHA Streamlines/IRRRLS. Plus, a Non-QM Price improvement of 50 BPS on all Non-QM, not including Closed End Seconds and Select Programs. Valid for loans locked 2/1/2024 through 2/29/2024. Terms/Conditions apply see our site and talk with your Account Executive. Don’t miss this month’s webinar on Closed End Seconds and how to Prepare for the CalHFA Dream for All. Register now!
Lenders and borrowers deserve technology that improves the mortgage process, saves time and money, and is intuitive. As both a startup and a company with decades of technology experience, Dark Matter Technologies (DMT) has a unique vantage point for identifying how to improve value for customers, and how to work with an ecosystem of like-minded partners to bring many of those ideas to fruition. In its latest podcast episode, The Spotlight, we meet Chief Product Officer Stephanie Durflinger, the 15-year industry veteran now guiding DMT’s product development team. Stephanie formerly held key positions at both ICE Mortgage Technology and Ellie Mae and brings her unique perspective and discerning eye to guiding the future of Empower and other DMT products. The podcast is hosted by DMT Vice President of Marketing Wes Horbatuck. Listen to the interview now.
Picture this… it’s Saturday afternoon and your borrower finds out they were out-bid and have a small window to decide if they want to offer more on their dream home. You’re at your kid’s soccer game and they’re in panic mode… how much does the payment increase? How much more cash will I need? When can I get an updated pre-approval letter? Fortunately, it’s 2024 and lenders using QuickQual never have to worry about this. Borrowers AND Realtors AND Loan Officers can run accurate payment and closing cost scenarios from their phones and they can generate updated pre-approval letters within guardrails set by the loan officer. Crisis averted with QuickQual.
Technology and operations leaders who care about making sure their technology and operations are competitive for today’s market, as well as learning what’s possible when you push the limits, you don’t want to miss this live event! On February 15, at 1PM CT come join Jonathan Spinetto, COO and Co-Founder of NFTYDoor, Janelle Lindseth, Senior Product Manager of Docutech, and Richard Grieser, Vice President of Marketing of TRUV, as they unpack how Jonathan and his team launched the business with zero loan volume, and in just 2 years, NFTYDoor debuted its digital home equity loan platform, was acquired by Homebridge, and is now on track to reach 3,000 loans per month in 2024, making them a major player in the market. Their technology is built from the ground up and processes everything from credit, KYC, valuations, disclosures, closing (RON), and payments, and all in full regulatory compliance. This is a success story as Jonathan and his team pushed the limits and accepted the risk, but those lessons learned can be immediately applied by you. Come and see the future of lending technology.
Capital Markets
The link between interest rates, mortgage rates, and borrower behavior is always changing. Although the Federal Reserve is apparently “on hold” until its May meeting, it is still important to see and understand what will cause interest rates to move higher and lower over time. Mortgage rates have stayed close to where they started the year, despite swings in Treasury yields because of slowing inflation offset by stronger than expected readings on the job and the housing markets.
The U.S. Federal Reserve is keenly aware of inflation. No news was good news when it came to inflation revision data to close last week, with the Consumer Price Index revised downward slightly in December and the fourth quarter left unchanged at 3.3 percent. A year ago, revisions to the November and December 2022 reports showed higher core inflation than what was initially reported, sending bond yields higher as investors prepared for a “higher for longer” interest rate environment. Dallas Fed President Logan said that disinflation progress has been “tremendous,” but the central bank is in no rush to start lowering interest rates.
The CPI revisions likely give the Federal Reserve further breathing room while allaying any concerns traders might have had about progress on inflation. The revisions were also in sharp contrast to last year’s, in which CPI was revised significantly higher. It’s not at the “magic” 2 percent level, but there is progress. Easing inflation data, a resilient economy and a solid earnings season so far have sparked this year’s stock market rally, which has seen the three major averages tallying their fifth straight weekly gains, and this adds to consumer confidence.
The narrative of late has been a resilient U.S. economy, with low unemployment, inflation largely under control, and the Fed’s fabled soft landing very much in sight. Focus now shifts to January’s CPI tomorrow and if price pressures continue to recede, it may pave the way for the Fed to begin cutting interest rates sooner rather than later.
We also learned last week that January’s ISM Services Index rose to 53.4 from 50.5 in December. The expansion in the services sector of the economy exceeded economists’ expectations as consumers return to pre-pandemic spending behaviors. The prices paid subindex jumped from 56.7 to 64.0, a sign that inflationary pressures remain. This was the largest monthly percentage gain since August 2012.
Consumer spending remains strong and despite higher interest rates, expanded to a record $5.1 trillion in December, although the pace of consumer credit expansion declined from 7.6 percent in 2022 to 2.4 percent in 2023. Rising incomes due to a strong labor market are expected to support the pace of consumer spending as a meaningful slowdown in the job market has yet to materialize. Jobless claims fell to 218,000 during the week ending February 3 and continuing claims declined to 1.87 million, suggesting that those who do find themselves in the job market do not remain there for long.
This week sees the return of “first tier” data including updates on CPI, retail sales, industrial production / capacity utilization, PPI, and Michigan sentiment. Other data includes regional Fed surveys, import prices, factory orders, NAHB HMI, and housing starts. Fed speakers are currently limited to a few Fed presidents, while Treasury supply will consist of just bills. Regarding MBS, Class B and C 48-hours are tomorrow and Thursday, respectively.
Today’s lone data point is the January budget statement, due out this afternoon, with the CBO forecasting a deficit of $21 billion, compared with $38.8 billion in the prior fiscal year. Markets will also receive remarks from Minneapolis Fed President Kashkari. We begin Monday with Agency MBS prices a few 32nds (ticks) better than Friday afternoon, the 10-year yielding 4.16 after closing last week at 4.19 percent, and the 2-year is at 4.46.
Jobs
“Hey, mortgage sales professionals DO NOT join radius financial group for our amazing culture, president club trips, best workplace accolades, 100 percent 401K match or because of our shared success program which grants phantom stock to ALL employees. Join radius to grow your business, mortgage team and wealth. Over the past 23 years, radius has become the best at what we do by caring intensely about the career growth of our team members and investing in technology that simplifies and automates our process. We are a world-class customer obsessed team focused on our loan officers’ growth and success. So, if you want real opportunities to grow, the ability to make a positive impact starting on day one and the freedom to chart the career you’ve always wanted, at radius, you can! For confidential inquires please contact Carla Herrera and visit us at radius financial group inc., Mortgage Lending Careers.
The Money Store has announced that Coleen Bogle has joined the mortgage lender as its Chief Marketing Officer. Bogle has more than 15 years of experience leading marketing departments in the home financing industry, and in her new role, she will focus on enhancing the brand, expanding marketing services, and attracting top-tier mortgage origination talent to the organization.
Private mortgage insurance companies are hiring: MGIC, National MI, Arch MI, Radian, Essent, and Enact (in no particular order). And while’s we’re at it, Fannie Mae and Freddie Mac. And my cat Myrtle’s friend the CFPB has career opportunities.
Don’t forget that anyone can post a resume, for free, at www.lendernews.com for potential employers to view for a nominal charge of $75 for several months.
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Home Equity Appraisal, Market Research Tools; Planet Home Stats; Agency Changes
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Home Equity Appraisal, Market Research Tools; Planet Home Stats; Agency Changes
By: Rob Chrisman
Wed, Jan 31 2024, 10:56 AM
I could tell that my cat Myrtle was miffed. Not only had the work on her “2024 Vision Board Statement” languished, but either there was no line-caught halibut in her bowl, or the laser pointer’s battery was dead. It turned out that it was neither. Instead, it was news that the CFPB was not meeting its goals. the Office of Inspector General of the Federal Reserve Board released a report assessing the CFPB’s process for conducting enforcement investigations and making two recommendations. First, noting that the CFPB has not met its stated goal to file or settle 65 percent of its enforcement actions within two years, the OIG recommended that the CFPB Office of Enforcement incorporates the timing expectations for key steps in the enforcement process into the tracking and monitoring of matters. The OIG also recommended improvements to enforcement staff training on document maintenance and retention requirements for the CFPB’s matter management system. The report states that the recommendations were accepted by the CFPB, with a follow-up to ensure full implementation. Today’s Commentary podcast can be found here and this week’s is sponsored by Calque. With The Trade-In Mortgage powered by Calque, lenders help their clients negotiate a lower purchase price, reduce their interest payments, and eliminate PMI. Hear an interview with Broker Action Coalition’s Katie Sweeney on her transition from leading the Association of Independent Mortgage Experts (AIME) to leading the Broker Action Coalition and the Political Action Committee that she started with AIME.
Lender and Broker Software, Products, and Services
Are you looking to source new third-party originators (TPOs) for your wholesale and/or correspondent channels in 2024? If so, be sure to start by considering important factors such as production volume, branch total, number of loan officers, and product types. While it can be overwhelming to manage all these factors, Optimal Blue’s Comergence Prospect Marketing solution makes it easy. As the most comprehensive prospect marketing and data analysis tool in the industry, Comergence simplifies how you research the marketplace, understand client volume and trends, identify and develop new business opportunities, and empower your field sales staff. Plus, production numbers are updated every week. Contact Optimal Blue to take the first step toward more effective TPO sourcing with Comergence Prospect Marketing.
Make your general ledger profitable and run your business more efficiently with Loan Vision and LV-PAM. Instead of “staying alive until ‘25”, with Loan Vision, a software built BY the mortgage industry FOR the mortgage industry, you can “produce more in 24!” Customers on Loan Vision see improvements of 30 precent+ decrease in days to close the books, 20 percent+ reduction in accounting headcount, complete LOS to G/L automation, and improved reporting and visibility. Interested in learning how Loan Vision can help you run a more efficient and profitable company? Contact Carl Wooloff to schedule a call today.
HELOCs, AVMs, PCRs… when it comes to home equity lending and its corresponding appraisal solutions, it can start to look like alphabet soup. Thankfully, Class Valuation put together your one-stop shop for all home equity appraisal solutions, specifically for brokers. The Home Equity Playbook by Class Valuation is a must-have guide for navigating the intricacies of home equity valuations. It provides essential insights and detailed explanations, ensuring you’re equipped with the knowledge necessary for accurate and efficient appraisals. This guide is more than just a resource; it’s a roadmap to understanding various appraisal methodologies and their use cases in HELOC lending. When you download the playbook, you’ll find everything you need to know about AVMs, evals and more, including what they are, what they’re used for, and how Class’ solutions may differ from others. You’ll find that navigating home equity appraisal solutions is no longer a daunting task, but a streamlined, manageable process. Download it here.
Want to make it easy for your borrowers to opt out of pre-screened credit offers to keep them from being bombarded by your competition when their credit is pulled? Your POS can do that. Well, maybe not yours, but LiteSpeed by LenderLogix can!
You need more than just a license to make money as a Loan Officer, but you probably already knew that. For starters, you’ll need to know three things to be successful: how to talk to your clients, how to process a loan application and how to seal the deal. At Madison Chase Academy we teach Loan Officers how to become successful in a short period of time. There are so many mistakes to avoid and I’m here to teach you how to do things the right way… the first time! 6 Months to 6 Figures. I will walk you through exactly what is necessary for you to build a profitable Loan Officer business. For more information contact Tanya Blanchard (770-851-9334).
Fannie and Freddie Updates
When a lender originates a conventional loan, the usual next step is to sell it to Freddie Mac or Fannie Mae, and retain the servicing, sell it to them and sell the servicing, or sell the loan servicing released. Or the servicing can be sold in bulk transactions later. Who’s buying the servicing that many lenders are selling to stay afloat? Well, among others, AmeriHome, Pennymac, Carrington, Newrez, and… Planet Home. During 2023, Planet Financial Group, LLC, parent of national mortgage lender and servicer Planet Home Lending, LLC and Planet Management Group, LLC, Owned Mortgage Servicing Rights (OMSR) portfolio rose to $92.48 billion at yearend 2023, up 47 percent from yearend 2022. 2023 origination volume hit $25 billion, down only 5 percent versus 2022. The company reached and estimated #2 government correspondent lender and the #3 correspondent lender overall, and acquired $14 billion of MSR’s through bulk and Co-Issue channels.
Planet’s servicing portfolio ended 2023 at $104.69 billion, up 42 percent from $73.64 billion in December 2022. At yearend, Planet was the 9th largest Ginnie Mae servicer, according to Inside Mortgage Finance data. Sub-servicing volume ended the year at $10.95 billion overall, up 68 percent from $6.5 billion at yearend 2022. Planet’s residential origination volume ended at $25 billion, down just 5 percent from 2022. Correspondent volume held steady in 2023, ending at $23.78 billion, off 1 percent from 2022 volume. Planet’s correspondent market share rose from 4.2 percent at yearend 2022 to 6.4 percent at Q3 2023, according to the latest data available from Inside Mortgage Finance. At yearend 2023, Planet was the #3 correspondent lender, up from #5 at yearend 2022 and the #2 government correspondent lender, up from #3, according to data from Refinitiv.
On January 23, Freddie Mac and Fannie Mae (the “Enterprises”) announced an updated Single-Family Social MBS and Corporate Debt Bonds Framework, and updates to mortgage-backed securities (“MBS”) disclosures. As part of the framework updates, the Enterprises will rename the Social Index to the “Mission Index” in February. Additionally, Fannie Mae will update the formulation of the index in February, and Freddie Mac will update the formulation of the index in May. The Mission Index offers MBS investors insights into the Enterprises’ mission-oriented lending initiatives, enabling investors to allocate capital towards those activities. The revised Mission Index will apply to pools issued by Fannie Mae starting in March and for Freddie Mac starting in June.
The updated frameworks define criteria beginning in June for the Enterprises’ mortgage collateral that may be pooled, issued, and labeled “Social MBS.” That label is applied when the Mission Index score of the underlying pool exceeds a specified threshold. The Enterprises also announced they plan to provide impact reporting annually beginning in 2025, “which will help the market understand the associated impact of the loans underlying their investments.”
Fannie Mae is implementing two enhancements for the HomeReady® mortgage product. For creditworthy very low-income purchase (VLIP) borrowers, Fannie’s Mae is offering a new temporary $2,500 credit for use towards down payment and closing costs. Along with this enhancement for borrowers, lenders who take HomeReady product commitments in Pricing & Execution-Whole Loan® (PE-Whole Loan®) can now reduce hedging costs and lock in margins with an enhanced best-efforts commitment. Fannie Mae Lender Letter (LL-2024-01).
Fannie Mae’s Press Release announced Single-Family Social Bond Framework. The updated Social Bond Framework describes the Fannie Mae mortgage collateral eligible to be pooled, issued, and labeled as Single-Family “Social MBS.”
Fannie Mae posted the January Appraiser Quality Monitoring (AQM) list.
Leverage key learnings and observations from calibrations to enhance your quality control (QC) program. This Fannie Mae Quality Insider features opportunities and tips aggregated from QC calibration exercises across a larger segment of lenders.
Freddie Mac published Guide Bulletin 2023-24 announced several changes, including updates to 10-day PCV types and occupancy requirements for a cash-out refinance to require all borrowers to occupy the mortgaged premises if occupied as a primary residence. See AmeriHome Mortgage Announcement Number 20240109-CL for more information.
Capital Markets
Credit conditions loosened as Treasury yields and mortgage rates decreased, so businesses and individuals are taking advantage of the borrowing opportunity. The Wall Street Journal has examined eight charts that detail the state of credit, from an increase in corporate bond issuance and consumer borrowing to a decrease in secured bond issuance. Despite long-standing concerns about a recession, some indicators suggest the economy and credit markets are at the beginning of a cycle of growth! Of course, with too much growth comes higher rates.
In supply and demand news, the Treasury Department has pared its borrowing estimate for the first quarter to $760 billion from the $816 billion projected in October. “Experts” had predicted the opposite, but Treasury officials say less borrowing is needed because of improving fiscal flows and higher-than-expected cash on hand.
Speaking of predictions that did not come to fruition, the U.S. economy is healthier than what economists expected a year ago. But some Federal Reserve officials emphasize a need for caution as they determine how to proceed with monetary policy. Per Fed Governor Waller, “Inflation of 2 percent is our goal. But that goal cannot be achieved for just a moment in time. It must be sustained.”
With the items above as a backdrop, in news of interest to the mortgage market, the latest home price data from S&P/Case-Shiller for November was another reminder that affordability remains challenging for home buyers. Despite the U.S. National and 20-City Composite Indexes recording their first month-over-month declines since January 2023, November’s year-over-year gain saw the largest growth in U.S. home prices in 2023, with the National Composite rising 5.1 percent and the 10-city index rising 6.2 percent. Rates falling around 100 basis points since October could support further annual gains in home prices.
Today’s highlight is the FOMC statement followed by the post-meeting press conference with Chair Powell, but the economic calendar kicked off with mortgage applications decreasing 7.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending January 26. Last week’s results included an adjustment to account for the MLK holiday. Prior to the Fed, we’ve also received ADP employment for January (107k, much lower than expected), and the Q4 employment cost index. Later today brings the Quarterly Refunding announcement, then January Chicago PMI. No change in the fed funds target rate range is expected with the release of the latest FOMC policy statement, but the market will be eager to hear if there is any softening in the hawkish rhetoric. We begin the day with Agency MBS prices better by .125-.250, the 10-year yielding 4.01 after closing yesterday at 4.06 percent, and the 2-year at 4.30.
Employment, and Transitions
Stronghill Capital, LLC, an Austin, TX-based Wholesale and Correspondent lender, is hiring across the country! If you’re a relationship-focused Account Executive with experience in Non-QM and Investor Financing, including multi-family and mixed-use properties, we’d love to speak with you! Stronghill’s Account Executives enjoy open territories, multi-channel opportunities to work with clients as correspondents or brokers, and consistent communication and collaboration with the Executive Leadership team. Stronghill Capital is a non-bank, balance-sheet lender specializing in commercial and investment property loans. We can help your clients meet their needs. If you’re looking to join a rapidly-growing, dynamic organization with a focused commitment to growth and expansion in Non-QM, reach out to our SVP of Sales, Matt Brammer, or 440.382.3183 to learn more.
Cenlar FSB announced the promotion of several senior leaders and the appointment of one Vice President: Owen Amster, to Vice President and Controller, Nick Brett, to Senior Vice President of Client Management, Mike Day, to Vice President of Executive Client Management, Trevor Friel, to Vice President of Workforce Management, and Rena Madia, to Vice President of Customer Interaction. Heidi Carter is now the Vice President, Business Information Officer, serving as the dedicated Business Information Officer (BIO) lead for our corporate functions across the enterprise.
Dark Matter Technologies announced that Tony Fox as its chief of client engagement responsible for directing the company’s account management and client success teams and will report to Sean Dugan, chief revenue officer at Dark Matter.
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