TODAY’S RATES & HOUSING NEWS

https://m.bixel1.net/28qb5z

Mortgage rates have risen quickly over the past few weeks in conjunction with the U.S. Government working on a debt ceiling deal.

The U.S. Government has never defaulted on debt, and the debt ceiling negotiations are about raising the amount of money the government can borrower to maintain operations and pay off it’s debt.  A default would have huge consequences.

A deal in principle was announced late last week and now both sides have to work on passing the bill in Congress so the bill can go into effect before June 5^th, which is the date Treasury Secretary Janet Hellen imposed as the drop date when the U.S. would default on it’s bills.

The average interest across America pushed over 7.1%.

Below is our Green Home Loans Average Rate Sheet compared to the National Average.

The hope is that interest rates will improve with the debt ceiling deal announced, and the initial results are encouraging.

On Tuesday early morning, the Mortgage Backed Security market is trading up 33 bps.

Matthew Graham from Mortgage News Daily states the rise in rates has more to do with economic reports and future FED actions than the debt ceiling.  Inflation has not dropped as fast as many had hoped and there is an increasing chance that the FED will again raise the Federal

Funds rate in their June meeting.

There are a number of important announcements coming up that could affect interest rates starting with Friday’s U.S. Jobs Report.

2 weeks later we have the CPI (Inflation Report), immediately followed by the FED’s announcement.

Below is a good article explaining current rate and market conditions:

https://www.mortgagenewsdaily.com/markets/mortgage-rates-05262023

INTRODUCING NEW 1% DOWN GRANT PROGRAM

Excited to announce a new 1% Down Payment Program that is a True Grant – meaning the down payment assistance is not a 2^nd mortgage

Many Mortgage Brokers won’t have this product based on who they choose to partner with.

Here is how it works:

Customer completes a loan at 95-97% Loan To Value – typically 97%

There is a 2% Grant and the client’s down payment is 1% + costs/prepaids.

NO MONTHLY MORTGAGE INSURANCE – this is huge as PMI is a significant cost at 95-97% Loan to Value.

$350K MAX LOAN AMOUNT

80% AREA MEDIAN INCOME OR BELOW

Here is the Area Median Income Look-Up Tool if you would like to look it up or email me and I can tell you what it is in your county.

https://ami-lookup-tool.fanniemae.com/amilookuptool/

TODAY’S RATES & HOUSING NEWS

https://m.bixel1.net/28a2lr

Average mortgage interest rates jumped up last week about .3%.  The average 30 year fixed conventional interest rate went from 6.67% to 6.95%. 

Below is our Green Home Loans Average Rate Sheet compared to the national average.

Below is the Mortgage Backed Security Market (MBS) and you can see that it is sharply down over the past 7 days. This downward trend pushes rate pricing higher.

Rates for many customers locking today are in the 7%’s depending on credit and cost scenarios.

INTRODUCING NEW 1% DOWN GRANT PROGRAM

Excited to announce a new 1% Down Payment Program that is a true grant – meaning the down payment assistance is not a 2^nd mortgage

Many Mortgage Brokers won’t have this product based on who they choose to partner with.

Here is how it works:

Customer completes a loan at 95-97% loan to value – typically 97%

There is a 2% grant and the client’s down payment is 1% + costs/prepaids.

NO MONTHLY MORTGAGE INSURANCE – this is huge as PMI is a significant cost at 95-97% loan to value.

$350K MAX LOAN AMOUNT

80% AREA MEDIAN INCOME OR BELOW

Here is the Area Median Income Look-Up Tool if you would like to look it up or email me and I can tell you what it is in your county.

https://ami-lookup-tool.fanniemae.com/amilookuptool/

IS YOUR LOW RATE PREVENTING YOU FROM BUYING A NEW HOME?

Many clients we speak to may want to purchase a different house or move their family, but they won’t do it because they have such a great rate on their first mortgage – typically in the 2% to 3% range.

We hear this every day.

In the video below, our partner Jeff Quincey explains how the Blended Rate including other consumer debt could be quite a bit higher.

If you take into account everything that you can pay off when you sell, the rise in rate and payment is much less.

I highly suggest you watch the video below.

https://vid.us/v5bs1p

https://m.bixel1.net/6zaltt

Average mortgage interest rates are slightly higher over the last 7 days.  The average 30 year fixed conventional interest rate went up .02% from 6.65% to 6.67%.

Below is the Green Home Loans Rate Average Sheet compared to the National Average.

The anticipated inflation report came out May 10^th. 

The results were good but not as good as Barry Habib initially expected due to a variety of factors mentioned last week.

Inflation went from 5% to 4.9%.

Core Inflation (minus food and energy) went from 5.6% to 5.5%.

The most significant inflation figures we are seeing show shelter costs are no longer accelerating.

Shelter costs make up a big portion of inflation and the shelter costs have appeared to hit a ceiling and will likely start moving down.

Barry Habib predicts that inflation will drop to 3.5% to 3.7% by the mid July inflation report.

That would be HUMONGOUS for interest rates. 

See Instagram video below:

We expect almost all of our clients that are closing loans right now to refinance in 6 months.

We offer a Green Home Loans Loyalty Discount on rate pricing and fees so customers can take advantage.

As Barry Habib mentioned in the video, we expect the Real Estate market to heat up.

We are already seeing multiple offer situations today.  If rates drop deep into the 5%’s, it could be a repeat of the frenzy we saw in 2020 through mid 2022.

There is simply not enough inventory if demand dramatically increases. 

Multiple Offers Over List

Sellers Dictating All Terms

High Appreciation Due to Competition and Low Inventory

FHA and VA – Retail vs. Wholesale

One of the biggest differences we have seen from moving from a Retail Lender to a Mortgage Broker is the

extreme difference in rate and price, especially on FHA and VA Loans.  We can offer better rates on Conventional Loans too,

but the difference with Government Loans is staggering.

We were competing with a local Retail Lender this week on a FHA/VA Loan.

We beat the other lenders quote: 

1% Lower in Rate

With Lower Closing Costs

If you are sending your FHA/VA clients to a retail lender, I would strongly suggest getting a 2^nd opinion from us.

I can 100% guarantee that your clients are not getting the best rate/payment/costs. 

You can always use our Free Mortgage Quote page to get a quick second opinion for you or your client.

MONTHLY MARKET REPORT

Here is the audio of Keeping Current Matter’s May Monthly Market Report: 

Below are my favorite slides from the report.

**

**

**

TODAY’S RATES & HOUSING NEWS

Average mortgage interest rates are slightly lower over the past 7 days.  The average conventional interest rate across the country went down .08% from 6.73% to 6.65%.

Below is the Green Home Loans Rate Sheet compared to the national average.

Lots of news since our last update.

The FED raised the Federal Funds Rate another 25 bps as expected.  This was the 10^th raise in a row putting the Federal Funds Rate at 5-5.25%.  The language from their statement suggests that we could be close to the end of rate hikes.

On Friday, the U.S. Jobs Report was released and job creation blew out estimates.  253,000 new jobs were created in April compared to an estimated 180,000. The BLS did revise February and March lowered by 149,000.  When accounting for the revision of prior months, the net gain was 104,000. 

With all this data, the markets remained relatively calm and interest rates didn’t move much on the week.

Leading Mortgage Rate Prognosticator Barry Habib has been pointing to May 10^th as a day that we would finally see the headline Inflation numbers drop due to lagging data.  Barry is backing off seeing a large inflation drop on May 10^th due to a number of factors.

#1 – The BLS lowered the inflation number in April 2022.  The yearly inflation number is 12 months added together, so by replacing April 2022’s number with a lower

April 2023 number, inflation year over year will drop.  The problem is because they have lowered April 2022’s number, it’s less likely that April 2023 will replace April

2022 with a lower number.

#2 – During April 2023, there was a spike in oil prices which will be reflected in the Inflation report this Wednesday.

He does predict the inflation numbers to drop, but it may take longer than he expected. He argues that mortgage rates follow inflation and as inflation numbers drop – so will interest rates.

HOME PRICES RISE 1.6%

CoreLogic reported last week that home prices in March 2023 were up 1.6% from February 2023,

and  3.1% year over year.  Let’s put that in perspective.  1.6% appreciation in one month equates to 19.2% over 12 months. While we don’t expect 1.6% to be the norm, the data supports that the national housing market is rebounding.

Per Chief Economist for Corelogic, Selma Hepp – “While housing markets across the country continue to send mixed signals, prices in many large metros appeared to have turned the corner, with the U.S. recording a second month of consecutive monthly gains.  At 1.6%, the month over month increase was twice the average seen between 2015 and 2020.”

Corelogic has also increased their forecast for monthly appreciation to go up .8% from March to April 2023, and up 4.6% from March 2023 – March 2024.

In real numbers, that equates to a $300,000 home increasing in value by $13,800 to $313,800.

TODAY’S RATES & HOUSING NEWS

https://m.bixel1.net/nojeki

Average mortgage interest rates across the country ticked up another .14% over the past 7 days.

The average interest on a 30 year fixed conventional loan is now 6.73% and with that rate customers are usually paying discount points.  

Below is the Green Home Loans Rate Sheet compared to the national average.

We expect the FED to raise the Federal Funds Rate another 25 bps on Wednesday, May 3^rd.

Of more importance to Mortgage Rates is the hints the FED gives on future actions. 

When will the Federal Funds Rate hikes slow or stop? 

We also have the April U.S. Jobs Report coming out on Friday, May 5^th, which can have a major effect on mortgage rates.

Lastly, the day Barry Habib has been pointing at for months (May 10^th) is finally almost upon us.

Barry expects that the inflation averages will finally start to show the full effect of the Fed’s policy.

Mortgage rates follow inflation, so if inflation drops rates should improve.

INTRODUCING THE 5 DAY HELOC

While the FED’s rise in rates doesn’t correlate directly with Mortgage Rates, it does directly affect the rates and payments of

consumer debt like auto loans, credit cards, personal loans, etc.  These payments are the highest levels we’ve seen in years.

Many clients have a lot of equity in their home and want to use it to pay off high consumer debt.

The problem is that many clients have first mortgage rates they don’t want to touch.

We have a New Program called the 5 DAY HELOC that can help a lot of consumers.

We can have clients fill out a quick application and we would execute a soft pull on their credit.   

We can then forward a link to our client to qualify, pick out terms, and fund a HELOC in 5 days without an appraisal.

If you are struggling with consumer debt payments or want to explore using your equity for additional cash to pay off expenses,

please reach out to me directly or you can start an application at: 

www.applywithgreen.com

In the comments of application, include that you are trying to qualify for 5 DAY HELOC.

Reggie Green / 480-206-5577

IMPROVED AFFORDABILITY MOTIVATING HOMEBUYERS

Mortgage rate improvements in Quarter 1 of 2023 have led to more and more buyers engaged and actively looking to purchase. 

Active buyers have increased in every region of the country and with the higher demand comes increased competition and more seller leverage.

We are also seeing homebuying take longer with the increase competition and low inventory.

TODAY’S RATES & HOUSING NEWS

Average Mortgage Interest Rates across the country ticked up about .7% for most scenarios over the past 7 days.

We are now going to include a Green Home Loans Rate Sheet as well as the average interest rates across the country from Mortgage News Daily.

Below are average interest rates across the country.

Overall interest rates have been relatively stable, but slowly moving up over the past few weeks.

OUTRAGE OVER LOAN LEVEL PRICE ADJUSTMENTS

The mortgage industry was on fire last week as Major News Outlets reported that new Fannie Mae changes going into effect May 1^st, were charging people with higher credit scores to pay for people with lower credit scores.

“I should stop paying my bills so I can get a better mortgage rate” was something I heard multiple times.

Let’s dig into the changes. 

Here is what you need to know:

IS IT TRUE THAT CLIENTS WITH LOWER CREDIT SCORES ARE GETTING BETTER DEALS THAN CLIENTS WITH HIGHER CREDIT SCORES?

NO

There is no situation where clients with lower credit scores are getting a better deal than clients with higher credit scores with the same down payment.

See chart below:

The higher the number, the more the borrower gets penalized with higher rate pricing.

You will see that there is no area where a lower credit score client has a lower number than a higher credit score client with the same loan to value.

Your credit score is also important to qualify for the loan and highly affect mortgage insurance premiums.

Any client should do their best to have the highest credit scores possible to help qualify for home financing as well as get the best deal. 

IS IT TRUE THAT CHANGES TO THE LOAN LEVEL PRICE ADJUSTMENT MATRIX BENEFITED LOWER CREDIT SCORE BORROWERS AND PENALIZED HIGHER CREDIT SCORE BORROWERS?

YES.

The adjustment for lower credit score borrowers went down (they get better rate pricing) and the adjustment for higher credit score borrowers went up (they get worse rate pricing).  There was a wider gap before with rate pricing for lower credit score borrowers.  The changes shrunk that gap.

Here is where the outrage lies.  Essentially, FHFA subsidized lower credit score borrowers with benefits that higher credit score borrowers are paying for.  The irony of the whole situation is that lower credit score borrowers typically will go FHA, especially with the lower FHA Mortgage Insurance Premiums that went into effect in 2023.  Most clients with a credit score below 680 will get a lower payment with an FHA Product.

As is often the case, this change was ill-conceived in my opinion and won’t do what it intended to do.

I disagree with the change, but I also don’t think it’s the death of the housing market that many are making it out to be.

News is manipulated to get more views and spark more reaction. 

Clients with lower credit scores still get worse pricing.

These changes have been in effect for weeks and we have locked a ton of loans with this updated pricing without client complaints.

I also find if funny how this news went viral last week when this change was announced in January.  I discussed these changes many times in this newsletter months ago.

See chart below comparing OLD LLPAs vs. NEW LLPAs. 

Lastly, FHFA has now built credit score matrixes for 740-759, 760-779, and 780+.

Before these changes went into effect, 740+ credit score was the highest qualification level.

Now clients over 760 and 780 with down payments less than 40% are getting better rate pricing than 740-759 credit score clients.

FORECLOSURE HEADLINES VS. DATA

Foreclosure activity is another instance of the News reporting correct information but in a context that causes fear and reaction.

See headlines. 

What they didn’t headline is Foreclosures have been at record lows for 2 years and there was a Foreclosure moratorium during COVID.

Of course foreclosures are going to go up when they were at some of their lowest levels in history.

Foreclosures in 2022 were lower than every year since 2005 except 2020 and 2021. 

TODAY’S INTEREST RATES

Mortgage rates have risen another .1% over the past 7 days, currently sitting near 1 month highs.

The average client can still get in the high 5%’s to mid 6%’s depending on how they want to structure costs. 

FHA loans already start with lowering rates than conventional loans for most scenarios.

With FHA lowering their mortgage insurance premiums, an FHA loan has become often a better payment option than a conventional loan, especially for below 700 credit score borrowers. 

If you would like to check the FHA loan limit for your county, you can call me

or go here:  https://entp.hud.gov/idapp/html/hicostlook.cfm

Put in county name and the loan limit is next to FHA Forward.

REMOVING THE STIGMA OF FHA PREQUALIFICATIONS

In a conversation with a Top Realtor Group in Phoenix, the topic came up about listing agents preferring Conventional

Prequalification offers over FHA Prequalification offers.

There is often a connotation that an FHA client is not as well qualified and that the appraisal is more difficult / comes in with a lower value than a conventional appraisal.

Here is the real information:

1. With FHA offering lowering initial rates and now lower mortgage insurance premiums than before, in many cases a borrower is getting a better payment on an FHA Loan vs. a Conventional Loan.  Agents need to understand that going FHA is no longer because a client is not well qualified. I would make sure your lender (hopefully us 😊) is calling the listing agent on FHA offers and explaining this.

2. FHA has their own panel of appraisals while Fannie Mae does not.

3. FHA appraisers use the same way to determine a value.

4. FHA appraisals have more focus on the safety and security of the home.  Here are some of the main items an FHA appraiser will look at.

• No damage to the foundation, roof, or exterior
• Safe access to the premises
• Working utilities
• No exposed wiring or other electrical systems
• A permanent heating system that provides sufficient heat for the home
• No peeling or chipping lead-based paint.  Homes built before 1979 use lead based paints.
• Access to clean water
• No termites or other wood-destroying insects
• Access to, and ventilation in, attics and crawlspaces
• No soil contaminants, such as from a damaged underground storage container
• No safety hazards, such as stairs without handrails
• Compliance with local zoning regulations

If the home is in good working condition, an agent/seller should not worry about taking an FHA Prequalification over a Conventional Prequalification.

TODAY’S INTEREST RATES

https://m.bixel1.net/5lb4am

Mortgage rates had some nice improvement last week until Friday’s Jobs Report. 

After that, the gains were taken back and interest rates are about .1% higher today than last week.

See green trend up and then red trend down on right of chart. 

Per the Jobs report, 236,000 jobs were created in March and estimates were 240,000.

Unemployment fell from 3.6% to 3.5%.

MBS Highway pointed out an interesting figure with average hours worked for Americans. 

Average hours worked went down .1 to 34.4 hours.

While this figure looks insignificant, it’s quite significant when you look at 161 million workers in the U.S.

This .1 hour less worked is like losing 468,000 full time jobs. 

On Wednesday, the Consumer Price Index will be released which measures inflation.
We expect a volatile market. 

MBS highway expects inflation to drop from 6% to 5.2%, but core inflation (taking out food and energy costs) to go up 5.5% to 5.6%. 

HOME PRICES MOVING BACK UP

Per the Zillow Home Value Index, home prices rose .9% in March 2023.

Home prices are still up 3% year over year, but down 3% from their peak in June of 2022.

A bunch of other indexes also showed positive signs in home values.

FHFA reported home values up .2% in January.

Black Knight up .2% in February.

CoreLogic up .8% in February. 

MBS Highway’s April 2023 survey is also showing increased buyer activity and upward home pricing pressure. 

Inventory is still low across the country.  If buyer demand increase, prices will rise.

See breakdown by region below: 

KCM’S APRIL MARKET UPDATE

Keeping Current Matters April 2023 Market Update was just released.

Here is the audio:

Below are my favorite slides from the report.

INTRODUCING GREEN HOME LOANS

After 6 great years at Fairway, we have decided to open up our own company –

GREEN HOME LOANS 🎉🎉

What does this mean for our Agent Partners:

* More Opportunities to Form True Partnerships

* Wholesale Rates

* $0 Lender Fees

* Every Product on the Market

* With the Same Great Service

If you don’t think your client is getting a great deal, we created an easy form they can fill out so we can compete for their business.

www.freemortgagequote.biz

Also, check out our updated Realtors Tools Menu including our Realtor Infinity Partnerships here:

https://greenhomeloans.lpages.co/realtor-tools/

We are grateful to get to work for a great company like Fairway for 6 years,

But also excited for this change for us and our partners.

Below is my updated contact info.

🏡 Reggie Green

🐸 Owner / Green Home Loans

🐢 480-206-5577

🌴 reggie@mygreenhomeloans.com

TODAY’S INTEREST RATES

Mortgage rates finally settled down after major volatility in the prior weeks.

Average interest rates across America went down about .1%.

Mortgage Interest Rates are hovering around 2 month lows which is fantastic for spring homebuyers. 

The average rate for a conventional client across America is 6.44%. 

This week, all eyes will be on Friday’s Jobs Report.  More job creation than expected in February, caused rates to jump up throughout the month.

THE MAJOR BENEFIT OF BUYER PAID HOME LOANS

As a mortgage broker we can take any client as buyer paid.

In Layman’s terms, this means we take all the profit out of the loan and then can charge the client origination fees for our compensation.

The great part about this is our origination fees can be counterbalanced by a lender credit towards other fees such as appraisal, title, and prepaid items.

See real rate sheet below taken on 4/4.   

The above rate sheet pulls out our compensation and we can start offering much lower rates.

We do need to charge origination fees to make a profit.

On the above example for a $300,000 Loan Amount – let’s say I charged 1.75 origination points or $5,250.

At 5.625%, I’m charging $5,250 but I’m also giving a lender credit towards other fees – essentially making lender fees:  $4,362

At 5.875%, I’m charging $5,250 but I’m also giving a lender credit towards other fees – essentially making lender fees:  $2,328

That is a rate in the 5%’s, while essentially charging the client less than 1% in points. 

This is a major benefit of brokering – complete control over pricing and the ability to go low for well-qualified clients.

Game changer as we can compete and win practically any deal we want to.

HOME APPRECIATION AT 3.8% ANNUALLY

January’s S&P CoreLogic Case-Shiller U.S. NATIONAL Home Price NSA Index (say that 5 times as fast as you can) has annual home prices up 3.8% nationally. 

The report covers the period from November 2022 to January of 2023 – so there is some lag to the data.

Home prices declined in many market from May of 2022 to December of 2022, but the substantial rise in early 2022 is still outpacing some of the

value drop after May of 2022.  Many markets are also seeing a positive uptick in 2023, which will not be reflected in this data yet.

Here is how major cities are fairing with annual home appreciation. 

1. Miami +13.8%
2. Tampa +10.5%
3. Atlanta +8.4%
4. Charlotte +8.1%
5. New York +5.2%
6. Dallas +5.0%
7. Cleveland +4.8%
8. Chicago +4.8%
9. Boston +4.2%
10. Detroit +3.2%
11. Washington +2.4%
12. Minneapolis +1.7%
13. Denver +1.0%
14. Los Angeles +0.9%
15. Las Vegas +0.4%
16. Phoenix +0.0%
17. Portland -0.5%
18. San Diego -1.4%
19. Seattle -5.1%
20. San Francisco -7.6%

I think with all the negative media about housing, the below graphic say a lot.

Reminder that fear gets clicks and eyeballs. 

TODAY’S INTEREST RATES

Mortgage rates it 6 week lows on Friday, only to bounce back up some this week.

Fears in the banking sector sent investors into the safety of bonds which helps Mortgage Interest Rates.

The news of First Citizens bank acquiring Silicon Valley Bank’s deposits and loans along with relative calmness in the European Banking Sector helped

the stock market and hurt the bond market on Monday. 

As of Tuesday Morning, the stock market futures are down which could mean a good day for interest rates.

This is quite the wild ride!

The average interest rate in the country is about .1% lower than my update 7 days ago.

Most well qualified conventional borrowers will find themselves in the mid 6% range depending on closing cost and credit qualifications.

As rates fluctuate near that 6.5% rate market, buyer demand increases substantially.

Demand will increase even more when rates hit 6%.

Remember leading Interest Rate Prognosticator, Barry Habib, has pointed to
May 10^th as a pivotal day where inflation numbers should drop and interest rates will likely improve. If this happens, expect buyer demand to quickly rebound
while there is still very low inventory.
 
If this happens, you will see pressure on home prices to move up. Higher demand and lower inventory.   The window of opportunity could be closing.

See video below:

FED RAISES RATES .25%

Most expected the FED to raise rates 0 to .25%.
 
The FED decided on a .25% raise in the Federal Funds Rate.
 
In Fed Chair’s comments, Jerome Powell stated that the FED considered a pause in interest rate hikes, but ultimately decided that it’s best course of action was to continue rate hikes as price stability and getting inflation to 2% was most important.
 
Let’s look at what’s happening on a larger scale.
 
The failure of 2 banks is going to cause the banks to shore up their balance sheets and be stricter on lending. If banks are not giving out as many loans, the economy will slow, layoffs/hour reductions will happen and inflation will go down.

As inflation goes down, mortgage rates will follow. 

WHY HOUSING MARKET ISN’T GOING TO CRASH