Student Loans DUE, Rates Improve

TODAY’S RATES & HOUSING NEWS

Interest rates have shown some nice improvement over the past 7 days!

Mortgage Backed Securities (MBS) have traded higher most of the week, helping interest rates drop .2 to .3%.

See MBS chart below.

On Friday, Powell’s Jackson Hole speech came and went, and the impact was minimal.

Powell stated that although inflation numbers have improved, the FED has still not achieved their target inflation number of 2%.

The FED will monitor incoming data and could raise the Federal Fed’s Rate more if deemed necessary to get to their target inflation number.

Currently the Federal Funds Rate sits at a 22 year high of 5.25%-5.5%.

All eyes will be on this Friday, September 1st, for the BLS Jobs Number for August.

A low job creation number would be great for mortgage rate improvement.

Below is Mortgage News Daily’s average rates across America as of 8/28.

Below is Green Home Loans rate sheet today.

There are a lot of characteristics that go into a mortgage rate – credit score, investor, loan to value, loan amount, costs, etc.

Please call me to go over your specific scenario so we can price your loan out accurately.

FEDERAL STUDENT LOAN DEBTS NO LONGER IN DEFERRMENT

The Federal Government has paused Federal Student Loan Interest and Required Payments for over 3 years.

That all ends September 1st, 2023 as interest will now accrue with first payments becoming due in October 2023.

It’s estimated that almost 70% of people don’t know that their student loan debts are now becoming due, and 46% are not financially ready to start making payments again.

As Mortgage Originators, it’s common for us to see student loan debt of $50,000 – $300,000.

I believe student loan debt becoming due is going to have ripples throughout the economy.

If you or someone you know has a lot of student loan debt as a homeowner – there are options.

Fannie Mae is allowing clients to refinance their existing mortgage and pay off student loan debts as a RATE AND TERM REFINANCE.

This is significant because CASH OUT REFINANCES have higher rates and more costs, especially if the client’s credit isn’t perfect.

Many clients also have substantial equity in their home and using a Home Equity Line of Credit (HELOC) to consolidate student loan debts and other high interest rate credit date (average credit card rate in America is 23.99%) could make financial sense.

Please call me and we can put together a Free No Obligation analysis so you know your options.

See CNET article below on student loan payments becoming due and how to get information about your payment and a possible income driven repayment plan.

https://www.cnet.com/personal-finance/loans/student-loan-relief-what-to-know-about-bidens-new-plan-to-help-borrowers/

Warren Buffet Takes Big Stake in U.S. Housing Market

TODAY’S RATES & HOUSING NEWS

Interest rates have continued to move higher over the past 7 days.

Interest rates are determined by trading levels in the bond market, and Mortgage Backed Securities continue to trade lower.

See major drop downward in the MBS market over the past 2 weeks.

This trend has pushed mortgage interest rates to their highest levels in over 20 years.

See quote below from Matthew Graham at Mortgage News Daily:

“Reasons for the rising rate momentum are apparent and ongoing. 

Decades-high inflation required decades-high rates to fix. 

The higher rates are supposed to be damaging the economy more than they have. 

Until that damage shows up, rates have a green light to continue higher.

As more and more market participants abandon their preconceived notions regarding an imminent rate reversal, the upward momentum takes on a certain glacial quality. 

In other words, it’s self-sustaining, often resulting in days like today where rates look like they’re acting on some obvious catalyst despite the absence of any such news.”

In order for mortgage rates to fall, we likely need to see more economic reports showing the economy is slowing.

The FED has raised the Federal Funds rate in order to lower inflation and slow down the economy.

Until this takes a noticeable effect, interest rates will likely maintain at higher than normal levels.

This week’s big market mover is FED President Jerome Powell’s speech on Friday at the Federal Reserve’s Economic Policy Symposium.

Last year, Jerome Powell warned us that the road to bring down inflation would be long and painful.

“While higher interest rates, slower growth and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses” 

I expect Jerome Powell’s speech to state that the FED will continue to make decisions based on economic data.

While the fight to lower inflation has worked, we are still not where we want to be.

Below is a good article from U.S. News previewing Jerome Powell’s speech.

https://www.usnews.com/news/economy/articles/2023-08-21/powells-speech-to-headline-feds-summer-gathering-at-jackson-hole

Below is Mortgage News Daily’s average rates across America as of 8/21.

Likely a bit higher when 8/22 comes out.

Below is Green Home Loans rate sheet today.

There are a lot of characteristics that go into a mortgage rate – credit score, investor, loan to value, loan amount, costs, etc.

Please call us to go over your specific scenario so we can price your loan out accurately.

WARREN BUFFET INVESTS IN THE HOUSING MARKET

Legendary investor Warren Buffet put his money in the U.S. Housing market, per recent 13F Filings. 

Berkshire Hathaway invested nearly $800 million in Home Builders: DR Horton, Lennar Corp. and NVR Inc.

See article from Yahoo Finance below:

https://finance.yahoo.com/news/warren-buffett-bets-u-housing-155711335.html

Interest Rates Rise .2%

TODAY’S RATES & HOUSING NEWS

https://m.bixel1.net/mjestw

Rates have trended higher over the past 7 days. 

The Mortgage Backed Security market started trending down on Thursday 8/10/23.

The MBS market ended the day down -53 bps on Thursday, -27 bps down on Friday, and -31 bps down on Monday.

When the MBS market is down, interest rates go up.

See MBS market substantially down in chart below.

Overall, interest rates have gone up almost .2% since our last update.

According to Mortgage News Daily, the average interest rate across the country is 7.24% for a well-qualified conventional borrower.

Below is Green Home Loans rate sheet today.

There are a lot of characteristics that go into a mortgage rate – credit score, loan to value, loan amount, costs, etc.

Please call us to go over your specific scenario so we can price your loan out accurately.

The start of the interest rate spike came on the heels of Consumer Price Index (CPI) inflation report.

Inflation rose .2% from 3% to 3.2%.

This change was expected since the overall inflation figure is made up by adding 12 months together.

The month that fell off a year ago had a negative .1% monthly figure.  The figure that replaced it was +.1%.

Rates have now hit the highest levels since November 2022. 

We still believe they will fall – not if, but when.


Mortgage News Daily agrees with us:

“Past precedent suggests a near certainty of good opportunities to refinance to lower rates in the future. 

The only uncertainty is how long you’d have to wait.

Some forecasters see rates beginning to move lower before the end of 2023, while the more pessimistic crowd thinks we could be stuck in a similar range through most of next year. 

One thing’s for sure, rates almost never stay that flat for that long.”

KCM MONTHLY MARKET REPORT

Keeping Current Matters just released their August 2023 monthly market report.

Click below for the audio recording:

Here are my favorite slides from the report.

This slide shows how many consumers were pessimistic about home prices at the end of 2022 and beginning of 2023.

Housing prices are on pace to have a good appreciation figure for 2023 in most markets.

New listings were expected to skyrocket in 2022.  After initially surging in the summer of 2022,

Housing inventory started to drop.  Consumers were afraid that a rise in rates could cause a housing market crash and were anxious to get their home on the market.

Many people ended up taking their home off the market and new inventory began to slow dramatically.

Housing has been underbuilt for over 10 years and most consumers with low rate mortgages don’t want to sell. 

There is not enough supply for home prices to drop considerably.

Many consumers and experts were wrong.

See original real estate price forecasts and updated forecasts.

**

And lastly, here are the appreciation figures over the last 20 years in the top 20 cities.

Homeowner Equity Near Record Highs

TODAY’S RATES & HOUSING NEWS

It’s been quite the up and down week for mortgage rates.

See Mortgage Backed Security chart below with an expertly crafted fuchsia circle to illustrate the rise and falls.

Interest rates have been rising after Fitch Credit Rating downgraded the U.S. credit rating.

Average interest rates started moving in the 7.25% range and then we finally got some relief from the BLS Jobs Report.

I’ve been critical of the BLS Jobs Report data and some of the massive gains in jobs didn’t appear to be accurate based on what I’m seeing in the economy.  Also, many of the jobs were part time or temporary jobs.

On Friday, the July BLS Jobs Report came out and FINALLY we saw a job creation number below estimates.

The estimates were for 200k job creation.

The numbers came back at 187,000 jobs created in July 2023, and May and June were revised lower by 49,000 jobs.

So why do we care about job creation when it comes to mortgage rates?

Here is why:

The FED is looking at economic numbers to help guide the FED’s fiscal policy.

The FED has raised interest rates at one of the fastest paces of all time to lower inflation.

If job creation goes down, it shows that some of the policies to slow the economy are working thus decreasing the possibility of another rate increase.

Also, when jobs increase it means employers are hiring which typically correlates to increased sales thus more staff needed.

When the companies are doing well, investors spend more money investing in the stock market which typically raises interest rates.

When the economy is not doing as well, investors spend more money in the safety of the bond market which typically lowers interest rates.

Here is an article from Mortgage News Daily going over Jobs Report and it’s impact:  https://www.mortgagenewsdaily.com/markets/mortgage-rates-08042023

The big economic report this week is the CPI Inflation report coming on Thursday, August 10th.

Expectations are for year-over-year inflation to rise from 3% to 3.3%.

Why would inflation rise if the FED is doing all these things to lower it?

The yearly inflation number is taken by adding up 12 months of monthly inflation numbers together.

In July 2022, there was a negative reading of inflation and in July 2023 there is expected to be a small positive reading.

Because the positive number (1 of 12) will replace the negative number, year-over-year inflation will likely go up.

Mortgage rates are down .14% since last Tuesday.

Below are the average mortgage interest rates across the country according to Mortgage News Daily.

Below is Green Home Loans rate sheet today.

We can go lower than these rates depending on credit and how you want to structure costs.

HOMEOWNER EQUITY NEAR RECORD HIGHS

According to Black Knight, total U.S. Homeowner equity topped 16 Trillion in June, while Tappable equity (available to use – defined at 80% LTV or below)

came in at 10.5 Trillion.

Let’s put that into perspective from an individual household standpoint.

The average home in America has equity of:            $249,000

The average home has tappable equity of:                 $199,000

Here is Black Knight’s full Mortgage Monitor Report:

  https://www.blackknightinc.com/data-reports/black-knights-august-2023-mortgage-monitor/

And here is a CNBC article on home equity in America.

https://www.cnbc.com/2023/08/04/record-high-home-prices-mean-you-may-have-cash-hidden-in-your-home.html

If you have a lot of equity in your home and want to use it for:

  • Paying off higher interest rate debt
  • Home Improvements
  • Creating a Security Fund
  • Other investments

Please give me a call.

We have a lot of consumers getting cash through cash-out refinances or HELOCS.

I’d be happy to show you the numbers to see if it makes sense.

HOUSING MARKET FORECAST

Home Prices Rise .7%

https://m.bixel1.net/ndkcni

TODAY’S RATES & HOUSING NEWS

The FED raised the Federal Funds Rate by 25 bps on Wednesday 7/26 as most expected.

This move was already baked into the market, but the potential market-move was the FED comments and press conference.

The FED came off as less hawkish on another FED rate increase at the next meeting in September.

Currently the Federal Funds rate sits between 5.25% and 5.5%. 

Mortgage Rates improved some after the FED announcement but see-sawed up and down Thursday and Friday. 

Thursday saw Q2 GDP grow 2.4%, beating the expectation of 1.8%.  Friday saw the PCE inflation year-over-year number drop .8% to 3%.   

The positive economic numbers despite the FED’s fiscal policy is putting pressure on mortgage rates.

Next week, the Friday BLS Jobs Report will likely be the biggest market-mover of the week.

More job growth than expected likely pushes mortgage rates higher.

Job growth below expectations likely pushing mortgage rates lower. 

Overall, average mortgage interest rates went up slightly on the week – .05%.

According to Mortgage News Daily, the average conventional mortgage rate in the country is 7.04%.

See full rate survey below. 

Below is Green Home Loans rate sheet today.

We can go lower than these rates depending on how you want to structure costs.

HOME PRICES RISE .7%

Home prices rose .7% in May of 2023 and .6% in April 2023 according to the Case Shiller Home Price Index.

Home prices in many markets have been rising since January of 2023 despite higher mortgage interest rates.

Home appreciation for 2023 will likely fall between 5 and 7% for most markets.

See CNBC article below:

https://www.cnbc.com/2023/07/25/sp-case-shiller-may-2023-home-prices-continue-to-climb.html

The 20 City Month Over Month Composite:

  1. Cleveland +2.7%
  2. Chicago +2.3%
  3. Detroit +2.3%
  4. San Diego +1.9%
  5. New York +1.9%
  6. Seattle +1.9%
  7. Minneapolis +1.6%
  8. Dallas +1.6%
  9. Washington +1.5%
  10. Miami +1.2%
  11. Boston +1.2%
  12. Charlotte +1.2%
  13. Los Angeles +1.2%
  14. San Francisco +1.0%
  15. Portland +1.0%
  16. Phoenix +1.0%
  17. Tampa +1.0%
  18. Atlanta +0.9%
  19. Las Vegas +0.9%
  20. Denver +0.7%

And S&P / Case-Shiller U.S. National Home Price Index

SERIOUS DELINQUENCY FORECLOSURE NUMBERS LOWEST SINCE 2006

Serious delinquency mortgages (90+ days past due) dropped to their lowest levels since August 2006.


See Black Knight’s full article and chart below: