Will we see a surge of homebuying this fall?

 Real Estate Market  Comments Off on Will we see a surge of homebuying this fall?
Oct 242014
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

With the froth off the housing market, this fall could be a good time for home shopping. At least one real estate firm, Redfin, expects activity to pick up this fall. It reports that price growth in all markets has slowed significantly, and it reported that this summer saw the biggest drop of the year in the number of homes that sold above list price.

Zillow confirms this trend. Home appreciation based on its home value index has dropped in every month since peaking in Apr. It forecasts that the rate of appreciation will continue to slow to 3% next year.

According to Redfin, flattening home prices coupled with still low mortgage rates could result in a surge of sales through the remainder of the year. If you’ve been sitting on the homebuying sidelines, it might be a good time to see what’s available before the before this combination disappears.

Payoff your FHA loan on the first of the month

 Loan Programs, Owner-occupied, Residential Mortgage  Comments Off on Payoff your FHA loan on the first of the month
Oct 222014
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

For those with an FHA mortgage, an unpleasant surprise may await when you sell your home. FHA charges interest one month at a time. That means even if the sale closes on the 15th of the month, FHA calculates the mortgage payoff through the end of the month. For a $200,000 loan balance, Uncle Sam is going to dip his hand into your pocket for another $400.

This practice runs contrary to that for VA and USDA loans and for conventional mortgages. When the Consumer Financial Protection Bureau released its Qualified Mortgage rule, it labeled the practice a pre-payment penalty and instructed FHA to do away with it. FHA finally is going to end the practice next year. For all loans closed after Jan 21st, the payoff will include only interest through the funding date.

Rate update: Has volatility returned?

 Interest Rates, Residential Mortgage  Comments Off on Rate update: Has volatility returned?
Oct 202014
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Last week was a wild ride. In one day, mortgage rates dropped by a quarter-point to start the day only to regain that quarter-point by the end of the day.

If you caught rates at their low point, lucky you. If not, all is not lost. Interest rates still are the lowest they’ve been in over a year with the exception of last Wed.

This week again doesn’t have any scheduled data releases that should affect rates. Rates are likely to meander while the market catches its breath. Could rates head lower again? Bond markets are likely to take their cues from the stock market and events overseas. Uncertainty has given the markets a nervous twitch. A headline that screams of a new crisis or economic weakness could send interest rates on another wild ride.

That said, stock market analysts still are decidedly bullish. A rising stock market generally doesn’t favor lower rates, but as recent experience showed, it also doesn’t necessarily mean higher rates. If the bulls start running again, a return to our flat rate range from earlier in the year could be in order.

The Credit Mulligan Bill

 Credit Scoring  Comments Off on The Credit Mulligan Bill
Oct 172014
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Many of us have experienced the frustration of trying to correct errors on our credit reports. Rep Maxine Waters thinks she has a solution. Let’s talk a look at her bill she says will protect consumers from errors on their credit reports.

Some of the highlights are:

– reduce to 3 years the length of time derogatory information can remain on the credit report;
– remove derogatory information that resulted from consumers taking out mortgagess they couldn’t afford;
– remove debts that have been paid off or settled; and
– remove derogatory information related to private student loans if the consumer has made two on-time payments in a row.

Now, I’m no big fan of the credit reporting agencies, but this proposal is just silly. We should call it the “Credit Mulligan Bill.” If you screw up your credit, you simply ask for a do-over.

If something like this passes, interest rates will rise. Creditors will not be able to identify those with poor credit habits, and those with good credit will subsidize the bad behavior.

A more reasonable step towards reforming credit scoring would be for Fannie Mae and Freddie Mac to adopt the new credit scoring models that we discussed a couple weeks ago.

Fannie Mae housing survey shows improving sentiment

 Real Estate Market  Comments Off on Fannie Mae housing survey shows improving sentiment
Oct 162014
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

The results of the Sep Fannie Mae housing survey turned positive after two down months. The results seem to track the general improvement in consumer confidence noted in other surveys at the end of the summer.

The share of respondents who think it’s a good time to buy a home ticked up 4 points to 68%, and the share who thinks it’s a good time to sell ticked up 2 points to 66%. An improved 66% percent said they would buy if they were going to move as more (55%) also expect rents to rise over the next year.

Folks finally seem to have clued into falling mortgage rates as the same percentage (45%) think rates will stay steady as think they will rise. Only 5% think rates will fall.

One disconcerting result was that despite improving sentiment about the overall economy, fewer respondents see their personal financial situation improving. This tracks rather well with economic reports that show very little growth in personal incomes.

You can find a link to the survey results at the end of my blog.

http://www.fanniemae.com/portal/research-and-analysis/housing-survey.html

Rate update: Data still doesn’t matter

 Interest Rates, Residential Mortgage  Comments Off on Rate update: Data still doesn’t matter
Oct 152014
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Bond markets continue pretty much to ignore US economic data. The data, especially employment data, has been generally positive, which typically would push rates up. Instead, rates have moved to their lowest levels of the year. So what’s driving them?

It seems to be combination of factors. I suspect the most influential is general uncertainty. While the US economy seems to be stable, other world economies, especially those in Europe, are collapsing. The US isn’t an island, and what happens elsewhere will have some spillover effect here at home. Add to that the various military actions and the Ebola scare, and investors have reason to worry a bit. As we’ve discussed before, uncertainty helps keep rates low.

Another factor may be the US housing market. While the rest of the economy seems to be improving slowly, housing is stuck. With mortgage originations very low, it doesn’t take much demand for mortgage securities to keep rates low.

A final factor may be the market itself. Many bond investors bet against falling interest rates, but as rates have fallen, they’ve been forced to buy bonds to cover their positions. Buying bids up bond prices, which means lower rates.

If you’re floating your rate hoping rates will go lower, keep in mind that resistance to lower rates is probably a lot greater than resistance to higher rates. I suggest you decide a bail out point. If rates start to rise, be ready to act quickly.