Dennis' Mortgage Blog

December 2nd, 2016 12:44 PM


Question: What are the new loan limits?

Answer: For the first time since 2006 the Federal Housing Finance Authority (FHFA) which governs Fannie Mae and Freddie Mac has increased the maximum loan limits for conforming loans and FHA has followed the FHFA’s lead and matched the new loan limits.

For single family residences in high-cost counties (Los Angeles and Orange Counties are high-cost, other counties in California may have different limits) the new loan limits are $424,100 (up from $417,000) for conventional mortgages and $636,150 (up from $625,500) for high-balance mortgages. The new loan limits are effective for all loans that fund on or after January 2, 2017.

When the loan limits increased from $359,650 to $417,000 in 2006 there was no “high-balance” category, loans over the conforming loan limit were generically called “jumbo” or “non-conforming.” In 2008, after the housing and mortgage market melt downs, Congress authorized the establishment of the “high-balance” loan limit for high cost areas to support the housing market and assist homeowners who have non-conforming loans by making conforming loans available for possible refinancing.

With home prices having dropped considerably from the establishment of the high-balance loan category the limit was lowered from $729,750 to $625,500 in 2011 where it has remained until it changes in January.

With median home prices having climbed to pre-Recession prices FHFA has returned to historic loan limit models of adjusting the conforming loan limits to keep up with changes in real estate values, hence the first increase in the loan limit in a decade. The lag between loan limit increases is the longest since before 1980, the last time there was no change in loan limits was from 1993 to 1996 when the loan limit was at $203,150.

The increase in loan limits is another sign that the housing markets are healthy across the United States, and have been critical in supporting economic growth for the past several years.

Have a question? Ask me!

Remember, with Dennis it’s not just a mortgage, it’s your complete financial picture.

A lot of significant data this week, including reports on the overall economy, wages, spending, employment and inflation—all of which impact interest rates. We’ll run through the pertinent reports in chronological order. Tuesday the second estimate of 3rd Quarter GDP was released with a 0.3% upward revision from the first estimate and showing 3.2% annualized growth in the economy from July 1st to September 30th. The increased revision was driven by stronger personal consumption. This news is positive for the economy and negative for lower mortgage rates.

Income up, spending down, prices up. That is the synopsis of the Bureau of Economic Analysis report on personal income and outlays for October. Personal income increased 0.6% for the month, up from 0.3% in September, while personal spending cooled down increasing 0.3% in October after 0.7% in September. Prices were almost unchanged for the month at 0.1% and are up 1.4% year over year, below the Fed’s inflation target. The news is mixed for mortgage rates.

Today the Labor Department released employment data for October. The economy created 178,000 jobs in the month, in line with expectations, however September payroll gains were revised downward from 161,000 to 142,000 jobs created. The headline for tomorrow’s newspapers is that the unemployment rate dropped from 4.9% to 4.6%, the lowest number since August 2007 right before the recession. The drop in the unemployment rate is not good news as it was not a result of more hiring but rather a dip in the participation rate and fewer people looking for work (remember the unemployment rate is not how many people are out of work but is how many people are actively looking for a job, if people give up looking for work the unemployment rate drops), the labor participation rate has dropped to 62.7% (percentage of eligible workforce that is working). Another bit of negative news is a drop of 0.1% in average hourly wages. Overall the report is negative for the economy and positive for mortgage rates.

Rates for Friday December 2, 2016: Good news for rates…they didn’t go up this week! For the first time in three weeks rates don’t go up, they didn’t drop from last Friday but we’ll take the no change after the run we went through. The combination of the election, Fed rate increase and several positive economic signs has resulted in the fastest increase in rates I can remember, going up 0.625% in three weeks. Will we see rates flatten out? Probably (?). Will we see rates settle back down? I feel we should, but then I wrote before the election that if Donald Trump won we should see rates fall.

FIXED RATE MORTGAGES AT COST OF 1.25 POINTS
30 year conforming 4.00% Flat
30 year high-balance conforming 4.125% Flat
30 year FHA 3.25% Flat
30 year FHA high-balance 3.75% Flat

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down (3.5% for FHA) with 740 FICO score for purchase mortgages.



The lights and decorations are coming out of the attics and garages, which always makes me think of the great movie, Christmas Vacation, when Chevy Chase decorates his home with “250 strands of lights, one hundred individual lights per strand for a grandddd total of 25,000 imported twinkle lights!” And of course they don’t work when he has the grand plugging in ceremony. One of the many joys of this time of year are all the great Christmas movies through the years. Be careful on those ladders.

Have a great week,

Dennis

Missed a Weekly Rate & Market Update? You can catch up as all the updates are posted on my website at http://www.denniscsmith.com/MyBlog .


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Posted by Dennis C. Smith on December 2nd, 2016 12:44 PMLeave a Comment

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November 25th, 2016 11:01 AM


Question: The question of the week is taking the day to recover from tryptophan overdose yesterday.

Have a question? Ask me!

Remember, with Dennis it’s not just a mortgage, it’s your complete financial picture.

Short week with limited economic data that was positive, supporting rates moving higher. Existing home sales in October were very strong with the most home sales since February 2007 after increasing 2% from August and up 5.9% from last October. The news is rate unfriendly as our economy has been pulled along with home sales this news gives a strong pull to economic growth. Other positive news came in the Durable Goods Orders grew 4.8% in October after declining in September. This news is also mortgage rate unfriendly as stronger orders for durable goods also signifies economic growth.

Rates for Friday November 25, 2016: With the certainty of a Federal Reserve rate increase in a few weeks, strong economic data and growing certainty as to the political future mortgage rates continued their climb this week. Early in the week it appeared the slide in Mortgage Backed Securities prices might have been at an end, but the pause was brief and the slide continues. Rates are up for their third straight week following the election and are now up 0.625% rising another 0.125% this week. Conforming rate hits 4% for the first time since last July.

FIXED RATE MORTGAGES AT COST OF 1.25 POINTS
30 year conforming 4.00% Up 0.25%
30 year high-balance conforming 4.125% Up 0.125%
30 year FHA 3.25% Flat
30 year FHA high-balance 3.75% Flat

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down (3.5% for FHA) with 740 FICO score for purchase mortgages.



I hope your Thanksgiving was enjoyable as ours.

Have a great week,

Dennis

Missed a Weekly Rate & Market Update? You can catch up as all the updates are posted on my website at http://www.denniscsmith.com/MyBlog .


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Posted by Dennis C. Smith on November 25th, 2016 11:01 AMLeave a Comment

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November 18th, 2016 10:29 AM
Question: With rates having gone higher what happens if I can’t close before my rate lock expiration date?

Answer: Every lender has their own policies when it comes to rate locks and the options when the lock is set to expire, however most have similar policies. Here is a look at how rate locks work and options when facing expiration before you are ready to close.

While everyone wants to close before a rate lock expires sometimes that is not possible due to many circumstances, from a sale escrow falling out, an issue with an appraisal or property condition, or inability to get required paperwork such as a payoff statement from a lender or an insurance policy. When this happens we need to see what is the best option available to extend the rate lock, and in an up-rate market protect you and your payment.

Let’s say that we locked you in on a $400,000 for a conventional purchase mortgage at 3.25% on October 4th for forty-five days and your rate expires today. The cost of the loan when we locked was 1.25 points ($5000). There was an issue with the closing of your current home which is delaying the closing of your new home for ten to twelve days. Rates are significantly higher, today the same lock would be 3.75%, an increase of 0.500% (one-half of one percent) in interest rate, or $112 per month.

There are two options at this point:

1) Let the rate lock be broken. Wait until we are ready to close and re-lock the loan. If this policy is followed then we get the worse of the original lock or the current rate sheet on the day we re-lock in the loan plus one-quarter point in fee. For example if your rate lock expired last week and you chose to float the rate until ready to close and we re-locked today your rate would be 3.75% but instead of 1.25 points the fee would be 1.5 points ($6000), so by float your rate lock extension you lost 0.500% in rate, or $112 per month, and one-quarter point in cost ($1000). That is the risk on floating a rate lock extension, that the market goes up or stays up during the period. On the other side, if you let the rate expire and rates drop over the next ten days to say 3.5% then you would get 3.5% at a cost of 1.5 points, your payment goes up $55 per month and it costs you $1000 more in fees.
2) On or before the day the rate lock expires pay for an extension of the same rate you currently have. A fifteen day extension costs 0.125 points and a thirty day extension costs 0.25 points. You do not have to pay for the extension at the time you make it, rather it will be added to your final closing costs. For example, we know we will be closing your loan in twelve days, we contact the lender and request a rate lock extension for 15 days. Your rate of 3.25% is extended until December 3rd, but since that is a Saturday the rate lock will be December 5th. The cost for the extension is 0.125 points ($500) which is added to your total loan costs, so the total points are $5500 for the rate of 3.25%.

As you can see Option 2 is significantly better than Option 1, even if the market floats back down to or below your original rate of 3.25%. If the market stays the same as it is today your payment increases $112 per month and your costs increase $1000, versus if you take the risk out of the market your payment stays the same and your cost increase only $500 to retain the rate. By paying for the extension instead of taking a chance on the market your costs of the extension are less than five months of payment increases should you float your extension and end up with the higher rate.

What happens in a stable or down-rate market if you rate is expiring? The policy for letting the rate lock expire and then floating is the same, you get the worst case scenario of the rate you were locked at or the current market plus one-quarter of a point. However if we extend prior to the rate expiring our options may be no cost for an extension of 15 days or possibly a rate reduction if the market has improved considerably.

We are not in a stable or down-rate market so my very strong advice is to know when your interest rate is expiring if you are in escrow and locked on your interest rate. As well know the policies for extending your locked rate should it need to be extended.

It has been some time since we have been in a market that has seen mortgage rates increase as high and as fast as we have seen in the past ten days. In the past we heard from several borrowers, and agents in escrow with borrowers, that they thought their rates were locked but in fact their loan originator had not locked in their rate and was floating the market to try to get better pricing for themselves. The rates went up and the borrowers were told their loans could not close before the expiration and then the lender locked them at the higher rate after the expiration.

If your loan is locked there is most likely, almost assuredly, an extension policy for your rate as a nominal cost—typically 0.125 points for 15 days and 0.25 points for 30 days. If you are told there is no extension policy, or that there is a substantial cost for extension, then demand to see confirmation of your rate lock.

With the new disclosure laws the non-lock rate scenario should be non-existent as when the rate is locked you must receive the Loan Estimate indicating when your rate is locked and for how long. If the lender is unable to close your loan by the rate lock expiration and then indicates the cost for extending is high, send them a copy of the Loan Estimate and demand to see a copy of the rate lock confirmation for the same day. If they are unable to provide then you have some recourse via the Consumer Financial Protection Bureaus—believe me any lender would rather make sure your rate extension and lock are handled properly than have to explain to the CFPB why they generated a Loan Estimate indicating your rate was locked when it was not.

Rate lock extensions are very important, as you can see it can be costly if your loan is not able to be closed within the rate lock period. Because of this it is critical you provide your lender with all documents they require as soon as possible after they are requested.

Have a question? Ask me!

Remember, with Dennis it’s not just a mortgage, it’s your complete financial picture.

This week saw some positive economic data released this week—all helping to push rates higher. Retail sales in October were up 0.8% from September, led by auto sales. Higher auto sales signify stronger consumer confidence which signifies economic growth which leads to higher rates. While the Producer Price Index was flat for October, and up 1.6% year over year, consumer prices went up 0.4%, 1.6% for the year led by higher energy costs. Higher prices means inflation which also leads to higher rates.

Rates for Friday November 18, 2016: Rates continue their march higher. As you can see from the chart below we have increased one-half of one percent in two weeks for conforming fixed rates. Going through my past charts the last time we saw rates increase this high in a short period was from May 15, 2009 when the conforming rate was 4.625% to 5.25% three weeks later on June 5, 2009. There are many factors to the spike, including herd mentality from investors and technical trading as well. What will be interesting is the Fed decision in a few weeks. The overwhelming consensus is a rate hike, but some began speculating on a half percent increase in rates instead of just a quarter. With the private and public long term rates increasing by as much as a half percent the Fed may see no reason to go with a large increase since the markets seem to be doing their work for them. One result of the increases will be a slow-down in purchase activity, which means if you are a buyer now might be a great time to go out and make a deal on your new home. In the meantime rates match their highs for 2016—right where we starting on January 1st.

FIXED RATE MORTGAGES AT COST OF 1.25 POINTS
30 year conforming 3.875% Up 0.25%
30 year high-balance conforming 4.00% Up 0.125%
30 year FHA 3.25% Up 0.125%
30 year FHA high-balance 3.75% Up 0.125%

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down (3.5% for FHA) with 740 FICO score for purchase mortgages.



Yeah! Fall appears to have arrived—I can tell because it was about 50 degrees when the dog got his walk this morning and I contemplated some light gloves. I love this time of year with the cooler temperatures, as well the fact that Thanksgiving is upon us.

I hope you enjoy your Thanksgiving wherever it might be.

Have a great week,

Dennis

Missed a Weekly Rate & Market Update? You can catch up as all the updates are posted on my website at http://www.denniscsmith.com/MyBlog .

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Posted by Dennis C. Smith on November 18th, 2016 10:29 AMLeave a Comment

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November 11th, 2016 11:15 AM


Question: Now what?

Answer: A question a lot of people have been asking this week in many sectors, and one I have had asked several times on Wednesday and Thursday. Now that the election is over and Donald Trump is President-elect, what are the expectations for the mortgage industry?

Three weeks ago I answered the question, “what impact will the election have on interest rates?” The short term of two days of open markets has shown the first part of my answer to be wrong, “no matter who is elected the impact on interest rates will be about the same, that is to say negligible.” On Wednesday the markets opened, ran through the day and closed, then opened on Thursday, ran and closed, exactly opposite of the expectations of myself and many others. The common wisdom that was a Trump victory would insert uncertainty in the markets. Markets do not like uncertainty and what normally happens is money flows from equities (stocks) to “safe harbor” investments—bonds and mortgages.

As the result of the election became apparent on Tuesday evening the futures market was follow the historical pattern of forecasted uncertainty as stock prices plummeted in overnight trading. This garnered well for mortgage rates as the expectation was that money would flow into Mortgage Backed Securities (MBS) raising prices—which lower rates.

When the equity markets opened on Wednesday they were almost flat from Tuesday’s close—surprising many after the overnight trading. And then pow—they started climbing rapidly approaching all-time highs. The ride up continued on Thursday and have been flat.

While the equity markets were jumping up the bond markets were falling down, rapidly and steeply. Looking at the charts the drop in MBS prices on Wednesday were the largest in one day in over several years, the increase in rates from last Friday to this are the largest since last June when rates jumped on expectations for the Fed to raise interest rates—which they did six months later.

Back to our question, now what? While short term my assessment was 100% backwards, long term I still feel confident in my expectations for rates to not move very much. It will take drift back down—many of you have heard me say for years rates go up on a rocket and come down on a balloon—but economic data supports low mortgage rates.

As for economic policy we will need to wait and see what is hammered out between the Trump Administration and the new Congress beginning in January. Expectations are for lower tax rates and unwinding some/many of the regulations put on various industries during the Obama Administration. Whether those will come to pass and their long term effect on the economy will certainly impact mortgage rates, however there is tremendous lag time between initiating policy, getting anything through the legislative process, implementing the policy and then the impact that any policy changes may have on the economy.

While waiting for the slow wheels of government the economy has its own momentum, or lack of momentum as is the case as I see it. As I mentioned in my Weekly Rate & Market Update three weeks ago, I feel we will enter a period of recession late 2nd Quarter or early 3rd Quarter in 2017—well before any impact of policies put into place by the new slew of officials in Washington.

Now what? Even with the bump in rates this week they are still extremely low and a bright spot for home buyers could be a lull in the market presenting some soft targets for sellers who are in a need to sell for whatever reason and suddenly seeing a reduction of buyers in the market. You may pay a bit more in rate than a week ago but possibly could pay a bit less in home price.

Have a question? Ask me!

Remember, with Dennis it’s not just a mortgage, it’s your complete financial picture.

Any economic data was overshadowed, actually ignored, by the election. One bit of data is new unemployment filings are flat at around 250-270,000 range which indicates pretty steady employment for those who have it. This data supports the increase in rates from the Fed in early December.

Rates for Friday November 11, 2016: We covered rates above. Cautiously optimistic for rates to drift back down in the future, however when and for how long are uncertain.

FIXED RATE MORTGAGES AT COST OF 1.25 POINTS
30 year conforming 3.625% Up 0.25%
30 year high-balance conforming 3.875% Up 0.375%
30 year FHA 3.125% Up 0.375%
30 year FHA high-balance 3.625% Up 0.375%

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down (3.5% for FHA) with 740 FICO score for purchase mortgages.




For those reading this who are Veteran’s thank you for your service and commitment to our nation and defending our liberties. It is my hope that one of the first acts of our new President and Congress will be legislation to improve veteran’s benefits, particularly for healthcare—both physical and mental.

Have a great week,

Dennis

Missed a Weekly Rate & Market Update? You can catch up as all the updates are posted on my website at http://www.denniscsmith.com/MyBlog .


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Posted by Dennis C. Smith on November 11th, 2016 11:15 AMLeave a Comment

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November 4th, 2016 11:50 AM


Question: I am going to purchase a condominium unit, what should I be looking at besides the actual unit?

Answer: Condos are a great option for many people. There is not as much upkeep as a home, if you like to travel you can generally shut the door and go, you are in a small community which allows for closer relationship with your condo neighborhood, and if you want to move to a detached single family residence later in life often your condo can become a nice investment option if you convert it to a rental.

There are many issues that can crop up with a condo purchase that you should be aware of before you commit to purchasing. Here some important issues you need to know about:

Is it really a condo? This comes up more often with “townhome” style units where buyers think they are purchasing a home, but the unit is really a condominium, however it happens the other way as well. What’s the difference and why does it matter?

The primary reason it matters is that rates are higher for condominiums than for single family residences if you have less than 25% down payment. The difference between a condo and a “townhome” is not the style of the complex but rather what you own. The simple way to tell the difference is that if you own the land under your unit the property is considered to be a PUD (Planned Urban Development) and priced as a single family residence for your mortgage. If you have an undivided interest in the entire complex, inclusive of land and buildings, then you own a condominium. In a condo you own the cabinets and counters in your kitchen, the Association owns the studs in the wall, the roof and the foundation.

Is there a lawsuit? This should be the first item checked off any list when looking at a condo complex. Not all lawsuits can prevent a new mortgage, but plenty of them can. If the Homeowner’s Association (HOA) is suing an owner for breaking the rules that is not generally an issue. If the HOA is suing the builder for major defects that is an issue and can put the complex on the Do Not Lend list with Fannie Mae, Freddie Mac, FHA and most lenders. With all the new condos put on the market through development and building conversions throughout Southern California in the past decade or so there has been a corresponding increase in lawsuits for building defects. This past week we had a client looking to purchase in one of the newer buildings in downtown Long Beach that has a major lawsuit against the developer for issues with the roofs, balconies, plumbing, electrical and other structural issues. The project is on the “Denied” list with Fannie and Freddie, meaning no loans will be made regardless of down payment using conventional financing.

Why does this matter to you as a buyer? Besides not being able to get a loan the price of the units will begin to drop precipitously since buyers can only buy with all cash or with subprime loans—if even those. The lack of availability of mortgages for the complex severely limits the market for buyers, lack of demand leads to lower prices.

Is the HOA solvent? Part of your purchase contract allows you to review the financial status of the Homeowner’s Association. This is important and many buyers do not undergo this review. Often we are required to review the financial statements of HOAs if prompted to do so by Fannie, Freddie or the lender, but not always.

What do you look for when reviewing the financials? Several items:

What is the delinquency rate of HOA dues? If there is a sizeable amount of unpaid dues that can lead to higher dues in the future for all owners.

Are there sufficient reserves? Does the HOA budget for future capital improvement/replacement projects? How old is the roof and will there be funds available for when will it need to be replaced? Are the funds for future upkeep and maintenance for painting, re-stuccoing, landscape and hardscape? A condo complex is like a giant house, and like a house it needs constant repairs and maintenance. Does the HOA set aside sufficient funds for necessary capital improvement projects?

Is there plan for future increases in HOA dues? Which leads to when was the last increase in dues? If dues are increased on a regular, annual, basis what is the reason? Poor budgeting? Increase in service fees for management, insurances, vendors? This can be the sign of a disengaged board that rubber stamps every suggestion from the company that manages the HOA (it is rare that condo associations manage their association themselves, generally they contract with a professional management company).

What is the owner occupancy rate? Does the complex have a significant number of units that are rentals? This may impact the ability to obtain financing, as well may affect the overall quality of life in the complex and future market values. Higher owner occupied neighborhoods (and a condominium complex is its own neighborhood) are shown to have lower public safety issues, cleaner environments, easier dispute resolution, and longer term residence which leads to stability. If there is a large number of rental units in a complex there is greater risk to units being abandoned if market declines, or landlords selling below market to rid themselves of the investment—thereby setting comparable sale prices for appraisals.

Does one entity own a significant number of units? This goes along with the prior question of owner occupancy. Single entity ownership is relevant in a few ways. First, many lenders will not loan in a complex if one person or company (other than developer when selling units for first time) owns 10% or more of a complex. Second, that one entity can control the market for the complex. If one person owns six of fourteen units and puts them all on the market at the same time it will depress values. As well if the entity is having financial issues and does not pay HOA dues or all its holdings go to foreclosure will have negative impact on the complex.

How many units are for sale? If a significant number of units are for sale at the same time, other than initial offering, this can be a signal that something is not right in the complex. It could be issues with the governing board, the management company, an owner that is constantly causing issues for everyone else, or an environmental issue such as noise. Also if there has been a large turnover in ownership in the recent past that may be a warning sign; have your agent provide you with sales in the complex over the past twelve to eighteen months.

How do the HOA dues compare? For a complex of its size and amenities provided are the HOA dues significantly higher or lower than comparable complexes in the immediate area? Too low can signify either incredible management or perhaps mismanagement not collecting enough which could lead to future assessment increases. Too high can signify lack of reserves and planning in the past that has led to increase in dues to bring the financial health of the Association back to normal.

How onerous are the CC&R’s? Covenants, Conditions and Restrictions are the governing rules of the Homeowner’s Association. Are there some items in the CC&R’s that bother you? If so don’t buy thinking you can change them as it is very difficult to get an Association to vote to change its rules. Are pets allowed but the rule says something like “dogs are permitted but total weight cannot exceed 45 pounds?” A Yorkshire Terrier averages seven pounds, can someone have six Yorkies because combined they do not exceed 45 pounds? Sounds ridiculous but such is the basis of potential lawsuits. Are visitors only allowed to park in guest spaces for two hours, or is there no limit? The former may be good if you have a relative visiting that you can only take for two hours, the latter allows for the guy down the hall to have his partner to become a permanent resident without paying for a parking sticker.

There are many more factors to consider when purchasing a condo than a single family detached residence. Primarily because once you purchase a unit you become a business partner with every other owner in the complex. You are tied to them financially on both a short and long term basis. Before making a condo your home do your due diligence to check out the entire project and your business partners to ensure you enjoy all aspects of your new home not just the spiffy kitchen and great location.

Have a question? Ask me!

Remember, with Dennis it’s not just a mortgage, it’s your complete financial picture.

Lots and lots of economic data this week. Leading the way was Personal Income, Consumer Spending and Price Index numbers for September were released Monday. Income was up slightly, but not significantly—neutral for rates. Spending was up pretty strong at 0.5% from August, mostly from auto sales—pushes rates higher. The Price Index continues to be stagnant at 1.7% year over year growth—positive for lower rates. Overall the news was shrugged off by investors as it did nothing to increase or decrease future rate predictions.

Fed does nothing. The minutes from the most recent Open Market Committee meeting for the Federal Reserve were released and to the surprise of no one the decision was to not increase the Fed Funds Rate. The language in the release gave no indication of a rate move in December, but the overwhelming consensus (80%) is that there will be a rate hike in December by the Fed. Unknown is how much will the hike be? News was market neutral.

New jobs not inspiring. This morning the Labor Department released employment data for October and the numbers did not inspire confidence of a strong labor market. Only 161,000 total jobs were added in the economy, of which only 142,000 were in the private sector. Considering between deaths and people coming of working age is around 193,000 per month there was a deficit of 32,000 jobs created versus needed. A bright spot was an increase in hourly earnings of 0.4% from September, though the average workweek has been stuck at 34.4 hours for months---keep in mind the definition of full time under the Affordable Care Act that mandates health benefits is 30 hours per week. The headline number is always the unemployment rate which declined from 5.0% to 4.9%, however this is mostly due to contraction of those looking for employment. Also dropping was the labor participation rate to 62.8%. Overall the news is positive for lower mortgage rates.

Rates for Friday November 4, 2016: Rates drift sideways for another week. There is quite a bit of nervousness in the markets this week as investors look to next week. The week is short (Veteran’s Day on Friday) which always leads to choppy trading, add to the short week the elections on Tuesday and there is a lot of unknown. Pouring through different analysis of “what if X wins..or Y wins…” the consensus seems to be the initial market reactions will be more muted if Clinton wins than if Trump wins under the “better the devil you know…” theory on Wall Street. If this is the case then the don’t-hold-me-to-it prediction for Wednesday is that rates will either remain stable or drop since if the “devil you don’t know wins” and spooks investors a lot then money in these situations typically flows out of stocks and into bonds, which leads to lower rates. However this is such a unique election cycle we could see everyone sell everything and go to cash and just sit on it. Volatility means one thing: lock when you can.

FIXED RATE MORTGAGES AT COST OF 1.25 POINTS
30 year conforming 3.375% Flat
30 year high-balance conforming 3.50% Flat
30 year FHA 3.25% *** Flat
30 year FHA high-balance 3.25% *** Flat

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down (3.5% for FHA) with 740 FICO score for purchase mortgages. ***FHA rates have may have no points and credit towards closing costs, changes daily.




Wednesday night’s Game 7 of the World Series had 40 million viewers, the most for a baseball game since Game 7 of the 1991 Series (perhaps the greatest Series ever with five one run games including the 1-0 extra inning final game). This puts Super Bowl viewing in perspective as Game 7 was the most watched TV show this year since the Super Bowl—which had 112 million viewers.

While Game 7 wasn’t great from a pure baseball standpoint it was outstanding for drama and excitement. Congrats to the Cubs who were able to give their fans a long, long, long awaited Championship. Unfortunately for the Indians they now replace the Cubs as longest suffering team in the four major sports without a championship…

Have a great week,

Dennis

Missed a Weekly Rate & Market Update? You can catch up as all the updates are posted on my website at http://www.denniscsmith.com/MyBlog .


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Posted by Dennis C. Smith on November 4th, 2016 11:50 AMLeave a Comment

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