Archive for category: News

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.

[email protected]

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

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.

[email protected]

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

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.

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

Question: What impact will the election have on interest rates?

Answer: Here I go grabbing the third rail of marketing…never discuss politics nor religion…

Some background, I have a Bachelor of Arts degree in Economics and Political Studies and have been active in continuing my education in both disciplines since receiving my degree in 1984. A bit of a news junkie and not afraid to be labeled an econ nerd, I have always read books, articles, columns, stories on economics and politics through history and modern times. Not trying suggest I am an expert, however I have a pretty good breadth of knowledge of economics and politics and how they interact.

The questionable bona fides established, let’s answer the question I have been asked several times over the current election cycle—which started in 2012 it seems.

When people ask about “the election” invariably they mean the Presidential election, so I will address the question as, “what impact will either a Clinton or Trump victory have on interest rates?”

The short answer is: no matter who is elected the impact on interest rates will be about the same, that is to say negligible. There are many charts available that show one party or the other has bigger impact on stock markets, and like with any statistics it depends on what years are used in the study, including what years are omitted. In looking at the charts with different starting points my opinion is that Congress has a greater impact on interest rates than Presidents. Because of this whoever is sworn in as our 45th President on January 20th will most likely have less impact than those sworn into office on Capitol Hill as members of the 115th Congress, and even more impactful will be those sworn into the House rather than those in the Senate.

Congress controls the purse of America, is responsible for the budget and approving expenditures. How the federal government spends tax revenues, what it decides to tax and at what rates and how much it borrows has significantly more impact on interest rates than appointments of judges, ambassadors and members of cabinet members.

Presidential policy can have an impact on America’s purse as a result of working with or against Congress, i.e. approving spending bills or vetoing them, but per the Constitution the President does not initiate any legislation.

What will have an impact on interest rates during the term of our 45th President is the overall economy, which is already on a course that neither Clinton nor Trump will have any impact on for at minimum six to seven months after one or the other is sworn in—and then only as a result of being able to get Congress to pass whatever spending and/or tax bills they support and have presented by amicable members of the House.

As I look at the economy it is my opinion, shared by some and disagreed with by others, that our next President is inheriting an economy that will likely go into recession by late spring or early summer 2017. Regular readers of the Weekly Rate & Market Update who follow the section on economic data know that our economy has had very anemic growth since the recession ended in June 2009. Although how anemic is hard to gauge since the way the Bureau of Economic Analysis (BEA) calculates GDP has undergone two major revisions in the past few years, once in 2013 and again in 2015. After each revision by the BEA past GDP calculations were revised upward.
As with the pre-recession economy much of the growth and strength has been due to a strong housing market that has seen sales and prices climb for the past several years. If/when the housing market cools, and how cool it gets, will impact economic growth and would aid, abet or help start a recession.

While anemic economic growth and job growth that has not had corresponding increase in wages and salaries as increasing percentage of jobs added to the economy are lower wage and hours, have had economy hovering just above zero growth for some time, those factors are not the only reasons we will see our economy go into a recession. The global economy has been struggling for quite a while. Interest rates for many of our trading partners are hovering around zero, and in the case of some countries rates are below zero—you have to pay the bank to hold your money.

America has never entered into a recession due to outside economic pressures, proud to say our recessions are Made In America. That may/will not be the case with our next recession as the challenges facing Europe and China, yes China which has been reporting suspect economic figures for many years, could start a global recession and drag the United States along.

As you consider a recession remember it is defined as two or more quarters with negative growth, i.e. contraction, in the economy. Because our economy is not flying along my opinion of a pending recession sometime in early 2017 is that it will not be very deep, certainly not like our last recession, and depending on foreign market should not last very long. The impact of the recession on interest rates will be that they do not change very much, meaning there is not a lot of room for them to drop, but also will keep a lid on rate increases through 2017 and into 2018.

So home loan mortgage rate in the near future be decided by Clinton or Trump? Most likely not.

Sidebar: While national elections consume electronic, print and social media, most people are less impacted by elections the further they are from your own community—despite the attention they receive. Local elections for city councils and mayor have a much greater impact on your daily life than who will reside in the White House.

Who fixes the sidewalk in front of your house? Determines cost to park in business and shopping districts? Manages animal control? Provides the police to protect your neighborhood and fire department to protect your home and office? Sets fees for business licenses and zones what type of commerce can happen where? Not the President, member of Congress nor Governor.

As you move up the level of elected officials from city to county to state to federal the impact on your daily life declines proportionally, so while who is our President is important to our nation, who is your local representative is even more important to your daily quality of life. And as a bonus you are much more likely to be able to meet and know your local representatives.

This election has been nasty, and not just the campaigns from those seeking your vote, I have seen too many nasty and hurtful posts and comments on social media—many much worse than either candidate has uttered—that has resulted in broken friendships and mistrust that will linger for years. No matter who wins on November 8th the sun will rise on November 9th and every November 9th for several millennia. Every election since Jefferson and Adams has had ardent supporters bashing opponents—and in many elections far worse than what we have seen in this one—it is the beauty and curse of that First Amendment, and as we continued as the greatest nation on earth despite or because of who has been elected in those prior election so we shall continue after our 45th President is sworn in, and our 46th, 47th, 48th…. End sidebar

As you read and contemplate my thoughts on rates and the economy keep in mind the cliché about economics and economists who are hard to pin down due to the famous, “on the one hand…on the other hand…” There is always the “other hand” and contrary opinion and someone will be right and someone else wrong. I just happen to think my hand is right!

[email protected]

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

You paid a little more for goods and services in September than you did in August. The Consumer Price Index for September increased 0.3% for all goods and services, but only 0.1% when food and energy are stripped out of the index (called the “core” index, which is gauge Fed uses for inflation). Year over year CPI is up 1.5% and the core index has risen 2.2%. Despite the annual price increase of 1.5% the government has established the cost of living adjustment for 2017 for Social Security payments at 0.3%, which means for every $100 someone received in Social Secruity benefits in 2016 they will receive $100.30 (or $1003 for every $1000 received in 2016). The CPI news has neutral impact on mortgage rates, it was within the consensus range so investors were not surprised and validated the common wisdom that the Fed will not increase rates prior to the election at its meetings November 1st and 2nd.

Existing home sales remain strong. Mortgage rates are flat for the week with a bit more pressure for lower rates through the week than higher rates as Mortgage Backed Securities floated a bit higher, but not enough to have impact on lender rate sheets. Rates are fantastic and there is more risk if they break higher than any benefit from them going slightly lower, if you are risk averse (and you should be with your monthly housing payment) lock your rate when you can.

Rates for Friday October 21, 2016:

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.

Note and adjustment to the chart for FHA, my data entry was corrected to show drop in FHA rate several weeks ago.

I know many readers enjoy this personal section of the Weekly Rate & Market Update and today I was intending to write about my love of fall and October in particular. However last night I learned through social media of the sudden passing of someone who as I reflected on how she entered my life what a tremendous impact she had on my life, the biggest impact in fact—and never knew it.

On Wednesday night Kathy Soule who has been an escrow officer in the local area for several decades passed away unexpected. She leaves behind her husband Ed and two daughters, Niki and Dani. I met Kathy through her husband who I worked with for a few years. Through Ed I was introduced not only to Kathy but also her the escrow company where she worked. The owner of that company, which today is Cardinal Escrow, Nancy Glass. Nancy was very active in the Greater Long Beach Association of Realtors and had bugged me to come help with a fundraiser. I went by her office after work one night to talk about the upcoming festival, she had convinced me to put on a Batman costume and entertain the kids, and pick up my costume. When I got there several people were making signs, and getting ready for the event. On the floor was a cute girl drawing a sign for hot dog sales. This boy said, “hey, nice hot dog!”

Those were the first words I spoke to Leslie McCormick, now Leslie Smith. Nancy introduced us and there began a rather lengthy attempt at courtship by yours truly and ultimately was successful as evidenced by our 22 plus years of marriage and our two beautiful daughters.

Fate, kismet, destiny, Providence, luck, happenstance, whatever the word, put the people in my path, and Leslie’s, so that we would meet and marry. Kathy was a critical part of that path for me.

Were it not for Kathy’s tremendous laugh, beautiful smile, at times mischievous look and especially her warm and welcoming personality I may not have been as likely to wanted to do business with her and missed the opportunity for Nancy to get me involved in a Batman costume and ultimately the pretty, smart and witty girl drawing a hot dog poster.

Prayers for Ed, Niki, Dani and all Kathy’s family and friends, a wonderfully fun and life-loving woman was tragically taken from them.

Have a great week,

Dennis