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Will I be affected by the change in the credit scoring model?

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Question of the week:  Will I be affected by the change in the credit scoring model?

Answer:  Most likely, yes, you will be affected. Will it affect you if you are applying for a mortgage? Most likely, no.

In January, Fair Isaac Corporation announced that it would roll-out a new credit scoring model this summer. Fair Isaac Corporation is the data company whose algorithms produce the FICO credit scores used by lenders for credit cards, auto and personal loans, and mortgages.

Before we get into the new credit scoring model and its impact, or no impact, on you, let’s look at what the credit score is and does. In credit parlance your credit score is known as your “FICO,” so named from the original score established by Fair, Isaac and Company. The FICO score started in 1989 and since then has had several versions as the company looks to better predict credit risk for lenders based on individuals credit history.

The model for scoring uses several different aspects of your credit data obtained from subscribing creditors. Some, but not nearly all, the information includes number of open accounts, accounts with balances, how long you have had credit, what percentage of your available credit is being used, what type of credit you have used and are using, and very importantly how have you paid your credit obligations. The data is broken down into five categories and each category is given a weight for calculating your credit score. The categories and weights are payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%) and credit mix (10%).

Credit scores are like bowling not golf, the higher your score the better. As you can see your payment history carries the most weight, so the better your payment history, i.e. payments made on time, the higher your score. Conversely, the more payments you have that were not on time the lower your score.

Please keep in mind that with all models so far, FICO scores have been generally positively impacted by having a good mortgage record. If mortgage payments are made in a timely fashion over a period of time there is a strong positive impact on your credit score. The same is generally true for auto loans. These credit obligations show that you have the ability, and history, to manage your finances such that you are a good credit risk for long term high balance credit obligations. A high balance mortgage does not impact your score as much as high balances on revolving credit, i.e. credit cards. For instance, a $400,000 mortgage is a lot to owe but will not negatively impact a credit score, whereas $50,000 owed on credit cards can, and in many instances will, negatively impact a credit score.

The new FICO Score 10 model is intended to give a more accurate numerical judgment of current credit risk to lenders than the current model.

Since the beginning, FICO scores have put the most weight in the model on payment history, the new model will increase the weight on delinquent payments, especially delinquencies in the past two years.

As noted above, the second highest weight in scoring is the amount owed on credit. To clarify, this amount owed weight is not necessarily the total dollar amount owed. Of great importance on the credit balances score is the percentage of credit outstanding to credit available, or credit utilization. In other words, how close to being maxed out are you on your credit cards? Someone owing $20,000 on credit cards with total available credit on those cards of $25,000 will likely have a lower score than someone with $20,000 on credit cards with total available balances of $50,000.

The third area that will see more weight on credit scores is personal loans. These are loans that are made by finance companies, have very high rates of interest and are considered high risk as many of the applicants for such loans are unable to get credit elsewhere. FICO Score 10 will weight these loans more heavily than previously.

FICO Score 10 will put more weight on not only missed payments over the past two years but also account balances. While Fair Isaac does not release the exact recipe for their algorithms, their release on the changes makes it easy to infer if your credit balances have been increasing the past two years your credit score will likely be lower than if your credit balances have been consistent or lower. Again, when addressing credit balances the impact is on revolving credit and personal unsecured obligations.

To sum up, the biggest changes made to the credit scoring model with FICO Score 10 are the weight given to recent history of delinquent payments, history of high credit utilization, and borrowers who apply for personal loans.

Estimates are that 110 million American consumers will be impacted by the new scoring system, seeing their scores either increase or decrease just by the change in the model. Many will see their scores increase, however an estimated 40 million will see their scores drop 20 points or more according the Fair Isaac.

Because the new model looks back twenty-four months of credit utilization (outstanding balances compared to available balances) it will be harder to increase your credit score. One of the actions we use to help mortgage applicants raise their credit scores is to pay down balances on credit cards to get below certain utilization percentages on individual cards. Recently I had a client who paid a total of $7500 down over two credit cards and we were able to raise his scores by 20 points, which enabled us to lower his interest rate. With FICO Score 10 it appears this will not be an action that can be taken as the change in current utilization percentages does not have the same impact due to the twenty-four month look back.

What about mortgage applicants, how will you be affected? In the short term not at all.

As mentioned above the FICO score was introduced in 1989. In 1995 Fannie Mae introduced its “Desktop Underwiter,” an Automated Underwriting System (AUS) that uses artificial intelligence to underwrite and approve mortgage applicants. A key factor in the success of Fannie’s Desktop Underwriter, and subsequently Freddie Mac’s Loan Prospector, was the ability to assess credit history and risk. FICO scoring enabled risk assessment of the part of an borrower’s application.

Over the next several years the AUS and FICO programs were refined to more accurately predict credit risk with the objective of approving mortgage applications within acceptable risk for the GSE, i.e. to enable wide spread lending with an acceptable amount of delinquencies and foreclosures.

The Federal Housing Finance Authority is the government overseer of Fannie Mae and Freddie Mac. As discussed in many WR&MU over the years, Fannie and Freddie (GSE) underwriting guidelines are the basis for most other lenders, whether government insured (FHA and VA) or jumbo mortgages. There are some differences but many guidelines and policies are the same.

One policy that is the same is the credit score criteria used by the GSE, which is the FICO model used by the GSE, and therefore most other mortgage lenders and products. The FICO model used today for mortgage applications was introduced around 2004 or 2005. Before the mortgage and real estate market melt downs and the Great Recession.

Because the FICO model we are currently using is not changing, yet, the impact on mortgage applicants of FICO Score 10 is currently no impact.

“Yet.” For several years VantageScore Solutions, LLC has been pressuring the FHFA to adopt, or at least enable, its VantageScore credit model to be used by Fannie and Freddie; which would likely open it to be used by other mortgage lenders and programs. The company is a joint venture of the three primary credit-reporting companies, Equifax, Experian and TransUnion. A lot of the resistance to allowing VantageScore to be an acceptable scoring model was due to the major credit bureaus ownership of the product’s company and concerns about conflicts of interest.

Last August FHFA issued a rule that Fannie and Freddie will have to consider credit-score alternatives to Fair Isaac Corporations’ FICO scoring model. The rule was huge for VantageScore as it provides an opportunity to compete for business in the mortgage industry.

Since the ruling last August Fannie and Freddie have been negotiating on joint guidelines for credit score acceptability and starting this month will allow credit scoring companies to begin submitting applications using their scoring models for assessment and comparison to determine if their models are acceptable alternatives to the current FICO models being used for mortgage approvals.

The results could have tremendous impact on the mortgage industry, and therefore mortgage applicants, as it may open up lenders to use more than one credit scoring model, enable borrowers to shop credit scoring models to provide the best score for underwriting (similar to high school students taking multiple SAT’s and using the best score for college admissions) or result in a scoring model that results in lower scores for many applicants and little opportunity to improve their scores in a short period of time. In other words, adoption of FICO Score 10 or something similar.

Any changes in the scoring models for mortgages will take quite a while to get through the testing and bureaucracy, but there is a strong chance that there will be some changes in the future.

Have a question? Ask me!

Employment data for April released today showed a 20 million jobs were lost for the month. The unemployment rate, which was at a 50 year low of 3.5% just two months ago, has surged to 14.7%, and is likely higher as furloughed employees are not counted in the figure. In an indication of who is losing employment, the average hourly income jumped $1.34, or 4.7%, in April. The income spike indicates workers in the lower wage end of the workforce are losing their jobs while higher-earners are retaining theirs. Which is not surprising since the vast majority of lost jobs are in the hospitality industries which shed 7.6 million jobs in April. Also showing large losses were retail (2.1 million) and health-care (1.5 million).

Job losses, savings gains. The Bureau of Economic Analysis released the personal income and savings rates for March. As stated many times in the WR&MU, consumer spending is 65-70% of our GDP. Covid-19’s shutdown of businesses, especially hospitality, has seen a dramatic drop in personal spending. In March personal incomes decreased 2.0%, when the stay-at-home orders first were issued across the country. At the same time personal spending decreased 7.5%. As a result of spending dropping a lot more than income dropped, the personal savings rate was 13.1%, the highest since 1981.

Looking down the road…with many cities, counties and states slowly opening up businesses this week, and a more open economy in sight in the distance, the question is how will consumers react? How much of their savings will they retain and now much will they spend to release their pent up desire for new shows, weekend trips, dinners out. Has Covid-19 changed our habits enough so that when the economy is open again consumers will return to old spending habits, or will spending change such that some industries will not see a return to prior sales and revenues?

Rates for Friday May 1, 2020:  We have found stability in the mortgage markets, for purchases at least. Purchase rates are the same for conforming rates for the third week in a row and for the second week for high-balance transactions. Refinances are case-by-case depending on your situation so call to go through your options.

FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS:

30 year conforming                                            3.125%     Flat

30 year high-balance conforming                    3.375%     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 with 740 FICO score for purchase mortgages.

How do you celebrate Mother’s Day without the requisite wait to get into the brunch buffet with your siblings’ families all toasting mom? Or the outing to the park with the kids so your wife can be pampered at the local spa? Or the nice dinner out after both of the above?

The Smith home is being transitioned to the Smith Resort on Sunday so Leslie can lounge and read by the pool while be served fancy drinks (pina coladas, mimosas, or anything else she desires), snacks, grilled shrimp tacos for lunch and poolside grilled steak dinner.

It appears that many families will be adding to their savings rates this Mother’s Day with stay at home creations to celebrate the moms.

Happy Mother’s Day,

Dennis

Past Weekly Rate & Market Updates can be found on my blog page at my website www.DennisCSmith.com/my-blog

7-13-18: How do inquiries impact my credit score?

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Question of the week:  How do inquiries impact my credit score?

 

Answer:  A lot or not at all.

 

Quite frequently we have new clients tell us, “don’t run a credit report because I don’t want it to hurt my score.”

 

My response is, “First I cannot give you a solid pre-qualification and absolutely no pre-approval without running my own report, and second it will not impact your score unless you have had several inquiries recently—have you been speaking with other mortgage professionals and have any of them run reports and if so when?”

 

Conventional wisdom is that credit inquiries push down your credit score, so when you need credit just by applying your score drops, which may mean a higher rate or credit denial.

 

Conventional wisdom is not always right, especially when it comes to credit reports. Let’s take a look at when credit inquiries do harm your score and when they do not.

 

If you are applying for several credit cards, department store cards or signature lines of credit the chances are your credit score will be negatively impacted. If you are applying for one such item of credit your score will most likely not be impacted at all. The credit score programs have in their algorithms risk factors and if they are told that you are making several inquiries to obtain revolving, easy to access credit that activity is a high credit risk—it is evident you are searching for funds from many sources. What if you apply for two department store cards and two credit cards within two weeks. You could very quickly have access to several thousand, tens of thousands, of dollars in credit. If you already have several open credit accounts with high balances compared to credit limits these inquiries will push your score down considerably.

 

If you have some open credit accounts and the balances are not very high compared to available credit and you apply for a new credit card, say one that will give you airline points so you can leverage your purchases for plane tickets to visit your kid at college, if this is the only revolving credit inquiry on your credit report then your score will not, should not, be impacted.

 

What about purchasing a home? We routinely see credit inquiries on our clients’ credit reports from other mortgage lenders, usually over the past month or so, and these inquiries do not generally impact the credit score. I say generally because if there are more than five or six there could be an impact but not necessarily. As a rule three or four, or fewer, inquiries for home loans will not impact your credit.

 

The reason for this is that it is not unusual for someone looking to obtain a mortgage, either for home purchase or refinance, to call more than one lender (unless they call Stratis Financial which is usually the last call needed). This behavior is programmed into the credit score software, so if there are multiple inquiries from mortgage companies in a somewhat short time frame, about 4 weeks or so, your credit score is not impacted.

 

The same is true about auto loans. Many people speak to many car dealers, who run reports themselves or through different banks, looking for auto loans and these inquiries are treated similarly to mortgage inquiries.

 

If you have multiple inquiries for long term debt obligations, like home or auto loans, you credit score will likely not be impacted, if you have multiple inquiries for revolving credit your credit score will likely be impacted negatively.

 

Have a question? Ask me!

 

Pressure, no pressure, was the impact on interest rates with the price data released this week. On Wednesday the Producer Price Index for June was released and the data put pressure on rates to increase as wholesale prices increased 0.3% for the month and were up 3.4% from last June (2.8% when food and energy are stripped from the data, called the “core” rate). This strong data for prices caused great anticipation for the Consumer Price Index data release the following day. Would the stronger PPI figures show inflation for consumers beyond what the Federal Reserve would prefer? No, the CPI data did not show a significant increase in prices in June, putting Fed interest rate decision makers at ease. Month over month prices rose a scant 0.1% for you across the economy’s basket of goods and services and the generic American consumer paid 2.9% more than in June 2016 (2.3% using the core rate). This data was met with a bit of a sigh, and a shrug. Looking ahead, will the June wholesale price increase bleed into July for consumers resulting in higher rates? We will on August 10th when that data is released.

 

Rates for Friday July 13, 2018:  A tame week in the rate markets with not a lot of movement, so little that rates are the same as last Friday. We like a flat market!

 

FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS:

30 year conforming                                            4.375%            Flat

30 year high-balance conforming                      4.500%             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 with 740 FICO score for purchase mortgages.

 

 

While we have had some significant summer heat early in July, we are still a week away from the Dog Days of Summer, which officially begin on Sunday, July 22nd and end on Thursday, August 23rd. Wait, there are official Dog Days of Summer? Yup. Based on ancient Roman and Greek astronomy, the time when the star Sirius (the star that is the nose of the constellation Canis Major) rises in the morning before the sun. This year Sirius will rise before the sun starting next Sunday and ending on August 24th (the sunrise after August 23rd).

 

In those times the period of the dog days were not looked forward to as it was during this period when sickness, war and catastrophes would occur—perhaps coincidence, perhaps not!

 

Have a great week,

 

Dennis

7-6-18: When should we have our credit report pulled when exploring the purchase of a new home?

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Question of the week:  When should we have our credit report pulled when exploring the purchase of a new home?

 

Answer: “We got a copy of our credit report on-line, can you just use that?” This is usually the question that precipitates our question of the week.

 

When should you have a credit report pulled? Our most common answer to the Question of the Week is, “that depends…” and it applies in this case as well.

 

Many people are fearful of having credit reports run because they are concerned the inquiry will hurt their credit score. As a result, when we ask them somewhat generically, how is your credit history, they often reply that they recently obtained a report on-line and would like us to use that for their pre-qualification and approval.

 

If we are in the very preliminary stages of the qualification process, using a generic report from one of the free on-line services can be helpful, but we will not issue a pre-approval or a strong prequalification recommendation unless we are able to obtain our own report.

 

Why?

 

Because. (I’m a dad so I get to answer “why” questions with “because.”

 

We need our own report for several reasons. First and foremost, our reports are what are known as “tri-merge” reports, meaning they include the data from the three main credit reporting bureaus, Equifax, TransUnion and Experian. This will provide us with a very complete credit history and with credit scores from the three bureaus so we know which score will be used for qualifying and rate pricing (we use the middle score, if two or more borrowers we use the lowest middle score).

 

Second, not all credit companies report to all bureaus. We have seen many “clean” reports over the years provided by one credit bureau and then when we pull our tri-merge items appear that were reported to one of the other bureaus. For instance, you obtain a report from Equifax and it shows your car and student loans, credit card balance and history with a late payment from Macys in 2013. That is pretty good. However, when we pull our report there is a collection from a medical bill in 2013 that showing unpaid that reported to both TransUnion and Experian. Suddenly we have an issue to deal with we did not know about. As well, the collection will give you a lower score on the bureaus reporting it than the one that did not, how much lower? Does it knock us out of the program we want to use? Does it change the rate significantly?

 

Back to our question of the week, when should we have the tri-merge report pulled?

 

It depends on where you are in the process. Are you just starting the process of purchasing your new home? You have really looked yet but have been talking about it and want to see where to begin, how to begin, what needs to be done to begin? If that is the case you are likely going to be some time away from actively engaging in the process, in which case we will probably speak in generalities, broad strokes, and begin prepping for the full on assault on the housing market.

 

 

If in our initial conversation you make some statements or provide some answers that leads me to believe we might have some issues creep onto the credit report I would suggest we pull a report to get a starting point and see if we have any work to do. What might come up that would lead us to want to pull a report? You are divorced—how did the credit separation go? Are you still linked to your ex-spouse on any open accounts? You mention you had a medical issue in the past that took some time to resolve—did any accounts go to collection? You are self-employed and had to change tax preparers as you were not satisfied with his/her performance—were there unpaid taxes that became a lien? There are several variables that thirty years’ experience can hear and suggest a credit report.

 

One thing we consider when strategizing the credit report is that after sixty days lenders will want a new report to make sure nothing has changed. If we pulled a report May 5th, and you are still looking for a home today, do we pull a new report them?

 

Probably not. Once we pull our initial report we tend to stick with that for as long as we can. In the current market it can, and does, take some buyers several months to find the home they want, and can, buy and have their offer accepted. If we did pull a report in May, or even April, and you write an offer this weekend, as part of my pre-approval package I would include the information form that May, or April, report and advise that we do not want to pull reports every sixty days to reduce inquiries with your credit bureaus and one of the conditions of the seller’s acceptance of your offer can be my providing updated information on your credit scores and ability to qualify within 24-48 hours using a fresh report.

 

On the one hand we do like to limit the number of reports we pull. On the other hand we have to have the tri-merge report to know exactly what we are going to be dealing with for qualifying and approval.

 

When is the best time to have your credit report pulled? Just before we are in “go mode” for a home purchase and will be writing offers, or if you think there may be some issue from the past that could have an impact or be an issue we need to deal with.

 

Next week we look at credit inquiries and their impact on your credit score.

 

Have a question? Ask me!

 

 

Words and numbers impact rates. Words released by the Federal Reserve Open Market Committee (FOMC) from their last meeting in June when it raised rates by 0.25% indicate Fed members see labor markets continuing to tighten and inflation should retain its 2% level in the near future. Concerns about the future were expressed as short-term rates are approaching long term rates, what is known as a flattening yield curve. This rate behavior often coincides with a recession—is the Fed predicting one? Not exactly but keeping an eye on data that often does. The minutes gave some relief to investors anticipating higher rates in the short term as the minutes were somewhat rate friendly.

 

The data supported the Fed’s assessment.  Our monthly First Friday Labor Department release of employment data happened this morning and most of the data supports the Fed’s course of two more rate increases this year. The economy added 213,000 jobs in June, over 202,000 in the private sector. As well the labor force grew by 601,000 in June. This increase in the job force caused the headline unemployment rate to increase for the first time in a long time from 3.8% in May to 4.0% in June. The increase is result of the growing work force, i.e. more people seeking employment, and the labor participation rate (percentage of individuals eligible for work who are working, or participating in the workforce) increasing from 62.7% to 62.9%. This news is rate neutral to the extent most people who follow this sort of thing anticipated numbers close to what was released. The number that caused some pause was the earnings portion of the report as wages grew 0.2% for the month and are up 2.7% from last June. This relative slack increase in earnings as employment grows indicates more workers are seeking work enabling employers to hold wages steady. This removes some concerns about inflation being driven by wages, and is rate friendly.

 

Rates for Friday July 8, 2018:  Our last recession ended in June 2009, it would certainly seem a course correction for the economy is long over-due as we start our tenth year of economic growth. That is just back drop for the political and economic issues that are impacting domestic and international economies that have more and more economists and investors starting to look at the horizon for signs of an economic downturn. When economies slow down or go into recession interest rates either lead in anticipation, or follow. The possibility now being brought up more and more of not whether but when the next recession will occur puts a bit of a parachute on rates trying to climb.

 

FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS:

30 year conforming                                            4.375%            Flat

30 year high-balance conforming                      4.500%             Down 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 with 740 FICO score for purchase mortgages.

 

How messed up is your internal calendar? Mine was out of whack all through June for whatever reason, I’m blaming school being let out and my routine being thrown off. Now starting the month with a holiday smack in the middle of the week has me really thrown off. Did we get two Mondays and two Fridays this week? I need a Tuesday and/or Thursday thrown in once in a while—but that does not mean I advocate for our Independence Day celebration and holiday to become a mandated Monday holiday with different dates every year a la Labor and Memorial Days.

 

I hope you enjoyed your celebrations on the 4th, our family did.

 

Have a great week,

 

Dennis

3-30-18: Credit report states impacted by natural disaster

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Question of the week:  Why do some of the creditors on my credit report say, “Affected by Natural or Declared Disaster” when I live nowhere near a natural disaster that has occurred?

 

Answer: Because creditors were not all A+ students in geography class.

 

Last year saw many natural disasters across the country, from hurricanes in Texas and Florida to wildfires up and down the state of California. Many people were severely impacted by the disasters, some of the more fortunate only lost some days at work and had the financial burden of cleaning up after the disaster, however many lost their homes, cars, places of work and neighborhoods. While trying to recover from the disasters, dealing with the emotion of such tremendous loss they also had the reality of bills still due, negotiating with insurance companies to cover losses and added costs of where to stay and how to get there.

 

Understanding that financial disasters create tremendous financial burden on those in the impacted areas more and more credit companies are automatically putting into their reports to the three major credit bureaus that the debtor resides in a natural disaster area. The purpose of this statement is to let those reviewing the credit report for the possibility of extending credit will understand if there are any late payments on the account that the natural disaster could be responsible for the late payments. Essentially letting future creditors know there is likely a very good reason for the late payments that should be taken into account when extending credit.

 

So why are these notices popping up on credit reports for people who have not been affected by a natural disaster? Because the notices are put on credit reports using computer models and the computer models, from what we have seen, are using counties or regions when determining which accounts to label.

 

For instance, a couple in Long Beach, which has not been impacted by any natural disaster in decades, has a couple of accounts labelled with the natural disaster language. While Long Beach has not had a natural disaster declared, within the last twelve months there have been severe fires in both Los Angeles and Orange Counties; Long Beach is in LA County and borders Orange. It appears the creditor plugged in LA County as having a natural disaster and tagged all its accounts in the county, not realizing the size of the county and how geographically distant Long Beach is from any of the fires that occurred.

 

In Texas and Florida people are facing similar reporting, while they were not severely impacted by any of the storms they live near enough, or are in counties, declared natural disaster areas that they have had accounts tagged with the natural disaster warning.

 

Does this impact your credit? No, it does not. Does it impact your mortgage underwriting? As this reporting is relatively new on credit reports we have had some underwriters request appraisers note on the report if the property was impacted by a natural disaster.

 

At this point we have not seen any impact on credit scores, positively or negatively. Meaning if you have an account that has a 30-day late payment on the credit report and that same account is labelled “Affected by Natural or Declared Disaster,” we have not seen your credit score not impacted by the late payment—meaning your score is still depressed due to the late payment.

 

If this label is on some of  your accounts do not be concerned that it is in any way impacting your credit or ability to obtain a mortgage or other applied for credit such as an auto loan. It is merely a head’s up to other creditors that if you do have any late payments in the recent past there may be a very good reason why—if you in fact did live in a natural disaster area and were negatively impacted.

 

If you have any questions about your credit report please do not hesitate to contact me.

 

 

Have a question? Ask me!

 

A few reports this week that can impact rates. On Wednesday, the final revision to Gross Domestic Product for the 4th quarter of 2017 was released, and the revision was up 0.4% from the prior revisions. Strength in the increase was mainly attributed to consumer spending, which increased 4.0% from the 3rd quarter. The news was somewhat mortgage rate unfriendly as stronger economic data portends higher interest rates in the future.

 

While consumer spending led the way in 2017, so far in 2018 that has not been the case, causing expectations for GDP growth in the first quarter to be lower than it was in 2017. On Thursday data was released on Personal Income and Consumer Spending. The good news is that wages continue to increase, up 0.4% in February, matching January’s increase. And like January, consumer spending in February was up a lackluster 0.2%. Workers are earning more but spending less, so it is no surprise that the personal savings rate has increased to 3.4%. With the flat growth in consumer spending prices were up 1.8% from February 2017, still below the Fed’s 2% inflation rate target. The increase in earnings is negative for mortgage rates as it creates expectations for wage inflation, however workers putting more of their earnings into savings instead of spending is positive for mortgage rates. Since consumer spending is approximately 65-70% of GDP, a slow-down in spending could slow down GDP growth, keeping upward pressure on rates at bay.

 

Rates for Friday March 30, 2018:  A short week for markets as stock and commodity exchanges are closed today for Good Friday. Conforming rates continue to hold steady from Friday to Friday, seven weeks in a row now with the same rate. Lenders continue to bounce up and down on the high-balance conforming rates (loans from $463,451 to $679,650) and we are down 0.125% from last Friday. Markets continue to be volatile, and there is more turbulence ahead as indicated by the stock markets down in the first quarter of 2018 after nine consecutive positive quarters. My advice remains to lock through your escrow closing when you can.

 

FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS:

30 year conforming                                            4.25%       Flat

30 year high-balance conforming                      4.375%      Down 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 with 740 FICO score for purchase mortgages.

 

For parents on young ones I will give you this Easter tip learned from my mom, count the number of eggs you hide so you make sure they are all found. My mom learned this lesson when her young sons found an egg or two in the middle of August, in Tulsa, that had been rotting in the sun and heat since March. There was a special kind of scent and cleaning her boys after they found the putrid little bombs and did what boys do (throw at each other) taught to always make sure all the eggs were found on Easter…

 

Spring Break begins for our kids and many others, after this next week the next stop is summer. Seems like forever for the kids and tomorrow for the parents.

 

Have a great week,

 

Dennis