First Time Home Builders Concerned about Credit

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Too many young consumers, however, are concerned their credit scores won’t make the cut when it comes to financing a home today, and they may be right.

“We’re still seeing credit remain relatively tight,” Jonathan Corr, CEO of mortgage processor Ellie Mae, said in a release.

About a third of future first-time homebuyers say their credit score might hurt their ability to buy a home and that 45 percent said they have delayed a home purchase in order to improve their credit, according to a new survey by Experian. One in 5 said they were likely to opt out of the mortgage process or buying a home all together for the next five to 10 years.

“Your credit profile is one of the factors that can have a substantial impact on securing a home loan because it is used by lenders as an indicator of your financial health,” said Rod Griffin, director of public education at Experian. “It is important to take steps early in the homebuying process to allow time to make changes and have those changes be reflected on your credit score.”

Nearly three-quarters of those surveyed said they are working to improve their credit, paying down debt, making sure bills are paid on time and even taking steps to protect their credit from identity theft and fraud. Still, just 30 percent of homebuyers in March were first-time buyers, well below the historical average.

What Happened to Rates Last Week?

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Mortgage backed securities (FNMA 3.00 MBS) lost -54 basis points (BPS) from last Friday’s close which caused fixed mortgage rates to move slightly higher from the prior week.  It was a our second straight week of sell offs of -25BPS or more.

We had a very light week for economic events.  Internationally, the ECB meeting grabbed all the attention of traders.  MBS were primarily pressured lower (higher rates) due to WTI Oil increasing from an open on Monday or $39.90 and a close on Friday of $43.75.

Domestic Flavor:

Jobs, Jobs, Jobs: Initial Weekly Jobless Claims were lower than expected (247K vs est of 263K) and hit a 42 year low! The more closely watched 4 week moving average fell to 260.50K.  Continuing Claims were also lower than expected (2.137M vs est of 2.171M).

Housing: Weekly Mortgage Applications rose 1.3%.  Purchases dropped -1.0% and Refinances gained +3.0%. Existing Home Sales: The March report showed a nice +5.1% gain over February and basically matched market expectations with an annualized sales pace of 5.33M vs est of 5.30M.
The March Housing Starts (1.089M vs est 1.170M) and Building Permits (1.086M vs est of 1.2M) were a tad lighter than expected but February’s readings for both were revised upward.  Overall, this data didn’t show any new trends.  YOY Starts are up 14.2% which is respectable though.

Across the Pond:
ECB:  They left their key interest rate unchanged and also kept their negative savings rate unchanged.  They did finally release details of their new corporate bond purchase program which will start in June.  MBS did fall under some slight pressure on comments made by ECB President Mario Draghi.

What to Watch Out For This Week:

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The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

Brought to you by:

Taff Weinstein
Broker/Owner

Office: 832-794-2136
Cell: 832-794-2136
taff@firstimperialmortgage.com

First Imperial Mortgage
3409 Morrison St
Houston, TX 77009
NMLS 225846

www.firstimperialmortgage.com

Copyright © 2016 Powered by www.MBSauthority.com

Home Builders Remain Very Positive

MBSauthorityHousing

Builder confidence in the market for newly-built single-family homes remained unchanged in April at a level of 58 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).

A level of 50 is the median level, so any reading above 50 is positive and expansionary.

“Builder confidence has held firm at 58 for three consecutive months, showing that the single-family housing sector continues to recover at a slow but consistent pace,” said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Ill.  “As we enter the spring home buying season, we should see the market move forward.”

“Builders remain cautiously optimistic about construction growth in 2016,” said NAHB Chief Economist Robert Dietz. “Solid job creation and low mortgage interest rates will sustain continued gains in the single-family housing market in the months ahead.”

The HMI components measuring sales expectations in the next six months rose one point to 62, and the index gauging buyer traffic also increased a single point to 44. Meanwhile, the component charting current sales conditions fell two points to 63.

Looking at the three-month moving averages for regional HMI scores, all four regions registered slight declines. The Northeast and West each fell two points to 44 and 67, respectively. Meanwhile, the Midwest and South each posted respective one-point losses to 57 and 58.

What Happened to Rates Last Week?

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Mortgage backed securities (FNMA 3.00 MBS) lost -37 basis points (BPS) from last Friday’s close which caused fixed mortgage rates to move slightly higher from the prior week.

It was a week that had huge potential for volatility, but in the end MBS (and rates) moved sideways for the majority of the week.

Domestic Flavor:

Retail Sales: Potentially the most significant data point of the week, disappointed.  The headline reading for March was -0.3% vs est of +0.1%.  When you strip out Autos, the reading also fell short (0.2% vs est of 0.4%).  The only bright spot was that Feb was revised upward for both readings.  Gasoline sales did have a rare increase, boosted by higher prices at the pump but really this overall a very weak report.

Inflation?:  We got a mixed bag as the Producer Price Index (PPI) showed zero threat of inflation on the front-end of the equation, but Consumer Prices (CPI) did show some increases on the back-end of the equation.  The YOY Core PPI data came in at 1.0% which fell back from Feb’s 1.2% reading.  The MOM readings also showed weakness with Headline PPI (-0.2% vs est of +0.1%) and Core PPI (-0.1% vs est of +0.1%).
For CPI, both the Headline and Core MOM readings showed inflationary increases of +0.1% over the prior month.  The more closely watched CORE YOY dipped from 2.3% down to 2.2% but still above the important 2.0% level watched by the Fed.

The Talking Fed:
The Fed’s Beige Book hit at 2:00EST.  You can read the official release from the Fed here:https://www.federalreserve.gov/monetarypolicy/beigebook/beigebook201604.htm
Overall, the tone of this report that is prepared specifically for the April FOMC meeting was of a growing economy seemingly supportive of rate tightening.
Since this isn’t a data point, traders like to focus on word searches.  Here are a few key ones:
“Weather” was used 28 times in January, 17 in March and 18 in April
“Stock Market” was used 3 times in March but only 1 time in April
“Global” was used 11 times in March but only 2 times in April
Wages saw good growth in every region except one (Atlanta).
Just about all of the districts reported improving credit conditions and Stable to Moderate Growth.

Across the Pond:
China: Their GDP data was right in the wheel-house of market expectations hitting 6.7% on a YOY basis.  The market expectations were in the 6.5% to 6.8% range.  This is a slightly sower pace than the 6.8% reading last quarter but again it was basically what the market expected.  Long bond traders are still in a “wait and see” mode with this data.  This growth rate is basically double that of the U.S. and many of the huge levels of stimulus that China has enacted are just only starting to move their economy.

What to Watch Out For This Week:

Untitled

The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

Brought to you by:

Taff Weinstein
Broker/Owner

Office: 832-794-2136
Cell: 832-794-2136
taff@firstimperialmortgage.com

First Imperial Mortgage
3409 Morrison St
Houston, TX 77009
NMLS 225846

www.firstimperialmortgage.com

Copyright © 2016 Powered by www.MBSauthority.com

Vacation Home Values Pop

According to the National Association of Realtors, the median price of a vacation home that sold last year, jumped 28 percent to $192,000 which is outpacing the rate of appreciation of owner-occupied homes.

Sales of vacation homes in 2015 hit 920,000 units with the strongest gains seen in the South, according to the NAR, particularly in Florida.

Vacation home sales accounted for 16 percent of all transactions in 2015 — down from 21 percent in 2014. Buyers used cash more often in 2015 and had a higher median household income ($103,700) than those in 2014 ($94,380), according to the NAR.

More than a third of buyers surveyed said they plan to use their property for vacations or as a family retreat (37 percent), 16 percent bought for future retirement plans and 7 percent bought as a rental investment, down from 11 percent in 2014.

What Happened to Rates Last Week?

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Mortgage backed securities (FNMA 3.00 MBS) gained +28 basis points (BPS) from last Friday’s close which caused fixed mortgage rates to move slightly lower from the prior week.

We had yet another week of good economic data (which is normally negative for mortgage rates) but that was offset by several “dovish” comments from Fed members and volatility in Oil prices.

Texas Tea, Black Gold:   We had a very choppy session last week with several sessions seeing over a $1 swing in intra-day prices for WTI Oil.  One the days that WTI prices increased by a buck, MBS sold off (higher rates) and on when WTI sold off by a buck, MBS improved (lower rates).  Overall, WTI did trend higher for the week but closed below the important $40 mark which provided terrific support for our bonds and rates.

The Talking Fed:    We got to look at the minutes from the last FOMC Meeting (March). The overall theme was that while the members all have varying opinions of the state of our domestic economy, they all were very concerned with global growth and its potential negative impacts on our economy and our financial system and had a “wait and see” position to see if things got worse globally or if they leveled off.  Most bond traders view the minutes with a lens that shows a June rate hike at the earliest, which is basically the same view traders had before the release of the minutes.

Separately, we heard from Federal Reserve Chair Janet Yellen.  She spoke on a panel with former Fed Chairs Bernanke, Greenspan and Volcker.  Basically, she defended the Fed rate increase in December and laid out a strong probability of a rate hike or two this year.  She said: “The U.S. economy has continued to progress in a satisfactory way. We continue to see good job performance, some evidence of inflation moving up, so that was our expectation when we raised rates in December,”
And, “So yes, there is accommodation in the monetary policy that we have. But we think the gradual path of rate increases will be appropriate,” Yellen added. “We remain on a reasonable path and I don’t think December was a mistake.”

Domestic Flavor:

ISM Services:  ISM Manufacturing two weeks ago, was stronger than expected (20% of the macro picture) and last week we get the other 80% with Non-Mfg and it was stronger than expected (54.5 vs est of 54.0).  This is the best reading since December of last year.  The employment component rose from 49.7 to 50.3 which is very important.  This was a strong report.

What to Watch Out For This Week:

table-firstimperial

The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

Brought to you by:

Taff Weinstein
Broker/Owner

Office: 832-794-2136
Cell: 832-794-2136
taff@firstimperialmortgage.com

First Imperial Mortgage
3409 Morrison St
Houston, TX 77009
NMLS 225846

www.firstimperialmortgage.com

Copyright © 2016 Powered by www.MBSauthority.com

Top Signs You’re in a Competitive Market

MBSauthorityHousing

Here are 10 clear signs you’re in for a competitive ride.

1. Cash is king

One major indication of a competitive market is when sellers can reasonably expect cash offers for their property. If you come in with cash, you’re going to beat out a loan offer every time. If paying in green is not be an option, don’t panic. It’s not the only tool up a potential home buyer’s sleeve.

2. Bidding wars? You betcha

Bidding wars are another sign that competition is fierce. This is when aspiring homeowners try to outdo each other in a battle over who can make the highest offer. Bidding wars are really common on properties with a trifecta of price, really good condition and really good location.

3. A city so hip it hurts (your pocketbook)

When a city becomes a wildly desirable place to live, that is reflected in its housing market. You’ve got to look at where industry’s going and where jobs are going. The tech industry has been a major factor in boosting the competitive edge in a number of markets (think: San Francisco, Seattle and Austin). How do you know when your region has reached the competitively chic threshold? Trendy stores, coffee shops and yoga studios are good indicators.

4. Escalation clauses

An escalation clause may sound like a real estate elf from the North Pole — and it can bring you an early Christmas gift in the form of the house of your dreams. But all of this comes at a price. Inserting an escalation clause in your bid indicates that you are willing to increase the dollar amount of your offer up to a certain point if there are other, higher bids. Why would you do this? Competition.

5. All about the extras

When the prospect of multiple bidders is likely, buyers may try to curry favor with an offer that makes a sale especially easy for the owners, or plays to their emotions. Buyers who write a heartfelt letter explaining why they want the property also give themselves a leg up.

6. Sell price soars above asking price

The simple rules of supply and demand are nowhere more apparent than the housing market. One of the greatest signs of competition is homes that sell for way more than their listing prices, leaving would-be lower bidders back on the mean streets, pounding the pavement.

7. Multiple offers

When you’re a buyer, it’s never the more the merrier. Multiple, rapid bids on properties are a sure sign that it’s a cutthroat market. So are packed open houses.

8. Snatched off the shelf

You’re in a tight market when you search online and there’s just not that much to chose from. That’s because housing is flying off the shelf almost as quickly as it appears. If you find yourself racing to view properties before the competition can get to them, cut down on the stress by setting up an alert on your phone to notify you about new listings.

9. “Tidal wave” neighborhoods

When one neighborhood becomes a hot spot, it’s not uncommon for the next one over to soon follow suit.  With a major resurgence in urban renewal, it’s not surprising that these popular areas often top the list of competitive home markets.

10. Offer deadlines

As if buying a house weren’t hard enough, now there are deadlines. Want to get buyers to hustle and create momentum and competition? Set a cutoff. This can only be achieved, of course, in a competitive market where there will be enough bids to set a good old-fashioned due date.

What Happened to Rates Last Week?

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Mortgage backed securities (FNMA 3.00 MBS) gained +94 basis points (BPS) from last Friday’s close which caused fixed mortgage rates to move lower from the prior week.

Just about all of our domestic economic data showed growth and strength at levels higher than market expectations.  This data is negative for MBS (higher rates), yet MBS didn’t sell off – instead they rallied (lower rates).  Why?  That was due to Fed Speak and Oil.

Texas Tea, Black Gold:   After trading above $40 two weeks ago, last week WTI dropped to as low as $36.22 which is a very large swing and was the primary reason that mortgage rates fell.  MBS had been under pressure as WTI Oil was rising two weeks ago as it is very inflationary and bond traders viewed it as having an influence on the timing of the next rate hike, but last week those concerns were pulled back as Saudi Arabia said that it would not cut production levels.

The Talking Fed:  Two weeks ago, we have several “Talking Feds” (Regional Federal Reserve Bank Presidents) and the overall theme of their speeches was very “hawkish”.  But last week, both Janet Yellen and Charles Evans came out on the opposite side and were very “dovish” signaling that the Fed may wait until at least June to make their next move.

Friday’s Jobs report got the most attention but we had a jam-packed week of better than expected data.

Domestic Flavor:
Jobs, Jobs, Jobs: Here is the tale of the tape:
March Non-Farm Payrolls 215K vs est of 205K
February NFP revised from 242K to 245K
The average for past 3 months is 209K which is solidly above the 200K mark.
The Unemployment Rate moved upward from 4.9% to 5.0% which is higher than expected.
But that is due to the Participation Rate moving forward to 63% and showed a fresh and new 400K entering the labor force…but until they find a job, they are counted as Unemployed and drag down the rate.
Average Hourly Wages (MOM) were up 0.3% vs est of 0.2% and a nice improvement over Feb’s -0.01%.
Average Hourly Wages (YOY) were up 2.3% vs Feb’s 2.2%.
The Average Work Week was 34.4 hours which matched Feb.

Manufacturing: The Chicago PMI report was much stronger than expected (53.6 vs est of 50.0) and was a nice surge from Feb’s contractionary reading of 47.6. the ISM Manufacturing Index showed continued growth and expansion in the smallest sector of our economy (Manufacturing 20%/Services 80%).  It came in at 51.8 vs est of 50.5 and more importantly ended the streak of below 50 readings.

Consumer Sentiment for March was revised from the preliminary reading of 90.0 to 91.0 and was higher than the market forecasts of 90.5.

What to Watch Out For This Week:

Untitled

The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

Brought to you by:

Taff Weinstein
Broker/Owner

Office: 832-794-2136
Cell: 832-794-2136
taff@firstimperialmortgage.com

First Imperial Mortgage
3409 Morrison St
Houston, TX 77009
NMLS 225846

www.firstimperialmortgage.com
Copyright © 2016 Powered by www.MBSauthority.com