Mortgage rates rose as markets prepare for expected economic growth and anticipated inflation under the Trump administration. Inflation can bring higher rates.
Fed Chair Janet Yellen’s comments this week support the idea of a Fed policy rate hike in December. Economists almost unanimously agree a hike is coming.
Also supporting a possible Fed policy rate hike, the labor market continues to show strength, and consumer prices recorded their biggest increase in 6 months.
With the anticipating of rate increase, the number of re-fi jumped up 2% month-over-month. Average FICO score is now 731 which is the all time high. Although the days to fund/close is 48 days, most new purchase loan got closed in 30 days while re-fi took longer, about 60 days, so the average is 48 days. In order to get away mortgage insurance, the average Loan-to-Value (LTV) is 78% and this is very encouraging. It means most borrowers have either sizable down payment or have equity built up over years before they re-fi. All these are good indicators that mortgage market is a lot healthier these days.
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After all RENT Check indicators turned to RED last month, we got some good news for you as the down turn stopped at the median lease as well as month total number of closed rental. Both of them gained some positive ground in the month of Octover. In the meantime, the average lease just dropped $1 and merely noticable. However, the DOM increased once again from 30 days to 33 days. Now the numbers…
Median Lease: $1,300 – Increased from $1,295 previous month.
Average Lease: $1,476 – Decreased from $1,477 previous month.
Avg. Days on Market: 33 – Increased from previous 30 days.
Rent Check Quotient™: 3 : 10 – Remain flat as 3 : 10 last month.
Closed Rental: 2,309 – Increased from previous 2,295 homes.
Rent Check Quotient™ (RCQ™) is the ratio of closed rentals and closed sales.
Cap rates and Cash on Cash are still above 4.14%, It’s time to ACT carefully!
Markets worldwide reacted to Trump’s victory, causing mortgage rates to rise. The reaction was to his proposed economic policies, not his political agenda.
Initially markets were expected to react negatively to Trump’s win. Instead stocks rallied and bond yields skyrocketed on early belief that inflation will follow.
The Fed is now overwhelmingly expected to raise policy rates at their December meeting. However, the Fed’s decisions have not failed to surprise in the past.
Owning a home has great financial benefits. Because of this, more and more experts are growing concerned about the ramifications of a falling homeownership rate. Today, let’s look at the financial reasons why owning a home of your own has been a part of the American Dream for as long as America has existed.
A study published by the Joint Center of Housing Studies at Harvard University shows the financial benefits of homeownership. The study mentions five major financial benefits:
Studies have shown that homeowners have a net worth that is 45X greater than that of a renter.
Just last month (August 2016), we explained that a family buying an average priced home this past January (2016) could build more than $46,000 in family wealth over the next five years.
Some argue that renting eliminates the cost of taxes and home repairs. Every potential renter must realize that all the expenses the landlord incurs are baked into the rent payment already – along with a profit margin!
Owning a home has always been, and will always be better from a financial standpoint than renting.
All RENT Check indicators turned to RED last month.
Median Lease: $1,295 – Decreased from $1,325 previous month.
Average Lease: $1,477 – Decreased from $1,499 previous month.
Avg. Days on Market: 30 – Increased from previous 28 days.
Rent Check Quotient™: 3 : 10 – Remain flat as 3 : 10 last month.
Closed Rental: 2,2952 – Decreased from previous 2,537 homes.
Rent Check Quotient™ (RCQ™) is the ratio of closed rentals and closed sales.
Cap rates and Cash on Cash are still above 4.00%, It’s time to ACT carefully!
The Fed voted not to raise policy rates at this week’s meeting, but did signal that they may raise rates at December’s meeting if economic improvement continues.
Jobless claims were up slightly, but layoffs were at a 5-month low. A strong non-farm payroll report could fuel speculation that the Fed will raise rates in December.
Consumer spending is up and factory orders rose for the 3rd straight month. As the economy heats up, inflation could become an issue and bring higher rates.
Although construction spending was down slightly in September, most of the drop was nonresidential. Spending on residential construction was up 0.5% for the month.
Mortgage purchase applications were down slightly from the previous week, but were up 9% compared to the same week in 2015.
First-time buyers represent 35% of homebuyers overall, according to a recent NAR survey. That’s the highest percentage since 2013 (38%).