Category Archives: Mortgage News

Mortgage related market intelligence.

Mortgage Interest Rates Getting Higher and Higher

Bloomberg and Jamie Dimon, JPMorgan Chase CEO announced that mortgage rates should be 1% higher, and could be 2% higher soon. Mortgage rates follow the 10-year note closely. Today, the 10-year note is at 2.93%.

Rates are going up due to the rising economy and increasing job market. Those who buy today will benefit from a lower mortgage payment while their earnings rise.

For an average loan amount of $275K, borrowers will save $349/month, which is close to $4K/year. Buying a home today could save you $40K over the next decade.

Monthly payment savings example is based on a 30 year fixed Conventional mortgage loan of $275,000 with 3.5% down. Savings estimated is based on the current interest rate of 4.625% vs increased interest rate of 6.625%. Monthly payment comparison is used for information and educational purposes only and does not depict any actual loan.

 

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Expecting Two More Rate Hikes by the End of 2018

With the economy expanding at a healthy pace, the FOMC is likely to maintain the upbeat assessment of growth outlook, paving the way for two more Fed Fund Rate hikes this year, most likely in September and December. Meanwhile, on Friday the economic data flow brings the latest employment report. Another firm increase in non-farm payrolls of close to 200k appears to be in the cards, which might nudge the unemployment rate lower, from 4.0% to 3.9%.

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Benchmark rate increased

Surprising no one, the Federal Reserve lifted its benchmark rate by a quarter point last week, the second hike this year. With unemployment at 3.8 percent, the lowest since 2000, and inflation creeping higher, the Fed says raising rates gradually will keep the economy from overheating. – Reuters

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Mortgage Getting Some Difficulties

Lenders face an increasingly difficult market. With mortgage rates up about 80 basis points since last September, refinancing is falling sharply; Purchase applications were also down 2.9 percent from April to May. Lenders may turn to cost cutting as a means of managing their bottom lines.  – Reuters

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Mortgage Rates – Jan 30, 2018

CONVENTIONAL
30 Yr 4.375 to 4.5 APR 4.65
15 Yr 4.125 to 4.375 APR 4.41

ARMS
5 Yr 4 to 4.25 APR 4.37
7 Yr 3.875 to 4 APR 4.124

FHA/VA
30 Yr 3.75 APR 3.82
15 Yr 3.5 APR 3.61

2018 Loan limits have INCREASED
$453,100 Conventional and VA vs $417,000
$294,515 FHA vs $279,450

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Housing Market Starts Strong for 2018

Here are some good indicators showing US housing market carries great momentum from 2017 to 2018:

  • Home equity has hit a new record high, reported to be $5.5 trillion. Remodeling spending topped $152 billion in 2017 and is forecast to increase in 2018.
  • Mortgage applications on newly constructed homes rose 18% in December from the previous month. The applications were 7.8% higher than December 2016.
  • The implemented tax reform is already being credited for increased economic growth. Multiple companies are reported to be passing savings on to workers.
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Mortgage Rates – Jan 12, 2018

CONVENTIONAL
30 Yr    4.25 to 4.375 APR 4.43
15 Yr    3.75 to 4 APR 4.1
 
ARMS
5 Yr 3.875 to 4.2 APR 4.37
7 Yr   3.875 to 4 APR 4.124
 
FHA/VA 
30 Yr    3.625 APR 3.74

15 Yr    3.375 APR 3.41

 

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About the Tax Reform

On December 20th, Congress passed the Tax Cuts and Jobs Act. This is the first significant change to the U.S tax code since 1986.

Here’s what you need to know in 2018:

  1. Tax deductions allowed on mortgage interest have been reduced from $1M to $750,000.
  2. Personal exemptions have been eliminated, but standard deductions rose from $6,300 (single) and $12,600 (married) to $12,000 and $24,000, respectively.
  3. State and local income and sales and property tax deductions are now limited to $10,000.
  4. Capital gain taxes changed for everything except home sales. If you meet certain requirements, a single filer can exclude up to $250,000 or married filing jointly up to $500,000. Click here to learn more.
  5. Reform reduces the corporate tax rate from 35% to 21%.
  6. The tax brackets have changed a lot. Those in lower brackets will see a decrease in taxes.
  7. Go here to see details about the new tax code, such as deductions for student loan interest or medical expenses.

Once again, I am no tax expert and above information is for your information only. To find out more about the impact on your tax obligation, you need to consult with your CPA or Tax filer.

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Refinances Increased as Mortgage Rates Dipped

The percentage of refinance loans inched up slightly in October as interest rates dipped to a new 2017 low, according to Ellie Mae’s latest Origination Insight Report (OIR).

The OIR found refinances climbed 1 percent to 39 percent of total loans in October. Ellie Mae attributed the small increase in the percentage of refinances to the decrease in interest rates to 4.20 percent.

“We are continuing to see borrowers take advantage of the lower interest rates as the refinance percentage increased to 39 percent of total loans in the month,” Ellie Mae President and CEO Jonathan Corr said in a release accompanying the report. “We saw increases in October across all loan types, with FHA refinances at 23 percent, conventional refinances at 46 percent and VA refinances at 32 percent of all closed loans.”

Ellie Mae also reported time to close a refinance stayed steady at 40 days, which was the shortest time to close a refinance since February 2015.

During October, conventional loans accounted for 66 percent, Federal Housing Administration loans accounted for 20 percent, and Veterans Affairs loans were 10 percent of all closed loans.

According to the OIR, the average FICO score on all closed loans during October was 724. Closing time for all loans averaged 43 days for the second straight month.

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