December 2018 was another great month for interest rates as they continued their slide that began in November. However, this came with high volatility as several opposing factors continue pushing and pulling rates in opposite directions.
Rates had an incredibly volatile week again. Last Thursday, rates hit lows not see since early 2018 and then managed to give it all back on Friday. Net effect, rates were relatively flat week over week, but exceptionally volatile.
So what happened? The greatest factor driving rates lower is a slowing global economy. However, the greatest factor driving rates back up is far stronger employment numbers domestically. The employment numbers seem to justify the Fed’s December decision to raise interest rates. These factors will likely keep volatility higher in the near term.
The Fed spoke again on Friday and the meeting minutes from the Fed’s December meeting are coming out this week as well. As expected, our usually hawkish Fed Chairman Powell is becoming more dovish and we feel it is highly unlikely that we see another rate hike before the summer if at all in 2019. We will keep you posted as conditions change.
Mountain State Financial Group was able to lock in several mortgage loans at the absolute lowest rates since early 2018 last Thursday. Be sure you are working with a mortgage professional who understands the markets.
As always, If you have any specific questions or scenarios you would like to discuss, I am always happy to help.
You’ve asked for better Jumbo pricing and we have listened. Our Jumbo 30 year fixed is priced similarly to our conforming 30 year fixed.
The slide in interest rates we had in November have carried over into December and we had another week of rate decreases. This is good news for those who haven’t refinanced their ARMs or higher interest rate mortgages, but it is GREAT news for home buyers. Housing prices have been soft this fall. Coupled with lower interest rates, this could be the best time to buy we have seen in many months! Now is a good time to visit with those prospects who have been on the fence about buying. It could save them many thousands of dollars.
The Fed is also meeting today and they are expected to raise rates by .25%, but there has been much for them to consider before making another rate hike. The Fed has already raised the Fed Funds Rate 3 times in 2018 and 8 times since rate hikes began in late 2015. Perhaps more important than the Fed’s decision today will be what they say about their intentions for further rate hikes moving into 2019. The Fed’s stance shifted to more hawkish late this summer, but then became more dovish recently so this will be an interesting meeting. We will fill you in during our next weekly update.
Many would-be homebuyers assume that spring and summer are the best times to buy a new house. After all, the kids are out of school, the weather’s nice and it seems like that’s when all the inventory hits the market. Why not use the nice weather and extra time to your advantage?
In reality, though, winter can be a favorable time to buy. From fewer bidding wars to a faster, easier closing, here’s what buying a house in winter can offer:
Lower Prices: There’s often lower demand in winter. Sellers will typically have to work harder to sell their homes during this season. That means price cuts, more concessions and maybe even some extra negotiation room for you.
Less Competition: Fewer people buy in the winter, and that often means a smoother homebuying process. You’re also less likely to contend with cash buyers and bidding wars, making it easier to get into the home you want.
Faster Timeline: All of the above means a potentially faster, more efficient closing. With fewer buyers to handle, inspectors, appraisers and agents are more likely to be able to work on your timeline. Movers, handymen and home cleaning services may also have more availability.
These are just a few of the benefits of buying in winter. If you’d like to learn more about what’s happening in the housing market right now or learn about your home loan options, get in touch today.
We didn’t provide a weekly update during the week of Thanksgiving, but true to our projections, rates dropped about an 1/8th of a percent over the last two weeks. Don’t get too comfortable though as rate improvements will be somewhat limited. We don’t see any exceptionally large moves going into the holidays but the Fed is meeting in December and we are still expecting them to increase rates. On the flip side, with inflation contained and a slowdown in European economies, the Fed may need to readdress their rate increase forecast going into 2019 which could help keep mortgage rates down as well. Make sure you are working with a mortgage professional who understands the markets!
Conforming loan limits for 2019 also came out this week! Resulting from nationally rising home prices, the new conforming loan limit for 2019 will be $484,350, up from $453,100 in 2018. This will also increase the High Balance limits in 2019, which are county specific. Colorado has several counties that will fall into the High Balance category while North Dakota and Minnesota do not. This means your clients may be able to afford more home or get better pricing on the same home in 2019!
As always, If you have any specific questions or scenarios you would like to discuss, I am always happy to help!
With its barn-inspired decor and welcoming, down-home feel, modern rustic design is one of today’s hottest trends. Professional designers, DIYers and HGTV fans are flocking to its natural materials, touches of traditionalism and classic, pulled-together style.
But you don’t have to be a pro to get in on this trend. Do you want to bring some rustic flair into your home? Here are five tips to get you started:
Let the home’s history shine.Rustic design is all about highlighting history. You can achieve this look with exposed ceiling beams or original wood flooring. Exposed brick, painted or not, is also hot in rustic-style homes.
Think light and airy. Forget dark, bold colors, and opt for whites, grays and light wood tones instead. Whitewashing is especially popular in rustic spaces, as are soaring ceilings and oversized windows to let in natural light.
Incorporate natural materials.Stone, wood, concrete and even greenery can add an instant rustic touch. In the kitchen, adding an herb garden or a butcher block island can be a great place to start.
Weather the storm. The weathered look plays a big role in rustic design. Reclaimed wood, shabby chic painting styles and furniture with nicks and signs of use are all fair game.
Aim for antique. Shop flea markets and antique shops for decor with personality. When it comes to rustic style, the more history an item has, the better.
If you need help covering the costs of your rustic makeover, you may be able to use a renovation loan, home equity loan or cash-out refinance. Get in touch today for details.
October began with the greatest mortgage rate increase since the Presidential Election and over the month rates rose by about another 1/8th of a percent which was to be expected. Perhaps more interesting, rate volatility rose during October and we had several days with multiple price changes. This makes it extremely challenging for borrowers to take advantage of the best rates when the target is constantly moving. We always advise borrowers to make sure they are working with mortgage professionals who truly understand the interest rate markets instead of the lenders who spend the most money on advertising.
Mortgage bond markets were not the only volatile markets this month. Both the stock and bond markets have been equally volatile and the S&P 500 dropped as much as 10% from its September all time highs to end the month down about 7%. Exceptionally strong employment and wage numbers continue to be released and have been a sign of healthy markets. The Fed used stronger language in October indicating that accommodative monetary policies will continue to be restricted, but during their October meeting rates were left unchanged. It is still highly likely that the Fed will raise rates in December, but there are other factors that the Fed will have to consider. The US dollar continues to strengthen against other world currencies, which is good news for mortgage rates. The Fed raising interest rates would only strengthen the dollar further and drive down inflation. This is very important for the Fed to consider before ratcheting rates up further.
Mountain State Financial Group believes that the biggest rate increases in the near term may be behind us for now and we could see more moderate increases with less volatility. If you would like to know more, please click here to read more or contact us directly.
As a follow up from last week, our projections of rate increases largely due to strong employment numbers had come to fruition. Friday the 2nd came with a surge in mortgage rates and they have hovered around that area since then. Initial jobless claims are near 50 year lows! Basically, employment numbers cant get much better but they might stay this good for the near future.
The Fed is also meeting and will release their monetary policy statement Thursday afternoon. Although we are not expecting a rate hike, we are very interested in what they have to say about wages, inflation, and the pace of rate hikes moving forward. Mortgage bonds are higher ahead of the Fed announcement, but we are expecting a flat, but volatile week barring any Fed surprises. We will report more on the Fed meeting next week. Take great care of your clients! Make sure you are working with a mortgage professional who understands the markets!
We will keep this short and begin again with a familiar statement. Rates remain relatively flat week over week with high volatility. Instead of digging into all causes for this volatility, we will try to stay focused. The big news this week revolves around employment numbers yet again. As you may recall, mortgage rates started its most recent trend upward back in early September after strong hourly earnings number were reported. Rates turned up again in October when the ADP released its strong employment numbers. Although the increase in rates were followed by pull backs, it creates a high amount of volatility. And more jobs and earnings reports will be released this Thursday and Friday. We believe these reports will either push rates higher or they will remain flat. It is highly unlikely these reports will cause rates to drop. If you have any clients who have not locked in their rates, be cautions! Under worse case scenarios, your clients could be out big dollars or NOT be able to qualify for the same home they could have weeks or months ago. As always, make sure you are working with a mortgage professional who understands the markets!
Accessory dwelling units -- often called granny flats, mother-in-law suites, garage apartments and even tiny houses -- are one of the most talked about trends in real estate. These extra living spaces don't just make a great place for loved ones to stay; they can also offer another income stream.
Should you buy in to the trend and add one to your existing property? Should your new home wish list include an accessory dwelling unit (ADU)? Here are a few of the perks you stand to gain with one:
Extra Space: First and foremost, granny flats mean more space for guests and family while still offering the privacy and amenities of a home. Have friends over, invite your family to stay and help with the new baby, provide elderly parents with a low-maintenance living situation or give your partner a home office.
Added Income Potential: Many homeowners use their ADUs as short-term or permanent rental units. A long-term tenant could provide consistent monthly income, which might help make your mortgage payment a little more affordable. If you're planning to build one, make sure it's allowed by your HOA.
Possible Increase in Home Value: A second living area on the same property could increase your property value, especially if you've had steady tenants. Just be sure to keep the unit well-maintained.
While the upsides are plentiful, ADUs are only beneficial if they're legal. Most cities have detailed rules and regulations regarding building and renting these units.
Have questions about adding an ADU to your property? Or have your eye on a property that already has one? Please get in touch.
More of the same! Rates ended the week from Wednesday to Wednesday exactly where it started, but the volatility was actually greater than last week! But there is some hope in sight. The S&P 500 is almost 10% off of is all time high set in September which could spook investors and cause them to seek the safety of mortgage bonds. Mortgage bond prices, and in turn mortgage interest rates, are a product of supply and demand. When investors are in a “risk off” position, they will purchase safer investments, such as mortgage bonds. As more investors seek to purchase mortgage bonds, the bond prices are pushed higher due to simple supply and demand. So as those bond prices increase, the yield from those bonds actually decrease.
For a simple example, an investor might be willing to purchases a mortgage bond that pays 5% for $100. In this case, the investor will earn $5/ year. However, if other investors want the security of holding mortgage bonds, they might be willing to pay $110 to purchase the 5% bond from the original investor. Although the 2nd investor will still received the same $5/ year, they payed $110 to get it. Now the yield for the second investor is actually about 4.5% (5%/ $110), less than the original investor’s yield of 5%.
So how does this apply to your new mortgage? Well, an educated investor should be indifferent in purchasing a 5% bond for $110 or a new 4.5% bond for $100. That means we can now lock in new loans at 4.5% instead of 5% and the borrower saves money while the investor earns less.
This can be confusing and unintuitive so make sure you are working with a mortgage professional who understands the markets! As always, If you have any specific questions or scenarios you would like to discuss, I am always happy to help!
Rates, rates, rates! Another volatile week in the mortgage markets and every day seems to be a new surprise! However, if we sift through the noise, it becomes clear that the Fed is making it quite clear that “normalizing” rates will be advantageous in the long run. Significant market shifts might indicate otherwise, but the reality is that the market is doing well enough (in whole) to justify less accommodative monetary policy. So look past the massive swings in both the bond and stock markets and focus on what is actually going on. Week over week, rates are generally flat or slightly down. However, throughout the week we saw drastic improvements followed by a day of giving it all back. Net effect… flat. Week over week flat markets do NOT tell the whole story so please make sure you are working with a mortgage professional who knows the market. It can make the difference between your clients buying their dream home and it remaining just a dream.
The Fed Meeting Minutes reiterated what we already knew. The days of accommodative monetary policies seem to be behind us and the focus seems to be focused on keeping the market in check. So rates are not as low as they once were. Is that bad? Probably not. Rates are still incredibly low from a historical standpoint and the housing market in the Front Range might benefit from some “normalcy.” 10-25% Year over Year value increases is simply not sustainable and could potentially harm our local housing markets. We promote long term, sustainable growth for the benefit of both buyers and sellers. Mountain State Financial Group is a strong supporter of healthy housing markets which sometimes feels uncomfortable. However, we are also exceptionally strong supporters of our local real estate professionals to assure we all grow together the right way.
That being said, we are supporting locking rates in the near term as volatility can often mean the difference between qualifying and not qualifying. As always, If you have any specific questions or scenarios you would like to discuss, I am always happy to help!
Another week of rising interest rates as more positive economic news comes in. However, both the stock and bond markets seem to be overly sensitive to any news which is causing greater volatility. Most recently, the Producer Price Index rose more than expected which hit bonds and raised mortgage rates. In addition, the NY Fed President reiterated the Fed’s plan for gradual but steady increases to interest rates. Luckily, we might be seeing near term flattening of mortgage rates as the technical analysis indicates more stability in rates near term. Its always a moving target so make sure you are working with a mortgage professional who understands the markets!
As we have been mentioning for some time now, many of the players in the mortgage industry continue to cut jobs. In fact, these job cuts are picking up steam. Not only are Wells Fargo, USAA, JP Morgan Chase, and many other lending giants cutting staff, but also some of the smaller, local companies are doing the same. Mountain State Financial Group does not subscribe to this practice as this would hinder the exceptional services that clients have grown to expect.
Many of these job cuts are not without merit. As interest rates rise, clients are not able to afford the same homes they could have during lower interest rates which is dragging on home sales. If you have any clients who were pre-approved for a certain price point, you may want them to reach back out to their pre-approving mortgage professional to make sure you are not showing houses your clients can no longer afford!
As always, If you have any specific questions or scenarios you would like to discuss, I am always happy to help!
Rates went higher. Much higher! October 3rd was the greatest single date rate increase since the 2016 presidential election. Rates are about 1/8th of a percent higher than a week ago. Why the sudden increase? Well, economic news keeps coming in better than expected. Last month, we saw hourly earnings increase above projections, which started a sell off in mortgage bonds. Then yesterday the ADP National Employment Report was well better than expected. Adding more jobs AND an increase in hourly earnings is a double whammy for bonds and mortgage rates.
In addition to employment news, the Dow hit another record high yesterday. In short, the US economy is booming, the market is in a “risk-on” position, and bonds across the board are taking the hit. This certainly would indicate that there will be more rate hikes to come and barring any surprising economic indicator downturns or more “trade-wars”, mortgage rates will be on the rise as well.
Watching the technical, the outcome remains the same. Bond yields have broken above recent highs and trending upward. Unfortunately, the trend is NOT our friend as this may indicate that the lowest rates of this economic cycle may already be behind us and we can expect to see rates continue to rise.
Now is good time to differentiate yourself from the rest! Reach out to your existing clients with their best interest in mind and talk to them about the net benefit/ harm of consolidating their debt with a refinance. Make sure you are working with a mortgage professional who is able to determine the best fit for your clients and not just a salesperson.
As always, If you have any specific questions or scenarios you would like to discuss, I am always happy to help!
The mortgage application process can feel stressful and drawn-out, but it doesn't have to. In fact, if you take some time to prepare by collecting your paperwork and learning about the process, applying for a home loan can be fairly straightforward.
Here's what you can do to streamline the process:
Get your credit in order. Going in with a great credit score helps. If need be, work on your credit before buying a home -- pay down debts and check your credit report for any errors. Any little change can help.
Have your paperwork ready.You'll need to provide lots of financial documentation, and that can take awhile to get organized. But you can start before you apply: Collect your recent pay stubs, tax returns, W-2s and bank account statements. If you have any retirement accounts, stocks or bonds, you'll also need records of those.
Learn about mortgage products.Look into the different loan options out there. Do you understand the difference between fixed-rate and adjustable-rate loans? What sort of term are you interested in? How much will you need for a down payment with each type? Have questions ready to discuss in person.
Apply for preapproval or prequalification. Getting prequalified or preapproved can help set the foundation for a quick and easy application. It can also help you determine your price range when searching for a home. As a bonus, a preapproval letter can give you a leg up over other buyers.
Your actual mortgage application might only take a few hours, but you'll likely need to provide updated documentation later in the process. Have questions? Get in touch today.
First, we are offering a 1% down conventional mortgage for your borrowers!!! They also receive a 2% gift, giving them a 3% equity position! We have been able to put great people into home who otherwise wouldn’t qualify. Another great reason to reach out to those prospects with little money to put down without have to go through CHFA! Program details are attached.
Top story is that the Fed raised rates by a quarter percent, in line with expectations. As I always like to remind people, this isn’t the rate that directly drives mortgage rates. However, many other loans, such as HELOCs and credit cards are tied directly to the Fed Funds rate so you can expect to be paying more in interest on any balance you may have.
However, although the Fed Funds rate went up, mortgage rates are actually down slightly over the last week. Now is good time to differentiate yourself from the rest! Reach out to your existing clients with their best interest in mind and talk to them about the net benefit/ harm of consolidating their debt with a refinance. This can actually mean refinancing into a higher rate in certain situations. Many mortgage lenders are merely salespeople so make sure you are working with someone who is able to determine if there is a benefit of doing so. Mountain State Financial Group can assist with this process and help your clients make an informed decision.
Are you considering buying a new home but have a small decorating budget? Luckily, with a little creativity, updates don't have to be expensive. Whether you're giving a fixer-upper a fresh look or wanting to personalize your property, these resourceful tips can help:
Reface old appliances. Dated appliances are a drag, but if they still work well, don't stress about replacing them. Instead, use appliance paint or adhesives for an instant update.
Opt for unique, inexpensive art. Shop thrift stores and flea markets for affordable, one-of-a-kind finds. Etsy, college art shows and craft fairs can be great places to find unique pieces.
Repurpose and reuse. Have vinyl records you don't listen to anymore or extra fabric left over from a craft project? Turn these items into wall art. See if there's a way to reimagine old items around your home that can be given new life.
Add some greenery. Plants add color and dimension to any room. If you're short on space, opt for small succulents or bonsai trees. For more open areas, consider a large snake plant or fern.
Swap rooms. Sometimes, swapping furniture and decor between rooms can be enough change to keep things interesting. Switch out bed frames, tables, chairs and linens, and see what new arrangements you can create with what you already have.
A beautiful, welcoming home doesn't have to cost a lot of money. If you're ready to start decorating a new home or considering a refinance to fund a bigger project, don't hesitate to get in touch.
Another tough week as mortgage rates continue to rise. This has been in part due to bond yields increasing globally, which had been acting to keep US yields lower. In addition, US stock markets are rallying to levels not seen in many months which is also weighing on bonds.
The Fed is meeting next week as well and it is widely believed that they will be raising the Fed rate by .25%. It will be interesting to hear what the Fed has to say, but there is very little expectation that it will be good news for mortgage rates. Both the fundamentals and technical analysis are indicating that the trend of raising interest rates will continue, but we may be due for some pull backs soon. As always, make sure you are working with a mortgage lender who knows the mortgage market.
New mortgage applications fell again in August as well as in Q2, which may not be a surprise, but what might be is that the total mortgage balances across the country are now nearing the record highs seen in 2008. Rising interest rates will likely continue to stifle new applications and may help level the housing market from a sellers market to something more neutral. We will keep you posted.