Good Morning,
I hope you had a nice weekend. If we can get away with one day of rain every so often (instead of a week at a time), I can get used to that. This will be a busy week going into the holiday weekend so let’s get to it.
On today's call: Markets, Housing, FHA, Interest Rates
The markets opened with little excitement today as investors will be cautious for the week while they look ahead to Bernanke’s speech about monetary policy on Friday. Many believe that it’s time for the Fed to take action now, and purchase bonds for as long as it takes to lower the unemployment rate. This would be the third round of easing. The first two rounds were positive, but lacked the lasting effects they were designed for. Now there is a big decision to be made; many economists believe that another round of easing could cause inflation rates to gain considerably, swinging the pendulum to far the other way. It remains to be seen when and how the Fed plans to find some sort of medium.
In housing, the Case/Schiller Home Price index for June will be reported tomorrow. The good news is that it’s expected to show an annual increase for the first time in two years. The height of the home-buying season might be behind us but this is very positive news. The National Association of Realtors announced its Existing Home Sales index for July and the gain was a modest 2.3%. They also reported something that has missed the headlines and I don’t know why: Fannie Mae has disclosed that 47% of the properties they now own are currently unable to be marketed. Either the eviction process is too long, the foreclosure process is being dragged out, or the home needs so many repairs that it’s not worth renovating. There are even more reasons, but the slow movement of inventory is what is preventing housing prices from increasing more rapidly. Why Fannie , the banks, and Congress can’t figure something out (they’ve been trying for what, 5 years now?) isn’t surprising, just status quo.
We have partnered with a new lender who specializes in government loans. This will allow us to provide a broader range of products, FHA especially, to our clients. While FHA loans are not credit-score driven, the administration does have minimum standards. Clients with a credit score of 640 and higher will qualify for any FHA program. We now can do loans for your clients with less than stellar credit (i.e. less than 640) and still do just 3.5% down. If a client has under 580, a loan is still feasible, with a 10% minimum down payment. Keep in mind if your client will be applying for an FHA loan and is looking for a condo, you must make sure that building is FHA approved. If you’re not sure of the building’s status, just let me know the name of the project and address and I will confirm for you. I hope this helps!
Interest rates dipped slightly lower at the end of last week after rising slightly thanks to a huge bond sell-off earlier. The 30 year fixed rate is back down about an 1/8th of a point and ARM’s are still performing well, with the 7 year ARM just under 3% at this point.
Thanks to Will for jumbo purchase in Lakeview. They got a 7 year ARM rate that is fantastic and we will be closing on time, or earlier if needed. If I can provide any info to you and/or your clients, please let me know. Have a great week...
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