Companies Hope Millennial Employees Attract Millennial Clients

 

Technology may change the ways we communicate with each other, but nothing works better than a face-to-face connec­tion, said Erica Lockberg Sullivan, a Mil­lennial and a real estate agent with Berk­shire Hathaway Home Services (BHHS) in Natick. While BHHS uses the Internet and social media to recruit Millennials, nothing is better than old-school networking.illennials – defined as those in the 18-to 35-year-old age bracket – made up 32 percent of the home buying population in 2015, according to the Na­tional Association of Realtors, and Boston was recently ranked as the busiest mar­ket for Millennial buyers in the country by Lending Tree. Savvy real estate businesses have run the numbers and are positioning themselves to capture their share of the $40 billion Massachusetts real estate market.

“I talk to other parents in places like the school pickup line or the coffee line in the morning,” Sullivan said. “Real estate has always been a fabulous path for a stay-at- home-mom to re-enter the workforce once her kids get a little older. And real estate is something people always want to talk about.”

Sullivan, who is also the local director of BHHS’s REthink Council, an initiative that brings young agents and affiliates together to generate fresh ideas and discuss insights, issues and trends that will help them to market to Millennials better, said her gen­eration values a work/life balance and is attracted to the flexible schedule of real es­tate sales.

Of working with Millennial buyers, she said, managing expectations in a sellers’ market is hard – and getting harder.

“Everything in a Millennial’s life is so in­stant, but in this market buying a home is not instant,” Sullivan said. “People often don’t get the first, second or third house they bid on, which is frustrating. It’s not uncommon to see something come on the market Wednesday night and be gone by Monday. We have to prepare them for that.”

Similar to her recruitment efforts, she said the one-one aspect of “the agent rela­tionship is more important to them.”

“They want to feel like you’re speaking just to them,” Sullivan said. “They’re being marketed to constantly, so we create cus­tom marketing plans for every home. Our voice is more conversation and congenial. We’re geared toward helping and coaching. It can be a bit of an intimidating process.”

Young Loan Officers Fill A Void

Fairway Independent Mortgage in South Boston is piloting a Millennial recruitment and training program that is beginning to spread to offices around the country. They’re recruiting college seniors to begin their careers in mortgage origination, and the results have so far exceeded expecta­tions.

“Our first three graduates have had a combined production of $60 million in their first year,” said Mei Genosa, who manages the program. “Now we’re really recruiting. We’re hoping to position ourselves [now], because the next big set of buyers is the Millennials.”

One of those graduates is 32-year-old Jarred Alexandrov. He closed $30 million in loans in 2015, his first full year in the busi­ness, and is on track to do it again this year. He left his own business doing social media marketing to work for Fairway a few years ago and said the program has been life­changing for him.

“I didn’t grow up wanting to work in mortgages,” Alexandrov said. “Fairway hired me to do their social media and I re­alized I kind of wanted to come work here. Originally I was going to do marketing but they described this new program and they thought I would be a good fit. “

He sees his age as an advantage – the av­erage LO is in their mid-50s, and his relative youth allows him to easily connect with his Millennial peers – customers and col­leagues alike.

“As a younger LO, I’ve gotten to do loans for a lot of my friends who are in that same demographic,” he said. “I’m the default op­tion for them. Then I get their friends. It’s an easy place to start.”

So happy is he with his new career, Alex­androv has helped recruit new Millennials for the Loan Partner program. One of those recruits is Connor Proctor, who graduated from Alexandrov’s alma mater, Trinity Col­lege, with a degree in psychology in 2014. Al­exandrov recruited Proctor into the program and Proctor took to it right away.

“I had never even thought that mortgages would be something I’d be interested in at all, but he talked about the sales piece of it and said you have a lot of freedom and con­trol and those aspects really attracted me,” Proctor said. “He said our sales manager expected to make over $500,000 this year. Those kinds of numbers catch your atten­tion.”

The first six months or so, trainees focus on getting familiar with the process, forms, vocabulary, etc. and gradually learning every stage of the process by supporting other LOs, which in turn frees them up to sell more loans. Proctor sold his first loan shortly after receiving his license.

“It’s like getting your master’s degree in mortgages and you’re also getting paid at the same

BY JIM MORRISON

Jonathan Burdick

Xperity Lending Group/Arizona Lending Resource

Scottsdale Arizona 85260

602-212-1234

NMLS # 1045837

http://www.ArizonaLending.Net

Fairway Independent Mortgage Company

NMLS Entity ID 2289

Equal Housing Lender

Confidentiality Notice: The information contained in and transmitted with this communication is strictly confidential, is intended only for the use of the intended recipient, and is the property of Fairway Independent Mortgage Corporation NMLS #2289 or its affiliates and subsidiaries. If you are not the intended recipient, you are hereby notified that any use of the information contained in or transmitted with the communication or dissemination, distribution, or copying of this communication is strictly prohibited by law. If you have received this communication in error, please immediately return this communication to the sender and delete the original message and any copy of it in your possession.

 

Home Sales Bounced Big in March

Home Sales Bounced Big in March, But Lag January Pace

Spring market buyers got down to business in March and existing home sales rebounded, up 5.1 percent but didn’t quite recover from a disappointing February.  The National Association of Realtors® NAR said sales during the month were at a seasonally adjusted annual rate of 5.33 million with sales especially strong in the Northeast and Midwest but first-time buyers were still missing from the equation.

Compared to March 2015 existing home sales were up a modest 1.5 percent. February sales numbers, which had surprised many by retreating by 7.1 percent from January’s, were downgraded further today, from 5.08 to 5.07 million.

Existing home sales are completed transactions that include single-family homes, townhomes, condominiums and co-ops.  Single-family home sales were up 5.5 percent from February (only partially offsetting February’s 7.2 percent drop to 4.51 million) to a seasonally adjusted annual rate of 4.76 million units and are now 2.6 percent ahead of sales in March 2015.

Existing condominium and co-op sales rose 1.8 percent to a seasonally adjusted annual rate of 570,000 units in March from 560,000 in February.  Those sales are running 6.6 percent below the March 2015 pace of 610,000 units.

NAR chief economist Lawrence Yun, says home sales had a nice rebound in March following February’suncharacteristically large decline. “Closings came back in force last month as a greater number of buyers – mostly in the Northeast and Midwest – overcame depressed inventory levels and steady price growth to close on a home,” he said. “Buyer demand remains sturdy in most areas this spring and the mid-priced market is doing quite well. However, sales are softer both at the very low and very high ends of the market because of supply limitations and affordability pressures.”

Median prices across all existing home types were up by 5.7 percent from the previous March to $222,700, marking the 49th consecutive month of annual gains.  The March 2015 median price was $210,700. The median existing single-family home price gained 5.8 percent to $224,300 and condo prices rose to a $209,600 median, 4.6 percent above a year ago.

The number of available homes increased by 5.9 percent over the month but inventories remain 1.5 percent lower than last year at the same time.  The 1.98 million existing homes for sale at the end of March represent a 4.5-month supply at the current rate of sales.

“The choppiness in sales activity so far this year is directly related to the unevenness in the rate of new listings coming onto the market to replace what is, for the most part, being sold rather quickly,” adds Yun. “Additionally, a segment of would-be buyers at the upper end of the market appear to have been spooked by January’s stock market correction.”

Properties sold rapidly in March – a typical marketing period of 47 days compared to 59 days in February and 52 days in March 2015.  Short sales were on the market the longest at a median of 120 days in March, while foreclosures sold in 50 days and non-distressed homes took 46 days. Forty-two percent of homes sold in March were on the market for less than a month – the highest since July 2015 (43 percent).

The share of first-time buyers was 30 percent in March, unchanged both from February and a year ago and matching the average share for all of 2015.  The investor share of sales was 14 percent compared to 18 percent in February but identical to the share a year earlier.  Sixty-six percent of investors paid cash in March and cash sales were 25 percent of all transactions during the month.

“With rents steadily rising and average fixed rates well below 4 percent, qualified first-time buyers should be more active participants than what they are right now,” adds Yun. “Unfortunately, the same underlying deterrents impacting their ability to buy haven’t subsided so far in 2016. Affordability and the low availability of starter homes is still a major barrier for them in most markets.”

Distressed sales continued to decline; foreclosures represented 7 percent of sales and 1 percent were short sales, down from a distressed property share of 10 percent in both February and March 2015. Foreclosures sold for an average discount of 16 percent below market value in March (17 percent in February), while short sales were discounted 10 percent (16 percent in February).

NAR President Tom Salomone says despite modest improvements, mortgage credit is still difficult to come by for many first-time buyers and middle-income households. “Reducing the Federal Housing Administration’s annual mortgage insurance premium rate and repealing its life-of-loan policy requirement would certainly expand options for more of these buyers,” he said. “These changes would save consumers money and further strengthen the FHA’s program by enticing more creditworthy borrowers to seek out FHA-insured loans.”

Sales of existing homes were up in all four regions.  In the Northeast they increased by 11.1 percent to an annual rate of 700,000, and are now 7.7 percent above a year ago. The median price in the Northeast was $254,100, a 5.8 percent annual gain.

The Midwest saw a 9.8 percent jump which brought the annual rate to 1.23 million, 0.8 percent higher than in March 2015. The median price in the Midwest was $174,800, up 7.0 percent from a year ago.

Gains were more modest in the other two regions, up 2.7 percent in the South and 1.8 percent in the West.  Sales in the South were at an annual rate of 2.25 million, 2.3 percent higher than last March while sales in the West were at a 1.15 million pace, down 2.5 percent from the year before.  The median price in the South grew 4.6 percent to $194,400 and in the West the median price was $320,800 a 5.9 percent annual appreciation.

 Reference Jann Swanson

Mortgage News Daily

Jonathan Burdick

Xperity Lending Group/Arizona Lending Resource

Scottsdale Arizona 85260

602-212-1234

NMLS # 1045837

http://www.ArizonaLending.Net

Fairway Independent Mortgage Company

NMLS Entity ID 2289

Equal Housing Lender

Confidentiality Notice: The information contained in and transmitted with this communication is strictly confidential, is intended only for the use of the intended recipient, and is the property of Fairway Independent Mortgage Corporation NMLS #2289 or its affiliates and subsidiaries. If you are not the intended recipient, you are hereby notified that any use of the information contained in or transmitted with the communication or dissemination, distribution, or copying of this communication is strictly prohibited by law. If you have received this communication in error, please immediately return this communication to the sender and delete the original message and any copy of it in your possession.

 

Early Spring Housing Numbers

Early Spring Housing Numbers

There probably isn’t a lot of backslapping going on in the housing world this morning.  March residential construction data released by the U.S. Census Bureau and the Department of Housing and Urban Development was disappointing to say the least, with permits and housing starts falling from February levels and both estimates falling way short of analysts’ predictions.  That March is the beginning of construction season in most of the country and that the downturn was almost universal across regions only makes it worse.  The less economically critical completions data did paint a more encouraging picture for current housing inventories.

Permits were issued in March at a seasonally adjusted annual rate of 1,086,000.  This is 7.7 percent lower than the February estimate and the fourth consecutive month of declines.  Permitting was 4.6 percent higher than in March 2015.  The February rate, originally estimated at 1,167,000 units was revised up to 1,177,000.

Analysts surveyed by Econoday had been expecting the permit number to be in the range of 1.175 million to 1.231 million.  Bloomberg said that after the big upswing for starts in February (an increase of 5.2 percent) and the 3.1 percent downswing for permits forecasters were calling for a big reversal in March, with starts down 0.9 percent and permits gaining 2.8 percent.  “A gain for permits, especially one centered in single-family homes,” Bloomberg said, “could lift the outlook for what has been an underperforming housing sector.”

Permits for single family construction did come in better than permits as a whole, but were still a loss, issued at a rate of 727,000, a 1.2 percent decline from February.  They were up 13.2 percent from a year earlier.  The February single-family permitting estimate was revised up from 731,000 to 736,000.  Permits for construction in buildings with five or more units dropped 20.6 percent from February to 324,000 and were down 12.4 percent year-over-year.

On a non-seasonally adjusted basis there were 98,500 permits issued in March compared to 84,500 in February.  Single-family permits numbered 67,700 compared to 53,000 the previous month.

Housing starts were at a seasonally adjusted rate of 1,089,000, a drop of 8.8 percent from February but 14.2 percent higher than the 954,000 starts the previous March.  The February estimate of 1,178,000 was revised higher, to 1,194,000.  Analysts had expected starts in the range of 1.120 to 1.195 million with a consensus at 1.167 million.

Single-family starts were estimated at a rate of 764,000, a 9.2 percent decline but much above (22.6 percent) starts in March of last year.  The February estimate was revised up from to 841,000 from 822,000.  Multi-family starts declined by 8.5 percent to 312,000 units.

On a non-adjusted basis, construction began on 88,700 units of housing during the month compared to 82,700 units in February.  Single family starts rose from 57,800 to 63,000 units.

There was an improvement in housing completions during March with units coming on line at a seasonally adjusted annual rate of 1,061,000, a 3.5 percent increase from February and 31.6 percent more than in the previous March.  Completions in February were revised upward slightly from 1,016,000 units to 1,025,000.

Of completed units an estimated 734,000 were single family houses, a 0.3 decline from 736,000 in February but 23.2 percent more than in March 2015.  There were 316,000 multi-family units completed, increases of 17.9 percent and 58.8 percent from the two earlier periods.

On a non-adjusted basis there were 77,800 units completed during the month, 55,500 of which were single family compared to 71,500 and 51,600 a month earlier.

At the end of the reporting period there were 990,000 units of housing under construction, 428,000 single family units.  The backlog of permits for which construction had not yet commenced was estimated at 154,700 on a non-seasonally adjusted basis.

Permits were issued in the Northeast region at a rate that was 17.9 percent lower than in February and 21.7 percent below a year earlier.  Housing starts however soared, up 61.3 percent for the month and 21.0 for the year and completions were also up significantly; 20.5 percent and 64.9 percent from the two previous periods.

The Midwest saw permits decline 3.1 percent from February but they were 24.2 percent higher than in February 2015.  Housing starts fell 25.4 percent for the month but rose 5.6 percent on an annual basis.  Completions gained 18.9 percent from February and 68.3 percent year-over-year.

Permits fell 3.2 percent in the South on a month-over-month basis while rising 11.3 percent annually. Starts were also down, a drop of 8.4 percent for the month but with an 8.6 percent gain from a year earlier. Completions were 6.7 percent higher than in February and up 26.3 percent on an annual basis.

In the West there was a decline in permitting of 15.4 percent for the month and 6.1 percent year-over-year.  Housing starts also fell, down 15.7 percent in March but starts were 30.8 percent ahead of last year.  This was the only region in which completions were down – off by 16.0 percent for the month.  They remained 15.3 percent higher than a year earlier.

 

Reference Jann Swanson

Jonathan Burdick

Xperity Lending Group/Arizona Lending Resource

Scottsdale Arizona 85260

602-212-1234

NMLS # 1045837

http://www.ArizonaLending.Net

Fairway Independent Mortgage Company

NMLS Entity ID 2289

Equal Housing Lender

Confidentiality Notice: The information contained in and transmitted with this communication is strictly confidential, is intended only for the use of the intended recipient, and is the property of Fairway Independent Mortgage Corporation NMLS #2289 or its affiliates and subsidiaries. If you are not the intended recipient, you are hereby notified that any use of the information contained in or transmitted with the communication or dissemination, distribution, or copying of this communication is strictly prohibited by law. If you have received this communication in error, please immediately return this communication to the sender and delete the original message and any copy of it in your possession.

 

 

Mortgage Lending Profitable in 2015

Year-end figures released on Tuesday by the Mortgage Bankers Association (MBA) shows that profits in at least one sector of mortgage lending increased substantially in 2015 compared to 2014.  Those profits, however trended down as the year wore on.

According to MBA’s Annual Mortgage Bankers Performance Report, independent mortgage banks and mortgage subsidiaries of chartered banks made an average profit of $1,189 on each loan they originated in 2015, up from $747 per loan in 2014. Ninety-two percent of firms responding to the MBA survey posted pre-tax net profits in 2015, including all business lines while 82 percent reported such profits in 2014.  However, in the first half of 2015 93 percent reported profits while only 83 percent did so in the second half of the year.

The average production profit (net production income) was 52 basis points (bps) in 2015 compared to 34 bps in 2014.  The income averaged 65 bps in the first half of last year then fell to 39 in the second half.

“Despite a drop in profits in the second half of the year compared to the first half, full-year 2015 net production profits were 52 basis points, 18 basis points higher year over year, with higher production volume,” said Marina Walsh. MBA’s Vice President of Industry Analysis. “Profits in 2015 were just below the annual average of 55 basis points since the inception of the Performance Report in 2008.  However, because of larger loan balances, per-loan profits were at their third highest levels since 2008.  Average loan balances for this sample grew 7 percent from 2014 to 2015 and have grown 22 percent since 2008.”

There were 276 companies reporting production data to MBA for the full year.  Seventy-two percent wereindependent mortgage companies and the remainder were subsidiaries and other non-depository institutions.

The average production volume was $2.40 billion or 9,906 loans compared to $1.57 billion or 6,779 loans per company in 2014. Among those companies reporting for both years, average production volume increased by 48 percent to $2.48 billion (10,183 loans) from $1.68 billion (7,243 loans) in 2014.  The size of an average loan increased 7 percent to $239,265 from $223,108 the previous year.

Total loan production expenses – commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations – rose slightly year-over-year, from $6,950 to $7,046 per loan. In the first half of 2015, total production expenses averaged $6,893 per loan, then rose to $7,272 per loan in the second half of 2015.

Personnel expenses were an average of $4,699 per loan, up from $4,500 in 2014.  There were 2.20 loans originated per production employee per month in 2015, compared to 2.05 in 2014.

The “net cost to originate” including all production operating expenses and commissions, minus all fee income, but excluding secondary marketing gains, capitalized servicing, servicing released premiums, and warehouse interest spread. was $5,567 per loan compared to $5,200 the year before. Secondary marketing income plus origination fees rose to 330 bps from 321 bps the previous year.

The purchase share of total originations, by dollar volume, decreased to 64 percent in 2015, from 71 percent in 2014. For the mortgage industry as whole, MBA estimates the purchase share dropped from 60 percent in 2014 to 54 percent last year.

Reference Mortgage News Daily

Jonathan Burdick

Xperity Lending Group/Arizona Lending Resource

Scottsdale Arizona 85260

602-212-1234

NMLS # 1045837

http://www.ArizonaLending.Net

Fairway Independent Mortgage Company

NMLS Entity ID 2289

Equal Housing Lender

Confidentiality Notice: The information contained in and transmitted with this communication is strictly confidential, is intended only for the use of the intended recipient, and is the property of Fairway Independent Mortgage Corporation NMLS #2289 or its affiliates and subsidiaries. If you are not the intended recipient, you are hereby notified that any use of the information contained in or transmitted with the communication or dissemination, distribution, or copying of this communication is strictly prohibited by law. If you have received this communication in error, please immediately return this communication to the sender and delete the original message and any copy of it in your possession.

 

Phoenix Real Estate up in January

Phoenix Real Estate in January: Sales up 9%, Inventory down 6%

This is a key distressed market to follow since Phoenix saw a large bubble / bust followed by strong investor buying.

For the fourteenth consecutive month, inventory was down year-over-year in Phoenix.

The Arizona Regional Multiple Listing Service (ARMLS) reports (table below):

1) Overall sales in January were up 8.7% year-over-year.

2) Cash Sales (frequently investors) were down to 27.4% of total sales.

3) Active inventory is now down 5.5% year-over-year.

More inventory (a theme in 2014) – and less investor buying – suggested price increases would slow sharply in 2014. And prices increases did slow in 2014, only increasing 2.4% according to Case-Shiller.

With falling inventory, prices increased a little faster in 2015 (something to watch in 2016 if inventory continues to decline). Prices are already up 5.3% through November according the Case-Shiller (more than double the increase in 2014).

Reference Bill McBride

Jonathan Burdick

Arizona Lending

Nmls # 1045837

BK # 10123-Suburban Mortgage Co.

Jburdick@ArizonaLending.net

602-212-1234

Equal Housing Opportunity Lender

 

Mortgage Rates Rocket to Lowest in a Year

 

Mortgage Rates Rocket to Lowest in a Year

Mortgage rates dropped significantly today, officially hitting the lowest levels in almost exactly 1 year.  For most lenders, that means a conventional 30yr fixed rate quote of 3.625% for top tier borrowers, though there are still quite a few lenders at 3.75%.  That’s an important point to keep in mind today as several lenders are still much closer to Friday’s rates.  Even then, a “significant drop” will mean different things depending on your point of view.

For instance, if you follow each day’s market movement, today is indeed a bigger drop in rates than average.  In fact, there are usually less than 20 days in any given year that move this much.  From another perspective, it leaves plenty to be desired.  Case in point: lots of lenders are still quoting the same rates as Friday, but with slightly lower closing costs.  Lenders who are quoting lower rates won’t have moved any more than 1/8th of 1 percent (0.125%).

This is a symptom of a well-known disease in the mortgage market.  The bonds that underly mortgage rates (MBS or “mortgage-backed-securities”) tend to act more like the rest of the interest rate world when trading is calm, but they tend to underperform when the rest of the interest rate world is moving quickly lower.  So on days like today when 10yr Treasuries (a perennial yard-stick for MBS and mortgage rates) is down 10bps, it’s no surprise to see most lenders haven’t lowered rates by a similar amount.

Theoretically, if market trading levels held their ground right here, mortgage rates would have a bit farther to fall, but of course, there’s never a guarantee that markets will hold their ground.  We have a positive long-term trend that is very much intact.  It has consistently offered opportunity this year.  The opportunity is offset by the risk that markets will bounce along with the enticement of the lowest rates in more than a year.

Today’s Best-Execution Rates

• 30YR FIXED – 3.625 – 3.75%
  
• FHA/VA – 3.5%
• 15 YEAR FIXED – 3.125
• 5 YEAR ARMS –  2.75 – 3.25% depending on the lender

Ongoing Lock/Float Considerations

• The Fed finally hiked on December 16th, causing fears of rising rates in 2016.

• But  global financial markets came into the new year in distress.  Now markets aren’t even convinced that we’ll see another Fed rate hike in 2016.  Major stock indices plummeted around the world, and investors sought shelter in the bond market.  When investor demand for bonds increases, rates fall.
• So we’re left with much lower mortgage rates despite the Fed having just begun its hiking cycle.  This paradoxical trend can continue as long as global market turmoil fuels a demand for safer haven investments.  A big bounce in oil/stock prices could mean trouble for rates–at least temporarily.

Reference Mortgage News daily

 

Jonathan Burdick

Suburban Mortgage Inc

Nmls # 1045837

BK # 10123

Jburdick@submort.com

602-606-6176

Equal Housing Opportunity Lender

Lower Rates Spur Loan Applications

Lower Rates Spur Refi Applications

 

Applications for mortgages rose significantly during the week ended January 15 as fixed rate mortgage interest rates fell to the lowest levels since mid-autumn.  The Mortgage Bankers Association (MBA) reported that its Market Composite Index, a measure of loan application volume rose 9.0 percent during the week on an adjusted basis and 12 percent unadjusted.

Compared to the week ended January 8 the Refinance Index was up 19 percent and the share of all mortgage applications that were intended for refinancing jumped from 55.8 percent to 59.1 percent.  Purchase mortgage applications increased 2 percent on their adjusted index and 4 percent unadjusted.  The unadjusted index was 17 percent higher than during the same week in 2015.

Applications for FHA backed mortgages decreased from 14.4 percent to 13.7 percent week-over-week and the VA share declined from 12.2 percent to 10.8 percent.  Applications for USDA mortgages eased by 0.1 percent to 0.7 percent.

Effective rates for mortgages fell across the board while adjustable rate mortgages (ARMs) were the only products to see an increase in contract rates.  The average contract interest rate for 30-year fixed-rate mortgages (FRM) with conforming loan balances ($417,000 or less) dropped to the lowest level since October 2015, 4.06 percent, while points increased to 0.41.  The previous week the rate was 4.12 percent with 0.38 point.

Jumbo mortgages, those with balances greater the $417,000, had an average contract rate of 3.93 percent, the lowest rate since the previous October, down from 4.02 percent a week earlier.  Points eased to 030 from 0.31.

Thirty-year FRM backed by the FHA had an average rate of 3.86 percent compared to 3.90 percent the previous week.  Points rose to 0.36 from 0.34.  The contract rate was the lowest since October 2015.

The average contract interest rate for 15-year fixed-rate mortgages was also at the lowest rate since October, 3.29 percent, down 3 basis points from the prior week.  Points were unchanged at 0.39.

The average contract interest rate for 5/1 ARMs increased to 3.20 percent from 3.14 percent, with points decreasing to 0.18 from 0.42.  Sox percent of applications were for ARMs compared to 5.1 percent the week before.

MBS’s Weekly Mortgage Applications Survey has been conducted since 1990. The survey covers over 75 percent of all U.S. retail residential mortgage applications with respondents that include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100 and rate data is based on loans with an 80 percent loan to value ratio and points that include the origination fee.

 

Reference: Mortgage News Daily

Jonathan Burdick

Suburban Mortgage Inc

Nmls # 1045837

BK # 10123

Jburdick@submort.com

602-606-6176

Equal Housing Opportunity Lender

 

 

Mortgage Rates Nicely Lower Despite Strong Jobs Data

Mortgage Rates Nicely Lower Despite Strong Jobs Data

Mortgage rates moved respectably lower today, nearly making it to the best levels in a month.  Whereas the average conventional 30yr fixed quote had been creeping up toward 4.25% at the end of December, we’re now easily back to 4.0% for most lenders.  It should be noted that there continues to be more variation between lender quotes during this time of year, but we are seeing signs that things are getting back to normal as business picks up after the holidays.

Today’s improvement is all the more impressive considering the fact that this morning’s employment data from ADP was much stronger than expected.  ADP is one of the leading forward indicators for Friday’s big jobs report.  Typically, a stronger than expected result is bad news for mortgage rates.  Today, however, rates weathered the storm quite well.  In fact, many lenders repriced to even lower rates due to bond market improvements in the afternoon.  It’s possible that lenders and market participants alike were more cautious ahead of today’s Fed meeting minutes.   As it happened, the Minutes weren’t the slightest bit interesting.

Loan Originator Perspective

“ADP’s December employment projection was released today, and despite it surpassing expectations, pricing rallied about 25 bps on continued overseas market angst.  Make no mistake, we aren’t breaking any new ground here yet, just continuing to slide up/down through our recent range.  It’s too early to call the improvement a trend, but I’m all in favor of it continuing.  I’ll still take a conservative approach on locking, rather be wrong and locked than wrong and NOT locked.” –Ted Rood, Senior Originator

“China worries and falling oil prices over come a much better than expected ADP employment report helping rates to stage a small rally today.   I do fear this might be short lived since we have non farm payrolls hitting on Friday.   I think it would be wise to look at locking in today if you are within 30 days of closing.” –Victor Burek, Churchill Mortgage

“Rates seem to be benefiting from a rough start to the year for the Stock Market and further declines in Oil prices.  With the Fed moving in the direction of higher rates I think we’ll need a stronger impetus to push rates even lower in the near term.  We may get that, but I would be cautious and tend to lock in these gains for now.” –Hugh W. Page, Mortgage Banker, Seacoast Bank

Today’s Best-Execution Rates

• 30YR FIXED – 4.00%
  
• FHA/VA – 3.75%
• 15 YEAR FIXED – 3.25%
• 5 YEAR ARMS –  2.75 – 3.25% depending on the lender

Ongoing Lock/Float Considerations

• In 2015 global interest rates rose unevenly from a long-term lows brought about by the onset of quantitative easing in Europe.  European rates moved most (first lower, then higher), but rates in the US, including mortgage rates, are always taking some of their guidance from the global picture.

• Just as European rates were bouncing at all-time lows, the Fed began talking up its plans to hike its policy rate (Fed Funds Rate).  While the Fed rate doesn’t directly affect mortgages, the two are generally connected in the long run.  They become more disconnected when the economy begins to contract (because Fed policy is slower to respond to changes in the economy).
• The Fed finally hiked on December 16th.  This implies a constant underlying pressure toward higher interest rates–as long as the economy doesn’t begin to contract.  Opinions vary greatly as to when we’ll see the early signs of the next economic contraction.  Some would argue we’re already seeing them.  This, along with persistently low inflation, has helped rates avoid taking a big hit from the Fed rate hike, though we’re still waiting for the first major trend of 2016 to emerge
• As always, please keep in mind that the rates discussed generally refer to what we’ve termed ‘best-execution‘ (that is, the most frequently quoted, conforming, conventional 30yr fixed rate for top tier borrowers, based not only on the outright price, but also ‘bang-for-the-buck.’  Generally speaking, our best-execution rate tends to connote no origination or discount points–though this can vary–and tends to predict Freddie Mac’s weekly survey with high accuracy.  It’s safe to assume that our best-ex rate is the more timely and accurate of the two due to Freddie’s once-a-week polling method).

 

 

10 homeowner tax breaks you should be taking advantage of

 

Don’t forget your 2015 mortgage write offs

If death and taxes are the two true givens in life, there probably should be a third: the bucketful of tax breaks Uncle Sam throws out every year to encourage more Americans to buy a home.

From being able to write off virtually all mortgage interest, not only for your primary home, but for a second home as well — up to $1.1 million of debt (when you include home-equity loans) in most cases, to being able to write off your property taxes, homeowners have opportunities for dozens more federal income tax deductions than renters.

In fact, only 21 states and the District of Columbia offer renters any kind of tax breaks or credits — generally credits for property taxes.
Americans took $68.5 billion in mortgage interest deductions (MID) alone in 2012, according to the Congressional Research Service (CRS), saving Americans who owned homes about $1,900 a year, on average. This is particularly beneficial to first-time home buyers whose early monthly payments in a 30-year loan are mostly only interest. About half of American homeowners took advantage of the MID in 2012, the CRS said. What about the other half? Well, according to the CRS, they already paid off their homes or the mortgage interest deduction was less than the standard tax deduction.
“If you have taken out a homeowner’s loan, consider these deductions as Uncle Sam’s gift to you. These tax breaks will surely alleviate the financial burden of many taxpayers, especially those who are paying their mortgage,” says John Gregory, founder of 1040Return.com, a Baltimore-based tax-prep company.

Some of the most significant tax breaks that only homeowners can claim are fairly well-known, such as the MID, but here are some others:

1. Points on home mortgage and refinancing: If you bought a home in 2014 with a mortgage, then in addition to the mortgage interest (which may not be a lot if you bought late in the calendar year), you can probably write off the points (both origination and discount points) on your tax return, says Jackie Perlman, principal tax research analyst at H&R Block (HRB). One point is equal to 1% of the principal loan amount. That’s because the IRS considers points to be prepaid interest. The challenge is whether you’re eligible to deduct the points all at once, or whether you have to spread the costs out over the life of the loan. Generally, if you bought your first home or got a loan on that first home, you can take the deduction all at once, the IRS says. For a second home, and often for a refinance on a first home, the IRS says you most likely have to spread it out. “You have to meet all the criteria in order to deduct them up front, otherwise you have to amortize them over the life of the loan,” she said. A good place to start, she says, is the IRS Tax Information for Homeowners guide.

2. Interest on home-improvement loan: The IRS considers the interest on a home-improvement loan fully deductible, up to $100,000 in debt. In addition, interest paid on a home equity line of credit (HELOC) is also tax-deductible. However, as Greg McBride, chief financial analyst with Bankrate.com, notes, any portion of a home loan that is over 100% loan-to-value (meaning the loan is worth more than the value of the property) isn’t deductible.

3. Property tax: Property taxes are almost always tax-deductible, but some things on your settlement document that might look like taxes really aren’t, says McBride. You can’t write off your attorney and appraisal fees, title insurance and credit report costs either, McBride notes. Transfer taxes however can be written off, says Gregory.

4. Energy-efficiency tax credit: If you made efforts in 2014 to make your home more energy efficient by installing equipment like storm doors, energy efficient windows, insulation, air-conditioning and heating systems, the IRS wants to give you a tax credit of $500, though only $200 of that can be used for the windows. The credit however is set to expire on Dec. 31, 2016.

5. Renewable-energy tax credit: If you’ve installed equipment that uses renewable sources of energy, such as the sun and wind, to help power your home, you may be eligible for the Renewable Energy Efficiency Property Credit. You are eligible for this tax credit up to a whopping 30% of the cost of the equipment, installation included, so long as the equipment is placed in service by the end of December 2016. About 600,000 American homeowners have added residential solar equipment since 2010, according to the Solar Energy Industries Association.

6. Ground rent: There are rare situations in the U.S. for homeowners where the original owner still owns the land under your house after you’ve bought it, and you own the aboveground property and “rent” the ground from the owner. The “ground rent” option reduces the cost of the home since you’re not buying the land. The IRS lets you get a break for this situation and thus “ground rent” amounts can be deducted if you have been paying the rent monthly or annually, so long as the lease is for more than 15 years. However, if you’re making a payment to capitalize the ground rent, to buy out the lessor’s interest to get out from under it every year, that payment isn’t deductible, the IRS says.

7. Income and interest on reverse mortgages: The IRS considers reverse mortgages as a loan advance not income, so the amount you receive isn’t taxable. But the interest accrued on a reverse mortgage isn’t deductible until the loan is paid off, so you can’t take a deduction each year for the interest as you might with the traditional mortgage interest you pay, says Gregory.

8. Private mortgage insurance: You may be eligible to claim the deduction for private mortgage insurance (PMI) or mortgage insurance premiums on your tax return, though the 2014 tax year is the last year the deduction can be taken. Keep in mind that the deduction for qualified mortgage insurance premiums is reduced if your adjusted gross income (AGI) is over $100,000, and if it’s over $109,000 you can’t take the deduction at all. And you won’t get around that limitation if you’re married and filing separately, as the deduction begins to be reduced at $50,000 in AGI and disappears at $54,500.

9. Home expenses and improvement: If you make improvements to your property, you cannot write off the cost of home improvement, such as the materials and the labor. (Though you can write off the interest of course if you took out a home loan to pay Joe Contractor and purchase the materials.) However, when you sell your home, you can add the cost into the asking price of your property, which should diminish the capital gain when you sell your home, says Gregory of 1040Return.com.

10. Buying a home: The IRS allows first-time home buyers to withdraw up to $10,000 from their traditional IRA (and even Roth IRAs) penalty-free to help with the purchase of the home. Your spouse or even a parent, child, or grandchild can kick in another $10,000 from their IRA accounts, for a total of up to $20,000. You can also borrow half of your 401(k) balance up to $50,000 for the purchase of a home. But, the interest you pay on that 401(k) loan, unlike a mortgage loan, isn’t tax-deductible, notes Perlman.

Reference Bankrate.com

Jonathan Burdick-1045837

Suburban Mortgage Inc

602-606-6716

Equal Housing Lender

 

 

Mortgage Rates Lowest in 2 Weeks

Mortgage Rates Lowest in 2 Weeks

Mortgage ratesmoved lower today as financial markets roared back to life after the winter break.  In this age of ever-increasing automation and digital connectivity, it would be easy to assume that financial markets continue to hum along in the background even as the rest of the world takes some time off during the holidays.  The truth is that financial markets are greatly affected by the Christmas/New Years holiday season and that’s readily apparent in today’s mortgage rates.

Mortgage rates are primarily a function of mortgage-backed-securities (MBS) prices.  Most days, there is a stable connection between the two (in that a certain amount of movement in MBS tends to correspond with a certain amount of movement in mortgage rates).  If we were to solely base our assumptions on that relationship, rates would be only marginally better today–somewhere near those seen on December 28th.  Instead, rates moved noticeably lower–closer to those seen on December 21st.

The x-factor here is the human element.  Strategies vary, but in general, folks in charge of setting rates for lenders tend to be more conservative heading into the holidays.  If MBS prices are in decent shape after the holiday season, lenders are able to get back to where they would have otherwise been fairly quickly.  As such, it’s no major surprise to see rates right back where they were a few days before the holidays kicked into high gear.

Loan Originator Perspective

“As I suspected last week, bonds did rally today, albeit not as much as they should have, given equities’ losses.  Once again, we’re basically cemented in our current pricing range.  At this point, we’re still closer to the high side of rates than the low, so we may see better pricing the next couple of days.  Friday, however, is the December NFP report, which is a huge wild card.  Float until Thursday if you like to gamble a little.  Only those who love “action” should float into Friday.” –Ted Rood, Senior Originator

“Nice little rally today thanks to a global sell off of stocks that started with very weak manufacturing data out of China.   If you floated over the long weekend, your rate sheets should reward you today.   With today’s gains, it would be wise to consider locking especially if you are within 30 days of funding.   The trend still isn’t our friend, so this could turn around very quickly.” –Victor Burek, Churchill Mortgage

“Mortgage bonds started the new year off right rallying at the open of trading.  This was largely due to the global sell off sparked by the manufacturing date released in China.  Bonds however did not hold their gains which worries me a bit and puts me in lock mode.  While it may be possible for rates to continue to improve the risk at this level may not be worth taking.” –Manny Gomes, Norcom Mortgage

Today’s Best-Execution Rates

• 30YR FIXED – 4.00-4.25%
  
• FHA/VA – 3.75%
• 15 YEAR FIXED – 3.25-3.375%
• 5 YEAR ARMS –  2.75 – 3.25% depending on the lender

Ongoing Lock/Float Considerations

• In 2015 global interest rates rose unevenly from a long-term lows brought about by the onset of quantitative easing in Europe.  European rates moved most (first lower, then higher), but rates in the US, including mortgage rates, are always taking some of their guidance from the global picture.

• Just as European rates were bouncing at all-time lows, the Fed began talking up its plans to hike its policy rate (Fed Funds Rate).  While the Fed rate doesn’t directly affect mortgages, the two are generally connected in the long run.  They become more disconnected when the economy begins to contract (because Fed policy is slower to respond to changes in the economy).
• The Fed finally hiked on December 16th.  This implies a constant underlying pressure toward higher interest rates–as long as the economy doesn’t begin to contract.  Opinions vary greatly as to when we’ll see the early signs of the next economic contraction.  Some would argue we’re already seeing them.  This, along with persistently low inflation, has helped rates avoid taking a big hit from the Fed rate hike, though we’re still waiting for the first major trend of 2016 to emerge

Jonathan Burdick

NMLS 1045837

602-606-6716

Reference Mortgage News Daily