Category: Industry News

Renters now setting their sights on homeownership

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A recent study from TransUnion showed American renters are increasingly setting their sights on homeownership. The number of renters shopping for a home increased from last year and from 2015.

The study showed 55% of those who shopped for a mortgage in the first quarter of 2017 were non-homeowners, most of whom were renters. This is a significant increase from the first quarter of 2016 when that number was 50% and from the first quarter of 2016 when it sat at 45%.

“The rental market has seen sustained growth for the last several years, but occupancy rates have flattened from their peak in the second quarter of 2016,” said Mike Doherty, senior vice president of TransUnion’s rental screening solutions group.

Millennial interest in homeownership has been steadily growing, the TransUnion study showed. In 2017, 29% of non-homeowners who shopped for mortgages were Millennials. This is up slightly from 28% in 2016 and 27% in 2015.

Read the source article at U.S. Housing Finance News

What the Interest Rate Hike Means for Homebuyers

Today, the Federal Reserve announced that they were raising interest rates. This is the third consecutive interest rate hike, and the Fed is citing a strong economy and low unemployment as reasons for this decision.

However, potential homebuyers don’t need to worry about mortgage rates increasing as the Fed makes their announcement.

The Fed raised short-term interest rates today, but mortgage rates, particularly for the 30-year fixed rate mortgage, are determined by the 10-year Treasury bond. Bonds are influenced by market conditions, global events, etc. and not by the Federal Reserve.

For those considering buying a home, know that though mortgage rates can increase at any moment, they won’t go up just because the Fed raised interest rates.

Source: HousingWire.com, June 14, 2017

Why Mortgage Rates are Falling Even As the Fed is Raising Interest Rates

When the Federal Reserve gathers on Wednesday, policymakers are all but certain to lift interest rates again in an attempt to keep inflation at bay by raising borrowing costs.

This will likely mark the third quarter-point rate hike announced by Fed chair Janet Yellen since last December.

But if that’s the case, why have mortgage rates sunk to near a seven-month low, from 4.32% at the end of December to just 3.89% in June?

The answer is simple: There isn’t just one interest rate that governs the entire economy. There are a myriad of rates to consider.

The Federal Reserve sets an ultra short-term rate called the federal funds rate, which determines how expensive it is for banks to lend money to each other on overnight transactions. This, in turn, helps determines how much interest you’ll be charged on, say, your credit cards.

Mortgage rates, on the other hand, are influenced by the yield 10-year U.S. Treasury notes, which the Fed does not have direct control over.

When investors buy a lot of longer-term Treasury debt — which is viewed as a safe haven for global investors to park their cash — prices on 10- and 30-year Treasuries rise while their yields fall (bond prices and yields have an inverse relationship). And when long-dated Treasury yields fall, rates charged by banks for long-term mortgages also tend to drop.

“Mortgage rates say very little about the housing market,” says Trulia chief economist Ralph McLaughlin. “It says more about what’s going on in the bond market.”

And how investors feel about what’s going on in the economy.

After President Trump’s victory last fall, Wall Street fell in love with the narrative that with Republicans controlling both chambers of Congress and the White House, the GOP agenda of lowering taxes, cutting regulations, and increasing infrastructure spending would boost economic growth.

So investors, by and large, sold safe government bonds — causing Treasury prices to fall and yields to rise — while loading up on stocks, which would stand to gain if economic activity took off. Equity indexes, such as the S&P 500 and Dow Jones Industrial Average, ballooned to all-time highs.

The lovefest has tempered, though.

“The initial failed implementation of the Affordable Care Act repeal was a reality check for markets,” says National Association of Realtors’ director of housing finance and regional economics Ken Fears. The GOP agenda “may not happen as soon as we thought, and might be pared down significantly.”

Toss in global uncertainty in places like North Korea and Syria, along with distractions stemming from multiple investigations into Russia’s possible interference in the 2016 U.S. presidential election, and uncertainty again rules the economy.

And uncertainty and slow growth is great news for bond prices. As a result, the yield on the 10-year Treasury has sunk from as high as 2.62% in March to as low as 2.13% last week. It is currently at around 2.20%.

For now that means your mortgage rates will stay near historical lows, a boon to first-time homebuyers (if they can find a house for sale in their price range) and homeowners looking to refinance.

But the cost — weak economic gains in one of the longest business cycles and bull markets on record — is real.

Read the source article at time.com

Skyline’s Reverse Mortgage Division Partners with Software Company

Skyline Home Loans is pleased to announce that we will be working with ReverseVision, a leading provider of software and technology for the reverse mortgage industry!

This partnership will allow us to focus more on our growing reverse mortgage division to help us serve the growing market for home-equity conversion mortgages.

“By growing our retail efforts and expanding HECM products to our wholesale channel, we can better serve the needs of Skyline customers,” said Skyline’s Reverse Mortgage Division Vice President Joe Rinner. “Getting the right technology and training from ReverseVision was our first step.”

As the need for reverse mortgages grows, Skyline wants to be ready to help consumers plan for their retirement.

Working with ReverseVision will help Skyline streamline the reverse mortgage process, allowing borrowers to participate with complete transparency.

To learn more about the partnership, click here.

Trump tax plan could hurt home values, but help first-timers

President Donald Trump’s push to cut taxes is a rare policy expected to draw political support from both sides of the aisle. But one aspect of the overhaul could doom it: a White House move that would effectively eliminate the mortgage-interest deduction, a perk cherished by millions of homeowners around the U.S.

If some version of Mr. Trump’s plan is adopted, all but the wealthiest Americans will no longer be able to deduct the interest paid on a home loan. That’s great news for proponents of rational markets, while potentially saving the U.S. government nearly $70 billion a year. But it would be bad news for current mortgage holders.

A separate analysis commissioned by the National Association of Realtors puts the immediate effect of a Trump-like tax cut at a 10 percent drop in home values.

While that would harm home sellers, a drop in housing costs would be welcome news for buyers, especially when combined with other elements of the White House tax plan: lowering overall tax rates and increasing the standard deduction. Those changes would likely result in more take-home income for ordinary taxpayers (not to mention the disproportionate benefits they would deliver to the highest earners). 

Read the source article at CBS News

New home sizes continue to shrink

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Americans seem to be more interested in smaller homes at the start of 2017 as the median and average square footage of new builds continues to decrease, according to a note from Robert Dietz for the National Association of Home Builders.

During the housing recovery, builders focused on higher end homes, however that is now beginning to change. The entry-level market continues to expand, including an increasing interest in townhomes, and new home sizes continue to shrink.

Median single-family square floor area decreased to 2,389 square feet, according to first-quarter data from the Census Quarterly Starts and Completions by Purpose and Design and NAHB analysis. This is down from 2,440 square feet last quarter and 2,465 square feet last year.

Similarly, the average square footage also decreased slightly from 2,652 square feet in the fourth quarter and 2,658 square feet last year to 2,628 square feet.

Read the source article at U.S. Housing Finance News

Housing Sentiment Springs Back from March Loss

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After moving along a nearly flat track for several years, consumer sentiment regarding whether “now” is a good time to buy a home started to rise and fall like the tides in late 2016. April saw increasing positives sentiment; the net share of those saying it was a good time gain 5 percentage points to 35 percent after rising and then falling by ten points in February and March.

The results of Fannie Mae’s National Housing Survey (NHS) also included a shift in the “good time to sell” sentiment, which has always lagged well behind the “buy” responses.  Its net percentage began to increase in November and hit a survey high of 31 percent in March but it dropped five points in April.

These two questions are among the six from the survey that make up Fannie Mae’s Home Purchase Sentiment Index (HPSI) which rose 2.2 percentage points in April to 86.7.  The index was rebounding from a March dip and gained 3.0 points over its level in April 2016.  The “good time to sell” component was the only one of the six to lose ground during the month.

Read the source article at Mortgage News Daily

It’s a Good Time to Trade Your Student Debt for Home Debt

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Fannie Mae, the government-controlled mortgage giant, is taking steps to make it easier for millions of student loan borrowers to own a home or refinance a mortgage. Student debt has become an increasing concern, amid worries that borrowers burdened by education loans are postponing home buying , causing a drag on the economy. The average undergraduate now leaves college with more than $30,000 in student debt, according to the Institute for College Access and Success.

Fannie Mae, which buys home loans originated by lenders that meet its standards, said Tuesday that it was easing the path for student loan borrowers — and those who may have co-signed such loans — in three ways, said Jonathan Lawless, vice president for customer solutions at Fannie Mae.

 

Read the source article at The New York Times