Tuesday, May 18, 2010

Markets Ignore The April Jobs Report And It's Good News For Mortgage Rates

Unemployment Rate 2007-2010On the first Friday of every month, the U.S. government releases its Non-Farm Payrolls report.
More commonly called "the jobs report", Non-Farm Payrolls is a major market mover. The number of working Americans is directly tied to the health of the economy which, in turn, drives the stock and bond markets.
In general, when jobs numbers improve, it's good for stocks and bad for mortgage bonds. It follows, therefore, that conforming mortgage rates in New Jersey rise because rates always move opposite of mortgage bond prices.
Conversely, when jobs numbers worsen, it tends to be bad for stocks and good for mortgage bonds.  Mortgage rates fall.
Today, markets are behaving a bit differently.
Despite 290,000 jobs created in April 2010 -- nearly twice the expected amount -- and a 40 percent upward revision of March's numbers, mortgage rates are essentially unchanged.
In a normal environment, rates would be higher.  Today is not normal.
Today is a departure because, for all of the jobs report's import to Wall Street, it's less important to markets than what's happening in Greece right now.
Greece is struggling to meet its debt obligations and its citizens are rioting.
Until a debt solution for Greece is made that sticks, unrest in the region will drive safe haven buying both domestically and abroad. U.S. mortgage bonds will gain on that movement because mortgage bonds are "safe", and mortgage rates will fall.
Indeed, this is exactly what's been happening since the start of April. Mortgage markets have been rallying for 5 weeks.
So, Friday's jobs news is terrific for the economy and mortgage rates should be rising because of it.  But, they're not. Consider taking advantage -- lock in a rate.

Reblog this post [with Zemanta]

Monday, May 17, 2010

NAR makes history in a vote to amend the Code of Ethics to include sexual orientation - vid...

This video makes me really proud to be a REALTOR, but even prouder to have been part of the process that led to what is a historic moment for the National Association of REALTORS and our 97 year old Code of Ethics.

Last year, during my term as Chairman of the Interpretations and Procedures sub-committee of the Professional Standards Committee, this amendment to the Code prohibitinh discriination based on sexual orientation was suggested by state associations. The sub-committee discussed the matter, and began the process needed to move this forward.

The change to our Code is significant because it is the first time in the history of the code that REALTORS have set a standard against discrimination that is higher than the law in many places. And did it quickly, unanimously and with little discussion at the meeting. (Though I did love the woman who suggested that we should just say "REALTORS shouldn't discriminate")

The people in this video from left to right are Linda Paige, Steve Roscoe, Domenic Cardone, and Rodney Ganshoe. They are the Chairman of the Professional Standards Committee, the Chairman of the Interpretations and Procedures sub-committee, the Vice-Chairman of the Professional Standards Committee, and one of the best association staff people on the planet. Oh, and yes, I am the Bill Steve mentions in the video (and I was paying attention before he said "sex" )

Thanks to all of the members and staff who made this possible so that we can as an organization move forward in such a positive manner.

(NOTE: Though this was approved by the Committee and the Board of Directors, it also needs to be approved by the Delegate Body at the Annual Meetings In New Orleans in November 2010.)

Reblog this post [with Zemanta]

Sunday, May 16, 2010

Interview w/Bill Lublin - REtechSouth

I Google myself regularly as part of my own reputation monitoring. I just came upon this video taken by Ricardo Bueno when I was in Atlanta speaking at the ReTechSouth Event 2010. SInce I hadn;t seen it for a while I though I might share it here. It does however raise a question in my mind - is the picture fuzzy because I was tired or Ricardo wasn't focused?  Anyway, hope you enjoy it.

Wednesday, May 12, 2010

Fannie Mae Tightens Guidelines On ARMs And Interest Only Products

Fannie Mae tightens its mortgage guidelinesFor the first time this year, Fannie Mae announced significant updates to its mortgage underwriting guidelines.
The changes include newer, harsher ARM qualification standards, the elimination of a once-popular loan product, and tighter rules for interest only mortgages.
Fannie Mae made its official announcement April 30, 2010.  The changes will roll out to home buyers and homeowners in Philadelphia and everywhere else over the next 12 weeks.
The first guideline change is tied to ARMs of 5 years or less.
Mortgage applicants must now qualify based on a mortgage rate 2% higher than their note rate.  For example, if your mortgage rate is 5 percent, for qualification purposes, your rate would be 7 percent.
The elevated qualification payment will disqualify borrowers whose debt-to-income levels are borderline.
The second change is Fannie Mae's elimination of the standard 7-year balloon mortgage.  Balloon mortgages were popular early last decade.  Lately, few borrowers have chosen them, though.  Mostly because rates have been relative high as compared to a comparable 7-year ARM.
And, lastly, Fannie Mae is changing its interest only mortgages guidelines.
Effective June 19, 2010, Fannie Mae interest only mortgages must meet the following criteria:

  1. The home must be a 1-unit property
  2. The home must be a primary residence, or vacation home
  3. The borrower's FICO must be 720 or higher
  4. The mortgage must be a purchase, or rate-and-term refinance. No "cash out" allowed.
Furthermore, borrowers using interest only mortgages must show two full years of mortgage payments "in the bank" at the time of closing.
Earlier this year, Fannie Mae-sister Freddie Mac announced that as of September 2010, it will stop offering interest only loans altogether.
Between Fannie Mae, Freddie Mac, the FHA, and other government-supported entities, the U.S. government now backs 96.5% of the U.S. mortgage market.  So long as mortgage default rates are high, expect approvals for all borrower types to continue to toughen.
Reblog this post [with Zemanta]

Tuesday, May 11, 2010

Housing Starts Data Hints That Housing Will Expand Even After The Tax Credit Expires

Housing Starts Apr 2008-Mar 2010As a real estate broker whose company's largest concentration is on the existing housing market in Philadelphia and South New Jersey, I only pay a little attentionb to the new housing market. Especially since that market has really been in more of a clean up than expansion mode for the past several years. After all, the existing inventory needs to shrink before we worry about about creating new inventory doesn;t it? It seems that there are indicators that the inventory has been shrinking and that the market has been changing. After a strong March showing and a surprise upward-revision for February, Housing Starts are, once again, trending better.

It's a significant signal that the housing markets in Philadelphia, Mount Holly and nationwide are stabilized.
A Housing Start is a new home on which construction has started and, over the last 6 months, home builders are averaging one half-million starts per month.
This marks the highest 6-month average since 2008 and a reading one-fifth percent better from 12 months ago.  Revisions to prior data have all been higher, too.
Even more interesting, though, is that the number of newly-issued building permits is exploding. Permits were up more than 5 percent last month and have climbed back to the levels of late-2008.
Housing permits are an important data point in housing because permits are precursors to actual housing starts.  According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance.
Therefore, because March's housing permits increased, we should expect Housing Starts to continue to rise into the early months of summer.
This, too, reflects well on housing because the federal home buyer tax credit won't be in existence this summer. The simple fact the homes are being built now shows that housing is likely to expand even now that the tax credit expires. And, as you may have noticed in my other posts, I sort of think that's happening as well.

Reblog this post [with Zemanta]

Sunday, May 9, 2010

March Pending Home Sales Point To Stronger Spring Market

Pending Home Sales September 2008 March 2010The Pending Home Sales Index moved higher in March as home sales were spurred by low mortgage rates and an expiring tax credit.
A "pending home" is a property that is under contract to sell, but not yet closed.
March marks the second straight month in which the Pending Home Sales Index improved after a series of weak showings this past winter.
March showed a 5 percent increase over the month, but the Pending Home Sales Index is still off its October 2009's peak.  October 2009 is a comparable period to March 2010 in that it marked the 1-month deadline before the home buyer tax credit's initial expiration date. The credit was later extended to April 2010, of course.
That said, March's surge in sales is being felt on the street.
Home buyers in Philadelphia no doubt noticed the change in activity. Both locally in our company and around the country, anecdotally, multiple offer situations were more common last month and "right-priced" homes tended to go under contract quickly.
The increase in March's Pending Home Sales is diminishing the nation's home supply which, in turn, should cause prices to rise in most markets -- including Philadelphia and surrounding counties including New Jersey.
Today's buyers should consider making an offer sooner rather than later.  We will probably see the trend continue as activity in the month on April as measured by our firm was even higher than in March, but for an  offical number, we'll  have to wait until next month. But looking at the data, it appears the best time to have found a "deal" on a home may have been in February, when snow kept many homebuyers off the streets, giving the hardy souls who braved the weather a competitive edge.
Reblog this post [with Zemanta]