You may be thinking that we are talking about how the world has changed over the years. For example, who would have thought that a conversation with our children would most likely occur through texting on a machine that many of us did not even grow up with years ago? Here we are talking about how things change from week-to-week. During the past few weeks we have been illustrating factors before and against a rate increase orchestrated by the Federal Reserve Board, whose “Open Market Committee” meets next week.
On the plus side we had a strengthening economy and the creation of jobs. On the negative side we had a correcting stock market, a stronger dollar, a slowing economy overseas and plunging oil prices. In just a couple of days, the stock market rebounded significantly, we had a significant upward revision in the estimate for our economic growth in the second quarter and oil prices rebounded sharply as well. In a matter of a few days, we went from not at all expecting a rate increase to thinking that a rate increase could happen. Just to make things interesting, a few days later, stocks and oil prices reversed again. If you are confused, think how the Fed must feel considering this decision.
And then came the jobs report. What did the jobs report tell us? Even though the addition of 173,000 jobs was less than expected, the unemployment rate dropped to 5.1%, the previous month number of jobs added was revised upward and wages grew a bit more than predicted. Overall, this report is a positive one for the economy and, therefore, increases the chance of a rate increase next week. Most analysts are putting the chances of an increase at 50-50 right now. Though, one thing we can tell you is that the Fed does not like major uncertainty. And there is plenty of uncertainty out there right now. Too much uncertainty may be the overriding factor determining the results of this decision.
Updated September 4, 2015
|Daily Value||Monthly Value|
|6-month Treasury Security||0.24%||0.12%|
|1-year Treasury Security||0.36%||0.30%|
|3-year Treasury Security||1.00%||1.03%|
|5-year Treasury Security||1.49%||1.63%|
|10-year Treasury Security||2.18%||2.32%|
|12-month LIBOR||0.828% (July)|
|12-month MTA||0.198% (July)|
|11th District Cost of Funds||0.643% (July)|
Fannie Mae announced HomeReady™ mortgage, an innovative lending option aimed at helping creditworthy borrowers with lower and moderate incomes have access to an affordable, sustainable home loan. HomeReady will replace Fannie Mae’s MyCommunityMortgage®. HomeReady will help qualified borrowers access the benefits of homeownership with competitive pricing and sustainable monthly payments,” said Jonathan Lawless, Vice President for Underwriting and Pricing Analytics at Fannie Mae. Under the new guidelines, Fannie Mae pricing is favorable and simplified for lender use. Borrowers will be required to complete an online education course preparing them for the home buying process and providing post-purchase support for sustainable homeownership. For the first time, income from a non-borrower household member can be considered to determine an applicable debt-to-income ratio for the loan, helping multi-generational and extended households qualify for an affordable loan. Other HomeReady flexibilities include allowing income from non-occupant borrowers, such as parents, and rental payments, such as from a basement apartment, to augment the borrower’s qualifying income. First-time and repeat homebuyers can purchase a home using HomeReady with a down payment of as little as 3%. Fannie Mae will provide additional details to lenders in the coming weeks through a Selling Guide announcement. Fannie Mae anticipates accepting loans under the HomeReady guidelines in late 2015 as well. HomeReady will be available to borrowers at any income level for properties in designated low-income census tracts, and to borrowers at or below 100% of area median income (AMI) for properties in high-minority census tracts or designated natural disaster areas. For properties in remaining census tracts, HomeReady borrowers must have an income at or below 80% of AMI. Source: Fannie Mae Interested in purchasing a home? Let us know and we will keep you informed as information about this program becomes available.
RealtyTrac®, the nation’s leading source for comprehensive housing data, recently released a Buy-or-Rent analysis on 3-bedroom residential properties in 285 counties nationwide. The separate Buy-or-Rent analysis found that making monthly house payments on a 3-bedroom property is more affordable than paying fair market rent on a 3-bedroom property in 188 of the 285 counties analyzed (66 percent). The Buy-or-Rent analysis compared the percentage of median household income in each county that would be needed to pay the fair market rent on a 3-bedroom property in that county to the percentage of median household income that would be needed to make monthly house payments — including mortgage, insurance and property taxes — on an average-priced 3-bedroom property in that county. Across all 285 counties analyzed, the average percentage of median household income needed to rent was 29.96 percent while the average percentage of median household income needed to buy was 29.00 percent. For this report, RealtyTrac analyzed all U.S. counties with a population of 100,000 or more and with sufficient home price and rental rate data. Source: RealtyTrac
Lawrence Yun, chief economist for the National Association of Realtors®, believes home construction in the next two years will finally return to normal levels for the first time since the recession. “The principal reason for the inventory shortage is the cumulative impact of homebuilders not being in the market for well over five years,” Yun wrote in his most recent economic update. “Homebuilders typically put up 1.5 million new homes annually.” And with each year trending higher, Yun believes 2017 may be the year construction levels finally return to normal. “Builders will construct more homes — by 1.1 million in 2015 and 1.4 million in 2016,” Yun wrote. “New home sales will follow this trend. This rising trend will steadily relieve housing shortages.” And while home building in general is expected to return to historical norms in the next 24 months, Yun says construction for apartments has returned to normal levels. Source: NAR