Most analysts are saying that this is it. December will be the first time that the Federal Reserve Board will raise rates since 2006. The markets, at least for now, seem to agree. Rates have moved up across the board since the release of the jobs report showing a gain of over 250,000 jobs last month. It seems everyone has jumped on the bandwagon and some have started discussing when the second rate increase will come.
We say, not so fast. We believe if the Fed were voting today, rates would go up. But the Fed does not meet for a month. That is a lot of time for the picture to change. We have another employment report to be released before the meeting and this report will contain revisions to last month’s data. There will be a slew of additional data released and in the past few months, data has been mixed at best. One should remember that the economy grew by less than two percent last quarter according to the first reading and this reading will be revised as well before the Fed meets.
Bottom line? There is a lot of data to be released in the next 30 days. If those reports are as strong as the jobs data, the decision regarding a rate increase will be a fait accompli, or done deal. If the data comes in mixed, the Fed’s increase is probable. But, if it swings the other way, the Fed may not move at all. In addition, there is always the possibility of an intervening variable such as an international crisis which could put the decision on hold. For now, the markets seem to have made up their mind that it is on the way.
The Markets. Rates on home loans rose again last week in reaction to the strong employment report. Freddie Mac announced that for the week ending November 12, 30-year fixed rates rose to 3.98% from 3.87% the week before. The average for 15-year loans increased to 3.20%. Adjustables were also higher, with the average for one-year adjustables rising to 2.65% and five-year adjustables rising to 3.03%. A year ago, 30-year fixed rates were at 4.01%, close, but still higher than today’s levels. Attributed to Sean Becketti, chief economist, Freddie Mac –“A surprisingly strong October jobs report showed 271,000 jobs added and wage growth of 0.4 percent from last month, exceeding many experts’ expectations. The positive employment reports pushed Treasury yields to about 2.3 percent as investors responded by placing a higher likelihood on a December rate hike. Rates on home loans followed with the 30-year jumping 11 basis points to 3.98 percent, the highest since July. There is only one more employment report before the December FOMC meeting, which will have major implications on whether we see a rate hike in 2015.” Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.
Borrowers may no longer need to worry about collecting pay stubs for a home loan application. Residential finance company Fannie Mae announced that it would allow lenders to use employment and income information from a database operated by credit bureau Equifax to verify borrowers’ creditworthiness. Fannie says it will no longer require lenders to rely on collecting physical copies of pay stubs and tax data, which has what traditionally has been required. Fannie also announced changes that could ease mortgage credit. Fannie said that in mid-2016 it would ease the lender process for granting loans to borrowers who don’t have a credit score. Borrowers who have a traditional score from Fair Isaac will still need to meet the 620 minimum (on a scale from 300 to 850). Also in mid-2016, Fannie said it would mandate lenders to start collecting “trended” credit data from Equifax and TransUnion, which includes longer-term borrower credit histories. The extra information will help Fannie see if borrowers are paying off their credit card bill every month and/or just making the minimum payment and letting balances rise. Borrowers who are making the full payment could see perks. “You can do things like approve more customers or give customers better rates,” says Steve Chaouki, head of TransUnion’s financial services group. Source: The Wall Street Journal
Sure, your buyers like the house they’re considering, but do their pets? It’s a question that’s coming up more frequently, and it’s causing builders to put the needs of their clients’ four-legged friends front and center. From designing homes with amenities including ‘smart’ pet doors and elaborate washing and grooming areas, to creating separate living spaces for pets, it’s clear that pets are an important factor when helping clients buy or remodel a home. Standard Pacific Homes was one of the first builders to make pet comfort a priority. Last year they built model homes that offered a pet suite as an optional amenity. These suites included 170 square feet of pet housing, wash and water stations, automated feeders, comfortable bedding, cabinets for pet toys and food, and access for a puppy run. Since then, more buyers are seeking out homes that keep their pets’ needs on the forefront, and with 79.8 million pet-owning households throughout the country, the demand for pet-friendly homes could grow significantly. Now other builders are seeing the importance in designing a home that is a perfect fit for pets. “We are finding that pet owners are growing more aware of the benefits of designing homes with pets in mind, says Rhyse Altman, an architect designer with Visbeen Architects in Grand Rapids, Mich. “What we are most concerned with is making it easier for their pets to eat, sleep, play, etcetera, on their own terms with as much independence as possible. The last thing a pet owner wants is to be tripping over food dishes, staring at a kennel in the middle of the living room, smelling the litter box or getting up in the middle of the night to let the dog out.” Source: The Washington Post
As home values continue to rise, more home owners may find now is the best time to add to that value even more. Spending on home remodeling is expected to climb from 2.4 percent in the second quarter to 6.8 percent by the second quarter of 2016, according to Harvard University’s Joint Center for Housing Studies. “Home improvement spending continues to benefit from the last years’ upswing in housing market conditions including new construction, price gains and sales,” says Chris Herbert, managing director of the Joint Center. “Strengthening housing market conditions are encouraging owners to invest in more discretionary home improvements, such as kitchen and bath remodeling and room additions, in addition to the necessary replacements of worn components such as roofing and siding.” Sellers are already diving into more remodeling projects and using some of the equity in their homes to fund the projects. Black Knight Financial Services reported an increase in cash-out refinancing this summer – a 68 percent jump in the second quarter year-over-year, and it’s now at the highest level in five years. With spending in the repair and remodeling industry expected to grow to $300.5 billion in 2016, much of that spending will be in small, discretionary