Consumer Confidence in Housing Hits All-Time High

Consumer Confidence in Housing Hits All-Time High

 

WASHINGTON, DC – The Fannie Mae Home Purchase Sentiment Index® (HPSI) increased by 5.6 percentage points in February to 88.3, a new all-time high. Five of the six components that comprise the HPSI were up, and three hit record highs. The net share of Americans who reported that now is a good time to buy rose 11 percentage points, while the net share who believe that now is a good time to sell rose 7 percentage points. Consumers also demonstrated greater confidence about not losing their jobs, with the net share rising 9 percentage points. On net, the share of respondents reporting that their household income is significantly higher than it was 12 months ago increased 4 percentage points. Additionally, more Americans expect home prices to go up, with the net share rising 3 percentage points. The net share of those who think mortgage rates will go down over the next 12 months remained unchanged for the third consecutive month.

“The latest post-election surge in optimism puts the HPSI at its highest level since its starting point in 2011. Millennials showed especially strong increases in job confidence and income gains, a necessary precursor for increased housing demand from first-time homebuyers,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Preliminary research results from our team find that millennials are accelerating the rate at which they move out of their parents’ homes and form new households. However, continued slow supply growth implies continued strong price appreciation and affordability constraints facing millennials and first-time buyers in many markets.”

HOME PURCHASE SENTIMENT INDEX – COMPONENT HIGHLIGHTS

Fannie Mae’s 2017 Home Purchase Sentiment Index (HPSI) increased in February by 5.6 percentage points to 88.3. The HPSI is also up 5.6 percentage points compared with the same time last year.

  • The net share of Americans who say it is a good time to buy a house rose 11 percentage points to 40%, rebounding strongly from last month’s survey low.
  • The net percentage of those who say it is a good time to sell increased by 7 percentage points to 22%, reaching a new survey high.
  • The net share of Americans who say that home prices will go up increased by 3 percentage points in February to 45%.
  • The net share of those who say mortgage rates will go down over the next twelve months remained constant for the third consecutive month at -55%.
  • The net share of Americans who say they are not concerned about losing their job rose 9 percentage points to a new survey high of 78%.
  • The net share of Americans who say their household income is significantly higher than it was 12 months ago rose 4 percentage points to 19% in February, continuing the increase from January and reaching a new survey high.

ABOUT FANNIE MAE’S HOME PURCHASE SENTIMENT INDEX

The Home Purchase Sentiment Index (HPSI) distills information about consumers’ home purchase sentiment from Fannie Mae’s National Housing Survey® (NHS) into a single number. The HPSI reflects consumers’ current views and forward-looking expectations of housing market conditions and complements existing data sources to inform housing-related analysis and decision making. The HPSI is constructed from answers to six NHS questions that solicit consumers’ evaluations of housing market conditions and address topics that are related to their home purchase decisions. The questions ask consumers whether they think that it is a good or bad time to buy or to sell a house, what direction they expect home prices and mortgage interest rates to move, how concerned they are about losing their jobs, and whether their incomes are higher than they were a year earlier.

ABOUT FANNIE MAE’S NATIONAL HOUSING SURVEY

The most detailed consumer attitudinal survey of its kind, Fannie Mae’s National Housing Survey (NHS) polled 1,000 Americans via live telephone interview to assess their attitudes toward owning and renting a home, home and rental price changes, homeownership distress, the economy, household finances, and overall consumer confidence. Homeowners and renters are asked more than 100 questions used to track attitudinal shifts, six of which are used to construct the HPSI (findings are compared with the same survey conducted monthly beginning June 2010). As cell phones have become common and many households no longer have landline phones, the NHS contacts 60 percent of respondents via their cell phones (as of October 2014). For more information, please see the Technical Notes. Fannie Mae conducts this survey and shares monthly and quarterly results so that we may help industry partners and market participants target our collective efforts to stabilize the housing market in the near-term, and provide support in the future. The February 2017 National Housing Survey was conducted between February 1, 2017 and February 21, 2017. Most of the data collection occurred during the first two weeks of this period. Interviews were conducted by Penn Schoen Berland, in coordination with Fannie Mae.

DETAILED HPSI & NHS FINDINGS

For detailed findings from the February 2017 Home Purchase Sentiment Index and National Housing Survey, as well as a brief HPSI overview and detailed white paper, technical notes on the NHS methodology, and questions asked of respondents associated with each monthly indicator, please visit the Surveys page on fanniemae.com. Also available on the site are in-depth special topic studies, which provide a detailed assessment of combined data results from three monthly studies of NHS results.

 

I read this article at: http://www.fanniemae.com/portal/media/corporate-news/2017/february-home-purchase-sentiment-index-6527.html

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HUD Lowers FHA MIP by a Quarter Point

HUD Lowers FHA MIP by a Quarter Point

 

This article was published on 1.9.17 – things may have changed by the time this blog posts.

 

Mortgage insurance premiums on FHA-backed loans will be lower by 25 basis points on loans endorsed starting January 27, the federal government announced today.

“After four straight years of growth and with sufficient reserves on hand to meet future claims, it’s time for FHA to pass along some modest savings to working families,” Julian Castro, secretary of the U.S. Department of Housing and Urban Development, announced today.

NAR President Bill Brown praised the move. “Dropping mortgage insurance premiums will mean a lot more responsible borrowers are eligible to purchase a home through FHA,” he said. “That puts more money in the fund to protect taxpayers, and it puts more families in homes so they can live out the American dream.”

The new premium schedule, which takes effect for residential mortgage loans that have an insurance endorsement date on or after January 27,  is expected to save the average home buyer $500 a year in insurance costs.

In its announcement, HUD said the reduced premiums reflect the healthy state of HUD’s mutual mortgage insurance fund, which is the agency’s principle fund for insuring FHA mortgages. “We’ve carefully weighed the risks associated with lower premiums with our historic mission to provide safe and sustainable mortgage financing to responsible homebuyers,” said Edward Golding, HUD principal deputy assistant secretary for housing. “This conservative reduction in our premium rates is an appropriate measure to support [home buyers] on their path to the American dream.”

Under the new schedule, a home purchase with a base loan amount of up to $625,000, with an 85-percent loan-to-value ratio and a 30-year loan term, will require an annual mortgage insurance premium of 55 basis points, down from 80 basis points.  A 15-year loan of that same amount and with a 90-percent LTV ratio will require an MIP of 25 basis points, down from 45. Access the full schedule.

NAR is calling on FHA to take even more steps to help home buyers, including eliminating FHA’s “life of loan” mortgage insurance requirement, which forces borrowers to maintain mortgage insurance regardless of their equity position. Borrowers with traditional mortgage insurance can typically extinguish their mortgage insurance once they reach 20 percent equity in the property. “Our work continues, but we’re encouraged by today’s announcement,” Brown said.

 

I read this article at: http://realtormag.realtor.org/daily-news/2017/01/09/hud-lowers-fha-mip-quarter-point?om_rid=AACmlZ&om_mid=_BYdA7tB9XEhzLd&om_ntype=RMODaily

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Low Down Payment Loans Are Back

One of the biggest hurdle I see – is saving up for the 20% down payment for a home loan.  And with the cost of housing in the Bay Area – that 20% is a very pretty penny.  In fact, it seems almost impossible for some to even fathom how to save that much.  So the prospect of a low down payment could help get buyers into the market. Enjoy this article… 

Low Down Payment Loans Are Back

A feature of the housing crisis is back.

Just because you haven’t saved up enough for a 20% down payment—or even 10%—doesn’t mean you’re locked out of the housing market.

In 2015, 26% of loans for home purchases were made with down payments of less than 10% of the home’s value, according to data released Thursday from RealtyTrac. That’s a 10% increase from 2014. In fact, the number of home owners who purchased homes with low down payments has been steadily increasing for the past five years.

The uptick is due in large part to a reduction in the cost of mortgages offered by the Federal Housing Administration, which underwrites loans to borrowers with subpar credit. While critics worry that a surge in low-money-down lending could set the stage for a reprise of the housing bubble, market watchers say the most important result of the change is to make homeownership a more realistic goal for many people, especially first-time buyers. In recent years, there has also not been a significant difference in the number of people who default on low-down-payment loans as opposed to those with higher down payments, according to data from the Urban Institute.

“Low-down-payment lending isn’t synonymous with risky lending,” says Nikitra Bailey, executive vice president of external affairs at the Center for Responsible Lending.

Read Next: What Mortgage Is Right for Me?

Indeed, the FHA has always offered loans with down payments as low as 3.5% to qualified buyers.

Still, there are considerations if you’re thinking about going that route. For one, it means you’ll have less equity in the home. You’ll also need to pay for private mortgage insurance, required for loans with down payments of less than 20% to guard against the risk of default.

If you’re looking to become a homeowner but can only afford to put a small amount down, here are a few more things to keep in mind:

  • Talk to a certified credit counselor, Bailey says. An adviser can walk you through your finances and help you decide if you’re in a position to buy a home despite not having a lot of savings built up. The U.S. Department of Housing and Urban Development also sponsors housing counseling agencies nationwide; you can find a list state-by-state directory here.
  • Keep in mind the cost of private mortgage insurance, which is required for anyone buying a home with a down payment of less than 20% of the value of the home. Add that on top of monthly mortgage premiums (and the higher interest rates you’ll likely pay when you put down less money), and in the long run taking out an FHA loan with a low down payment could be more expensive than paying 20% upfront. Additionally, the agency now also requires that certain borrowers pay insurance for the entire term of the mortgage, unless they refinance.

Make sure you’re able to set aside at least 1% of the house’s value in cash, in case you need to tap into it for maintenance or emergency repairs, says Mark Calabria, director of financial regulation studies at the Cato Institute. And of course, be prepared for unforeseen financial challenges in your own life: For instance, if you were to lose your job, you’d ideally want to have enough savings to cover six months of mortgage payments.

I read this article at: http://time.com/money/4218298/buy-home-low-down-payment/

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Lenders Sniff Out Borrowers’ ‘White Lies’

Oh – I had to share this article from Daily Real Estate News.  Honesty is always the  best policy!

Lenders Sniff Out Borrowers’ ‘White Lies’

 

Borrowers who aren’t as forthcoming on their loan applications on certain items – such as occupancy status – may feel like it’s harmless, but lenders say such “white lies” constitute fraud.

Occupancy fraud is one of the most common lies from borrowers on mortgage applications. Lenders want to know if borrowers intend to actually live in the house they’re purchasing or whether it’s a primary, second, or investment property. If the home isn’t a primary residence, the person’s chance of default tends to be higher.

Borrowers who are dishonest are committing occupancy fraud.

“People will try to get an owner-occupied loan as opposed to an investment property loan because you can get a higher loan-to-value, meaning a lower down payment, on a primary,” says John T. Walsh, the president of Total Mortgage Services in Milford, Conn. “And you’re going to get a better interest rate on an owner-occupied.”

For example, a down payment on a primary residence could be as low as 3 percent while a loan for a single-family investment property could be at least a 15 percent down payment, Walsh says. What’s more, the interest rate could be as much as half a percentage higher, he notes.

Occupancy fraud comprised 19 percent of all mortgage misrepresentation on loans backed by Fannie Mae in 2013, the latest data available.

“Occupancy fraud is costly to lenders because it can raise the default rate and the risk that, if a fraudulent loan is exposed, the loan investor (like Fannie Mae) could require the lender to buy back the loan,” The New York Times reports.

Lenders are getting better at catching false occupancy claims, looking for such red flags as borrowers who have mortgage applications pending elsewhere or who have an unusually long commuting distance between their property and place of employment.

Many people think lying about occupancy is “the white lie of mortgage fraud,” Tim Coyle, the senior director for financial services at LexisNexis Risk Solutions, which develops risk mitigation tools for banks. “But it’s extremely costly to the banks and financial institutions.”

Source: “White Lies’ on Mortgage Applications Are Costly to Lenders,” The New York Times (June 5, 2015)

 

I read this article at: http://realtormag.realtor.org/daily-news/2015/06/12/lenders-sniff-out-borrowers-white-lies?om_rid=AACmlZ&om_mid=_BVex4kB9Cpzh$V&om_ntype=RMODaily

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FHA mortgage insurance premiums – going down

Earlier this year, President Obama announced that HUD will lower its FHA mortgage insurance premiums by 50 basis points, from 1.35 percent to .85 percent, effective Jan. 26.  This move will make it easier for hundreds of thousands of home buyers to get a mortgage and provide greater access to homeownership for historically underserved groups and credit-worthy families.  On a $300,000 loan, that could mean a savings of $1,500 a year.

 

The annual mortgage insurance premium for most FHA transactions has been reduced. What does this mean for you?

· Monthly savings: borrowers can purchase a home with the lowest possible total monthly mortgage payment. For those with an LTV greater than 95% or high credit scores, FHA financing will provide a lower total monthly mortgage payment than conventional loans with private mortgage insurance.

· Repeat homebuyers are eligible for high LTV financing: conventional loans with private mortgage insurance restrict LTVs greater than 95% to first-time homebuyers. Alternatively, FHA financing is available for first-time homebuyers and repeat principal-residence purchasers with LTVs up to 96.5%.

· Qualify more buyers : A lower total monthly mortgage payment results in a lower DTI ratio, potentially allowing more borrowers to qualify for mortgage financing.

· Afford more home: You may be able to purchase a more expensive property without increasing their total monthly mortgage payment.

· Refinance savings: Clients who have recently purchased a home with FHA financing may be eligible to refinance their mortgage and lower their total monthly mortgage payment for immediate savings.

 

This is great news for homebuyers!   Call us for more information!

 

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Thanks for reading – Sabrina

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Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE# 70000218/ Office BRE #01499008

 

California Homebuyer’s Rejoice as Mortgage Rates Continue to Drop

California Homebuyer’s Rejoice as Mortgage Rates Continue to Drop in February

 

Though many experts once predicted mortgage rates around 5% at the beginning of 2015, these forecasts have once again been defied this month. Thanks to concerns over slowing foreign economies, among other economic factors, mortgage rates have continued to drop – an encouraging change for buyers and the newest indication that business will continue to blossom in 2015.

According to the latest report from Freddie Mac, the average fixed rate on a 30-year loan dropped to 3.58% in the first week of February, marking the first time since May 23, 2013 that the average rate for a 30-year fixed loan reached below 3.6%.

Similarly, the fixed rate on a 15-year loan dropped to 2.92% – down from 2.98% the week before. Likewise, the starting rate on a hybrid loan – those that become adjustable after five years – dropped the same week.

While mortgage rates have reached their lowest point in over 20 months, it should be noted that these rates are far below their historic levels. In February of 1982, for example, rates were as high as 17.6% for a 30-year fixed loan, according to Freddie Mac. In February 2007 – the beginning of the subprime mortgage meltdown – the average rate on a 30-year fixed loan was at 6.29%

According to Len Keifer, Freddie Mac’s Chief Economist, buyers or those trying to refinance their home need not worry about rates rapidly increasing, as recent economic reports have indicated the economy is still not strong enough to trigger inflation.

“Pending home sales were weaker than expected,” he said. “Moreover, real [economic] growth for the fourth quarter was 2.6% and the Institute for Supply Management reported slower growth in manufacturing last month, both missing market consensus forecasts.”

I read this article at: http://re-insider.com/2015/02/12/california-homebuyers-rejoice-as-mortgage-rates-continue-to-drop-in-february/

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Report: DOJ Pushing to Charge Individuals for Roles in Mortgage Meltdown

This is a hot topic –  I thought I would repost this article.  I don’t have an answer but I am curious as to you, my readers opinions.  Please comment or email me!

 

Report: DOJ Pushing to Charge Individuals for Roles in Mortgage Meltdown

Author: Tory Barringer

 

Attorney General Eric Holder has given U.S. attorneys across the country 90 days to judge whether or not they want to bring cases against specific individuals for their alleged roles in 2008’s mortgage crisis, according to reports.

Speaking at a National Press Club event on Tuesday, Holder said federal prosecutors who have previously brought charges against firms for selling toxic mortgage-backed securities will be given an opportunity to investigate individual employees for potential charges, Reuters reported.

Holder reportedly told the assembled press that prosecutors will have 90 days to report back on “whether they think they are going to successfully bring criminal or civil cases against those individuals.”

The announcement marks a policy shift for Holder, whose department has taken criticism from consumers and politicians with its failure to go after bank executives and some institutions following the crash. In early 2013, he famously remarked at a Senate committee hearing that the size of some institutions makes it difficult to prosecute them without impacting the economy.

He walked those comments back later, saying, “If we find a bank or financial institution that has done something wrong, if we can prove it beyond a reasonable doubt, those cases will be brought.”

The timing of the attorney general’s announcement is also bound to raise questions: With Holder on his way out, the ultimate decision to prosecute would be made by his replacement, who right now is slated to be Loretta Lynch.

“Once again, it appears as though the Administration is looking to bully the mortgage banks, or should I say bankers, instead of restoring faith and confidence into the mortgage banking system,” said Ed Delgado, President and CEO of the Five Star Institute.  “Despite hundreds of billions paid in fines and penalties, it’s not enough.   Today’s announcement from U.S. Attorney General Eric Holder to seek action against mortgage bankers, just as he is about to leave office, is nothing more than one last attempt to impugn and embarrass an already beleaguered industry.

“Now names and people’s lives have to be destroyed, but to what end? To satisfy what agenda? It begs the question: will a single family benefit from this action? Will a foreclosure be reversed? Or has the matter of seeking justice become politicized to the point, where unless a mortgage executives name and face appear on the cover of the New York Times, charged with some criminal act, there simply will be no measure of satisfaction in the eyes of the government.  It’s a shame that taxpayer money is being spent to further a cause without a means to an end.”

A message left with the department’s Office of Public Affairs was not immediately returned.

 

I read this article at: http://dsnews.com/news/02-17-2015/report-doj-pushing-charge-individuals-roles-mortgage-meltdown

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Thanks for reading – Sabrina

The Caton Team – Susan & Sabrina – A Family of Realtors

Berkshire Hathaway HomeServices – Drysdale Properties

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE# 70000218/ Office BRE #01499008