Category: Swanson Home Loans Blog – Mortgage Rate Updates and More

Economic Headlines are Mortgage Rate Friendly

Posted on by Evan in Rate Update, Swanson Home Loans Blog - Mortgage Rate Updates and More

St. Patrick’s Day is this coming Sunday which may have you thinking if you should look at borrowing money from a leprechaun instead of your favorite mortgage lender?  Well, you can but last time I checked leprechaun’s are always coming up short……

Mortgage Rates

Home Loan interest rates remain at 10-month lows.  Might they go even lower?  Some of the current economic headlines are interest rate friendly.

Jobs Report

As I wrote in last week’s post I was very keen on seeing the results of Friday’s all-important employment report.  Initially when I saw the unemployment rate drop from 4.0% to 3.8% I was concerned that mortgage rates may rise (good news for the economy tends to be bad news for rates).

However, according to the report only 20,000 jobs were added to the US economy in February and analysts had been expecting +170,000.

Overall the results were disappointing which is favorable for mortgage rates.

Inflation Data

Earlier today the Labor Department released the Consumer Price Index (CPI).  Year-over-year prices increased by the slowest clip in over two years (+1.5%).  If you strip out volatile food & energy prices the core CPI increased by 2.1%.  These are considered “tame” price increases which is good for mortgage rates.

Outlook

The remainder of this week’s economic calendar is relatively light.  The highlights include the Producer Price Index and Durable Goods on Wednesday followed by New Home Sales and Consumer Sentiment on Friday.

I recommend maintaining a floating position.

Current Outlook: floating

How to Buy a Home Without a Sale Contingency – Down Payment

Posted on by Evan in Swanson Home Loans Blog - Mortgage Rate Updates and More

Over 60% of homebuyers in the United States are repeat buyers which means they often have a home to sell concurrently with buying a home.  In today’s competitive housing market it can be a challenge to get an offer accepted when it includes a home sale contingency.

Therefore, it’s always worth trying to see if and how a homebuyer can be pre-approved for their home loan without the requirement of a home sale contingency.

There are two common hurdles that an applicant faces when trying to get pre-approved in this manner.

The first hurdle is how the buyer will generate a down payment without the proceeds from the sale of their home.  I cover that topic in the video below:

The second hurdle is cash-flow and I will discuss that in next week’s video.

If you are seeking to get pre-approved to buy another home and would like to a void a home sale contingency please reach out to us today!

Might this Friday’s jobs report signal an imminent recession?

Posted on by Evan in Rate Update, Swanson Home Loans Blog - Mortgage Rate Updates and More

On this day in 1963 a toy company in California that initially experienced success by marketing the “Pluto Platter”, which later became known as a Frisbee, filed patent for their next big product.

25 million units were sold in the first four months and set off a huge fad across American culture.  What was the product?………the hula hoop.

Mortgage Rates

Interest rates continue to circle around 9-month lows but there are some signals which suggest interest rates could trend higher.

US-China Trade Talks

According to multiple sources US and Chinese negotiators are close to finalizing a new trade deal between the two economic powers.  For months there has been uncertainty about the economic impact of US-China trade relations.

Uncertainty tends to help US mortgage rates improve so by removing the uncertainty I think we will see upward pressure on US interest rates.

Jobs Report

It’s jobs week which means we’ll see the ADP employment report on Wednesday, jobless claims numbers on Thursday, and the all-important jobs report from the Bureau of Labor Statistics this Friday.

The markets are currently expecting 175,000 new jobs created for February.  However, I will be paying special attention to the unemployment rate in this month’s release.

The unemployment rate hit a low of 3.7% in September and November of 2018.  Since then it has increased to 3.9% in December and 4.0% in January.

If the unemployment rate continues to trend higher then I think an economic recession is imminent.  As the graph above shows every time the unemployment rate has established a cyclical low a recession has followed.

The potential good news is that mortgage rates tend to improve during economic recessions.

Outlook

Although mortgage rates may benefit from a recession the current economic headlines are not interest rate friendly, so I am going to recommend a locking bias.

Current Outlook: locking

How much are buyer’s closing costs?

Posted on by Evan in Swanson Home Loans Blog - Mortgage Rate Updates and More

When preparing to purchase a home a buyer needs to not only prepare for the down payment but also the settlement charges.

Total Settlement Charges…

Settlement charges will vary for each buyer so it is difficult to forecast exactly how much a specific person should budget without a complete pre-approval application.  That said, please watch this short video which explains how much a homebuyer should plan for based on a median priced home in Portland, OR.

As the video states, on average we are accustomed to seeing homebuyers in Portland, OR pay about $10,000 in total settlement charges for a median priced home.

….includes non-recurring closing costs…

Included in that figure are the one-time non-recurring closing costs, such as the lender’s administration fee(s), appraisal, credit report, title & escrow company fees, and county recording.  On average these costs total between $4,000-$5,000 depending on multiple factors including the purchase price, loan amount, down payment, loan program, property type, credit score and others.

…as well as pro-rated and prepaid interest, taxes, and insurance…

In addition, the ~$10,000 total includes pro-rated and prepaid mortgage interest, property taxes, and homeowners insurance.  This set of settlement charges will typically total ~$5,000-$6,000 but can vary greatly depending on whether or not the loan will have impounds for taxes and insurance, the amount of property taxes, the closing date, and whether the property has HOA dues.

…be careful in comparing

Unfortunately, Federal regulations do not guarantee that consumers receive a comprehensive and accurate disclosure of upfront settlement charges from lenders at the beginning of a loan application.  The result is that some consumers think they are getting the best deal on their home loan closing costs, but when they show up to closing they are faced with the unwelcome surprise of higher upfront charges than they expected.

There are a myriad of factors which can influence a homebuyers closing costs.  If you would like to avoid an unwelcome surprise then choose to work with a lender that is ethical and who will take the time to deliver an accurate and reliable disclosure of your settlement charges.

If you are looking for a home loan lender we would love to be a resource.  Please contact us today.

How long until an average home in Portland is worth $1.0 million?

Posted on by Evan in Rate Update, Swanson Home Loans Blog - Mortgage Rate Updates and More

Happy birthday Fats Domino who was born on this day in 1928.  This little-known musician is considered a pioneer of rock and roll music and started playing bars in New Orleans at the age of 10.

Domino’s single “Fat Man” was the first rock and roll record to sell more than 1,000,000 copies in the US.

Home prices in Portland

Speaking of one million, how long will it take for an average home in Portland to be worth $1,000,000?

According to today’s Case-Shiller Home Price index report home prices increased by 3.9% during 2018.  For a median priced home in Portland ($423,000) that appreciates by 3.9% it will take 23 years for the home to be worth $1,000,000 (2042).

According to the FHFA Home Price Index report, which only tracks home prices for homes with conforming (non-jumbo) mortgages, home prices increased by 4.92% during 2018.  For a median priced home in Portland ($423,000) that appreciates by 4.92% it will only take 18 years for the home to be worth $1,000,000 (2037).

Why is there a discrepancy between the two reports?  The discrepancy is likely related to the fact that higher priced homes, which are generally bought with jumbo mortgages, are not appreciating as much as median and lower priced homes which are secured by conforming loans.

The Federal Reserve

Fed Chairman Jerome Powell is scheduled to testify on Capitol Hill tomorrow.  The interest rate markets will be listening for clues on how monetary policy will evolve during 2019.  Last week, the Fed commented that they may slow rate hikes.

Outlook

From a technical perspective interest rates have been trading in a sideways pattern.  If rates continue without much volatility then we could set ourselves up for a “breakout” which is when interest rates move sharply lower or higher (we never know in advance).

 Current Outlook: cautiously floating

Benefit 3 – Avoid contractual problems by getting pre-approved by a reputable lender

Posted on by Evan in Swanson Home Loans Blog - Mortgage Rate Updates and More

Did you know the standard Residential Real Estate Agreement commonly used in Oregon allows the seller to prevent you from switching lenders or loan programs?

In this short video I explain the third benefit of being pre-approved for a home loan prior to starting your search:

Consumers should take the time to compare lenders prior to starting their home search because once they are in an accepted offer they need the sellers written consent to switch lenders.

If you would like to get pre-approved then please contact me today to get the process started!

Benefit 2 – Avoid surprises by getting pre-approved before you start your home search

Posted on by Evan in Swanson Home Loans Blog - Mortgage Rate Updates and More

Are thinking of buying a home and wondering when you should get pre-approved?  Unless you are open to the potential for an unwanted surprise, I recommend you get pre-approved early on.

In this short video I explain the second benefit of being pre-approved for a home loan prior to starting your search:

By taking the time to get a mortgage pre-approval ahead of time a competent lender will be able to properly set your expectations for monthly payments, closing costs, and down payments.  This way, you can direct your home search at a level that is financially sustainable for you.

If you would like to get pre-approved please contact me today to get the process started!

Threat of government shutdown helps mortgage rates remain low

Posted on by Evan in Rate Update, Swanson Home Loans Blog - Mortgage Rate Updates and More

Are you having withdrawals from the ‘round the clock media coverage of the federal government shutdown?  Don’t worry, without a fresh funding bill the government will shut down this Friday at midnight.

Or will it?

Agreement in Principle

According to multiple reports republicans and democrats have reached an agreement to fund the government past this Friday.  Assuming the bill is passed and a shutdown is avoided I would expect the stock market to rally (it is up 200 points this morning) and interest rates to increase modestly.

Mortgage Rates

In the meantime, home loan rates remain at 9-month lows and there is plenty of uncertainty to help keep them low.  The US and China continue seemingly endless trade talks.  If and when there is a trade deal it could spark a stock market rally and hurt mortgage rates.

As I wrote about last week uncertainty about Brexit is also helping US mortgage rates remain low.

On tap this week

Tomorrow the Labor Department will release the latest Consumer Price Index (CPI).  Inflation is the primary driver of mortgage rates because it reduces the purchasing power of dollars repaid to a lender in the future.  Higher inflation results in higher home loan rates and vice versa.

I’ll also be watching the Producer Price Index which is released on Thursday and Consumer Sentiment on Friday.

Outlook

Mortgage rates remain in a long-term downward trend which I highlighted in last week’s update (see HERE).  I will maintain a floating position but am concerned that rates may reverse higher if a government funding deal is reached.

Current Outlook: cautiously floating

Benefit 1 – Getting pre-approved for a mortgage

Posted on by Evan in Swanson Home Loans Blog - Mortgage Rate Updates and More

Are you thinking of buying a home and wondering if you should get pre-approved?  The answer is “YES!” especially in Portland, Oregon where desirable homes are still very competitive.

In this short video I explain one benefit of being pre-approved for a home loan prior to starting your search:

By taking the time to get a mortgage pre-approval, a home seller will take your offer more seriously than without one.

If you would like to get pre-approved then please contact me today to get the process started!

Mortgage rates remain at 9 month lows

Posted on by Evan in Rate Update, Swanson Home Loans Blog - Mortgage Rate Updates and More

Later tonight President Trump will deliver his State of the Union address to a joint session of Congress.  Generally the US president will use the address to communicate the state of the national budget, economy, and layout priorities for the coming year.

In other words, it’s a great night to binge watch “Friends from College” season 2.

Mortgage Rates

Interest rates remain at the best levels since April of last year.  Will they reverse course and move higher?  Or might they go even lower?

Technical Signals

The economic calendar is relatively light this week so I expect interest rates to react to technical trading patterns.

Currently, the yield on the US 10-year treasury note is trading up against its 3-month trailing trend line.  I will be watching to see if the yield can bounce lower off this level.  If so I expect home loan rates to improve.

If not, watch out as rates will likely increase by .125%-.25% in the coming week.

Home Prices

Core Logic released its monthly Home Price Index report earlier today.  It showed that on average home prices across the US increased by +4.6% from last year.  This confirms trends seen in similar housing data.

Home prices continue to increase but at a pace that is declining.  This is much like a car that is slowing.  Home prices continue to move ahead but at a slower speed than they have previously.  Home prices are not reversing and going backwards despite the media’s spin.

Outlook

I expect mortgage rates to react based on the aforementioned technical trading patterns.  What may make it difficult for mortgage rates to improve this week is that the US Treasury is scheduled to auction ~$84 billion in fresh bond supply.  Last year at this time the US government only had to auction ~$66 billion to funds its budget.

Read THIS LINK to learn how this can adversely impact home loan rates.

Current Outlook: cautiously floating