September Market Update
HISTORIC HIGHS FOR HOME EQUITY
In the second quarter of 2019, U.S. home equity hit an all-time high of $6.3 trillion, according to a new report from Black Knight.
The average owner with tappable equity has $140,000 available to borrow against, Black Knight said. About 55% have interest rates that are at least 0.75% higher than current rates and have credit scores at or above 760, the mortgage data firm said.
“Nearly half of the 45 million homeowners with tappable equity have 1st lien interest rates at or above 4.25%, making refian attractive option,” Black Knight said in a statement. – housingwire.com
Today, nearly every homeowner that has a mortgage more than six months old, could be eligible for a refinance to reduce their interest rate, and/or tap home equity. If you have not taken advantage of this historic opportunity, contact us today.
VETS TO FUND THEIR OWN CARE
On June 25th, President Trump signed a bill into law that would raise fees charged to Veterans on VA loans, to pay for the care of injured and disabled Veterans addressed in the Blue Water Navy Vietnam Veterans Act of 2019. VA fees will increase on January 1st, 2020 to 2.3% from 2.15%, and those using a VA subsequent times, the fee increases to 3.6% from 3.3%. This fee extension is slated to be in affect for two years.
The Ryan Kules Specially Adaptive Housing Improvement Act of 2019 is another pending bill that would extend the increase in VA fees from two years to six years. This bill is anticipated to be signed into law by the President in the near future.
Both bills have been created to help Veterans, although the funding of these bills is at the expense of those Veterans they are intended to help.
U.S. gross domestic production increased at an annual rate of 2.0% in the second quarter of 2019, down 50% from the second quarter just one year ago.
(U.S. Bureau of Economic Analysis)
GDP, while strong, is falling rapidly.
MORTGAGE DEBT AT HISTORIC HIGHS
In the second quarter of 2019, U.S. mortgage debt hit an all time high of $9.406 Trillion. – Wall Street Journal
Consumer debt also remains in excess of $4 Trillion, also an all time high.
PENDING HOME SALES SLOW
The National Association of Realtors reported that pending home sales in July fell by 2.5%.
Northeast: Decreased 1.6Midwest: Decreased 2.5% South: Decreased 2.4% West: Decreased 3.4%
As the economy slows, home sales are also anticipated to post continued declines.
NEW HOME SALES CORRECT
New home sales plummeted 12.8% in July, due to rising home prices and limited inventory. Falling interest rates seemed to have little or no effect on spurring new home sales.
A big 50% jump in sales in the Northeast was offset by declines in the West, Midwest and South.
The median sales price fell to $312,800. That is down 4.5% from a year ago but marks the highest level since April. – MPA.com
Rising home prices is unsustainable, and likely at a peak. As sales begin to decline, prices will likely follow suit.
WHO CARES ABOUT VALUES
The Federal Deposit Insurance Corp, the Office of the Comptroller of the Currency, and the Board of Governors of the Federal Reserve just released a proposal that would eliminate the need for a home appraisal for homes sales of $400,000 and less. The CFPB has also signed off on the new rule. With Fed approval, this proposal will go into effect.
Although it is important to note, that loans sold to Fannie, Freddie, or HUD would still require appraisals per current standards and guidelines. This rule would still affect nearly 40% of home sales today if signed into law.
ARE YOU A HAPPY HOMEOWNER
A recent survey from Freedom Debt Relief states that 29% of homeowners are not so happy being homeowners. Most blaming unforeseen costs associated with homeownership as the greatest cause for their dissatisfaction of being a homeowner.
Many new homeowners never considered the costs of maintaining a home. Annual maintenance, landscaping, pool care, etc are never disclosed or used in the qualification of home financing. Today, with the average debt to income (DTI) is soaring due to the high cost of home prices, and national income not keeping pace with home appreciation, many are tapped out the day they move into their home. Something as common as a roof leak or a down AC unit can spiral many homeowners it to catastrophic debt.
It is critical that when purchasing a new home, you consult with a mortgage professional that is looking out for your best financial interests, and not simply trying to qualify you for the “biggest” mortgage. Just because you can qualify with a debt to income ratio of 50%+ (based on gross income), does not mean you should. And saving for a down payment, even 3%, can radically change your financial situation. You do not want to become a slave to the American Dream.
HUD CAPS CASH OUT TRANSATIONS
The maximum loan to value allowable on a FHA cash out refinance was 85%. All applications taken after August 31st, 2019, are now capped at 80%. HUD will now mirror the maximum loan to values allowed on Fannie Mae and Freddie Mac cash out transitions.
This is a responsible move by HUD to limit the risk of mortgage default by borrowers with an FHA loan, and to future limit the risk of the U.S. taxpayer. VA is anticipated to follow suit shortly.
FANNIE MAE PRINTING MONEY
Fannie Mae’s second quarter income soared to $4.5 billion, over the $2.4 Billion reported in the first quarter of 2019. Fannie Mae and Freddie Mac will pay roughly $3.4 billion to the U.S. Treasury. Fannie Mae currently owns 35% of the total mortgage market share.
For two socialized institutions, they sure know how to generate revenue.
NATIONAL HOME SALES STILL GROWING
A recent report from RE/Max showed home sales grew 2.4% in July. The median home price now sits at $273,000, rising 9.2% from July of 2018. This is down slightly from the all time high of $276,000 in June of 2019. – housingwire.com
GENEVA FINANCIAL, LLC NOW LICENSED IN 43 STATES
Alabama, Arkansas, Arizona, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, Wisconsin (Pending: Washington D.C.)
RATE WATCH – LOWER
Interest rates as of 09/03/2019. Conforming interest rates. Interest rates and APR based on loan amounts not to exceed $484,350. Loan to value not to exceed 80%. 740+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify. Call today for your individual scenario rate quote.