Mortgage Market Update (4/8/24)

Welcome to Homeseed’s Mortgage Market Update, where we dive into the latest trends, insights, and changes shaping the dynamic landscape of the housing and lending industries.

Mortgage Rate Trends & Forecasts

  • Mortgage rates increased noticeably on Monday and are higher on a week-over-week basis.
  • The increase in rates was due to higher than expected numbers for the S&P and ISM manufacturing indices, which also mentioned higher prices in their reports.
  • Prices are crucial due to the persistent inflationary pressures, and if they fail to revert to the downward trend it will make it hard for the Fed to want to cut rates.


Personal Consumption Expenditures (PCE)

  • This is the Fed’s preferred measure of inflation and its goal is for the Core reading, which strips out volatile food and energy prices, to be at 2%.
  • Last week’s release of data showed that the Core headline reading fell to 2.8%, but the progress lower has been slowing.
  • With future data projecting a slow progress towards 2% for Core PCE, it may take weaker labor market data before the Fed cuts rates.


BLS Jobs Report

  • March’s job growth roared in above forecasts, as the BLS reported that 303K new jobs were created.
  • 68% of the job gains came from three sectors: Leisure & Hospitality (49,000), Government (71,000), and Education & Health Services (88,000)
  • Revisions to the data for January and February added an additional 22K jobs to those months combined.
  • Unemployment rate declined to 3.8%.


Case-Shiller Home Price Index

  • The Case-Shiller Home Price Index, which is considered the “gold standard” for appreciation, showed home prices rose 6% year-over-year in its most recent report for January 2024.
  • The 6% annual rate is the fastest increase since 2022 and all 20 cities in its composite index saw annual increases for the second straight month.
  • Home values are expected to remain supported throughout 2024 as housing demand remains high.
  1. RATES MOVE HIGHER EARLY IN WEEK – The concern for higher prices and inflation after Monday’s manufacturing data pushed rates higher early in the week.
    https://www.mortgagenewsdaily.com/…
  2. ISM INDEX TURNS POSITIVE – A barometer of business conditions at U.S. manufacturers turned positive in March for the first time in 17 months.
    https://www.marketwatch.com/…
  3. BABY BOOMERS PLAN TO STAY IN HOMES – More than three-quarters of baby boomers plan to stay in their home as they grow older.
    https://www.businesswire.com/…
  4. HOUSING MARKET STAYS TIGHT – New home listings are down to start the Spring market, but competition remains fierce as demand is still high.
    https://www.mpamag.com/…

FCC Closes The Lead Generation Loophole

You can read our previous blog post on trigger leads and how to reduce them by CLICKING HERE.

In the world of mortgage lending, trigger leads have long been a point of contention. While some praise them for their potential to foster competition and secure better rates for applicants, most oppose them for inundating borrowers with unwanted solicitations. However, developments in regulations over the past few years are refining rules for trigger leads in the pursuit of stronger data privacy and consumer protections. Most recently, the FCC announced a new ruling on December 13, 2023 that will effectively close the “lead generator loophole.”  

The FCC’s adopted rule to close the lead generator loophole marks a significant change in the way consumer information is shared with businesses through comparison shopping websites. Under this rule, consumers must provide individual consent for their information to be shared with each business, effectively closing the loophole that allowed for the sale of a single lead to multiple businesses at once. This move aims to address consumer frustrations with receiving an overwhelming number of calls and texts after submitting an online lead.

How Will This Ruling Impact Borrowers and Businesses?

  • Mortgage applicants can expect relief from the inundation of solicitation calls. The previous influx of unwanted calls and texts from solicitors has been a source of frustration for many applicants, but the FCC’s actions aim to mitigate this issue, ultimately enhancing the borrower experience.
  • Requiring businesses to obtain one-to-one consent before contacting new leads. The rule will likely reshape lead strategies for businesses built on this type of lead generation model and challenge the operational models of comparison-shopping sites due to compliance regulations.

Link to FCC Announcement

Mortgage Market Update (3/25/24)

Welcome to Homeseed’s Mortgage Market Update, where we dive into the latest trends, insights, and changes shaping the dynamic landscape of the housing and lending industries.

Mortgage Rate Trends & Forecasts

  • Last week’s comments on rate projections by the Fed Chair, Jerome Powell, retained the Fed’s previous expectation of 3 rate cuts by the end of this year and gave the forward-looking markets something to be hopeful for, which led to a decrease in mortgage rates.
  • The labor market has been showing signs of weakness with the unemployment rate ticking up.

Inflation Higher Than Expected

  • Recent inflation data for both the Consumer Price Index (CPI) and Producer Price Index (PPI) came in higher than expected.
  • The month-over-month changes of 0.4% in CPI and 0.3% in PPI imply an annualized reading of 4.8% and 3.6%, respectively (the Fed’s target is 2% for core readings).
  • Inflation is the biggest concern for interest rates, so it was no surprise to see the Fed unwilling to cut rates just yet.

March Fed Meeting

  • The Fed left rates unchanged following their meeting that concluded today for the fifth straight time, but did acknowledge the recent higher inflation readings could be a result of seasonality that was impacting the data.
  • Federal Reserve Chair Jerome Powell stated that any adjustments to the policy rate would depend on incoming data and the evolving economic outlook.
  • The Fed’s dot plot showed they expect to cut rates three times in 2024 with the Fed Funds Rate decreasing to 4.6%.
  1. RATES IMPROVE AFTER FED MEETING – Mortgage rates have trended higher over the last week due to inflation reports, but comments by Jerome Powell did help ease concerns.
    https://www.mortgagenewsdaily.com/…
  2. FED HOLDS RATES STEADY – The Fed maintained its Fed Funds Rate following its two-day policy meeting as expected, and provided their thoughts on the recent inflation readings.
    https://www.cnbc.com/…
  3. BUYERS’ DESIRED HOME SIZES – A NAHB study shows that buyers want smaller sized homes than they did 20 years ago.
    https://www.eyeonhousing.org/…
  4. NAR SETTLEMENT MYTHS – Debunking some of the myths from the recent NAR settlement agreement.
    https://www.housingwire.com/…

The Importance of Buyer Agent Representation

Just as you would want a listing agent to help you maximize the sale of your home, navigating the intricate world of real estate demands the guidance of a buyer’s agent. After all, purchasing a home stands as one of the most significant financial decisions one can make. Amidst the myriad of decisions, paperwork, and negotiations, having trusted and knowledgeable professionals by your side can make all the difference in helping you avoid costly mistakes and missed opportunities. In this blog post, we’ll delve into the crucial role of a buyers agent in the home buying process and explore how their collaboration with mortgage lenders ensures a smooth and informed journey towards homeownership.

Expertise & Knowledge

One of the standout advantages of having a buyer’s agent by your side is their profound understanding of the local real estate market. They know the ins and outs of neighborhoods, property values, and current market trends. Additionally, they offer valuable insights into what it means to be a homeowner and provide education on topics such as insurance and utilities, ensuring you’re well-informed every step of the way.

Guidance & Support

Buyer’s agents are more than just property tour guides. They serve as trusted advisors, listening to your needs and preferences and assisting you in finding the perfect home. From scheduling viewings to gaining access to properties, they handle the logistics, making the process smoother and more efficient.

Negotiation & Advocacy

When it comes to negotiations, buyer’s agents are your advocates. With your best interests in mind, they navigate the intricacies of the negotiation process, ensuring you secure the best possible deal. Their keen eye for detail allows them to evaluate the value of a home relative to the local market, spot potential issues on the property, and advocate for necessary repairs or adjustments.

Example: Jon and Jane finally found a home they loved and were willing to offer $25,000 over the asking price. Their agent, however, suggested they only offer the asking price after performing a comparative market analysis (CMA) that calculates a home’s value based on the recent sales of similar real estate in the area. In the end, the sellers accepted Jon and Jane’s offer at the asking price and saved them the additional amount they were willing to include.

Orchestrating The Transaction

Buying a home involves a multitude of moving parts, from putting together the offer to coordinating with lenders and sellers. Buyer’s agents serve as conductors, guiding you through each stage of the transaction with clarity and expertise. They demystify the home buying process, ensuring you understand every document and decision along the way.

In conclusion, the significance of having a buyer’s agent in the home buying process cannot be overstated. Their expertise, guidance, and advocacy are invaluable assets, particularly when making such a substantial financial decision. As you embark on your home buying journey, remember the importance of seeking professional assistance. Together with Homeseed as your lender, we will work to ensure your home buying experience is seamless, informed, and ultimately, rewarding.

Mortgage Market Update (3/11/24)

Welcome to Homeseed’s Mortgage Market Update, where we dive into the latest trends, insights, and changes shaping the dynamic landscape of the housing and lending industries.

Mortgage Rate Trends & Forecasts

  • Mortgage rates are lower week-over-week after the recent PCE inflation data came in as expected.
  • Downward momentum on rates continued as yesterday’s ISM Services index showed a big decline in prices paid for the service sector where we are seeing most of the inflation.
  • Tomorrow’s BLS Jobs Report is potentially a market mover as recent comments by Fed members show they are paying close attention to the labor market.


Personal Consumption Expenditures

  • Fed’s favorite measure of inflation, Personal Consumption Expenditures, showed the headline or all-in inflation declined from 2.6% to 2.4% year-over-year.
  • Annualizing the last 6-months of core readings, which the Fed says they are looking at, puts Core PCE at 2.46% and close to their 2% target.
  • There are emerging signs that the consumer is coming under pressure when looking at income and spending data.


CoreLogic Home Price Insights

  • Home prices were up 5.8% year-over-year in January, which is an increase from 5.5% on the previous report.
  • Forecasts for February show home prices being flat and will rise by 2.6% over the next 12 months, but it is worth noting that CoreLogic has been very conservative in the past.
  • Despite fewer buyers in the current market, housing demand still exceeds available inventory which is why home prices remain supported.
  1. RATES LOWER AHEAD OF JOBS REPORT – Recent inflation data helps mortgage rates move lower ahead of the important BLS Jobs Report.
    https://www.mortgagenewsdaily.com/…
  2. FEBRUARY LAYOFF NUMBERS – Layoff announcements in February hit their highest level for the month since the global financial crisis in 2009.
    https://www.cnbc.com/…
  3. HOME-SELLING SENTIMENT MOVES HIGHER – February data shows more consumers believe it is a good time to sell a home ahead of the spring homebuying season when compared to January.
    https://www.fanniemae.com/…
  4. CREDIT SCORES WORSEN – For the first time in a decade, the average credit score for consumers fell according to FICO.
    https://www.investopedia.com/…

Accessing Your Home Equity

Homeownership brings with it a valuable asset beyond the comfort of having a place to call your own – home equity. Today, homeowners collectively hold trillions in equity, presenting an opportunity to leverage these funds for various financial opportunities. Whether it’s funding home renovations, consolidating debt, making financial investments, or covering life events, your home equity can be a valuable resource to leverage for your benefit. In this blog, we’ll discuss the many options you have available to access your equity!

Loan Products to Access Your Equity:

  1. Home Equity Loan (HELOAN):
    1. A fixed-rate loan offering a lump sum payment.Ideal for those with a clear vision of their financial needs.
    1. Consistent monthly payments, providing stability.
  2. Home Equity Line of Credit (HELOC):
    1. A flexible credit line secured by your home’s equity.Allows for periodic access to funds when needed.
    1. Adjustable interest rates, providing flexibility but requiring careful financial planning.
  3. Cash-out Refinance:
    1. Replace your existing mortgage with a new one, withdrawing excess funds.Fixed monthly payments and potential for lower interest rates.
    1. Suitable for those looking to streamline mortgage payments and access substantial funds.

Renovation Loan Highlights:

  1. Borrowing Based on Expected Home Value:
    1. Allows you to access funds based on the anticipated post-renovation value of your home.
    1. A great solution for those seeking additional funds for renovation but lacking sufficient equity in the home.
  2. Building an Accessory Dwelling Unit (ADU):
    1. Utilize renovation loans to finance the construction of an ADU.
    1. Enhances the property’s value and provides potential rental income.
  3. Purchasing a Property That Needs Upgrades:
    1. The renovation loan product can also be used on a home purchase.
    1. The downpayment can be as little as 3% with a HomeStyle renovation loan.

What Loan Product Is Best:

When deciding to access your home equity, it’s crucial to consider various factors that can significantly influence which loan product is best for your situation. Two key considerations are the amount of debt you are borrowing and the interest rate of the loan product. As your loan advisor, we help provide a blended interest rate calculation that takes into account the interest rates associated with your existing mortgage and the new loan you’re considering, weighted by the loan amounts. This helps you assess the potential impact of blended interest rates on your financial situation, providing clarity on the short-term and long-term implications of each loan option.

As you explore possibilities with your home equity, remember that your homeownership is not just a place to live but a gateway to financial opportunities. Now is the time to leverage your home equity and unlock its potential. Our dedicated team is here to guide you through the process, offering insights, expertise, and personalized solutions. Whether you’re considering a HELOAN, HELOC, or renovation loans, our goal is to empower you to make informed decisions as a homeowner.

Mortgage Market Update (2/26/24)

Welcome to Homeseed’s Mortgage Market Update, where we dive into the latest trends, insights, and changes shaping the dynamic landscape of the housing and lending industries.

Mortgage Rate Trends & Forecasts

  • The main reason for higher mortgage rates this week was due to a weak 20-year bond auction that caused a sell off in the bond market.
  • Mortgage rates have seen a slight upward trend since the beginning of the year due to stronger inflation and labor market data.
  • The minutes from the most recent Fed meeting were released this week which confirmed that they are certain to cut rates this year, but this will likely not occur by the next meeting in March.

Existing Home Sales

  • Housing inventory remains low with about 3 months of supply of homes versus the normal market value of 4.6 months.
  • The median home price rose by 5% from the previous year, reaching $379,100.
  • Lawrence Yun, Chief Economist for NAR, notes that mid-priced homes are receiving multiple offers, with a significant share (32%) being cash deals, indicating a market driven by record-high housing wealth.

Producer Price Index

  • The Producer Price Index measures inflation from the perspective of producers.
  • Similar to the recent CPI report, inflation on the producer side was also higher than expected for the month of January.
  • Services were the main culprit in the high inflation reading that includes items such as health care and legal services.
  1. RATES MOVE SLIGHTLY HIGHER – A weak 20-year bond auction pushes rates slightly up to highs not seen since November.
    https://www.mortgagenewsdaily.com/…
  2. FHA HELPING BORROWERS KEEP HOMES – The new offering, called the Payment Supplement, will help borrowers bring their mortgage payments current and avoid foreclosure.
    https://www.hud.gov/…
  3. ACTIVE INVENTORY IS UP – Recent data shows that active inventory is up 15.7% and new listings are up 0.9% YoY.
    https://www.calculatedriskblog.com/…
  4. THE FED EXPRESSES CAUTION – Meeting minutes show that the Fed plans to cut rates this year, but express caution in lowering too quickly.
    https://www.cnbc.com/…

Understanding and Succeeding in the Current Housing Market

In today’s dynamic real estate landscape, a persistent housing inventory shortage defines the market’s competitiveness. This scarcity arises from two main factors. Firstly, household formations consistently outpace housing completions over the past decade, with projections indicating a continued trend. The growing population entering the median age of first-time home buyers (37 years old) further exacerbates this issue. Secondly, many homeowners are hesitant to sell due to the current higher interest rate environment. While they might have considered upgrading in the past, prevailing higher interest rates anchor them to their current residences. This dual dynamic, driven by increasing household formations and homeowners holding onto their properties, shapes the current sellers market and intensifies competition.

Making Your Financing as Competitive as Possible in the Seller Market

Where time is of the essence, the importance of offering a quick closing cannot be overstated. Enter Homeseed’s Cash Committed Program, a highly impactful tool in the homebuying process. Unlike traditional pre-approvals, this program provides an underwritten credit approval that signifies a more robust evaluation of your application and commitment to financing. The added assurance of a $10,000 guarantee for closing on time not only expedites the process but also builds trust with sellers, making your offer stand out in multiple offer situations.

Homeseed also offers a Buy Before You Sell Program that allows homebuyers to move quickly on the purchase of the new home rather than worrying about selling their current residence. This strengthens their offer on a new property as they are not contingent on the sale of their current home. Buy Before You Sell also offers the option to receive a bridge loan to help cover the down payment on the new purchase or to make repairs to the departing residence.

Create Your Inventory and Build the Home of Your Dreams

With inventory at an all-time low, homebuyers have also expressed a need to find alternative avenues for homeownership. Building a new home or rehabilitating an existing one emerges as a strategic move. These options often come with the enticing prospect of instant equity post-construction or rehab, where the appraised value exceeds the initial investment. Moreover, with low down payment options, such as 5% with conventional financing or 3.5% with FHA financing, these programs make homeownership more accessible.

It’s essential for homebuyers to adapt and thrive in this competitive market, and a crucial aspect of this is collaborating with a local lender who understands the nuances of the market. Working with someone knowledgeable about the local real estate landscape can provide invaluable insights and pave the way for a smoother and more successful homebuying journey. As you embark on your homebuying journey, consider exploring innovative financing options with Homeseed. The dynamic nature of the real estate market calls for proactive and informed decisions, and Homeseed is here to empower you on your path to homeownership.

Mortgage Market Update (2/12/24)

Welcome to Homeseed’s Mortgage Market Update, where we dive into the latest trends, insights, and changes shaping the dynamic landscape of the housing and lending industries.

Mortgage Rate Trends & Forecasts

  • Mortgage rates are higher this week as a result of strong labor market and manufacturing data.
  • The BLS Jobs Report showed nearly double the amount of jobs were added to the market than expected.
  • The ISM Non-Manufacturing PMI was also higher than expected and the upbeat economic data put additional upward pressure on rates.


BLS Jobs Report

  • The report for January showed that the 353,000 jobs created were nearly double the expected 180,000.
  • One thing to be mindful of is that January is a month of heavy adjustments due to new benchmarks, seasonal adjustments, and population controls.
  • Despite the job gains, the entire labor force is working on average 30 minutes less per week, which is equivalent to 2.4M jobs lost.
  • We will have to wait for February data to see if the labor market tightening once again.


Home Values Continue to Appreciate

  • The two most notable housing indices, Case-Shiller and FHFA, both recently released data showing that home prices set new highs.
  • Although data for December 2023 is not available yet, both indices show that home values were on pace to appreciate by 6% in 2023.
  • Lower numbers for existing inventory and active listings will continue to be supportive of home prices throughout 2024.
  1. RATES MOVE HIGHER – Upbeat economic reports provide the catalyst for higher week-over-week rates.
    https://www.mortgagenewsdaily.com/…
  2. MEDIA SAYING HOUSING CRASH – But housing credit data today looks nothing like what was seen in 2008.
    https://www.housingwire.com/…
  3. BOOST TO HOUSING SENTIMENT – The Fannie Mae Home Purchase Sentiment Index reached its highest level in nearly two years.
    https://www.fanniemae.com/…
  4. TWO SIDES TO JOB MARKET – Economists and reports say the labor market is strong, but job seekers don’t share the same confidence.
    https://www.cnbc.com/…

Wealth Through Homeownership: A Decade-by-Decade Analysis

Homeownership has long been considered a cornerstone of the American dream, providing not only a sense of stability and security but also a unique avenue for building wealth. For many, purchasing a home is not just about having a place to call their own; it’s a strategic financial move that can lead to long-term prosperity. Below we’ll provide a decade-by-decade analysis on home values and explore how homeownership is a powerful investment tool, enabling individuals to leverage their assets and capitalize on the appreciation of real estate.

Historical Appreciation By The Decade

Consistent Appreciation: Regardless of the decade, those who invested in homeownership and held onto their properties for 10 years experienced positive appreciation on average. This consistency underscores the enduring nature of real estate as a wealth-building asset.

Diversification of Investments: The data highlights how real estate can serve as a valuable diversification tool for investment portfolios. While other assets may experience volatility, real estate has historically shown a trend of appreciation over time.

The Power of Leverage in Real Estate

One of the unique aspects of real estate investment is the ability to use leverage. When you purchase a home, you typically make a down payment (an initial investment) while borrowing the rest through a mortgage. This means you control an asset’s full value with a relatively small upfront payment. As the property appreciates, the return on your investment is calculated based on the property’s entire value, not just your down payment. This leverage magnifies the potential for wealth accumulation.

Homeseed Can Help You Get Started

Discover the possibilities with our exclusive loan programs that offer little to no down payment options. This means you can potentially start building equity and wealth with very little upfront investment. Our commitment is to make homeownership accessible and financially advantageous for you. Contact us today to discuss your goals, explore available opportunities, and make informed decisions about your real estate investment. Your path to homeownership and financial prosperity starts with a conversation. Let’s connect and turn your homeownership dreams into reality!

Get Started in Less Than 10 Minutes

Get pre-approved with our online mortgage application. It’s simple, fast & secure!