Mortgage Market Update (5/20/24)

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 have been on a consistent downward trend the last two weeks due to weakening economic data from reports such as the BLS Jobs Report, CPI, and Retail Sales.
  • With the weaker data, the financial markets are now expecting two rate cuts from the Fed this year.
  • The next market moving data will likely be the Personal Consumption Expenditures (PCE) report at the end of the month, which is the Fed’s favorite measure of inflation.

Consumer Price Index (CPI)

  • The Consumer Price Index continues to be the biggest source of momentum for mortgage rates as it measures inflation.
  • The April report released today showed overall inflation rose 0.3% for the month versus the expected 0.4%, while year-over-year inflation decreased from 3.4% to 3.5%.
  • Much of the core rate, which excludes food and energy, is coming from motor vehicle insurance (+22.6% YoY) and shelter (+5.7% YoY).

New Home Construction

  • Housing starts rebounded in April, rising 5.7% from March.
  • Building permits, which represent future construction, declined.
  • Completions did rise in April, but the numbers were a bit softer than expected and could limit much-needed supply down the road.
  1. RATES ON A DOWNWARD TREND – Mortgage rates have consistently moved lower the last two weeks after multiple reports showing weakness in the economy.
    https://www.mortgagenewsdaily.com/…
  2. INFLATION EASES IN APRIL – Today’s CPI report showed inflation in line with expectations and the lowest 12-month core reading since April 2021.
    https://www.cnbc.com/…
  3. UNLOCKING MORE HOME EQUITY – Freddie Mac, one of the US’s government-sponsored enterprises, is proposing that it be allowed begin purchasing home equity loans which would help unlock equity for homeowners.
    https://www.businessinsider.com/…
  4. INVESTMENT FROM HUD – The US Department of Housing and Urban Development (HUD) announced it has secured approval for $1.1 billion in funding to help with tribal housing and community development.
    https://www.housingwire.com/…

Temporary Vs. Permanent Buydowns

In today’s real estate market, the landscape may seem daunting to would-be homebuyers. Elevated interest rates, coupled with negative media speculation, have cast a shadow of doubt over the feasibility of homeownership. However, amidst these challenges lies a strategy that could help you become a homeowner: interest rate buydowns. We’ll explain how this strategic tool can empower you achieve homeownership and begin building wealth through real estate.

Understanding Interest Rate Buydowns

Interest rate buydowns offer a strategic approach to securing a lower interest rate, thereby reducing monthly payments and long-term borrowing costs. At Homeseed, we provide both temporary and permanent buydown options tailored to meet your unique financial goals and circumstances. Clients can also combine the benefits of both temporary and permanent buydowns to lower their monthly payment even more.

Temporary Buydowns: A Gradual Path to Affordability

Temporary buydowns are financing options that allow borrowers to lower their initial mortgage interest rates, which gradually increase over a specified period. The four most common types of temporary buydowns offered by Homeseed are the 1-0 buydown, 1-1 buydown, 2-1 buydown, and 3-2-1 buydown. This gradual approach allows you to ease into homeownership, mitigating financial strain and providing breathing room to adjust to your new responsibilities. Additionally, any unused financing credit put towards the temporary buydown will be applied to your principal loan balance if you refinance before the buydown period is over.

Permanent Buydowns: Securing Long-Term Savings

For those seeking lasting benefits, permanent buydowns offer a compelling solution. By purchasing discount points upfront, you can permanently lower your interest rate for the entire loan term. While this requires an initial investment upfront with no possibility of a refund when refinancing, the long-term savings and financial flexibility it provides can be significant, especially for buyers needing a lower monthly payment in order to qualify for the loan. Payment towards a permanent buydown can also potentially help lower your taxable income when filing taxes.

A Comparison Between Temporary and Permanent Buydowns

Leveraging Seller Concessions

In some situations with today’s market, sellers can be motivated to offer seller concessions toward closing costs, including fees associated with buydowns, to further enhance the attractiveness of purchasing their home. By leveraging these concessions, buyers can minimize their out of pocket expenses and expedite their path to homeownership.

Conclusion

Despite the noise surrounding the real estate market, interest rate buydowns stand as a highly useful strategy for aspiring homeowners. Whether opting for a temporary or permanent solution, the benefits are clear: increased affordability, financial flexibility, and long-term savings. With the support of a Homeseed Loan Advisor, you can confidently navigate the complexities of the current real estate landscape and embark on the journey to homeownership with optimism and assurance.

Homeseed’s 2024 Mortgage & Real Estate Spring Update

Welcome to Homeseed’s 2024 Spring Market Update! We are in the thick of the spring market and  there have been many promising shifts in the real estate and mortgage markets recently. Whether you’re a seasoned homeowner or a hopeful buyer, the current market presents ample opportunities worth exploring. Let’s delve into the latest trends shaping the spring market and what they mean for you.

Mortgage Rate Outlook

The trajectory of mortgage rates has been a focal point for many, and recent developments shed light on what lies ahead. Since the outset of the year, rates have shown an upward trend, influenced by factors such as inflation dynamics and the strength of the labor market. While initial projections hinted at multiple rate cuts by the Fed in 2024, the latest forecasts suggest a more conservative approach, with one potential cut on the horizon. Fed Chair Jerome Powell’s reaffirmation of a probable cut underscores the Fed’s commitment to stabilizing inflation. However, the timing of this adjustment hinges on forthcoming economic indicators.

Inventory Is Increasing

Recent data on inventory signals a welcomed uptick in available homes especially when compared this time a year ago. This surge in inventory translates into a plethora of choices for both homeowners seeking upgrades and prospective buyers eyeing entry-level properties. For first-time buyers particularly, increased options alleviate some of the affordability concerns exacerbated by fluctuating mortgage rates. Simultaneously, current homeowners looking to sell find themselves in a favorable position, with heightened demand and an array of properties to explore.

Home Values Are Expected to Continue Appreciating

The continued increase in the value of homes underscores the allure of owning a home as an investment. Unlike renting, homeownership offers the dual benefits of shelter and equity accumulation. As the housing market continues its upward trajectory, homeowners stand to bolster their financial portfolios through accrued equity. Projections from the Home Price Expectations Survey paint a promising picture of sustained growth in home values over the coming years. This steady appreciation not only solidifies homeowners’ positions but also presents a compelling case for prospective buyers weighing their options. By capitalizing on the potential for long-term wealth accumulation, homeowners can leverage their equity to unlock new avenues of financial stability.

Opportunities in the Spring Market

The spring market offers a wealth of opportunities for both homeowners and homebuyers alike. With mortgage rates poised for potential adjustments later this year, it is estimated that 5 million buyers will enter the market for every 1% drop in mortgage rates. Coupled with the expanding inventory landscape, now is the time to stay informed and consider strategic financial decisions. Whether you’re looking to upgrade your current home or embark on the journey of homeownership, reach out today and lets discuss the opportunities for you this spring.

Mortgage Market Update (5/6/24)

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

  • After surging higher in early April, mortgage rates have moved lower in the last week.
  • Mortgage rates trended lower week-over-week after the Fed’s announcement of tapering their balance sheet reduction and a weaker BLS Jobs Report.
  • The financial markets now expect just one rate cut this year due to the persistence of elevated inflation.

The Fed Meeting

  • The Fed wrapped up its third of eight annual meetings yesterday that followed with its usual press conference.
  • The financial markets tune in to the press conference where Fed Chair, Jerome Powell, acknowledged that elevated inflation meant a delay for the Fed’s next move with rates.
  • The good news was Powell reiterated that the next move is more likely to be a cut rather than a hike as the Fed believes they are still on track to return inflation back to their 2% target.

BLS Jobs Report

  • April’s job growth missed estimates, as there were 175K new jobs created versus the 243K that were expected.
  • Revisions to the data for February and March also shaved 22K jobs from those months combined while the unemployment rate rose to 3.9%. 
  • Overall, the data suggests softening in the labor sector, which could pressure the Fed to cut rates if this trend continues. 
  1. RATES MOVE LOWER AFTER FED MEETING – Positive momentum following the Fed meeting continue for a second day after Fed acknowledges next move will likely be a rate cut.
    https://www.mortgagenewsdaily.com/…
  2. ACTIVE INVENTORY IS UP – Report shows that active inventory and new listings are up on both a year-over-year and week-over-week basis.
    https://www.calculatedriskblog.com/…
  3. FED MEETING HIGHLIGHTS – The Fed keeps rates unchanged as it notes lack of further progress on inflation, but did acknowledge its next move would likely be a cut later in the year.
    https://www.cnbc.com/…
  4. FHFA’S EQUITABLE HOUSING PLANS – FHFA announced their finalized plans to address barriers to sustainable housing opportunities for first-time and low-and-moderate income buyers.
    https://www.housingwire.com/…

+BuyerBenefit Strategic Financing Partnership Program

With the recent changes in the real estate world, we believe it is more important than ever for lenders and agents to work closer together to best serve buyers and sellers. Your ability to provide value-added services to your clients not only sets you apart but also strengthens your position in the market. That’s why we have enhanced our +BuyerBenefit program with the goal of providing you with more resources for helping clients. Below are some highlights of how our +BuyerBenefit will help you:

Empower Your Listings with Strategic Financing

Our +BuyerBenefit Strategic Financing Partnership Program empowers you to market special financing incentives on your listings using both physical and digital materials. Imagine being able to offer additional value to your clients through personalized mortgage rates and financing strategies tailored to their needs.

Capture Leads and Close Deals Faster

With our program, you can capture leads effortlessly using personalized co-branded marketing tools. Plus, our lead management systems ensure that you qualify leads efficiently with your preferred lending team, paving the way for quicker closings and more transactions.

Unveil Exclusive Savings for Your Clients

One of the standout features of +BuyerBenefit is the opportunity to offer your clients exclusive savings. Eligible clients can enjoy 0.5% savings on the loan amount towards interest rate pricing, further sweetening the deal and solidifying their satisfaction. Some restrictions apply, see full terms and conditions at homeseedloans.com/buyer-benefit.

Access Cutting-Edge Digital Tools

We provide a suite of digital tools, including custom live-rates flyers for your listings and a co-branded mobile mortgage app. These tools enable prospective buyers to run personalized scenarios and explore rate buydown strategies, fostering meaningful conversations and driving conversions.

Elevate Your Marketing Efforts

From exterior marketing materials like sign riders and yard signs to interior resources like our +BuyerBenefit Book and raffle flyers, we equip you with everything you need to attract more buyers and convert leads effectively.

Seamlessly Collaborate with Your Preferred Lending Team

Our program isn’t just about providing resources; it’s about fostering strong partnerships. That’s why we offer detailed partner reports to keep you informed about the status of every active lead and loan. Additionally, our “Meet Your Preferred Lending Team” flyer simplifies the introduction process, ensuring smooth collaboration every step of the way.

Reach out today to learn more about +BuyerBenefit!

Mortgage Market Update (4/22/24)

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 flat but volatile week-over-week after surging much higher the week prior.
  • The pressure for higher rates was caused by a strong jobs report, more troubling inflation data, and a higher consumer spending.
  • The odds for the first rate cut by the Fed’s July meeting has now fallen below 50%.


Consumer Price Index (CPI)

  • The monthly report showed inflation was much hotter than expected in March, continuing a trend we’ve seen in recent months.
  • Rising energy, automobile insurance, and shelter costs were the main contributors to the increase in inflation.
  • Annual inflation still remains below the peaks in 2022, but stubbornly high inflation readings will likely delay the Fed’s timing for rate cuts this year.


Home Builder Sentiment

  • The most recent Home Builder Sentiment report by NAHB showed that sentiment among builders remains in positive territory.
  • Internal components of the report show that buyer traffic and current sales expectations ticked higher.
  • Forward looking sales expectations have softened a bit due to higher rates as some buyers remain on the fence.
  1. MORTGAGE RATES FLAT – Rates are relatively unchanged week-over-week but the daily changes have been volatile.
    https://www.mortgagenewsdaily.com/…
  2. RATE CUTS DELAYED – The Fed Funds Rate could stay higher for longer if inflation persists.
    https://www.morningstar.com/…
  3. WHAT HOMEBUYERS WANT – A recent study shows that a vast majority of homebuyers are looking for a home with at least one home office.
    https://www.eyeonhousing.org/…
  4. HOME PRICES KEEP CLIMBING – Higher rates are keeping a lid on housing supply and putting pressure on home price appreciation.
    https://www.housingwire.com/…

Rent Costs Are Increasing

In recent years, the rental market has seen a significant trend: rent prices are steadily climbing year after year. According to a recent CoreLogic Index for US Single-Family Rent, February 2024 marked the highest annual increase in the last 10 months, with US single-family rents surging by 3.4% year-over-year. Many large cities, in particular, have witnessed spikes of over 5%, putting a strain on renters’ budgets as they also grapple with high inflation.

As rent prices continue to soar, many individuals and families are grappling with the question of whether renting or owning a home is the better financial choice. The answer becomes increasingly clear when considering the broader economic landscape and the long-term benefits of homeownership. In fact, data from the Federal Reserve reveals that the median net worth of homeowners is a staggering 40 times greater than that of renters.

Benefits of Owning A Home

  • Owning a home provides stability and predictability in housing expenses. Unlike renting, where landlords can raise rents at their discretion, homeowners enjoy fixed monthly payments, consisting of principal and interest, that do not fluctuate over time. This stability not only offers peace of mind but also serves as a hedge against inflation, as the cost of housing remains consistent regardless of economic conditions.
  • Homeownership enables individuals to build equity over time and leverage their asset. Home prices have historically appreciated, increasing in value in 74 out of the last 82 years. Additionally, as mortgage payments are made, homeowners accumulate equity in their property, which can then be tapped into for various purposes, such as funding home improvements, financing education, or even investing in additional real estate properties. This ability to leverage one’s home as an assets opens up a world of financial opportunities and contributes to long-term wealth accumulation.

In conclusion, as rent prices continue to rise annually, the case for homeownership as a superior investment becomes increasingly compelling. Not only does homeownership offer the potential for significant wealth accumulation, but it also provides stability, predictability, and the opportunity to leverage one’s assets for further financial growth. Aspiring homeowners should consider these factors carefully when making their housing decisions, as owning a home represents not only a roof over one’s head but also a pathway to financial security and prosperity.

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/…

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