What a different world we live in at the moment. Stay safe and stay positive. Even in the midst of this we still have transactions going on, and some eventually will drop or postpone. And, of course the statistics are based on lagging data, so we will see how March plays out. February had it's highest month over month sales increase in 13 years as compared to January sales. Demand is still high and likely will remain, but, consumer spending will be down and job situations may change dramatically which would affect buying decisions and ability at some point. But for now, there seems to be a surprising amount of persistence in closings.
A rapidly emerging focus on keeping folks afloat during this time of crisis is happening. There are rumblings of some mortgage companies providing temporary forbearance programs. Bank of America announced such a program. It sounds like a typical forbearance whereby the waived payment will be on the back end, but for some this may be a life saver. Check in with your bank or credit union or mortgage company and if it is not posted on the company site then: chat, email, or call them directly and ask. There may be valuable info just not posted yet.
If you have been working with an I-buyer such as Opendoor, Zillow, or Redfin, there may some programmatic pauses or changes, so be aware and get your information from that particular source.
Chase Bank Covid Info
Forbes.com Article. List of Banks with Customer Assistance Programs.
If you have questions about the Prescott Areas or want to check in on the market when you are ready, drop me a line.
Thoughts and Prayers to All.
Friday, March 20, 2020
Monday, March 16, 2020
SAVED BY ZERO....Fed's To "Fixx" Liquidity...Interest Rates Zero Percent! May Not Be What You Think.
I received an email from a mortgage broker saying how slammed they are by applications and that they are busy all day explaining the difference between "Fed Rates" and mortgage rates. I am not in mortgages or economics and like anyone else, when I hear "Zero Percent" rates, immediately I make the logical leap to end user rates, i.e. mortgage rates and re-financing possibilities. A common, but incorrect leap.
Without going into great detail, (you can do that on your own), the "Fed Rate" is not "the mortgage rate". A Fed Funds rate is a rate that banks charge other banks on short term loans, REALLY SHORT as in an overnight term. The Rate is decided 8 times per year. A mortgage lender rate can change daily and this is what lenders are busy explaining right now. Some speculated that posted lender rates ticked upward last week to actually slow down the barrage of applications. Back to fed rates, banks have to maintain certain levels of reserve based on their deposit levels and so this short term cash swapping goes on between banks and is regulated by the Federal Reserve. So, no, you will not get a zero percent loan at this time. However, rates are still historically low. I imagine no one is interested in stifling economic movement with high rates with all that is going on. From what I have read, the CPI (Consumer Price Index) and job indices are more directly related to how interest rates move. The CPI basically is the percentage of change in costs for consumer goods and services over a time period. It will be interesting to see what the job indices are in the near future. Again, I am not in mortgages, so do not get your education from here, do your due diligence and speak to your mortgage professional, accountant, or banker before deciding on your re-finance or type of mortgage.
I read a few days ago that the search term "should I buy a house" had it's highest frequency ever, actually doubling during March. Even in the midst of this chaotic time and unprecedented set of variables we are facing, there are lots of people at least wanting to buy a home. You cannot read too much into the search frequency, but, it seems like demand is still high.
There is a large chunk of soon to be first time home buyers waiting in the wings (Millennials are more or less 20-38 yrs old now), there is a perceived lack of supply, there is continued demand by mid-career and retirees to move out of high-tax/high-regulatory states and into other states such as Arizona, Nevada, Idaho..etc. , and of course rates are extremely attractive still. If you are in that boat and are considering Arizona, give me a call or email!
Without going into great detail, (you can do that on your own), the "Fed Rate" is not "the mortgage rate". A Fed Funds rate is a rate that banks charge other banks on short term loans, REALLY SHORT as in an overnight term. The Rate is decided 8 times per year. A mortgage lender rate can change daily and this is what lenders are busy explaining right now. Some speculated that posted lender rates ticked upward last week to actually slow down the barrage of applications. Back to fed rates, banks have to maintain certain levels of reserve based on their deposit levels and so this short term cash swapping goes on between banks and is regulated by the Federal Reserve. So, no, you will not get a zero percent loan at this time. However, rates are still historically low. I imagine no one is interested in stifling economic movement with high rates with all that is going on. From what I have read, the CPI (Consumer Price Index) and job indices are more directly related to how interest rates move. The CPI basically is the percentage of change in costs for consumer goods and services over a time period. It will be interesting to see what the job indices are in the near future. Again, I am not in mortgages, so do not get your education from here, do your due diligence and speak to your mortgage professional, accountant, or banker before deciding on your re-finance or type of mortgage.
I read a few days ago that the search term "should I buy a house" had it's highest frequency ever, actually doubling during March. Even in the midst of this chaotic time and unprecedented set of variables we are facing, there are lots of people at least wanting to buy a home. You cannot read too much into the search frequency, but, it seems like demand is still high.
Tuesday, March 10, 2020
Posted Mortgage Rates Are Higher But May Not Actually Be Higher....Say What?
An article today at housingwire.com says lenders are slammed with business, and this may be the reason why there seems to be a sudden posting of higher rates after record low rates recently. "As the mortgage business continues to try to deal with repercussions of interest rates hitting an all-time low last week, it appears that some lenders are inflating their advertised mortgage rates to try to stem the tidal wave of mortgage applications....."
Wow, if you are locked in to a rate right now, it seems you have house hunting competition in the pipeline. The good news for buyers overall it seems is that this slight rate increase may be a temporary reaction to a surge in applications. It could even be just an advertising measure to slow applications down according the the article.
Of course there are many rare factors pressuring markets right now, not the least of which is the confusing impact of this particular strain of Corona Virus/COVID-19 that has even an entire country on lock down. Some articles attributed this latest decrease in interest rates to the higher demand in bonds which result in lower yields and ultimately lower lending rates, all likely based on Corona panic effect on Wall Street.
Another aspect of this confusing soup of market factors is that inventory is down in the vast majority of major US cities on a year over year basis. The near future number of potential home buyers is increasing. And what impact will this current state of affairs have on contractor supplies? Flooring, drywall, lumber, metal goods, roofing materials, HVAC, nails, epoxies, paint, insulation, and on and on.......much of these items are imported from Asia.
The widely accepted factors at this moment that we do know are: there are a lot of home buyers filling out applications according to the above article, inventory is not in abundance, and rates (whether they spike a tad this week in reality or only in advertising) are very low. It may still be a great time to keep pushing towards the goal of making that move despite the craziness around us. What a tight rope to walk, pursue living as normally as possible but use wisdom.
Wow, if you are locked in to a rate right now, it seems you have house hunting competition in the pipeline. The good news for buyers overall it seems is that this slight rate increase may be a temporary reaction to a surge in applications. It could even be just an advertising measure to slow applications down according the the article.
Of course there are many rare factors pressuring markets right now, not the least of which is the confusing impact of this particular strain of Corona Virus/COVID-19 that has even an entire country on lock down. Some articles attributed this latest decrease in interest rates to the higher demand in bonds which result in lower yields and ultimately lower lending rates, all likely based on Corona panic effect on Wall Street.
Another aspect of this confusing soup of market factors is that inventory is down in the vast majority of major US cities on a year over year basis. The near future number of potential home buyers is increasing. And what impact will this current state of affairs have on contractor supplies? Flooring, drywall, lumber, metal goods, roofing materials, HVAC, nails, epoxies, paint, insulation, and on and on.......much of these items are imported from Asia.
The widely accepted factors at this moment that we do know are: there are a lot of home buyers filling out applications according to the above article, inventory is not in abundance, and rates (whether they spike a tad this week in reality or only in advertising) are very low. It may still be a great time to keep pushing towards the goal of making that move despite the craziness around us. What a tight rope to walk, pursue living as normally as possible but use wisdom.
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