May 23rd, 2019

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We’ve got some positive outlooks coming out of the Genworth MI’s First-Time Homebuyer Market Report: according to Genworth’s chief economist Tian Liu, the market for first-time buyers is improving, with 38% of single-family home sales and 57% of purchase mortgages originated in Q1 being attributed to first-timers. The main reason for this is most likely due to rates being down from 2018 levels, improving housing affordability for many consumers. According to Liu, "First-time homebuyers continue to represent a large part of the activity in the housing market despite the slowdown in the overall market. The first-time homebuyer market experienced further slowdowns due to worsening affordability from the past three years. However, affordability began to improve, and further decreases in interest rates in Q1 suggest that affordability will have more room to improve, significantly reducing the cause of the original slowdown.”

May 21st, 2019

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Rates have made their way into some sate of limbo recently, and even experts aren’t sure which direction they should expect them to go. Take Atlanta Fed’s President Raphael Bostic, who recently stated a rate increase or a rate cut are equally likely this year. The Fed has previously stated they want to practice “patience”, yet with signs of slowing economic growth, a US-China trade war and the president calling for a 1-point rate cut, you can see how things are in the gray. According to Bostic, “There are a lot of risks out there which if they come to fruition might have the economy weaken. If that happens, then a rate cut might be appropriate. But there are also a lot of sources of uncertainty that if they are resolved in particular ways the economy might actually get a whole lot stronger, which could suggest we might want to do a rate hike.’’ Overall, it’s not a bad place to be in, but it’s important to keep an eye out for whatever is ahead.

May 16th, 2019

The MBA’s most recent Builder Applications Survey showed some positive signs about the purchase market. Even though it hasn’t kicked into full-swing like many industry experts predicted, there are some good things coming in sight. New home purchase applications have increased by 3% from last month and 16% from a year ago. Today would be a GREAT day to get in touch with your realtors and referral partners to try and boost up your own applications.

May 10th, 2019

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So a recent report from Black Knight shows that borrower retention rates are now down to record lows, and as counterintuitive as it sounds, that may actually be to your advantage. First, about the report. The company’s Mortgage Monitor report found that in Q1, only 18% of borrowers stayed with the same servicer after refinancing, with the retention rate on cash-out refis being roughly half the rate on R/Ts.

When talking about the sway interest rates have on a borrower’s decision to switch servicers, it’s historically been because they’ve been able to find much lower rates between them. Last year, however, that changed to the point where many borrowers who switched received a similar interest rate to those who retained servicers. Black Knight’s president of Data & Analytics had this to say: “This is critical, because refinances driven by a homeowner seeking to reduce their rate or term have always been servicers’ ‘bread and butter’ when it comes to customer retention. Offering lower rates to qualified existing customers is a good, and relatively simple, way to retain their business. Unfortunately, the market has shifted dramatically away from such rate/term refinances. In fact, nearly 80 percent of 2018 refinances involved the customer pulling equity out of their home — and more than two-thirds of those raised their interest rate to do so.”

So why is this good news for you? Because it not only gives you a huge opportunity to win borrowers over from their current servicers, but it also opens up the door to establish customers for life. The more you take the time to build true relationship and trust, and the more you provide unique and powerful options (esp. with cash-out refis), the better chance you will have at retaining your borrowers. Be the comparison and knock it out of the park.

May 7th, 2019

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Reports coming from the National Association of Home Builders is showing that the baby boomer housing market is, well, booming. The NAHB found that builder confidence in the 55+ market reached a record high of 76 in Q1. The builder confidence index is made up of 3 components: present sales, expected sales, and prospected buyer traffic. All 3 went up last quarter. This is most likely due to 55+ buyers looking for simpler living spaces to live out their retirements. However, there are challenges that are presenting themselves, mainly with making homes affordable. Construction costs have been on the rise and skilled labor has been harder to find. HousingWire gives some good advice here to loan officers who are looking to capitalize on this demographic market: HECMs for Purchase, which allows home buyers aged 62 or older to buy a primary residence using a reverse mortgage product. Although those loans require sizable down payments and have other nuances, it' could be a great option for those homeowners looking for their retirement spot.

Do you have builder contacts? If not, you should look at expanding your builder referral partnerships because the opportunities are very much there.

May 2nd, 2019

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Good news coming from Freddie Mac this morning: the GSE’s April forecast expects a solid 2019 for the mortgage market, with sustainably low rates and increasing income affordability. The forecast projects total home sales to rise to 5.98 million units by the end of the year, with most of the increase coming from existing home sales. However, first time homebuyers aren’t expected to feel the positive effects as much, as entry-level homes are in increasingly high demand and prices are expected to go up. But the positive side is that rates are looking to remain low and the mortgage market should be in full swing in 2019. (Source: MPA)

May 1st, 2019

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Over the years, first-time home buyers have found many creative ways to get the money for their down payments. However, it seems that today’s Millennials home buyers are resorting to the “old fashioned” way: saving up paycheck by paycheck, according to a recent survey conducted by Redfin. In fact, 72% of Millennial home buyers responded to the survey saying they’re setting aside money from each paycheck to put toward their future down payment. The reason? It’s not completely clear, but one driving factor could be that the generation’s income levels are rising (average hourly earnings have risen 3.2% over the past year).

The chart above is an updated representation of the various ways Millennials save for down payments, and the red shifts are encouraging to see. However, as we always have to keep in mind, just because Millennials home buyers are able to save more from their paychecks, it doesn’t mean they can automatically afford more. It’s the loan officer’s job to look at their entire financial picture and make sure that after paying the down payment, they still have plenty of money in reserves for emergencies, home improvements, furnishings, retirement, etc. Explore the different alternatives for them, encourage them to create a budget, and give them options based on what they can afford in both the short-term and the long-term.

April 26th, 2019

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Good news for home sellers: Q1 home sellers saw an average gain of $57,500 on their home sales, marking a 31.5% average return on their investments. Although that number is slightly down from Q4 of 2018, which saw a $60,000 average gain, it’s still a year-over-year increase. This shows that borrowers who are selling-to-buy have the market working in their favor as home prices are appreciating. When talking to customers who are looking to sell, make them aware of the opportunities of selling their home now. (Source: ATTOM Data Solutions)