Inside Lending Market Update – HUD Mortgage Ins Reduction gone for now

For the week of January 23, 2016 – Vol. 5 Issue 4

>> Market Update

BULLETIN… HUD announced that the Mortgage Insurance Premium reduction for loans with Closing/Disbursement date on or after January 27, 2017, has been suspended indefinitely. FHA will issue a subsequent announcement at a later date should the policy change.

QUOTE OF THE WEEK… “A developer who is not optimistic shouldn’t be a developer.” –Harry Triguboff, Australian residential developer

INFO THAT HITS US WHERE WE LIVE… Last week saw plenty of evidence that U.S. residential developers and builders are getting very optimistic. Housing Starts shot up 11.3% in December, reaching a 1.226 million unit annual rate. Yes, this month’s bump all came from the multifamily side, but single family starts remain positive, up 3.9% the past year. And get this. Single family building permits are up 10.7% over a year ago, at their highest level since 2007, showing a continuing uptrend. Multifamily building permits are down 15.1% from a year ago, evidence of the shift to single family starts after multifamily construction peaked in 2015.

The optimism reflected in the starts and permits reports got further support from the National Association of Home Builders (NAHB). The NAHB builders confidence index hit an impressive 67 in January, just below its December reading, the highest in 11 years. Analysts say both builders and prospective home buyers are encouraged by the pickup in jobs and wage growth and by optimism (at least for now) that more market-friendly policies will be coming out of Washington. December’s University of Michigan Consumer Sentiment report saw its Current Economic Conditions index at the highest point since 2004. Nice to see things looking up.

BUSINESS TIP OF THE WEEK… Technology provides convenient channels for connecting with clients and prospects. But an app can’t provide the skills, knowledge and experience you can convey in a personal interaction.

>> Review of Last Week

INAUGURAL BALL… At noon on Friday Donald Trump took the oath of office as the 45th President of our country and Wall Street held its own inaugural celebration. Stocks ended the day near session highs, with the Dow, S&P 500 and the Nasdaq all ahead. Equities had been trading in a fairly narrow range, so all three major indexes finished the week down a tad, but they remain in positive territory for the year. Investor optimism stems from the President’s campaign promises to lower taxes, reduce regulation and boost infrastructure spending, all good for business, and especially for smaller companies, who create around two thirds of the nation’s new jobs.

The week’s economic reports looked encouraging. Industrial Production was up more than expected in December and factory capacity grew to 75.5%. The Philadelphia Fed Index increased from December to January, showing optimism among East Coast manufacturers.
The Consumer Price Index (CPI) also gained in December and is now 2.1% over a year ago. However, Federal Reserve chair Janet Yellen indicated on Thursday that she wasn’t worried about the inflation surge, signaling she saw no reason to quickly raise interest rates. More positive news came with drops in both Initial and Continuing Unemployment Claims.

The week ended with the Dow down 0.3%, to 19827; the S&P 500 down 0.1%, to 2271; and the Nasdaq down 0.3%, to 5555.

U.S. Treasuries enjoyed small gains on Friday, but many bonds ended the week lower. The 30YR FNMA 4.0% bond we watch finished the week down .29, at $104.77. In Freddie Mac’s Primary Mortgage Market Survey for the week ending January 19, national average 30-year fixed mortgage rates dropped for the third week in a row despite the bump in bond yields after the CPI showed hotter inflation. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?… Research reveals that among millennials, 76% prefer texting to talking, 63% say it’s less disruptive than voice calling, 19% never check voicemail, and 75% could live without a call function on their phones if they could still text! 

>> This Week’s Forecast

EXISTING AND NEW HOME SALES, Q4 ECONOMIC GROWTH ALL SLIDE… The December reports for Existing Home Sales and New Home Sales are both expected to be down for the month. But sales of existing homes should still be above 5.5 million and new homes just under 600,000. The GDP-Advanced Q4 reading of the economy is forecast to show last year closing at a still slow 2.2% growth rate.

>> The Week’s Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of Jan 23 – Jan 27

 Date Time (ET) Release For Consensus Prior Impact
Jan 24
10:00 Existing Home Sales Dec 5.55M 5.61M Moderate
Jan 25
10:30 Crude Inventories 1/21 NA +2,300M Moderate
Jan 26
08:30 Initial Unemployment Claims 1/21 246K 234K Moderate
Jan 26
08:30 Continuing Unemployment Claims 1/21 NA 2.046M Moderate
Jan 26
10:00 Leading Economic Indicators (LEI) Dec 0.5% 0.0% Moderate
Jan 26
10:00 New Home Sales Dec 589K 592K Moderate
Jan 27
08:30 GDP – Advanced Q4 2.2% 3.5% Moderate
Jan 27
08:30 Durable Goods Orders Dec 3.0% -4.6% Moderate
Jan 27
10:00 U. of Michigan Consumer Sentiment – Final Jan 98.0 98.1 Moderate


>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months… A few more economists think the Fed may hike before June, but the majority still sees rates remaining where they are. Note: In the lower chart, a 5% probability of change is a 95% certainty the rate will stay the same.

Current Fed Funds Rate: 0.5%-0.75%

After FOMC meeting on: Consensus
Feb 1 0.5%-0.75%
Mar 15 0.5%-0.75%
May 3 0.5%-0.75%

Probability of change from current policy:

After FOMC meeting on: Consensus
Feb 1         5%
Mar 15       22%
May 3       40%
Ron Schulz
Senior Loan Officer
NMLS# 266128
13140 Coit Rd # 502
Dallas, TX 75240
Office: 214-346-5279
Mobile: 214-794-4014
Fax: 972-284-0715
www.ronschulz.comThis information is an advertisement for Ron Schulz. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice, or a commitment to lend. Although the material is deemed to be accurate and reliable, there is no guarantee of its accuracy. The material contained in this message is the property of Supreme Lending and cannot be reproduced for any use without prior written consent. This message is intended for business professionals only and is not intended for distribution to consumers or other third parties. The material does not represent the opinion of Supreme Lending. EVERETT FINANCIAL, INC. D/B/A SUPREME LENDING NMLS ID #2129 ( 14801 Quorum Dr., #300, Dallas, TX 75254. 877-350-5225. Copyright © 2017. This is not an offer to enter into an agreement. Information, rates, & programs are subject to change without prior notice and may not be available in all states. All products are subject to credit & property approval. Supreme Lending is not affiliated with any government agency. Supreme Lending is required to disclose the following license information: AZ Mortgage Banker License 0925918, AZ Principal Office: 25030 S 190th Street, Queen Creek, AZ 85142. Licensed by the Department of Business Oversight under the CA Residential Mortgage Lending Act License 4130655. CO Mortgage Company – Regulated by the Division of Real Estate. GA Mortgage Lender License 22114– Georgia Residential Mortgage Licensee. IL Residential Mortgage License MB.6760323-DBA1– Illinois Residential Mortgage Licensee. NV Division of Mortgage Lending Mortgage Banker License 4063. Licensed by the N.J. Department of Banking and Insurance – New Jersey Residential Mortgage Lender License. Licensed Mortgage Banker-NYS Department of Financial Service. NY Mortgage Banker License B501049. OR Mortgage Lending License ML-4265. Licensed Mortgage Banker by the PA Department of Banking – Pennsylvania Mortgage Lender License 45048. Rhode Island Licensed Lender 20142998LL. TX – SML Mortgage Banker Registration – Residential Mortgage Loan Originator.

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