CHM Blog

Realtor Market Insider October 1, 2019

October 1st, 2019 7:59 AM by Richard Sardella MLO.100007700/NMLS 233568

Rates At a Glance
Mortgage Rates
Currently Trending
7 Day Mortgage
Rate Forecast
This Week's
Potential Volatility

Neutral

Neutral

High
(by Sigma Research)
Realtor Report

First-time homebuyers often feel unprepared for ownership

For some it seems like a no-brainer. Renting a home feels like throwing money away, offering no sense of ownership whatsoever. Buying a home is investing in the future. Even if it takes up to 30 years to pay off the loan, you have been LIVING in your investment.

According to a new study by Framework, however, there is more than meets the eye with first time home buyers, who see it as laced with blind spots and pre-loaded with anxiety ā€” mostly because they went into it fairly blind, without enough education and information. The surveys were completed by two groups: recent first-time homebuyers and prospective first-time homebuyers.

The report says only 41% feel very well prepared for the home buying process, 57% worry they can't afford homeownership, 47% think the home buying process is "rigged" against the buyer, 44% fear making costly mistakes, and 55% said they could use an independent advocate to coach them through the process of home buying and homeownership. On top of that, more than half of first time home buyers in both groups said buying a home was more difficult than it should be.

So what does this tell the average real estate professional or mortgage loan officer? That they may have fallen short of making their buyers literate enough to have confidence in the process? While, once they had been through the process of buying a home, 64% of responders said they emerged from it knowing a lot more about the financial aspects of it, most wished they had taken some kind of class to prepare them for it.

When you think about it, those in the industry often don't do a great job in explaining aspects of homeownership not in their purview ā€” things like paying taxes, how and when a payment can adjust, or promoting the idea of having a home ownership "slush fund" in the case of an emergency, such as flooding, a failing roof, or plumbing leaking underground. Of course, these aren't included in the warm, fuzzy feelings industry professionals care to project as they lead buyers through the process, but that doesn't mean first-time homebuyers shouldn't be encouraged to find classes or sources that address their concerns.

CurrentMortgageRatesToday.org says that while the largest cost of owning a home will be your monthly mortgage payment, there are several other costs that you should be aware of when trying to find out how much homeownership will cost you ā€” things like an HOA fee (and what it covers), property taxes, homeowner's insurance, and utilities. And then there is maintenance and repairs.

There are always risks inherent in any large purchase. But it's up to the potential homeowner to decide if it's the best financial step for them. Lenders and Realtors often offer courses for first-time homebuyers, but they can also be found online as well.

Source: PRNewswire, currentmortgageratestoday.org, TBWS

This Week's Mortgage Rate Summary

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage Backed Securities (MBS) which are traded in real time, all day in the bond market.  This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events.  When MBS pricing goes up, mortgage rates or pricing generally goes down.  When they fall, mortgage pricing goes up.  Tracking these securities real-time is critical.  For more information about the rate market, contact me directly.  Iā€™m among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Neutral

Mortgage rates are trending sideways so far today.  Last week the MBS market worsened by -1bps.  This caused rates to trend sideways for the week.  Rate markets started to settle down through the week.  We could see a good deal of rate volatility toward the end of the week.

This Week's Rate Forecast: Neutral

Three Things: These are the three areas that have the greatest ability to move mortgage rates this week: 1) Geopolitical and trade news, 2) The Fed, and 3) Domestic.

1) Geopolitical and trade news: China will be closed for their "National Day" this week, so any direct trade commentary out of China is unlikely. The market will then focus on our domestic tweets and reports on trade negotiations. Domestically, we'll hear from the "whistleblower" that is at the center of the recent impeachment inquiry.

2) The Fed: We have a "deluge" of Fed speakers this week, including Fed Chair Powell:

  • 10/01 Charles Evans, Richard Clarida, James Bullard, Michelle Bowman
  • 10/02 Patrick Harker, John Williams
  • 10/03 Charles Evans, Randal Quarles, Loretta Mester, Richard Clarida
  • 10/04 Eric Rosengren, Raphael Bostic, Jerome Powell, Lael Brainard, Randal Quarles, Esther George

3) Domestic: We have a monster week for big-name economic releases that have the "gravitas" to move rates. Chicago PMI and ISM Manufacturing will give us a good idea on the manufacturing sector. There's a concern that the sector has been contracting, but the market is expecting readings that show expansion. The ISM Services data is also expected to show expansion. We get a ton of jobs related data with ADP Private Payrolls, Challenger Job Cuts, Initial Weekly Jobless Claims, Non-Farm Payrolls, Unemployment Rate, and Average Hourly Earnings. YOY Earnings will get the most attention from bond traders.

This Week's Potential Volatility: High

Last week rates moved sideways on reduced volatility. Look for rates to continue to move sideways unless we get some unexpected economic data toward the end of the week. Of course, political and geopolitical concerns could play a role in increased volatility for the markets.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

About Richard Sardella

Richard Sardella has been actively managing and providing services in the mortgage industry for over 27 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

About This Report And Disclosure Information

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.

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Posted by Richard Sardella MLO.100007700/NMLS 233568 on October 1st, 2019 7:59 AM

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