Join us to learn why FHA Manual UW is even more important after recent DU TOTAL Scorecard Updates.
During this webinar we will cover:
- What factors in the file can trigger a downgrade to Manual Underwrite
- What Non-Traditional Credit options are available for borrowers without a credit score
- What are Compensating Factors, and how can they help with a higher DTI
- Parameters for working with derogatory credit events
- Submitting the best possible file for fewer conditions the first time through
In an effort to better serve our broker partners, Carrington Mortgage has created a Marketing Resouces center in brokerIQ for approved brokers. The materials available include flyers in PDF format that are customizable with your name, logo, contact information and disclaimers. The flyers can be printed and/or emailed to your prospective borrowers.
Please browse the page to see what flyers are available and contact your Account Executive if you have any questions.
Last Week in Review: Good times continue
Initial Jobless Claims is a weekly report that tracks how many people have filed for unemployment benefits. It is both a solid gauge on the state of the labor market and economy, and a leading indicator on what to expect in the months ahead.
So, what are Initial Jobless Claims telling us today? Last week’s 196,000 recorded was the lowest in over 50 years! This is what it’s telling us:
- The labor market continues to strengthen.
- The chance of a recession in 2019 is near zero.
Low Initial Jobless Claims also leads to continued higher wage gains, which is wonderful for consumer spending and housing.
Another great data point this past week was the JOLTS (Job Openings and Labor Turnover Survey) which showed the US economy still has a 1,000,000-person shortfall against the current 7,000,000 job openings. This is just another example of how tight the labor market remains.
Bottom line — the great story remains — low rates + great job market = nice housing market.
In observance of Good Friday, the Carrington Mortgage Services, LLC (CMS) Lock Desk will be closed Friday, April 19, 2019. Normal Lock Desk hours will resume on Monday, April 22, 2019.
As a reminder, pursuant to the Lock Policy all lock extensions must be requested prior to expiration. If a lock expires on Friday, April 19th, 2019 it will need to be extended no later than Thursday, April 18th, 2019.
Issues related to locks should be sent via email to firstname.lastname@example.org.
Spring is the peak home buying season for many parts of the country. After years of softer home sale activity – thanks to low housing inventory, affordability issues, and more – this Spring home buying season could prove to be one of the best in years. Why?
Call it the “Goldilocks” economic scenario – and here are several bullets that should help housing not just this Spring, but for the foreseeable future:
- The Fed has stated they will not raise rates in 2019. Yay!!! There is actually a better chance of a rate cut before 2019 comes to an end. This means home loan rates won’t go too high.
- Inflation remains subdued – for now. Low inflation means lower rates.
- Home price gains are slowing year-over-year to healthier levels, and at equilibrium with personal wage gains. In years past, housing prices were gaining 10% to 15% or more, and wages were growing at 2%. Now we are seeing house prices increase 4% to 5% year-over-year, just slightly more than wages.
- Housing inventory is increasing. This is a big change from years past and should it continue, buyers will continue to come to the market and take advantage of the “Goldilocks” conditions.
- The Labor market remains solid. People buy homes because they feel good about their job and their future. Unemployment is at a 50-year low. This is very positive for housing.
- Europe can’t get out of their own way. Their economies are weak and that is keeping their bonds yields ultra-low. This is putting downward pressure on US Bond yields. Yes – you can thank Europeans for your low home loan rates.
- The Stock market is right at all-time highs. This means higher 401K and IRA values create a positive wealth effect that should provide a nice tailwind for housing. People with money spend it.
- Consumer Confidence and Sentiment are increasing again thanks to the Fed no longer hiking rates, the strong job market, and Stocks up nicely in 2019. “Confident” consumers purchase homes.
- No fear of a US recession as Friday’s March Jobs Report showed 196,000 new jobs created, a great rebound higher from February’s 33,000 – which had stoked some recession chatter.
- Home loan rates continue to hover near 14-month lows, thanks to the many bullets above.
This past week we saw mortgage rates experience their largest one-week decline in 10 years!!! What caused the sharp decline in home loan rates? Recessionary fears, and the likelihood the Fed’s next move on rates may be a cut and as soon as this year.
The Treasury’s Two-Month Bill yielded 2.40% this past week and the 10-Year Note yielded a low of 2.34%. This “inverted yield curve”, where short-term Bonds yield more than long-term Bonds, elevated the recession talk.
Bond yield curve inversions are not always accurate, and the lead time to a recession can be as much as three years.
It will be more important to track how the 2-Year Note, presently yielding 2.23%, performs against the 10-Year Note in the weeks and months ahead, because a sustained inversion between them would be a more serious recessionary signal.
The financial markets were spooked this week when potential Federal Reserve Board Nominee Stephen Moore said if he were brought onto the Fed, he would immediately vote for a .50% cut to the Fed Funds Rate. This surprise statement brought uncertainty to the financial markets, which led to Stocks moving lower and Bonds moving higher in price.
Bottom line: Inflation is not a threat, and was evidenced in last Friday’s PCE reading of just 1.8% year-over-year. Plus, the idea that the Fed may now cut rates next means this complacent “wait and see” attitude may continue to keep home loan rates at low levels for the spring homebuying season, and more.
On April 15, 2019, we surveyed our broker community to find out more about their media consumption habits. 116 people responded and these are the results. We think they are very interesting and we hope you do too.
Last Week in Review: Thank you Jerome Powell
The monetary authority of the United States, the Federal Reserve, meets 8 times a year to discuss the economy and adjust monetary policy to promote maximum employment and maintain price stability (inflation).
The Fed, led by Chairman Jerome Powell, met this past Wednesday and decided to leave the Fed Funds Rate unchanged at 2.50% – this was expected. They also issued their Monetary Policy Statement which includes their outlook on the economy and its interest rate forecast.
Overall the Statement was “dovish”, meaning stimulative to the economy. They forecasted slower US growth, and inflation running beneath their target, which led to them forecasting no more rate hikes for the remainder of 2019. This was a nice surprise to the financial markets.
The Fed, inflation, and higher interest rates are not an immediate threat. This continues to push Stocks higher and long-term Bonds, like Mortgage Bonds, to one-year highs. This helps bring home loan rates to one-year lows.
Bottom line: The spring housing market could be one of the best in years thanks to a solid economy, relatively low rates, a positive wealth effect thanks to the rise in Stocks and a Federal Reserve that said rates are not likely to rise anytime soon – if at all.
Last Week in Review: Complacency heading into spring
Volatility has disappeared in the financial markets and a sense of calm and complacency has emerged. Why?
Well thanks to the Fed, and inflation and higher rates not being a threat — both Stocks and Bond prices are moving higher.
For 2019, home loan rates have been stable at one-year lows (look at the chart below), and everyone’s stock portfolio is increasing in value. What’s not to like?
Complacency will change to volatility at some point, and what we are watching is rising wages and how that may increase inflation in months to come.
Should that happen, we could experience a real shock to the US Bond market and the present complacent interest rate market will be over — and in a hurry.
But for now, complacency is the theme as we head into the Spring housing market…meaning good times for us.
Last Week in Review: Disinflation washes up on our shores
If inflation moves lower or is expected to move lower — rates must go lower as well. That’s the situation right now.
The financial markets and interest rates also follow inflation on a global scale. Why is this important to homeowners?
If disinflation or the rate of inflation moderates in places like Europe, interest rates in those countries move lower and tend to drag US interest rates lower as well.
This past week we watched home loan rates revisit one-year lows upon news that the European Central Bank or ECB downgraded their economic outlook and inflation expectations.
The ECB said they now expect 2019 economic growth to come in at a paltry 1.1%, down sharply from a previous forecast of 1.7%. Moreover, ECB officials said inflation, which is already very low, could move lower still.
Again, if inflation moves lower in large countries around the globe — we tend to see improvement in long-term US interest rates…that is the current trend.
Interest rates don’t buy houses, jobs do!
The Bureau of Labor Statistics reported that just 20,000 jobs were created in February, well below expectations of 175,000. This was a disappointing number, but the unemployment rate fell to 3.8% and wages grew by 3.4% year over year…the highest level in a decade. Overall the labor market continues to expand and wages are rising — all good news for housing.