Last Week in Review: Uncertainty helping rates
The ongoing and unresolved US/China trade turmoil is the biggest story to follow right now. The uncertainty and negative headlines associated with the negotiations have pushed Stocks lower for most of May, with Bonds and home loan rates being the beneficiary.
We would like to think that the talks over the past year or so will bring forth a positive agreement — but it’s unclear whether this will come to pass. The next round of talks is scheduled for June 28-29 at the G20 meeting, so there is likely to be no progress before this time. If that is the case, US interest rates will remain near multi-year lows.
One thing’s for sure…the Fed will not be hiking rates anytime soon if this trade turmoil goes unresolved or escalates. In fact, there’s actually a chance we see a Fed rate cut in 2019 — especially if the US economy reacts poorly to the US/China trade dispute.
It’s important to understand that this story, while very negative and uncertain at the moment, could change very quickly. If a positive resolution comes to pass, we should expect Stocks to reclaim all of their recent losses and more — all at the expense of bonds and home loan rates.
Bottom line: Home loan rates are back near 16-month lows and coupled with the current strong US economic backdrop, it is an incredible moment to either refinance or purchase a home.
The Lock Desk will be closed on Monday, May 27, 2019 for Memorial Day, which is a Federal Holiday. Normal lock hours will resume on Tuesday, May 28, 2019.
Additionally, the Lock Desk will close early on Friday, May 24, 2019 at 10:00 A.M. PST due to the early close of the financial markets.
Locks that expire on the holiday will automatically roll to the next business day. In addition there are some important disclosure considerations associated with the holiday:
- Monday, May 27, 2019 cannot be included in the rescission period for refinance transactions.
- Monday, May 27, 2019 cannot be included in the seven (7) business day waiting period between the date the initial Loan Estimate (LE) was provided to the borrower and the consummation of the loan
- When re-disclosure of the LE is required, Monday, May 27, 2019 cannot be included in the four (4) business day waiting period between the date the revised LE was provided to the borrower and the consummation of the loan.
- When re-disclosure of the CD is required, Monday, May 27, 2019 cannot be included in the three (3) business day waiting period between the date the revised CD was provided to the borrower and the consummation of the loan.
Issues related to locks should be sent via email to email@example.com.
Last Week in Review: US/China uncertainty
The biggest story in the financial markets and around the globe is the ongoing US/China trade negotiations.
At the moment, there is no resolution and it appears there will be no resolution for at least several weeks as the US and China are not expected to talk again until the G-20 Summit June 28-29.
The uncertainty surrounding the talks helped home loan rates improve this week, and are at lows seen in January 2018.
The US, China and the entire globe would benefit from a deal and should it happen, Stocks will likely recover all of their recent losses and then some. At the same time, should the story drag on and escalate as higher tariffs are instituted — it would have a negative effect on global economies and Stocks may suffer as home loan rates improve further.
Looking at the US economy, it continues to do very well. Walmart posted incredibly strong corporate earnings this past week. Seeing they have $500B in annual sales — if Walmart is doing well, the US economy is doing well.
In housing news, April Housing Starts and Building Permits came in higher than expectations, providing further evidence of confidence in the sector.
Bottom line: The backdrop to housing could not be much better. The economy is strong and home loan rates are historically low. Today presents an incredible window to consider buying or refinancing a home.
Carrington Mortgage Services, LLC (CMS) has made an immediate adjustment to the Wholesale Rate Lock policy. Effective, May 14th, 2019, the Lock Desk will no longer process any lock extensions on VA IRRRL transactions. In addition, automated lock extensions are no longer available in BrokerIQ/CorrIQ/Encompass on VA IRRRL loan programs.
In response to continued feedback and clarification from the VA and others, the Carrington Mortgage Services, LLC (CMS) VA Interest Rate Reduction Refinance Loan (VA-IRRRL) Guidelines and Matrix are being republished with updated requirements regarding recoupment and NTB.
As a reminder, The Protecting Veterans From Predatory Lending Act of 2018 (the Act), was enacted to protect Veteran borrowers from predatory lending practices known as “loan churning” or “serial refinancing”, when obtaining a VA-guaranteed refinance loan. CMS has taken steps to ensure all VA-guaranteed loans meet the fee recoupment, net tangible benefit and loan seasoning requirements.
Loan applications submitted on or after May 9, 2019 must meet the following requirements. There will be no impact to the existing pipeline.
When issuing a VA-IRRRL, Lenders must provide the Veteran or borrower with the following fee recoupment and net tangible benefit requirements:
(1) VA IRRRL LTV: Drive-By or Interior Inspection Appraisal required if discount points are charged; Points > 1% Max 90% LTV; Points <= 1% Max 100% LTV; No Points: No appraisal required.
Last Week in Review: The US economy remains “durable”
Good news is typically bad news for Bonds and home loan rates. That has not been the trend of late, and certainly not this past week.
Durable Goods Orders is a report which shows buying demand for products with a life cycle beyond 4 years — think cars, washing machines and planes. And that buying demand of long-lasting goods is up at the highest levels since last summer, highlighting that the US economy continues to grow, and consumers and businesses feel confident in investing.
Adding to the good-news week were continued strong corporate earnings reports, and future guidance from the likes of Amazon, Microsoft and Facebook.
Finally, the first look at 1st quarter GDP showed the US economy grew at a blistering 3.2% pace — way above economists’ expectations of 1.9%. The US economy is reaccelerating.
In the face of all the good news, home loan rates held steady and remain near one-year lows.
Bottom line: when you consider the strong labor market, rising wages, growing economy, low inflation, high consumer confidence, and low rates — it truly is a Goldilocks situation in the economy and for anyone looking to buy a home.
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.