The Mortgage Heroes Podcast Episode 18 – Better CREDIT now costs more?!?!

The new Loan Level Price Adjustments are out and people are pretty upset (including us). Today we talked about the new fee changes that are impacting ALL CONVENTIONAL LOANS originated from May 1, 2023 onward.

SIGN THE PETITION TO REVERSE THESE FEES: https://www.change.org/p/stop-the-fhfa-s-unfair-loan-level-price-adjustments-on-mortgagees-with-good-credit?recruited_by_id=1f332830-defa-11ed-87f8-774cbbc88cb4

What’s the Fed gonna do now? #thefed #rates #inflation #gdp #jeromepowell #mortgage #realestate

The fiery comments of disdain over the new Fannie Mae and Freddie Mac fee structure continued into last week as we are now at the May 1st juncture where these new fees will take place on all conventional loans. In case you missed it, there are new higher fees imposed on borrowers with credit scores of 680 and higher, and lower fees imposed on borrowers with credit scores of 680 and below.

This is an effort to even out the cost to borrowers, at least on paper, but what its doing mathematically is charging higher credit worthy borrowers MORE than those with less than stellar credit. Yes, borrowers still have to qualify in underwriting in order to purchase or refinance a home, and now once you do you will get fee-ed accordingly.

The only hope for this to reverse course is for it to suffer such scathing public backlash that they have their arm twisted to roll it back. Unless there’s enough political pressure or public uprising, it will land in the hands of the industry on it’s own – whom are already up in arms and loudly, very loudly, telling the FHFA how BAD of an idea this is. There’s already petitions circulating around the internet calling for the reversal of this fee structure, but as for now, we’re rolling…and until people really start to see the inverse impact it makes, the powers that be don’t have to do anything about it. Great!!!

Last week consumer confidence was lower than projected but fine, Core PCE came it exactly as expected so no surprise for the better or worse there…but the Biggie was Advanced GDP…this came in VERY weak at 1.1% vs. 2.0% projected. This is evidence of market pain upon us. Please remember, the Fed said we needed to see “below trend” growth in order to know they’re making progress in their fight against inflation. So now, after 13 months of raising rates, there’s become ENOUGH pressure to make GDP slump to a figure low enough to make them now calculate how much longer to leave their current rate in place where it’s at before ratcheting it back down.

Watch, just watch, at the next fed meeting and press conference this Wednesday, May 3rd you’ll hear Jerome Powell mention “below trend” GDP as a reason for them to come to a pause soon, even if they don’t actually pause this week. With that being said, keep your eyes open for a possible rate hike of 0.25% this week in what could be the finale to the fed tightening we’ve all been experiencing since March of 2022. Next they will turn our attention to unemployment – remember that needs to get to 4.5%, and then they’ll tell us about price stability again. These are all the hallmarks of driving down inflation back to 2% by 2025. Yup, they’re still calling for it it 2025.

Here’s what to look for this week.

This week is really all about the Fed. Yes, we will have job openings data, employment change unemployment rate and all that, but let’s be real – EVERYONE’S WATCHING THE FED OKAY!?! Wednesday May 3rd the Fed Funds rate will be announced and it’s only gonna be 1 of 2 things: a quarter percent 0.25% rate hike, or a pause. That’s it. There will be NO rate cut this meeting.

So what does this all mean for mortgage rates Andy?

Mortgage rates continue to bounce around while we digest a lot of jobs and employment data, but what will really move the markets this week is Jerome Powell’s prepared statement at the Press Conference, and the answers he gives reporters during the open Q & A. If you’re locking your loan this week I recommend you see what happens Wednesday during the press conference and then go from there. You’re likely to see a lot of neutrality prior to that meeting and my bet is that rates will be better 1 of the days near the end of the week and most likely sputter around otherwise.

And that’s it for this week. let us know how we can help you win in mortgage and real estate!

Thanks again for tuning in to Monday Mortgage Minute.

Remember to like, subscribe and turn on notifications so you see this show right when it posts each week.

Share this video with someone you care about so they can WIN in mortgage and real estate in 2023.

We’ll see you again next week!

The Mortgage Heroes Podcast Episode 17 – Spring & Summer Buying Season

This week we talk about the Spring & Summer Buying Season and how market pessimism is NOT actually weighing in on trends here in San Diego.

Monday Mortgage Minute – This NEW RULE is very questionable!

Nothing dominated the mortgage and real estate space more last week than the proposed loan level pricing adjustment program that would charge loan applicants with better credit scores and larger down payments a higher fee than those with lower down payments and lower credit scores. Essentially an inversion of responsible personal credit strength and large downpayments.

When this came out last week the entire industry turned its focus 100% to this topic in what is essentially loan level price adjustments that negatively impact borrowers with higher credit scores compared to lower credit scores.

Under the new rule high credit borrowers with scores ranging from 680 to above will see an increase in the cost to deliver a mortgage to Fannie Mae – Understand, this fee is passed on to borrowers, not absorbed by the market.

These new credit score ranges make some before after comparisons tough to swallow if you’re a borrower with above 680 credit, and more than 15% downpayment in hand.

Without overburdening you with the nuances of the details the overarching take away here is that they are attempting to even out the cost to deliver loans to them across the spectrum of applicants based on credit score, which in short means it will cost less to deliver a loan to them if the borrower has a qualifying score below 680 and it will cost more to deliver a loan to them if the borrower has a credit score above 680.

This is only conventional loans. Unless noted otherwise FHA, VA are excluded from these adjustments.

Some of you may remember that during the refinance heyday just a few years ago there was a pricing adjustment added to every person doing a conventional refinance based on what their loan to value ratio was and the type of home, ultimately this was a penalty imposed on the homeowner for refinancing their property for better terms, a lower rate, during the time when by the way the Fed was buying billions of dollars of mortgage-backed securities and in the end the entire industry knew it was just a cash grab on homeowners trying to advance their personal financial position. Why am I mentioning this? I’m mentioning this because once again you’re having a agency imposed fee structure placed upon people who are responsible in order to shore up their coffers at the expense of those same people. No matter where you lie in disliking or liking this program, looking back at other similar program changes like this, they were eventually rescinded or reversed due to unpopularity, illegality, or industry pressure.

Expect that this will be the same in the weeks and months to come. As there are new changes and new details emerge about how this will impact borrowers, we will of course let you know.

Here’s what to look for this week.

On Tuesday we get the consumer confidence reading and we’re hoping for this to be a positive reading because two weeks consumer sentiment was good so there’s no reason this should be any different. But over the course of time we’re going to probably see consumer confidence get weaker as the Fed continues to fight inflation.

On Thursday we will have the advanced GDP reading and unemployment claims both of which are going to be looked at very carefully by the markets to determine if we are making progress against sustained high inflation.

Friday, Friday is the important day this week! Core PCE….the FEDS FAVORITE READING TO gauge their success (or struggle) with inflation. I’m personally expecting it to be AT or below the projection of 0.3%, man I really hope it is.

So what does this all mean for mortgage rates Andy?

Mortgage rates continue to bounce around within their recent highs and lows with no breakout for the higher or lower definitely. As I’ve stated before, when there is wild uncertainty, you have to stay on your toes and closely connected to your loan office so that on a day when rates take a dip you can snag that “lower on the day” rate.

Let us know how we can help you win in mortgage and real estate!

Thanks again for tuning in to Monday Mortgage Minute.

Remember to like, subscribe and turn on notifications so you see this show right when it posts each week.

Share this video with someone you care about so they can WIN in mortgage and real estate in 2023.

We’ll see you again next week!

The Mortgage Heroes Podcast Episode 16 – Pulse of the Market #realestate #mortgage #rates

We chopped up a lot during this episode, diagnosing the Pulse of the current real estate and mortgage markets.

– Listings are down nationally, but comparatively are these actually bad numbers locally?

– Risk reduction is happening all over the place, how is it effecting people?

– We need more new home builds to come to the market, but in the meantime you might have to GO TO the area you want to move in and try to make something happen.

– Recent mortgage application data confirms that mortgage activity is low. This is a great time to work on your personal advancement in credit, budget, savings, investing.

– Be aware of what’s happening in your own backyard. This is a very different market, even though things may FEEL the same, they are not EXACTLY the same.

– This is when you build relationships. Build your wealth team. Need a trust attorney – find one, need a financial planner – find one, you need a tax strategist – find one! Don’t know where to turn…ask US!

Monday Mortgage Minute – Will this be the week we get a “vacation” from economic news? #inflation

Here is a quick recap of what went down last week.

Needless to say, last week was really good, in the bad kinda way…which is still good!!!!  Here’s what I mean.

Wednesday the CPI numbers came in just below what was expected which means we could actually be seeing the beginning of the flattening of inflation that’s required before a REVERSAL in inflation. This is a welcome sign right now.

The PPI numbers came in lower than expected and THIS TIME had the negative sign before the number. For those of you who have been following our inflation talk and it’s impact on rates, you know that we need to see negative PPI numbers in order to see negative cpi numbers which eventually will help bring reduced rates back to the market…it just takes time. THIS was a really good PPI reading!

The Federal Reserve’s Meeting Minutes were released and this is when we found out that everything was pretty much as Jerome Powell delivered on March 22. No big changes in the notes means that he was pretty upfront and transparent during the press conference about what the Fed’s plans were BEFORE the SVB failure, and what they have to adjust POST SVB failure in order to accomplish their goals while also shoring up confidence in the banking systems stability.

Friday The retail sales data was worse than expected and contraction in this sector was already the base expectation. This is where the rubber meets the road. Consumers spending less money pulling back eventually causes prices reductions at the retail level which thus reduces inflation. This is what the Fed wants to see. Even though they have to say things like “easing in consumer spending” what that really translates to is “we need to see y’all make retail sales go negative for a bit”

But despite retail sales figures coming in negative, the preliminary consumer sentiment was higher than expected.  So we have Consumer inflation possibly cooling, producer inflation going negative, retail sales in the negative…but sentiment is up?….weird right?

So let’s quickly cover what coming up this week: Comparatively, it’s going to be like a mini-vacation.

Monday is the Empire state manufacturing index

Tuesday we get Building Permits & Housing Starts

Thursday Unemployment Claims & Existing Home Sales come out

Friday Flash Manufacturing PMI & Flash Services PMI

So what does this all mean for mortgage rates Andy?

Mortgage rates continue to show signs of getting better, but bit by bit. People who are ready to strike while the iron’s hot are actually seeing their offers get a good solid look with sellers, and those who are willing to sell are still getting the price they want because some of the cost of borrowing money has eased since the highs of Summer and fall of 2022.

The limited economic data coming out this week means the market is expected to function with minimal interruption that could uproot this most recent progress. In general though, please remember that we are still in what we call the “needs-based market”. If you are unsure what you should be doing over the next 12 to 24 months with your property, please let us know when we can discuss this with you to create a game plan that best suits your family’s personal financial needs.

Wherever we can help you win in mortgage and real estate we want to help you win. We want you to feel confident about your financial future when it comes to your mortgage options and your real estate holdings. Tell us how we can help!

Thanks again for tuning in to Monday Mortgage Minute.

Remember to like, subscribe and turn on notifications so you see this show right when it posts each week.

Share this video with someone you care about so they can WIN in mortgage and real estate in 2023.

We’ll see you again next week!

The Mortgage Heroes Podcast Episode 15 – CalHFA Dream for All

In this episode we discuss the CalHFA “Dream for All” program. Not so surprisingly, the $300M allocation was quickly snatched up by the time this conversation aired BUT we are hopeful this fund will be replenished as the demand is clear!

If you need downpayment assistance in California, let us know because we’re already preparing aspiring homeowners for the next round OR the new offering that comes out next.

Monday Mortgage Minute – Inflation to weigh on mortgage rates this week #rates #inflation #mortgage

Here is a quick recap of what went down last week.

Monday ISM Manufacturing was a Miss, but not by much. This is what we expected and is another log on the fire that the overall economy is still slowing as the Fed intends. Even a reversal for the better in the coming months will not change Fed policy as this is still just 1 factor among ALL the variable they are juggling right now. Yes, Juggling.

Tuesday JOLTS – Job Opening and Labor Turnover Survey was a HUGE miss and this is good news. Less job openings essentially means less opportunity for people to make money which makes its way into the economy, thus keeping prices high and inflation steady. This is also the first time in almost 2 years that the number was under 10M openings. For nearly 24 months we had somewhere between 10 million to 11 million job openings and that was making it more difficult on the Fed tamp down inflation.

Wednesday was a punch to the gut when ADP non-farm employment change came in way lower than projected. Fewer jobs than forecast spells trouble on personal budgets and small business growth projections; however, it does favor the Fed’s agenda of slowing the labor markets. Once again, of the many tools they claim to have, suppressing labor growth as a result of credit tightening on the business sector, is part of the plan.

Thursday we got even more “bad” news on jobs when unemployment claims came in higher than expected. The increase of corporate layoffs that are set to continue through 2023 and possibly into 2024 is beginning to be reflected in this figure. Again, I don’t want more people to be out of work, but it’s what our “betters” are calling for…so we have to understand and interpret what this means to us at the personal level.

And finally, Friday’s lower unemployment rate was a headliner! Even though the markets were closed for Good Friday, this 3.5% print coming in lower than last months 3.6% print could already spell trouble for the next Fed meeting…Why? Remember when Jerome Powell said they need the unemployment rate to be at 4.5% by end of year 2023?…This month’s reading of 3.5% is a lower number than the previous months reading which means we are now moving in the wrong direction, and now with less time on the clock. They still need to get to 4.5% unemployment and now only have 8 whole months remining to do so.

And there’s no break this week with a slew of inflation readings coming out. Remember these are backwards looking so what we need to our eye on is slowing inflation to eventually target a flattening, and then a reversal. If you missed our full breakdown of the Fed Press conference where I detailed when this will be, you can click the banner at the top of this video to watch that next.

In summary we will have Fed members speaking this week, CPI, CORE CPI, PPI, CORE PPI, retail sales, Core retail sales, and preliminary consumer sentiment all hitting us hard this week.

Strength in these figures will mean there is more tightening the fed may have to do in order to grind to a stop all this entrenched inflation.

Weakness in these figures will signal that the last 13 months of tightening is finally making its impact felt throughout the economy at large and future rate hikes could be paused.

DO NOT bet the farm on Rate Cuts no matter what the TV analysts say. Look, I’d love to be wrong about this, and will admit if I am, BUT JUST 3 WEEKS AGO Jerome Powell stated abundantly clearly that “rate cuts are not in our base case”…So even though there are pundits and economists calling for the Fed to start cutting sometime this year….what we have been told point blank is that rate cuts aren’t even on the table at this time. Maybe we’ll look back at this in the future an celebrate that we were wrong…maybe. And this week’s inflation readings are expected to weigh heavily on whether or not we can point and laugh at how wrong I was…of if we take another victory lap. As for me, I’ll be out buying new running shoes this weekend.

So what does this all mean for mortgage rates Andy?

Mortgage rates got better at the beginning of last week but it was a short week, and that short week ended up with the mortgage backed security market going back up on Good Friday. Expect that this week you will see price changes to reflect that, since markets were technically closed on Friday.

We are 100% in the needs-based market. If you are unsure what you should be doing over the next 12 to 24 months with your property, please let us know when we can discuss this with you to create a game plan that best suits your family’s personal financial needs.

For those of you looking to purchase a home in 2023 there are new programs coming about that might help ease your entry into home ownership. If you have not yet scheduled your pre-approval appointment with William or with Brian please send us a direct message or contact them directly so that we can help you best prepare for home ownership this year. You will still see that there is mild buyer competition but in general less and less overbidding and fighting over one another to get into homes.

Wherever we can help you win in mortgage and real estate we want to help you win. We want you to feel secure and confident about your financial future when it comes to your mortgage options and your real estate holdings. Tell us how we can help!

Thanks again for tuning in to Monday Mortgage Minute.

Remember to like, subscribe and turn on notifications so you see this show right when it posts each week.

Share this video with someone you care about so they can WIN in mortgage and real estate in 2023.

We’ll see you again next week!

The Mortgage Heroes Podcast Episode 14 – Practical advice for what to do next financially #thefed

This week Brian and Andy discuss WHAT TO DO NEXT now that we know what the Fed’s intentions and agenda are. We KNEW what they were STATING the agenda was, and even in the light of the bank failures, it’s apparent now that they are NOT PIVOTING.

Get out your notepad for quick takes that can help you and your family in the upcoming months and years as we work our way through the headwinds still impacting personal budgets, businesses, neighborhoods.

Monday Mortgage Minute – The evolution of personal needs financing #mortgage #rates #realestate

Here is a quick recap of what went down last week.

First on Tuesday we got the consumer confidence reading which came in better than expected and although we are still digesting everything that has occurred in the month of March, the consumer in general still has some optimism left in the tank. And the new question will be at what point could they begin to feel fatigue? I do have a sense that fatigue will begin to show in future consumer confidence readings as I have been hearing people around me grumble and utter under their breath about elevated prices everywhere they look. This will eventually reflect in the numbers even if they don’t right now.

Wednesday we got pending home sales that came in better than forecast and also still in positive territory. So even though it only expanded by .8% that was a much better reading than the – 2.9% forecasted. Like I mentioned last month when the print was 8.1% I said this would be a key marker to carry real estate and mortgage across the finish line in 2023. Keep your eyes on this reading…we will be!

Thursday we got the final quarterly GDP number which was 2.6%, just shy of the 2.7% forecast. This is a very good sign on the surface, however we also must remember that the fed is forecasting “below trend growth” in the next years ahead. This number is expected to retreat over the course of the next 12 to 24 months. Also, Additional unemployment claims came in just higher than forecast and are right around where the target number needs to be in order to achieve an increasing unemployment number for the duration of 2023. As this number continues to grow throughout the course of the year the effects and the impacts it has in the material economy will begin to show with less dollars chasing goods. The hope and intention is that products and service sectors will eventually begin to reduce prices as a result of consumer pain hitting their personal pocketbooks. It’s not upon us now, but it will have to come at some point.

On Friday the Federal Reserve’s main measurement for inflation came out better than expected. I’m talking about the Core PCE reading that was forecast to be .4% and it came in at .3%. This is a good sign because it is lower than expected and it also shows that there is plenty of work still to be done because the .3% is still in positive territory month over month and will eventually have to be a zero print and then a negative print in order to return down from our highs.

Looking ahead next week is predominantly about jobs manufacturing and services. We are going to get a whole host of data that indicates whether or not our economy is expanding in services and manufacturing while at the same time seeing what job growth or contraction is occurring with the jolts job openings, ADP non-farm employment change, unemployment claims, average hourly earnings, nonfarm employment change, and the actual unemployment rate! All of this may not move the markets that much in comparison to overall banking health and the mixed messaging The US treasury and Federal Reserve members have been making over the past few weeks, but it is advised that we still take this into consideration as they foretell what the next quarter will look like – Which will make a direct impact in mortgage rates

So what’s this all mean for mortgage rates Andy?

Mortgage rates got better last week for a few days but then revisited their most recent averages meaning that intraday repricing for the better did occur on select days of the week but in general rates ended up rebounding to where they started at the beginning of the week. This is the type of price action in mortgage rates that we expect moving forward into quarter 2 of 2023. The mortgage market has less and less participation of the Fed and more and more to do on its own. It will influence the markets as banks will have to become more appetizing with lower rates than what we’re currently seeing in order to regenerate loan business which is the primary revenue stream for banks.

We are beginning to get a lot of needs based questions from people about what they should do during this time in their personal finances and in their real estate and mortgage strategy. If you are unsure what you should be doing over the next 12 to 24 months with your property, please let us know when we can discuss this with you to create a game plan that best suits your family’s personal financial needs.

For those of you looking to purchase a home in 2023 there are new programs coming about that might help ease your entry into home ownership. If you have not yet scheduled your pre approval appointment with William or with Brian please send us a direct message or contact them directly so that we can help you best prepare for home ownership this year. You will still see that there is mild buyer competition but in general less and less overbidding and fighting over one another to get into homes.

Wherever we can help you win in mortgage and real estate we want to help you win. We want you to feel secure and confident about your financial future when it comes to your mortgage options and your real estate holdings. Tell us how we can help!

Thanks again for tuning in to Monday Mortgage Minute.

Remember to like, subscribe and turn on notifications so you see this show right when it posts each week.

Share this video with someone you care about so they can WIN in mortgage and real estate in 2023.

We’ll see you again next week!