Mortgage News Weekly

Mortgage News Weekly

GTG Financial, Inc
GTG Financial, Inc
Published on January 17, 2023

Mortgage News Weekly

We are excited to share with you the latest updates and insights from the mortgage market

Mortgage Rates: Back to the rollercoaster. More improvement on Conventional conforming rates but movement elsewhere.

Verify my mortgage eligibility (Feb 3rd, 2023)

Some clients were “lucky” and timed the market last week, but in all honesty, the first step is getting in contract on a property first. Then worry about rates!

TECHNICALS

Stabilizing Rates… Maybe?

10-Year Treasury 01.17.2023
  •  Consumer inflation continues to decrease, with the Consumer Price Index showing a decrease of 0.1% in December and an annual decline from 7.1% to 6.5%.
  •  Inflation remains a top problem for small businesses, with 32% reporting it as their biggest issue.
  • Seasonal factors likely impacted the latest jobless claims, with Initial Jobless Claims remaining relatively flat and Continuing Claims rising by 270,000 since October.
  •  Services sector shows signs of slowdown, with the ISM Services Index falling to 49.6% in December, indicating contraction in the sector.
  •  Watching an important recession indicator. Lower inflation typically helps both Mortgage Bonds and mortgage rates improve, and these signs of easing inflation are welcome. If the lower monthly readings we've seen recently continue, they will help us make substantial progress towards the Fed's 2% inflation target.

 We are on the edge of trading one advantage for another. If we get the rate rally we have been wanting and waiting for, it will fuel even MORE buyers to get in the market and start the cycle of inflating selling prices (and seller’s egos!) again. Not to the extreme of 2020/2021, but competition is right around the corner.

 

PRODUCT SPOTLIGHT

Temporary Buydowns: AKA 2/1 Buydown

A program to help borrowers lower their interest rate for the first 12 to 36 months of their mortgage

  • Can be seller paid or lender paid
  • Borrowers must qualify off of the initial note rate
  •  Non-disbursed and available buydown funds will be credited to the unpaid principal balance of the mortgage if the property is sold during the buydown period
  • Buydown funds held in an escrow account will be used to pay down the principal of the new loan in the event of a refinance
  • Benefits include: lower monthly payment, opportunity to use excess seller concessions, lower interest rate for 1-3 years, ability to use monthly savings towards renovations or other expenses, potential to refinance to a lower rate after the buydown period, and easing the transition from renting to buying

 Sellers can benefit too.

  • Allows sellers to avoid price reductions and offer credits instead.
  • A great opportunity to help sell a property without affecting the sales price.
  • In a rising interest rate environment, sellers may be more likely to offer a temporary rate buydown to make their property more appealing to potential buyers.

Who should do this?

What’s the hook then? Really this needs to make sense for the buyer to use this much seller credit vs taking a price reduction or even just wiping out all closing costs.

Show me today's rates (Feb 3rd, 2023)
GTG Financial, Inc
GTG Financial, Inc
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(707) 546-0440

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