Mortgage News Weekly

Mortgage News Weekly

GTG Financial, Inc
GTG Financial, Inc
Published on April 9, 2023

Mortgage News Weekly

Happy Monday💸 That didn’t last long. Dream For All is GONE, and our rate rally last week went up in smoke.
Apologies for the email being later than usual. A rate shift of this caliber causes us to play defense with clients as the news of these rates have not filtered down to mainstream media.
Let’s dive in.
TLDR (Too Long Didn’t Read) Summary:
  • ⬆️ RATES – Last week’s gains were wiped out in 1 day.
  • 🔎 TECHNICALS – Volatile knee-jerk reaction to the jobs report.
  • ☠️ DREAM UPDATE -Dead on arrival.
  • 📊 Mortgage Rates: Big jump in rates reacting to the jobs report on Friday. The movement we saw from Thursday to Friday was a total knee-jerk, but the market is holding in anticipation of the consumer price index report Wednesday. Experts point to the CPI making the reaction worse⛽by pouring gas on a fire.
🗓️ What to Look for This Week:
  • Inflation data: Consumer Price Index (Wednesday) and Producer Price Index (Thursday).
  • Small business optimism from NFIB (Tuesday), Jobless Claims (Thursday), and March’s Retail Sales (Friday).
  • Minutes from the Fed’s latest meeting (Wednesday) and demand for 10-year Note and 30-year Bond auctions.
🔧 Mixed Jobs Report for March:
  • 236,000 jobs created, in line with estimates.
  • Unemployment rate dropped to 3.5%.
  • Some signs of weakness in the labor market.
🏢 Disappointing Private Sector Job Growth:
  • 145,000 jobs created in March.
  • Leisure and hospitality sector led the way with 98,000 job gains.
  • Economy seems to be slowing down (ya think?!)
📊 Reporting Adjustment Sheds Light on Unemployment Claims:
  • Initial Jobless Claims fell by 18,000 to 228,000.
  • Continuing Claims rose by 6,000 to 1.823 million.
  • BLS revised seasonal adjustment factors, showing higher Initial and Continuing Claims.
🏠 Home Price Forecast Sees Upward Revision:
  • Home prices increased by 0.8% from January to February and 4.4% YoY.
  • CoreLogic forecasts a 0.2% increase in March and 3.7% YoY.
  • Pent-up homebuyer demand is responding favorably to lower rates.
🏭 Recession-like Conditions Continue in Manufacturing:
  • ISM Index at 46.3% for March, marking fifth straight month in contraction territory.
  • New orders and production both contracted.
🚨 Family Hack of the Week: Beware of Tax Scams 🚨
  • Watch out for suspicious emails, texts, or calls from scammers posing as the IRS.
  • Be cautious of fake charities and shady tax professionals.
💹 Technical Picture:
  • Mortgage Bonds moved lower, breaking beneath the 200-day Moving Average.
  • Currently battling a dual floor at the 100-day Moving Average and 100.758 Fibonacci level.

California Dream For “SOME”

UPDATE: This program did not help anyone it was designed for.

Verify my mortgage eligibility (Dec 5th, 2023)

From launch on 3/27 to being shut down at 1 pm on 4/7 (8 business days [State was off Friday 3/31]) there is a slim chance that anyone was pre-approved, got out into the market shopping, got a home under contract, and was able to reserve funds in that time period.

Only actively shopping buyers were able to take advantage of the program. I am assuming the conversation went like this. “Congrats on getting in contract on your new home! Did you know there is a new loan program available you can take advantage of?”
So basically, all funds were used by people already in the home buying market and decided to shift strategy. I can only imagine the stress and let down for those borrowers who got their hopes up for this program helping them.
Personally, I think the state made the net too wide for qualification. Any of the below 3 things would have made it an equal footing for those families that this was aimed at helping:
  • Lower income limits. Rather than the CalHFA limit, they should have mirrored the Fannie Mae AMI limits for low to moderate-income borrowers, just like a normal 3% conventional buyer, or first time buyer with LLPA exemption.
  • Proof of funds for use. There was NO restriction on the ability to qualify for this program from the standpoint of existing assets. A borrower could have $1,000,000 in the bank and still qualify for the 20% down payment assistance if they were a FTHB and fell under the large income limit. Instead, the state should have implemented a rule like USDA where you have to prove you needed the funds. (FYI, this is my least favorite of the 3 ideas here).
  • Above market rates. The rates that were being issued for this program were consistently trending .125% to .375 LOWER than conventional market rates. This added fuel to the fire of demand. They should have trended the rates the other direction like some of their other products. The conventional rate is 6.5% today? Great, make Dream a 7%. Help temper the demand.
All and all, I do feel this product had potential. As I had predicted before though, I think that it was manipulated and taken advantage of by existing buyers to expand their purchasing power rather than helping disadvantaged borrowers.

Can I blame those borrowers? Absolutely not. I would have (and did) advise buyers in the same position.

This program will likely make a comeback. It needs a tune-up and more guard rails to work as designed. I look forward to seeing the next evolution of the “Dream For All” product next year.

Show me today's rates (Dec 5th, 2023)
GTG Financial, Inc
GTG Financial, Inc
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