⏱ THE MORTGAGE MINUTE

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Ah, summer is finally here and that means barbecues, swimsuits, and plenty of real estate news to keep us busy. The kids are out of school, so let’s hope the only inflation we’re talking about is blowing up those pool floatie things that always seem to pop after one use.

There’s a few options of how you can read this week’s newsletter: 

1. Around - meaning you’re looking at the back of your phone or laptop,

2. Through - you’re cutting a hole in your device (and, sorry, but that’s just not ideal), or 

3. You read the whole thing - meaning you just got smarter in five minutes or less. 

We know which one we’re doing. 

How about you?

Market Sentiment & Economic Calendar

Well, our bet last week that CPI would come in slightly below expectations paid off big time! The market picked up 65 basis points off that report.  

We are locking in the June 18^th retail sales data gains for the loans closing in 15 days and floating the rest. 

We just broke through a major ceiling of resistance on the 30yr UMBS and believe this rally may have some legs in the weeks to come.  

What to Watch This Week:

Tuesday, June 18

• Retail sales data came in soft.  This is a signal that growth in the market may be starting to slow, which will lead to a reduction in interest rates. The bond market rallied nicely off this news. 

Friday, June 21

• S&P U.S. manufacturing PMI – a slight miss here could continue to add to the slowing growth narrative, further extending our interest rate slide.  This could be a market mover similar to the action we saw on the June 18^th retail sales data. 

Pipeline Save of the Week

We used to worry about our grandmas getting scammed (online viruses, phone calls, you name it), but nowadays we need to be worried about ourselves and our neighbors just as much.

Take this story for example: You’ve been saving up for ten years at your nine-to-five, and finally, FINALLY, you’ve saved up enough to buy that dream home. You look at your bank account and it has $250,001.01 as its balance. Perfect, you think because you’re putting $250k down. (Relax, it’s a joke. We all know you need those reserves!)

The time has come to wire those funds to escrow. You take a deep breath and send the funds. Finally, the house is going to be yours. Then, a few days later escrow calls that they’re waiting on the wire transfer. The room starts spinning. Your soul leaves your body and you look down and see yourself on the phone, trying to make out what just happened.

You return to your body, voice shaking, ready to be sick. Escrow finds out that the money was wired to the wrong account. 

You’ve been hacked. 

Wire instructions were sent via a malicious attacker, and they’re already off sipping mai tais and working on that summertime tan. The money is gone, and you’re left to break the news to your family that they’re going to be sleeping in those bunk beds and sharing rooms for a bit longer.

Problem is, this isn’t a made-up story. In fact, we’ve personally seen it happen to two colleagues just this year. As loan officers and real estate professionals, we tend to let the other arms of the industry handle their end and we handle ours. But working together, making that thirty-second phone call to double and triple check that everything is correct saves you a deal and your borrower years of heartache. Tell your clients about the dangers of wire fraud throughout the process. They’ll know you really care and have their best interest at heart.

RESULTS - Survey Time!!!

Here are the results from last week's Survey.  

If interest rates fall to below 6% by March 2025, housing prices will:

1. Increase – 86% of you voted that housing prices will increase. 

2. Move sideways – 14% of you voted move sideways

3. Decrease – 0% voted decrease!

Loophole Spotlight

Family Opportunity Mortgage

Fannie and Freddy allow children to purchase a property using an owner-occupied loan for their parents if their parents are unable to work and have limited income.  The beauty of this loophole is that you get a lower-rate owner-occupied loan but do not have to occupy the property. 

The guidelines say that a parent must not be able to work OR does not have sufficient income to qualify for a mortgage on their own. 

The same is true in reverse, where parents can purchase a property for a dependent child with a disability or handicap, and get the benefit of using an owner-occupied loan without having to live there.  

The spirit of this guideline is to allow parents or children to provide housing for one another, without having to pay a higher interest rate for an investment property purchase.

The Real Estate Doctor is IN

Housing might be on Ozempic, but dang if it doesn’t still look good. 

Per Redfin’s home price index, home prices are growing at their slowest pace in nearly a year and a half, but take another look at the numbers and you’ll find that national home prices were up 7.16% year over year in May. In addition, 49 of the 50 largest metros in the nation posted annualized gains! 

Try as they might to make the *gestures everywhere* current state of things look doom and gloom, at The Mortgage Minute we think these are pretty strong indicators of sunny days ahead.

We’ve seen the start of this decade with rates that skyrocketed faster than ever recorded, yet we still see a growing housing market in relation to price and record low foreclosure rates. Housing remains one of the greatest wealth building tools in America. Just don’t forget to renew your prescription.

Attachment Disorder

Sticking to our medical theme…

What’s that? You don’t know what early childhood attachment disorder is? What are you, a real estate professional or something? Call your cousin still working on his master’s degree in psychology. He’ll tell you what it is.

Anyway, rental income data released by CoreLogic this week showed that U.S. single-family rental homes posted year-over-year price growth of 3% in April, but the attached rental segment is showing signs of weakness, particularly in Sun Belt markets. 

The juice might be worth more than the squeeze, and this may show that some consumers are getting squeezed dry due to months of high inflation. This is precisely why rates have been high due to the Federal Reserve’s actions, so this shows signs that it is working, meaning we may see rates start to come down in the near future.

Keep that juice cup handy. It’ll get refilled soon enough.

Stay Connected

See! We told you! Five minutes or less!

Crazy how much we packed in there, right?

Thank you for being a part of The Mortgage Minute community. Stay tuned for next week’s insights and tips!