With vigilant focus on the source of funds for closing mortgage loans, it's important to know what's acceptable. Here's what you need to know and what you'll need to provide:
Thankfully we saw the end of the government shutdown late last week, although it remains to be seen if this is a permanent measure or simply a stop-gap that will cover funding through the 15th of February. While this is positive news, it warrants mentioning that there is currently a backlog on data and it remains unclear when the impacted reporting will be released. For now, we will review the information that has been released and provide updates as more data becomes available
Naples, Fla. (January 18, 2019) - The Naples area housing market ended 2018 with impressive annual activity statistics in all areas of the residential real estate market including an 11 percent increase in total closed sales and a 14 percent increase in inventory compared to 2017. Sales of homes over $1 million continued to drive the market in 2018, especially in the condominium market where closed sales of condominiums over $1 million increased 37 percent! According to the Year End 2018 Market Report released by the Naples Area Board of REALTORS® (NABOR®), which tracks home listings and sales within Collier County (excluding Marco Island), inventory at the end of 2018 was the highest on record in six years.
The shortened holiday trading week saw the rate of global growth slow, which coupled with some weaker than expected manufacturing data, helped to increase concerns about slower growth and what that reality means for the markets and rates. Fortunately, labor data was quite strong which helped to nudge mortgage rates slightly lower. Fed Chair Powell also shared on Friday that the Board is essentially taking a pause on rate hikes, information that was met with exuberance in the equity markets.
It was another volatile week in the equity market, with debt rates remaining pretty steady. The data reports relating the US economy were at expected levels, and Mario Draghi's remarks held no surprises. He confirmed that the European Central Bank (ECB) will move forward with their plan to cease bond purchases, information that has been widely known for some time now. All in all, it was a fairly quiet week for mortgage rates, evidenced by a slight downward move.
There was some good news to be had at the conclusion of a tumultuous week on Wall Street. Slowing global growth and a slight miss on jobs numbers helped to push mortgage rates to their lowest levels that we have seen in the past two months. This weakening in growth rates has analysts less concerned about inflation which is reflected in the lower mortgage rates.
There have been a number of different market analysts discussing a potential economic slowdown in recent weeks, and many of their remarks include data highlighting to a slowing housing market. Typically, construction and housing are strong drivers in the overall economy, with overall construction, both residential and commercial, accounting for about 7% of today's GDP. It is interesting to note that while housing starts are growing at a slower pace, no such change has been observed in the commercial sector. This downturn has some market watchers worried about the chances for another massive crisis similar to the crunch that precipitated the 2008 housing crisis and ensuing recession.
If you are shopping for a mortgage, you may hear the terms conforming and non-conforming, and wonder what exactly they mean. Simply put, conforming loans are at or below the level of debt that can be taken on by Fannie Mae and Freddie Mac. With non-conforming loans, there are additional financial requirements that are part of the mortgage process. Every year the Federal Housing Finance Agency (FHFA) determines the necessary increase in housing prices in order to establish the new conforming loan values.
It was a good week for mortgage rates in spite of mixed data reports on the economic front. The stock market continued its trend of volatility and finished the week down overall. Concurrent changes in the bond market reflected its inverse relationship with equities, and the continued outlook for a global slowdown also helped to push yields lower. This, in turn, influenced the decrease in mortgage rates