Mortgage Rates Rise for Seventh Straight Week

Mortgage rates are on an upward run that has now lasted seven consecutive weeks. So reports Bloomberg.

According to Freddie Mac, the 30-year fixed-rate mortgage averaged 3.18% in the week ending April 1.

That’s up one basis point from the previous week, but it’s the highest level since June, and it compares with an all-time low of 2.65% in early January.

Read the full article from Bloomberg.


Why Today’s Real Estate Markets Favor Multigenerational Households

These are not the best times for first-time homebuyers, especially young ones. Some 19 million millennials who want to buy a home, and have the income and the credit to do so, are still renting. They are missing some of the lowest mortgage rates in recent history because most simply cannot find a house they can afford.

Three factors are driving up the price of starter homes. The first is extraordinary demand from the millennial generation. Second is demand from investors who prefer less expensive homes to convert into rentals. Investors account for about 10-15% of all existing homes sold each month. Finally, home builders, strapped by labor shortages and rising costs of supplies, have been slow to respond to the demand for less-profitable smaller homes, which are less profitable. Planned construction has rebounded since the great recession but remains 38.2% below the pre-recession peak.

Multi-Generation Family Sitting Around Table At Home Enjoying Meal TogetherMulti-Generation Family Sitting Around Table At Home Enjoying Meal Together

Inventory Shortages Punish Starter Home Buyers

Thirty years ago, half of all homes on the market were smaller and less expensive and by 2018, that percentage had fallen to 23%. New construction of small homes under 1,800 square feet represented just 22% of single-family completions in 2018, down from 32% on average from 1999 to 2011, according to the State of the Nation’s Housing Report. With new home construction unable to meet today’s demand and another group of young buyers approaching home buying age, there’s no indication on the horizon that the starter home shortage will improve anytime soon.

Many millennials are forgoing starter homes altogether. They are waiting longer to buy and finding ways to save for down payments larger enough for a mid-priced property. Supplies of larger, more expensive homes have been in much better shape than starter homes and today’s real estate market conditions reward households that can afford them.

Boom in Multigenerational Living

Multigenerational households are on the rise and millennials are playing a part. In 2016, a record 64 million people, or 20% of the U.S. population, lived with multiple generations under one roof, according to an analysis of census data by Pew Research. Growing racial and ethnic diversity in the U.S. population helps explain some of the rise in multigenerational living. Asian and Hispanic populations overall are growing more rapidly than the white population and those groups are more likely than whites to live in multigenerational family households (two or more generations under the same roof).

In recent years, young adults have been the age group most likely to live in multigenerational households. Today more twenty-somethings are living with their parents than live with a spouse. Some 10.2 million adults aged 25–34 lived with their parents or grandparents in 2017, more than double the 4.8 million from 2000. Young adults without a college degree now are more likely to live with parents than to be married or cohabiting in their own homes, but those with a college degree are more likely to be living with a spouse or partner in their own homes.

Other millennials who want to buy now rather than wait are teaming up with several roommates. These arrangements have increased by 28% over the past decade and are more successful if a written agreement is in place to address issues such as equity, maintenance, improvements, and exiting the arrangement.

More Adults Increase a Household’s Income

Whether in a multigenerational household or roommate arrangement where each adult is a co-owner, the total household income makes it possible to qualify for a mortgage on a much larger and more expensive house and avoid the starter home price tier. One potential problem for several co-signers on a mortgage is the treatment of credit. Lenders will use the lowest credit score of all the co-signers.

Multigenerational arrangements can save money in other ways. Grandparents and older family members can provide childcare while younger adults can care for elderly relatives. Travel costs are reduced, as members don’t have to pay for gas or airfare to visit.  Household tasks and expenses like utilities and upkeep can be shared. Alternative households are one way that first-time homebuyers can address the rising costs and scarcity of starter homes. As even more young adults reach homebuyer age in the near future, multigenerational households and other shared living arrangements may become more popular.

Steve Cook is the editor of the Down Payment Report and provides public relations consulting services to leading companies and non-profits in residential real estate and housing finance. He has been vice president of public affairs for the National Association of Realtors, senior vice president of Edelman Worldwide and press secretary to two members of Congress.


New Petition Urges Mortgage Re-HARPing

Well, file this one under “was bound to happen,” or, “was only a matter of time.”

A clever guy by the name of Marcus J. from Clementon, New Jersey has created an online petition to eliminate the securitization cut-off date for HARP eligibility.

At the moment, this ever-important cut-off date is May 31, 2009, meaning if your mortgage was sold to Fannie Mae or Freddie Mac after that date, you’re not eligible for a HARP refinance.

Unfortunately, many homeowners already refinanced their mortgages under HARP, perhaps when it wasn’t as attractive as it is now, seeing that there is a much more flexible HARP 2 nowadays.

At the same time, mortgage rates have marched lower and lower since HARP was originally unveiled, again, likely frustrating homeowners who refinanced early on.

There are also the many people who purchased homes after that cut-off date, who are now underwater and likely seeking a HARP refinance.

Eliminate HARP Cut-Off Date?

The petition essentially calls for the elimination of the cut-off date, which Marcus J. refers to as “arbitrary,” along with the one-time HARP limit. This would allow for so-called “reHARPing.”

He argues that removing these roadblocks would permit millions of Americans to refinance their mortgages to lower rates, thus saving thousands on their monthly mortgage payments over time.

Note: You can reHARP a Fannie Mae loan that was refinanced under HARP from March to May 2009.

Interestingly, he isn’t the first to propose such an idea. Back in May 2012, U.S. Senators Robert Menendez (D-NJ) and Barbara Boxer (D-CA) proposed extending the cut-off date an additional year to May 31, 2010.

That seemed to fall on deaf ears, so it’s unlikely a complete removal of this key date will be approved.

As much as it sounds like a good idea (maybe), it’s a bit of a slippery slope. If you remove the date, borrowers could just refinance over and over until they saw fit, assuming rates continued to fall.

And this isn’t a traditional refinance program – it’s essentially a loss mitigation tool for distressed borrowers, or those at risk of walking away.

A line has to be drawn somewhere, otherwise it would become something of a free-for-all.

Does the cut-off date deserve a second look? Absolutely; the FHFA should dissect the data to determine if extending it will provide a net benefit.

But removing the date entirely might be a bit extreme.

When it comes down to it, timing can be your best friend or your worst enemy, and we can’t rely on the government to extend the program every time rates drop, especially when there’s not even a refinance program for non-agency mortgages.

Ironically enough, you can blame the government for creating this situation, seeing that they simultaneously worked to push mortgage rates lower and lower long after HARP was released.

Petition Needs 25,000 Signatures


It will certainly be interesting to see if the petition receives the necessary 25,000 votes to at least “get a look.”

It’s currently available for online signature over at, which is the official website to have your voice heard.

At the moment, it only has 26 signatures, so an additional 24,974 are needed by February 8th, 2013 in order for an official review and response from the Obama administration.

Additionally, it needs at least 150 signatures to be publicly searchable on the website, meaning it’s got zero visibility right now.

If you’re interested, you can sign here.

(photo: Feral78)

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 15 years.


Five Ways to Find a Bargain on a Home in 2020

Single family homes in America are more expensive today than they have ever been. In August 2019, on a national basis, the median price on existing homes rose for the 90th straight month. However, inventories are slowly improving, and prices are growing at a much slower pace and, in many markets, sales have been relatively soft even at today’s low mortgage rates.

For many buyers, the lack of affordable homes is delaying their entry into homeownership, and delay can be expensive. Studies show that the sooner a young buyer can buy their first home, the more successful they will be in building equity. There is a $72,000 difference in the median housing wealth of those who bought their first home between ages 25 and 34 and those who waited until they were 35 to 44.

couple using computer to searchcouple using computer to search’s state-of-the-art platform includes local market information and tools that can help you land a good deal on a home. They can also keep you up to date with the most current listings and local market data from multiple listing services nationwide.

You can augment your search with additional resources from the government and elsewhere to find houses that are not available on any listing service if you know where to look. Once you are plugged in to key resources on and other sources, you may be able to land a new home in these times of remarkably low interest rates.

  1. Look for recent price reductions. Sellers lower their price grudgingly, often after a home has failed to sell during the summer months and sellers want to get the deal done before the end of the year. To find recent price reductions, click on the “price reduced” filter on the “sort by” tool on the top left of the sort page. However, homes that haven’t sold could also be “turnkeys” that aren’t selling for a good reason, so be careful. See the cautionary note below.
  2. Find aging listings. To find the number of days a listing has been on, go to the listing and scroll down to “Home Details.” Click on price reductions. The average listing spends an average of 30 to 40 days on the market before sellers accept an offer. However, time-on-market differs significantly from one market to another. Your real estate agent can provide you your market’s information, or it might be listed on the website of your local multiple listing service. If your market’s average is more or less, that’s an indicator of local demand. It could also be an indication that there might be a problem with the house.
  3. Buy a foreclosure. You can save as much as 25 to 35% by buying a foreclosed home. You can also find foreclosures at government sites like HUD and VA, Fannie Mae, Freddie Mac, and state housing finance agencies. Many foreclosures have been vacant for many months, and previous owners probably didn’t do an adequate job of maintenance. (See cautionary note below.)
  4. Buy a short sale. Short sales occur when owners cannot make the mortgage payments and the lender agrees to sell the property for less than the owner owes on the mortgage. Though the lender takes a “short” loss, it’s less costly than going through a protracted foreclosure only to lose as much or more. Short sales are relatively rare these days. There is less competition for short sales than foreclosures, and the properties are generally in better shape. Some multiple listing services that make their data accessible to consumers list short sales. It’s probably easier to ask your agent to search for you. For more information on buying a short sale, check out this information from Freddie Mac.
  5. Move to a more affordable market. In the second quarter of 2019, the median cost of a single-family home in the Chicago market was $278,100. In Cleveland, it was only $169,000. The home prices in different markets vary so much that a first-time buyer can cut years off the time it will take to save for a down payment by moving. Faced with shortages of affordable homes where they live, more and more young buyers are moving to markets where they can afford to buy.

A recent study by the National Association of Realtors found that in the majority of the top ten markets popular with millennials, the unemployment rate is lower than the national average, and home prices are generally lower. Based on the area average income, millennials in these markets can afford to buy one out of four homes listed for sale. In more expensive markets like Dallas, millennials can afford just 10% of the listed homes, just 13% of the listings in Boston and barely 2% in San Diego, according to the NAR study.

Be Careful and Protect Yourself

Homes that take a long time to sell or have had their price reduced have already been picked over by other buyers. Others have passed on them for a good reason. Perhaps they were priced too high, or they may have flaws that would be expensive to fix.

Have any property you are considering inspected by a professional inspector as soon as you can and include a contingency clause in your offer that will allow you to get out of the deal if the house fails inspection. Ask the inspector to estimate costs to fix any problems and add these estimates to the price of the home to arrive at your actual purchase price.

You cannot add contingency clauses to foreclosure contracts, which increases the risk you incur with foreclosures. With homes being sold by the owner, ask the owner to fix problems you identify before closing or reduce the purchase price to account for what you will spend to put the property in proper shape.

Steve Cook is the editor of the Down Payment Report and provides public relations consulting services to leading companies and non-profits in residential real estate and housing finance. He has been vice president of public affairs for the National Association of Realtors, senior vice president of Edelman Worldwide and press secretary to two members of Congress.


Four Signs that a Buyers’ Market is Coming

Since February 2012, home prices have been rising at an accelerating pace, fueled by a combination of extraordinary demand and inadequate supplies of homes for sale. Over the past year, prices have been rising faster than incomes, reaching an annualized rate of nearly 7% a year. Median prices in more than half the nation’s housing markets had reached all-time highs. Now, sales are lagging and prices are rising at much slower rates. Fundamental changes are underway in the real estate economy that should bring a degree of relief to the record-breaking millions of millennial first-time buyers who are struggling to save enough for a down payment.

The laws of supply and demand govern real estate markets. High levels of demand deplete supplies and prices rise until homes become too expensive for average buyers, and demand declines. High prices also encourage sellers to list their homes and builders to build new ones. Supplies increase until prices moderate and decline. Buyers’ markets occur when the supply of available properties for sale exceeds demand (the number of buyers actively shopping for properties). Sellers’ markets occur when demand exceeds the supply of available homes on the market.

In sellers’ markets, homes sell faster and for prices at fair market value or higher. Often, more than one buyer will make an offer, creating a multi-bid situation where buyers may raise their offers to win the contract. In buyers’ markets, houses take longer to sell and sellers may decide to settle for offers below list price. Sellers may offer incentives, such as including a home warranty insurance policy that covers appliances and systems like air conditioning at the time of sale.

Buyers’ Markets Are Inevitable

Real estate markets are cyclical. Even the longest sellers or buyers’ market will eventually end as demand, price, and supplies change. Over the past year, the laws of supply and demand have been at work, changing the dynamics of hundreds of housing markets. Prices in half the nation’s markets have reached peak heights, and they continue to increase in most markets, albeit at a slower pace than last year. Sales began sagging 18 months ago, then stabilized recently as more buyers became active to take advantage of lower interest rates.

Most markets today favor sellers. However, many are in the early stages of becoming buyers’ markets and your market is probably one of them. Eventually, your market will make that transition. With the help of your real estate agent, who has access to local data from your local multiple listing service or other sources that are not readily available to consumers, you can read the signals in your market data that professionals use to anticipate the change before it occurs.

When using real estate data to track market trends, be careful to account for seasonality. Prices, sales volume, inventories and the time it takes to sell a home all change with the seasons. Spring and summer months are traditionally more active and, on a month-to-month basis sales will usually rise, and supplies will probably decline during the warmer months. That’s why real estate economists compare data on a year-to-year basis, or they will adjust monthly data using a formula to account for seasonality.

buyers marketbuyers market

Here are four signs that decipher the direction in which your market is headed:

  1. Houses take longer to sell. The time that passes from the day a home is listed for sale and the day a seller accepts an offer is an excellent indicator of demand. When demand is weakening, houses in a market will sell less quickly than they were selling a year ago. Demand can be measured by days on-site, the time that has passed since the home was listed on a web site like or days on market, the number of days since the home was listed on the local multiple listing service. To express the effect of demand on the domestic supply of homes for sale in a particular market, some economists prefer months’ supply―the number of months that it would take to deplete the local inventory of homes for sale at the current rate sales.

There is no specific definition for buyers’ and sellers’ markets in terms of time on market, but generally, the average listing time is 46 to 55 days. By itself, time to sell a home is not enough to define a buyers or sellers’ market. However, a lengthy time on market during the fall and winter months is a sure sign of a buyers’ market. When a listing takes six weeks or less to sell in the spring or summer, you are probably in a sellers’ market. By comparing changes in the time on market over the past two or three years, you can identify trends and get good sense of whether conditions are improving for buyers or sellers.

  1. Sales slow down as demand drops. Home sales quickly reflect changing supply and demand. When sales decline from levels of a year ago over a period of several months, it’s a reflection of either falling demand or low levels of inventory. Demand may fall for one or more reasons ranging from consumer confidence in the economy, changes in mortgage rates, or price increases that exceed what local buyers can afford.

Your agent should be able to provide you with monthly data on local sales trends in the form of closings and contracts or pending sales. Though about 15% of contracts fail to close, pending sales are an indicator of future sales trends.

  1. Prices appreciate at rates lower than 3%. Prices reflect changes in the relationship between supply and demand. Prices rise in a sellers’ market and are flat or trend down in a buyers’ market. As a rule of thumb, residential real estate appreciates about 3% in a typical year. In July 2019, home prices rose 4.3% over 2018, suggesting that we are still in a sellers’ market, but less so than in July 2018, when prices were 6.9% higher than in 2017. If price appreciation falls below 3% next year, it’s a sign than a buyers’ market is here. To get a sense of recent price trends, ask your real estate agent for a graph illustrating price trends in your market over the past three years.
  2. Supplies of homes for sale exceed demand. When inventories of affordable homes fell so low that they started to hamper sales, many housing economists were caught off guard. By 2017, the month’s supply of available homes for sale in the nation’s largest markets had declined 25% over the preceding two years. Inventories continued to fall quickly, until the point that the lack of affordable homes for sale was making the problem even worse by pushing prices up so high that middle-class homeowners in many markets could not find move-up homes which would free up the houses in which they were living for first-time buyers. By late 2017, the first signs of relief appeared in hotter markets. On a year-over-year basis, new listings started to improve, and supplies of active listings stopped shrinking every month.

Several factors contributed to the inventory drought: low levels of new home construction, the conversion of 7 million homes from ownership to rental, move-up buyers who could not afford the move up, and above all, the coming of age of the largest generation of prospective homebuyers in history― the millennials.

Inventory shortages may be the most destructive cause of home price inflation. When supplies cannot meet the demand, buyers find themselves bidding against each other for a house they can afford. By the time the bidding ends, winners often turn out to be the real losers because they have stretched their budgets to the maximum. Also, shortages can creep up on buyers and their agents if they are not following market reports carefully which will artificially drive up prices.

The nation’s housing markets have not recovered from the inventory drought. The relationship between prices and inventories is very delicate. For example, in June 2019 demand improved when mortgage interest rates fell unexpectedly. Many buyers became active to take advantage of the rates. With demand up, inventories fell slightly below levels of a year ago. Should rates continue to rise, demand will return to its slow decline.

Pay attention to inventories and new listings in your market. Your market with not make the transition from sellers to buyers’ market until supplies of homes for sale outnumber sales on a monthly basis.

Markets do not change quickly from sellers’ to buyers’ or vice versa. The process is a slow one, giving you time to prepare. If you are a potential seller, you can track these trends to help you decide when to sell in advance of a changeover. If you are a buyer, particularly a first-time buyer, get your ducks (credit score, down payment) in a row so that you will be ready when the market turns in your favor.

Steve Cook is the editor of the Down Payment Report and provides public relations consulting services to leading companies and non-profits in residential real estate and housing finance. He has been vice president of public affairs for the National Association of Realtors, senior vice president of Edelman Worldwide and press secretary to two members of Congress.


Frigid February Cools Off Monthly Home Sales

During harsh winter weather in February, nationwide sales of single-family homes fell to their lowest in nine months. So reports Reuters.

Home Sales to Vets Increase

New home sales tumbled 18.2% to a seasonally adjusted annual rate of 775,000 units in the month, according to the Commerce Department.

Experts said a record jump in lumber costs and rising mortgage rates could slow housing sales in 2021.

Read the full article from Reuters. 


Staying Prepared in a Recession | Tips for Financially Protecting Your Home

It was one for the history books, second only to the Great Depression, the Great Recession saw countless homes foreclosed, numerous bankruptcies, and overall catastrophic distress in the housing & financial markets. In fact, during the 10 years that spanned the Great Recession, 7.8 million foreclosures happened. For those that lived through the financial turmoil, there is fear and hesitancy of history repeating itself. The real estate market has certainly recovered; however, there is chatter that a looming correction could be on the horizon. Whether it’s just an adjustment in the housing market or a full-blown recession, there are steps you can take now to hedge your bets and place you in the best place financially.

African male holding piece of paper while paying gas and electricity bills online on notebook pc. Young family calculating their expenses, planning domestic budget, sitting in kitchen interiorAfrican male holding piece of paper while paying gas and electricity bills online on notebook pc. Young family calculating their expenses, planning domestic budget, sitting in kitchen interior

Take Advantage Of Current Low Interest Rates

For much of 2019, interest rates have been low. One of the contributing factors to foreclosures during the recession were extreme or variable interest rates. There are two ways to take advantage of low interest rates to protect yourself in case of another recession:

  1. Buy A Home. Arguably one of the best ways to hedge your bets is to have affordable housing that can sustain an economic downtown. Locking in a mortgage with a low interest rate helps a buyer experience more affordable monthly payments & more money applied to the principal balance.
  2. Refinance Your Mortgage. If your original home mortgage was secured pre-recession, you probably know the impact of variable rates, interest-only loans, & balloon payments. Even if your mortgage was secured after the recession, mortgage rates have since declined and your home equity could have increased. By refinancing your current mortgage, you can lower your overall monthly payment. Decreasing your overall monthly housing budget is a critical step in recession-proofing your finances.

Create Multiple Streams Of Income

While the housing market took a downtown during the recession, the rental market remained steady and one of the ways to withstand an economic downturn is to have multiple streams of income. While demand may be less from buyers due to a recession, the demand by renters typically increases. By purchasing rental properties with lower interest rates, the additional stream of income can be a vital asset during a recession. While strategies may vary in how to acquire a cash-flowing rental property, the math is still the same: purchase low with a 20% down payment and a low interest rate will help an investor to not only maintain but cash flow the rental.

Pay Down Your Mortgage

Whether you choose to refinance your current mortgage or not, paying down your existing mortgage will not only build equity but provide freedom in the next recession. By utilizing programs such as Bi-Saver, homeowners can experience flexibility in mortgage payment schedules as well as increased equity. Programs like Bi-Saver act as a third party that collects the mortgage bi-weekly throughout the life of the loan– by the end of each year at least one additional mortgage payment is applied to the loan. This process can erase years off the life of the loan. By combining a low interest rate and additional mortgage payments each year, homeowners have the ability to experience some breathing room in their finances.

While nobody knows if, or when, the next recession will be, it’s important to make cautious and wise financial decision now that your future-self will thank you for. By taking advantage of lower interest rates, creating multiple streams of passive income, and paying down your mortgage will help you to hedge your bets!

Jennifer is an accidental house flipper turned Realtor and real estate investor. She is the voice behind the blog, Bachelorette Pad Flip. Over five years, Jennifer paid off $70,000 in student loan debt through real estate investing. She’s passionate about the power of real estate. She’s also passionate about southern cooking, good architecture, and thrift store treasure hunting. She calls Northwest Arkansas home with her cat Smokey, but she has a deep love affair with South Florida.


How Low Mortgage Rates are Making Housing Shortages Even Worse

Perhaps the most damaging aspect of the chronic drought of homes for sale is the destructive way shortages are concentrated on the least expensive properties on the market– the starter homes that are the gateways to homeownership.

When I worked at the National Association of Realtors, I learned about the homeownership ladder.  Here’s how it works: First-time buyers purchase the least expensive homes on the market; this transaction makes it possible for a young, growing move up to the next price level. The proceeds from the sale of their starter home get a good start on a more expensive home with a sizeable down payment, then the ladder continues until the kids are on their own and a large family home costs too much to maintain. Then it’s time for the retiring couple to sell, cash in their equity and either purchase or rent a retirement home. This phenomenon continues as the family moves from one town to another.

At each rung of the housing ladder, except the first and the last, each family moving up the ladder generates two transactions, a sale, and a purchase. Should large numbers of owners get stuck at a certain level and they do not move up, the housing ladder slows down. This creates problems for homeowners that are above and below the problematic level to suffer.

buyers marketbuyers market

The housing ladder works best when all generations are roughly the same size, housing inventories at all levels remain constant, and new home construction replace tear-downs. At local levels, many events ranging from natural disasters, economic disasters, exceptional growth or population decline may cause local housing to break down. At the national level, only events that impact large numbers of the nation, like national disasters, recessions, depressions, crises that cripple the nation’s housing finance system, significant changes in the nationwide housing inventory or substantial changes in the sizes of generations.

Today several of these factors are creating a chronic national crisis in inventories of homes for sale. Housing ladders are slowing down as problems affecting one level impact others.

These problems are:

  • The successive coming of age of two of the largest generations in history, the Millennials followed by Generation Z;
  • The conversion of 6 million of the lowest-level homes into rentals;
  • The inability of new home construction to relieve these shortages;
  • New construction cannot meet the demand from first-time buyers, about one out of three buyers,
  • Prices generated by shortages of homes for sale are creating widespread unaffordability at lower levels of the housing ladder; and
  • The generation at the top level of the housing ladder is choosing to age in place rather than sell their homes.

The housing ladder makes it easier to understand how an event that impacts one tier will also affect adjoining tiers. For example, the decision by millions of Boomers to “age in place” is reducing the available inventories today but will increase supplies as Boomers die off in the next decade. Prices of large homes will drop, encouraging move-up buyers. The increase in Boomer homes for sale will work down the hosing ladder and may eventually increase the number of homes available to move-up buyers and reduce prices.

HousingWire reported that last December, the inventory of mid-tier housing houses priced below $200,000 declined 18.1% year-over-year. In the next tier, houses priced between $200,000 and $750,000 fell 10.2%. Listings of homes priced over $1 million shrank by 4.4% year over year. The shortfall originated at the entry-level and worked its way up the housing ladder from bottom to top, declining in strength at each level like an echo.

However, an event at one level may not produce the expected result at the next. Mark Fleming, the Chief Economist at First American, recently suggested that falling mortgage rates can incentivize homeowners to sell their home and buy a different one, but persistently low mortgage rates can have the opposite effect.

“While historically low rates increase buying power and make it more affordable for potential buyers to purchase a home, they also discourage many existing homeowners from selling,” he wrote.

“There is little to no house-buying power benefit for homeowners with an already low mortgage rate, so the only way existing homeowners can increase their house-buying power is through household income growth. This helps explain why more and more homeowners have decided to stay put, reducing the inventory of homes for sale and increasing the length of their tenure,” he said.

While historically low rates increase buying power and make it more affordable for potential buyers to purchase a home, they also discourage many existing homeowners from selling. This helps explain why more and more homeowners have decided to “stay put,” reducing the inventory of homes for sale.

Steve Cook is the editor of the Down Payment Report and provides public relations consulting services to leading companies and non-profits in residential real estate and housing finance. He has been vice president of public affairs for the National Association of Realtors, senior vice president of Edelman Worldwide and press secretary to two members of Congress.


Are Your Originators Ready for a Purchase Money Market?

While mortgage rates are still historically low, many lenders were caught off guard when rates recently rose. They thought that interest rates wouldn’t increase until later in the year.

Sherlock: not having an accurate view of sales performance is a recipe for disaster
Pat Sherlock

Likewise, refinance applications dropped. Freddie Mac also reported that the percentage of borrowers with rates above 5% has declined. All of these trends indicate a shift to purchase money, which means 2021 will undoubtedly be more challenging for lenders and originators than last year.

None of this should be a surprise for experienced mortgage bankers familiar with the ups and downs of origination. But, for newer LOs who have focused their sales efforts on refinance lending, the switch to purchase money can seem especially daunting.

Many originators are currently faced with attempting to rekindle relationships with referral sources they may have ignored, a nearly impossible task. Any producer who believes that a low price is enough to win back a real estate agent who they have not spoken to in months is living in a fantasy world.

It may not seem fair that a previous referral source has moved on to other contacts for home loans, but that’s the reality. With more than 500,000 originators nationwide to choose from, referral sources have endless options to do business with sales professionals who are attentive to their needs.

So, how can originators increase their purchase money market share? Here are three strategies that work:

  1. Select a niche. Originators who think that every person is a potential customer is missing out on the benefits of being known as an expert in a particular area. Selecting a niche enables producers to differentiate themselves in the marketplace and better target their sales efforts to potential referral sources.
  2. Create value for referral sources. What is valuable to one referral source may not be valuable to another. For that reason, originators must learn what a particular referral source values before they can establish a meaningful relationship. Once this piece of the puzzle falls into place, originators can deliver value to a referral source and build a long-term partnership.
  3. Be consistent in marketing. To attract the attention of referral sources, originators must reach out consistently and frequently with valuable content. Messaging should be presented in a format that matches with how referral sources want to receive information. Mass marketing emails and newsletters are no longer effective at setting an originator apart from the competition.

Right now is the perfect time for lenders and originators to polish their purchase money strategies. Originators who take these three simple steps will have referral sources knocking down their doors.

Pat Sherlock is the founder of QFS Sales Solutions, an organization that helps organizations improve their sales talent management and performance. For more information, visit


Why It’s Suddenly Harder to Get a Mortgage

With COVID-19 making it incredibly difficult to buy a home, or even to get a mortgage, home buyers and homeowners trying to refinance their mortgage have something new to keep them awake at night.
In response to increased risk to lenders from the coronavirus, in mid-April, JPMorgan Chase raised standards for mortgages and stopped approving mortgages with down payments lower than 20%. It also increased its minimum FICO credit score to 700.

Lenders Raise Scores

Flagstar raised its minimum credit score for new Federal Housing Administration (FHA), Veterans Affairs (VA), and U.S. Department of Agriculture (USDA) purchase loans to 680. For cash-out refinances, the bank now requires that borrowers have at least a minimum credit score of 700.

US Bank and Wells Fargo both raised their minimum credit score to 680 for FHA, VA, and USDA loans, and 640 for conventional loans. LoanDepot requires 620 minimum FICO score for VA and FHA loans and a higher score, 660+, for cash-out or streamline refinancing. Now, the bank requires borrowers to have a minimum FICO score of 700 with a maximum debt-to-income (DTI) ratio of 43% when any funds used for closing costs or down payment are not borrower’s funds or gift funds, according to HousingWire.

Serious millennial man using laptop sitting at cafe table, looking up mortgage related resourcesSerious millennial man using laptop sitting at cafe table, looking up mortgage related resources

Fannie Mae and Freddie Mac are adding to the new hurdles facing borrowers by asking lenders to take additional steps to verify employment status. Instead of verbal verification, lenders may obtain an email directly from the employer’s work email address that identifies the name and title of the verifier and the borrower’s name and current employment, a year-to-date pay stub from the period that immediately precedes the note date. When a borrower is using self-employment income to qualify, the lender must verify the existence of the borrower’s business within 120 calendar days before the note date from a third party, such as a CPA, regulatory agency, or the applicable licensing bureau, if possible.

Homeowners Rush to Refinance

With millions of breadwinners out of work and unemployment payments delayed, a surge of applications for home equity loans and lines of credit jumped 30% or more from a year earlier in recent weeks before stay-at-home orders cut application volumes.

Happy adult man having a video call with a laptopHappy adult man having a video call with a laptop

Bank of America significantly tightened its standards for loans to homeowners wanting to borrow against their equity, ratcheting up an internal gauge that measures market conditions from the company’s lowest level to its highest. Its minimal credit score is now 720, up from 660.

Wells Fargo cut the maximum amount homeowners can borrow and reduced how much the bank will lend relative to a property’s value. The bank is applying stingier valuations to homes due to a lack of inspections and appraisals resulting from the pandemic.

Mortgage Credit Supply is Low

With mortgage rates at a historically low level and applications to refinance exploding, the Mortgage Bankers Association reported that the supply of available mortgage credit fell 16% in March, reaching the lowest level it has been since June of 2015.
“Mortgage credit supply decreased 16% in March to the lowest level since June 2015, with declines in availability across all loan types. There was a reduction in the availability of loans with lower credit scores and higher LTV ratios, and the largest pullback came from the jumbo and non-QM space,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.

If you’re looking for more resources as a homeowner, renter, or seller during the coronavirus outbreak then visit our COVID-19 Resources page where you can find everything from DIY projects to tackle during a weekend to seller and buyer tips during the pandemic.

Steve Cook is the editor of the Down Payment Report and provides public relations consulting services to leading companies and non-profits in residential real estate and housing finance. He has been vice president of public affairs for the National Association of Realtors, senior vice president of Edelman Worldwide and press secretary to two members of Congress.