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Central Coast Lending Market Update

Mortgage Applications

Despite the sharply higher mortgage rates, purchase applications for home mortgages rose 3.0 percent on a seasonally adjusted basis in the week of December 16th.  This puts the purchase index 1 percent above the level in the same week a year ago. Refinancing also rose 3.0 percent from the prior week. Interest rates on the 30-year fixed rate conforming mortgages climbed 13 basis points from the week prior to 4.41 percent to the highest level since May 2014.

Existing Home Sales

Sales rose a surprise 0.7 percent to a 5.610 annualized rate which is a cycle high, this is well ahead of October’s 5.570 million which is the second highest of the cycle. Resale of single family homes slipped 0.4 percent in the month but the 4.950 million rate is the cycle’s second highest, next only to October’s 4.970 million. Condo resales were the strength of the November report, up 10.0 percent to a 660,000 rate. Year on year rates have barely been in the plus column this year. Total resales were up 15.4 percent in November with single family resales up 16.2 percent and condos up 10.0 percent. Supply is very thing in the market right now which is resulting in driving up prices. Supply fell a steep 8.0 percent in the month to 1.850 million which is down 9.3 percent on a yearly basis. The median price rose 0.3 percent higher in the month to $234,900 for a yearly gain of 6.8 percent. Aside from the rising prices, rising mortgage rates are another factor that will limit the affordability of resales.

GDP

The third quarter lived up to its early expectations, rising with each new revision to an inflation adjusted 3.5 percent annualized rate for the best showing in two years. The consumer was the driving force in the quarter, spending at a 3.0 percent rate (up from 2.7 percent in the prior estimate) on top of the second quarter’s very strong 4.3 percent rate. Exports, benefiting from agriculture, were another positive as was nonresidential fixed investment which got an upgrade in the latest estimate to show a plus 1.4 percent annualized rate. Inventories also added to the quarter, but less so than prior estimates predicted, which is a positive for fourth quarter production and employment. The GDP price index is unrevised at 1.4 percent. The fourth quarter, held down by a reversal for exports and perhaps by less strength in consumer spending, isn’t as strong at the third quarter proved to be.

Jobless Claims

In a negative sign for the December employment report, initial jobless claims rose 21,000 in the week of December 17th to a much higher than expected level of 275,000. The week of December 17th is also the sample week of the monthly employment report and a comparison with the November sample week that shows a sizable 42,000 gain. A comparison of 4 week averages at 263,750 in the latest week shows a 10,750 gain. Continuing claims rose 15,000 in lagging data for the week of December 10th to 2.036 million with the four week average down slightly to 2.037 million. The unemployment rate for insured workers remains unchanged at 1.5 percent.

FHFA House Price Index

The FHFA house price index rose a softer than expected 0.4 percent in November, 1 tenth shy of economists forecast but following strong gains of 0.6 percent and 0.7 percent in the two prior months. And despite the weakness, the yearly gain is at plus 6.2 percent, marking the third straight month the rate is over 6 percent. Home price appreciation has been less than sensational this year but has been steady and remains much higher than income growth. Low supply in the new and resale markets hints at perhaps a stronger appreciation next year.

Personal Income and Outlays

Though November may have been a cycle high for confidence it actually proved to be a weak month for the consumer. Personal income was unchanged in November as the wages and salaries component dipped into the negative column at minus 0.1 percent. Consumer spending rose 0.2 percent and reflected specific weakness in vehi9cles. Not helped by the weakness in income, the consumer had to dip into savings during the month where the rate fell 2 tenths to 5.5 percent. Price date is flat, unchanged for both the PCE and PCE core (less food & energy) with the yearly rate at 1.4 percent for the PCE and at 1.6 percent for the core. The yearly rate for the core fell 2 tenths to 1.6 percent, this does not point to accelerating inflation pressures. Two months into the fourth quarter, consumer spending is running at a plus 2.0 percent annualized pace, well down from the 3.0 percent rate of the third quarter.

New Home Sales

New home sales jumped 5.2 percent in November to a 592,000 annualized rate that is the second strongest of the recovery. But this report is very volatile on a monthly basis which points to the need to look at the three month average that at 575,000 has shown little change since the summer. Lack of supply, at 5.1 months at the November sales rate, which is very thin, is holding down sales but isn’t giving much lift to prices where the median is at 305,400, up 0.9 percent on the month but down 3.7 percent on a yearly basis. But, the year on year sales rate has been very strong, reflecting an upshift in trend that started in July when sales hit the cycle peak of 622,000. New home sales are up 16.5 percent compared to November last year in what contrasts sharply with the decline in prices.

Consumer Sentiment

Consumer sentiment ends December at 98.2, up 2 tenths from mid-month for a new cycle high. The index began to take off in November following the presidential election as a record percentage of respondents, at 18 percent, “spontaneously mentions” the expected favorable impact of new economic policies .The prior record for this measure was 9 percent back in 1981 following Reagan’s victory in the presidential election. Gains are strong for both the current conditions and the expectations components, the former hinting at stronger monthly readings for consumer spending and the latter pointing to rising confidence in the jobs outlook. Despite confidence in the labor market there doesn’t seem to be much hope for wage gains. Inflation expectations are at record lows at 2.2 percent for the year ahead outlook, down 2 tenths from November and at 2.3 percent for the five year outlook, down 3 tenths. The jump in confidence during November didn’t translate into stronger consumer spending though high spirits would certainly see ma positive for the holiday shopping season.

Written by Central Coast Lending - Go to Central Coast Lending's Website/Profile
805.543.LOAN info@centralcoastlending.com
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FOMC Raises Rates, As Expected

As most were expecting, the Federal Reserve raised its target rate up 0.25 percent to a range of 0.50 to 0.75 percent. The assessments of the economy are roughly the same as the November meeting, with jobs gains described as “solid”, household spending called “moderate” and business investments still “soft”. Inflation is also described as mostly soft, though the inflation compensation got an upgrade; the inflation compensation is the yield difference between inflation-protected securities and regular securities. The committee still sees the economy as expanding at a moderate pace and sees near term risks as roughly balanced. The vote to raise rates was unanimous, 10 to 0. The FOMC forecasted up to three rate hikes for the next year, up from the two predicted in September. Inflation forecasts are unchanged but the unemployment rate forecast has been lowered.

Written by Central Coast Lending - Go to Central Coast Lending's Website/Profile
805.543.LOAN info@centralcoastlending.com
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New Listing! 3 Bedroom 3 Bath in Santa Maria


Options galore in this nicely maintained home near Joe Nightingale Elementary School. Versatile plan could accommodate home business; extended family living arrangements; day care?? Updated kitchen and baths. All appliances included! Three bedrooms, including extra large master with sitting area and additional private entrance. New vinyl dual pane windows. New interior paint and carpet. Low maintenance and drought friendly front yard. New vinyl fencing in rear yard with fruit trees. Conveniently located in the Orcutt school district with easy 101 Fwy access, and walkable to shopping and restaurants.
Gina Gluyas 805.310.7208

Written by Keith Byrd - Go to Keith's Website/Profile

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PIW Fee to be Waived in 2017

Fannie Mae will no longer charge a fee to exercise a Property Inspection Waiver (PIW) due to customer feedback. This change will become effective January 1, 2017, the process for a Property Inspection Waiver will not change, but the $75 fee will no longer apply.

A Property Inspection Waiver is an offer to waive the appraisal necessary for most loans, for certain refinance transactions. A PIW is issued through Desktop Underwriter (DU) using Fannie Mae’s database of more than 20 million appraisal reports in combination with proprietary analytics from Collateral Underwriter (CU); these factors determine the minimum level of property valuation required for loans.

When a Desktop Underwriter loan casefile receives a PIW offer, Fannie Mae accepts the value estimate submitted by the lender as the market value for the subject property; waiving the need for an appraisal. If, however, the lender has reason to believe the property’s current market value should be confirmed, they must order an appraisal. For example, a property located in an area impacted by a recent disaster should always order an appraisal. Purchase transactions and the majority of refinance transactions will NOT receive a PIW offer, which means they will require an appraisal by a qualified residential appraiser to determine the market value.

A PIW offer will be considered for: one unit properties, including condominiums, principal residence, second home, and investment property transactions, limited cash-out refinance transactions up to a 90% LTV/CLTV for principal residences and second homes; up to 75% LTV/CLTV for investment properties, Cash-out refinance transactions up to a 70% LTV/CLTV for principal residences; up to a 60% LTV/CLTV for second and investment properties.

For a PIW to be considered a prior appraisal must be found for the subject property in Fannie Mae’s Collateral Underwriter data; that appraisal must be associated with at least one of the borrowers on the loan casefile. In some cases, the prior appraisal, though the property address match is found in CU and the borrowers on the casefile match, may not be acceptable. For example, if a CU “Overvaluation Flag” was issues on the prior appraisal, or the appraisal could not be scored, the prior appraisal will not be used and a PIW will NOT be offered on the new loan case file.

Written by Central Coast Lending - Go to Central Coast Lending's Website/Profile
805.543.LOAN info@centralcoastlending.com
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2016 was a much better year than CAR projected back in 2015

2016 is on track to exceed the number and volume of sales that we’ve seen in previous years. There have been 3,487 sales in the first 11 months of 2016, there were 3,743 total sales in 2015 and only 3,368 sales in 2014. Even if December 2016 has fewer sales than previous Decembers, we’ll exceed the number of sales in both previous years.
We talk a lot about the number of sales that occur, but how does that translate into dollars? In 2014, there was a total volume of $1.75 billion dollars in residential home sales here in SLO County. That number increased to just over $2 billion in 2015, and should reach $2.2 billion at the end of this year. The increase is due to both the increased number of sales and the increasing median home price. The residential median home price has increased 6.2% this year in SLO County, from $485,000 in 2015 to $515,000 in the first 11 months of 2016.
Back in October of 2015, the California Association of Realtors predicted a median home price increase of 3.2% statewide for 2016. The statewide increase for California ended up at right around 6.2%, exactly the same as what we saw here in San Luis Obispo. They have forecasted that next year the median home price increase will be slightly lower, closer to 4.3%.
Click Here to view the California Association of Realtor’s 2017 Housing Forecast
Written by Keith Byrd - Go to Keith's Website/Profile

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Loan Limits Increase for 2017

Both Fannie Mae and Freddie Mac announced that effective January 1, 2017 the maximum loan limits are to increase for the first time since 2006. Below are the loan limits for 1-4 units for standard and Agency Jumbo loans.

Maximum Original Principal Balance for 2017

loan-limits-2017

Maximum Loan Limits for High-Cost Areas for Mortgages Acquired in Calendar Year 2017

loan-limits-high-cost-2017

The new SLO County high balance loan limit will rise to $586,500, and Santa Barbara County will remain at $625,500.

High-cost area loan limits are derived from median home prices estimated by the Federal Housing Administration (FHA) of the Department of Housing and Urban Development (HUD). FHA will permit a 30-day appeals period during which requests for individual area median home price increases will be evaluated. FHFA will issue a subsequent announcement if any individual high-cost area loan limit is increased as a result of the appeals process. Updates resulting from subsequent FHFA announcements will be posted on Fannie Mae’s website.

Click here for the full announcement: https://www.fanniemae.com/content/announcement/ll1605.pdf.

 

Written by Central Coast Lending - Go to Central Coast Lending's Website/Profile
805.543.LOAN info@centralcoastlending.com
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Jumbo Loans

The term “jumbo loan” is a catch-all phrase for properties that exceed the price ceiling of Freddie Mac and Fannie Mae guarantees and so are exempt from conventional financing programs.

We offer a jumbo loan product to meet every need, including flexible qualification terms (asset depletion, pledged assets), property types (unique builds, investments, hobby farms, etc.), and loan sizes (over $5 million). Our creative approach to every loan allows us to find solutions that our competitors do not offer.

  • Down payment: as low as 10%
  • Credit score: as low as 660
  • Debt-to-income ratio: as high as 50%
  • Gift payments: allowed; gifts, grants, and seller concessions
  • Rate and Term: fixed and adjustable rate options
  • Ceiling: $10,000,000
  • Occupancy: primary, secondary, and investment eligible
  • Mortgage insurance: no

Notes and Special Offers


90% loan-to-value with NO mortgage insurance up $1.5 million.
~ Allows borrowers to keep their assets deployed and working for them rather than liquidating to meet large down payment requirements.

Asset depletion for income qualification.
~ Allows borrowers to use liquid assets as collateral for income to assist in meeting debt-to-income ration requirements.
~Good for complex income scenarios: self-employed, retired, divorce situations, trust income recipients, corporate buyouts, and more.

Use of business funds for down payment and closing costs is acceptable.
~ The line is often blurred between personal and business assets. We understand that and make the mortgage financing process easier.

Cash out available up to $2.5 million (50% loan-to-value).
~ Access the home equity you’ve worked hard to build.

Hobby farm, farm, and ranch properties eligible.
~ Whether you are boarding horses, harvesting avocados, or maintaining 900 acres of grapes, we offer the financing solution you need.

Written by Central Coast Lending - Go to Central Coast Lending's Website/Profile
805.543.LOAN info@centralcoastlending.com
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New Listing! 2 Bedroom 2 Bath in Santa Maria


Santa Maria cutie close to schools and shopping! Three bedroom home features the owner’s suite on the main floor along with another bedroom and bath…Upstairs you’ll find an oversized bedroom. The brick fireplace is framed by two large sliding glass doors that open to the newer outdoor patio – great for entertaining. The kitchen offers updated features, too. Seller will install new roof prior to the close.
Wendy Teixeira 805.310.3505

Written by Keith Byrd - Go to Keith's Website/Profile

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New Listing! 3 Bedroom 2 Bath in AG


Top of the hill, next to club house and pool. The double wide Skyline Sunset Ridge K517H has large home features. All rooms feature good sized closets, large luxury master bedroom suite and unique integrated covered porch that adds functionality and residential elevation. The K517 is a popular choice for California residents. Upgraded stainless steel appliances built-in microwave, dishwasher, side by side refrigerator. Stove/oven combo, they also both have 9 ft. Flat ceilings with coffered ceilings in the living room and dining room. Loaded with options such as ceiling fans, can lights, etc.
Sal Orlando 805.235.9770

Written by Keith Byrd - Go to Keith's Website/Profile