Weekly Update!

Get FHA Case #'s Ordered by October 4th

A reminder that FHA is changing their mortgage insurance premiums on October 4th. If you have any transactions coming together for customers seeking FHA loans around the end of Sept / early Oct, be sure to get a copy of the contract to the lender and make sure they get the FHA case # ordered by October 4th. If not, the customer will be subject to the new MIP calculations. The new structure will lower the Up-front Mortgage Insurance Premium from 2.25% to 1% but increase the Monthly MIP from .55% to .90%. Although the up-front amount is dropping, this is not a more favorable overall structure for the borrower and, thus, the urgency to get the case #'s ordered by Oct 4.

Positive Employment Developments

Two good economic reports to pass on to you. Against a consensus forecast for a decline of 110k jobs, the economy lost only 54k jobs in August. Temporary census workers accounted for a loss of 114k jobs, and the private sector added 67k jobs. The Unemployment Rate rose to 9.6% from 9.5%, matching expectations, as the labor force grew by about 550k workers.

In addition, Weekly Jobless Claims fell to the lowest level since July 10th.

Home Sales Figures

After several months of housing data which has failed to meet expectations, last week's data contained relatively good news. Investors were expecting July Pending Home Sales to remain at June's record low levels, but instead they rose 5% from June. Pending sales are a leading indicator for the housing market, so home sales may pick up a little in coming months. The chief economist of the National Association of Realtors (NAR) expects "improved affordability conditions" to boost home sales, but warned that a housing market recovery will be a "long process."


Rate Update

For the first time in five weeks, last week there was some upward pressure on mortgage rates mostly due to stronger than expected economic data.

The above rates are for purchase loans for a primary residence and are intended to give you an overall idea of how rates are changing from week to week. Other factors such as credit score, down payment, and number of days the rate is locked all contribute to the exact rate, which is subject to change at any time and without notification. The Conforming rates above apply to purchase loan sizes $150,000 - $417,000 and carry zero discount points. Rates for lower loan amounts are slightly higher. Lower rates are also available for all programs with discount points. Qualification is subject to credit and property approval and other restrictions may apply.

Looking Ahead

The most significant economic data this week will be the monthly inflation reports. The Producer Price Index (PPI) focuses on the increase in prices of "intermediate" goods used by companies to produce finished products and will come out on Thursday. The Consumer Price Index (CPI), the most closely watched monthly inflation report, will come out on Friday. CPI looks at the price change for those finished goods which are sold to consumers. In addition, Retail Sales, an important indicator of economic growth, will be released on Tuesday. Retail Sales account for about 70% of economic activity. Industrial Production, another important indicator of economic growth, is scheduled for Wednesday. Empire State, Import Prices, Consumer Sentiment and the Philly Fed round out a very busy week.

Courtesy of James Williamson, Fairfield Mortgage