Archives for May 2017

Mortgage Requirements Ease in 2017

Obtaining a mortgage can be a difficult process for some however mortgage requirements have recently been eased by Fannie Mae.  Everyone knows that after 2008 the lending industry pulled backed and made it more difficult than pre-2008 to get a new mortgage. And I think it’s safe to say that everyone agreed it was the necessary path equal housing lenderconsidering that you were able to borrow a million dollars, put nothing down and show no income during the height of the real estate boom.  

However around 2015 you started hearing that maybe Fannie Mae, Freddie Mac and the banks have gone too far; made it too difficult for qualified borrowers to get a new mortgage.  There were some valid concerns however the restrictions never got as bad as 40 plus years ago.  It’s long been rumored that Fannie Mae and the lending industry were going to loosen guidelines to bring in more buyers and qualified applicants.  It’s no surprise that with dwindling mortgage loan volume we’re now seeing Fannie Mae introduce more lenient guidelines.

Recently Fannie Mae introduced an update to their underwriting guidelines that eases the Debt To Income requirements currently in place.  It’s important to know these types of guideline changes have no affect on mortgage rates.  So getting a low home loan rate does not depend on these changes; and only depends on current market factors, your home (or home your about to purchase) and your credit score.  

Back to the mortgage requirement changes; the implementation of these new underwriting guidelines will take place July 29th however the information released about the changes just came out so lenders can prepare for the updates.  The main change is the Debt To Income ratio.  Fannie Mae is now allowing a 50% DTI where as it used to be 45% unless there were some super strong compensating factors.  A compensating factor would be 12-24 months of liquid assets along with a very low Loan To Value ratio and a top credit score.  

If you had all three in place then you might get lucky with a DTI Fannie Mae mortgage solutionsabove 45% under current guidelines.  On July 29th that changes, and you don’t need a compensating factor (s) to go up to a 50% DTI.  The good news is the best California mortgage rates are available even if you are at a 46%-50% DTI!  So there is no penalty if you are a borrower that might have a higher than normal Debt To Income ratio.

Directly from the Fannie Mae update here are some of the details of the changes that will take place in July (DU stands for Desktop Underwriter and this is the software that is used to underwrite loans under Fannie Mae guidelines):


  • DTI simplification: The maximum allowable debt-to-income ratio (DTI) will be adjusted in DU Version 10.1. Under the adjustment, DU will consider applications with a maximum DTI up to 50%. For DTIs above 45% and up to 50%, DU will no longer require certain additional compensating factors. If the DTI on a loan casefile exceeds the maximum allowable DTI of 50%, the loan casefile will receive an Ineligible recommendation.
  • DU Refi Plus™ loan casefiles submitted to DU Version 10.1 will continue to be subject to the maximum allowable DTI applied to DU Refi Plus loan casefiles in DU Version 10.0.
  • ARM enhancements: With DU Version 10.1, the maximum allowable loan-to-value (LTV) ratios for adjustable-rate mortgages will be aligned with fixed-rate mortgage LTV ratios. This alignment will be for all transactions, occupancy and property types, up to a maximum of 95%.
  • Simpler self-employed borrower documentation requirements: DU Version 10.1 will simplify IRS tax return documentation requirements for many self-employed borrowers. The number of DU loan casefiles eligible for the one year (instead of two years) of personal and business tax return documentation requirements will increase.
  • Disputed tradelines: DU will assess the risk using any disputed tradelines, and lenders will not be required to investigate the disputed tradelines if the loan casefile receives an Approve recommendation when using the disputed tradelines.

Mortgage Rates May 31 2017

Yesterday we started off the week on a positive note as mortgage rates generally improved.  Mortgage rates for May 31, 2017 are starting off the day similar to Monday as we move towards the latter part of the week.  Earlier this morning we received the MBA (Mortgage Banker Association) Purchase and Refinance Index and both readings were lower than the previous month.  That is a bit surprising since mortgage rates have generally improved over the last month so I’d imagine some were expecting to see a better reading.  Over the last 24 hours we’ve heard from various mortgage interest rateFOMC members and this morning FED President Kaplan stated he backed a gradual and patient tightening policy since inflation was low and the economy wasn’t expanding too fast.  Most analyst believe that the FED will raise short term interest rates at their next meeting.  What is unclear is what the FED will do the rest of 2017 since some of the data readings suggest that prices are cooling and inflation is set to remain below the FED’s target.  Also wages are not increasing as much as the FED would like despite a tight labor market.  The best California mortgage rates can still be found as fixed rate mortgages and adjustable rate mortgages continue to settle right at their 2017 lows.   The 10y yield is starting off the day at the 2.21% level and the 3.5 FNMA is at 103.20 while the 4.0 FNMA coupon is 105.55.  Both are at or near the best levels of 2017 which is good news for mortgage rates.

If you have any questions or wish to get a no cost – no obligation mortgage quote please be sure to contact us directly at 1-800-550-5538.  As always if we have any important updates we’ll make sure we get those out to you in a timely manner.


Chicago PMI for May 2017 came in lower than expected.  The reading of 55.2 is also below the previous months reading of 58.3.  The 10y yield is at 2.19%.  Also Pending Home Sales came in negative which was below the positive expectation of 0.5 (CORRECTION- They apparently released the wrong number!  The reading was 59.2 not 55.2 so the report came in stronger (not weaker) than expected).

Inflation slips as the Fed prepares for another rate hike in June

The Fed’s favorite inflation reading didn’t produce a favorable number this month.  The PCE index (personal consumption expenditures) rose 1.7% in April 2017 which is down from the 1.9% reading in March and the 2.1% reading from February.  Core inflation, which is apart of the Fed’s tools to gauge inflation, slowed to the weakest annual pace since 2015.   What’s helping prices stay low?  Oil is a big part of that answer; as it continues to dip from Janet Yellenthe highs seen in April.  So what does this all mean?  With prices coming down could we start hearing “deflationary” talk again?  The simple answer is that it’s to early to tell and the easing of prices recently probably won’t prevent the Fed from raising their rate at the next meeting.

So far the FOMC has done a good job with moderately raising rates in a thoughtful manner.  Some people believe they took to long and they’re not raising rates fast enough while others believe it’s a huge mistake to raise rates since we are not back to higher levels of job, wage and GDP growth.  At the end of the day we’ve seen a stable market and have avoided the run away inflation so many people predicted when the FED refused to raise rates a few years after the banking crisis.  I get asked a lot; does the FED control mortgage rates?  Will the FED prevent the best mortgage rates from coming back in 2017?  The simple answer to both questions is no…the FED does not control mortgage rates and I don’t think the FED is trying to prevent mortgage rats from moving lower.  What we’ll most likely see at the next FOMC meeting is similar language as before with maybe a slight twist about the concerns over prices cooling (and they’ll raise another .25%).  Overall this should be fine in terms of how the FOMC may influence mortgage rates.

Are you looking to refinance your current mortgage or purchase a new home in California?  Then contact us directly for a no cost and no obligation quote: 1-800-550-5538.

Mortgage rates May 30 2017

We’re starting off the week on a positive not as the bond market yields move lower.  Mortgage rates for May 30th, 2017 should start the day slightly improved from Friday as the market digests today’s economic data.  If the rally in bonds continues throughout the day and into tomorrow there’s a chance we may more than a small improvement to mortgage rate terms….keep in mind that things change frequently and there is no guarantee improvements will happen.

mortgage interest rateThis morning we received several economic readings including Personal Consumption, Personal Income, Core PCE Price Index, CaseShiller and Consumer Confidence for May.  Collectively these readings lend some weight to the movement of mortgage rates but to a lesser degree than a reading like the employment report coming out later in the week.  Personal Consumption came in as expected however the Core PCE was a bit higher than the market anticipated (reading of 0.2 and the market was expecting a 0.1 reading).  No real surprised with the CaseShiller reading and Consumer Confidence was a bit weaker in May than expected (came in at 117.9 instead of the market expectation of 119.8).  So who has the lowest mortgage rates in California? Most lenders are being aggressive right now with rates and I know the lenders we work with are bending over backwards to be as aggressive with rates as possible.  Both fixed rate mortgages and adjustable rate mortgages are near their 2017 lows and that should continue for the short term (unless some surprise comes out that the market was not expecting).  Later in the week we have the Chicago PMI, Pending Home Sales, ADP, ISM and the all important BLS employment report.

As always if we see any significant changes today we’ll certainly update the post.  If you are looking for a new home or considering a possible refinance of your current mortgage please be sure to contact us directly for a no cost – no obligation quote at 1-800-550-5538.  We have a top rating with the Better Business Bureau and with the Business Consumers Alliance.  Right now we’re offering some of the lowest mortgage rates of 2017 so it’s a great time to consider your options.


UPDATE – We’ve seen continue improvement in the bond market and if they hold we should finish the day on a positive.  A short while ago the following hit the news wires:



Mortgage Rates May 26 2017

Mortgage rates for May 26th, 2017 are starting off the day in positive territory as the 10y yields has dropped to 2.23% and Mortgage Backed Securities (MBS) have followed.  The FNMA 3.5 coupon is nearing it’s 6 month high of 103.31 (which is good news for mortgage rates!).  Keep in mind these positive moves can reverse, and they can reverse quickly so if current rates make sense for you then don’t take on too much risk in terms of trying to get a small improvement that may never happen.  Especially if you’re buying a home and closing in the next 30 – 45 days; waiting to to lock in a better term is risky.

mortgage interest rateThis morning we had the Durable Goods and preliminary GDP readings.  The headline reading for each report was better than expected however one aspect of the GDP reading was a bit concerning for US economic growth and the Fed’s inflation target.  The GDP Deflator was a bit weaker than expected, not a huge miss but still a miss, and this measures the level of prices of all new goods and services produced domestically.  If prices start to trend down for all new goods and services then the Fed will be concerned about deflation (they want inflation).  As always one reading is not enough and we’ll have to see what happens the next few months as inflation targets for the Fed are very important.  Markets close early today for the three day holiday weekend.  The best California mortgage rates are still near their lows for both fixed rate mortgages and adjustable rate mortgages.

Next week we have the following readings: Personal Consumption, PCE index, Consumer Confidence, Chicago PMI, ADP employment, ISM manufacturing, Construction spending,  and the all important Employment report….busy week!  If you are refinancing your current mortgage or looking to buy a new home please contact us directly at 1-800-550-5538.  We have a top rating with the Better Business Bureau and the Business Consumers Alliance along with industry low rates.

As we head into the weekend lets all remember those who have served and those that have died to protect our country.   “Our debt to the heroic men and valiant women in the service of our country can never be repaid. They have earned our undying gratitude. America will never forget their sacrifices.” – President Harry S. Truman