HOME PRICES RISE DESPITE PRESSURE

Home prices rose 5.5% in April, despite economic and interest rate pressure.

The demand for homes still outpaces the current supply, and rising interest rates and a somewhat flat economy will likely start putting downward pressure on the housing market.

Seattle, Portland and Dallas saw the highest annual home prices gains in the top 20 cities, with increases of 12.9%, 9.3% and 8.4% respectively. (housingwire.com)  The current pace is unsustainable as home affordability reaches record lows.

CoreLogic: Home prices jump 6.6% in May

Home prices increased in May from last month and last year, an increase that will only continue to rise, according to the CoreLogic Home Price Index and HPI Forecast.

Home prices increased 6.6% nationally from May 2016 to May 2017 and 1.2% from last month, CoreLogic’s HPI showed. (Housingwire.com)

FED RAISE INTEREST RATES

In June, the Federal Reserve raised interest rates for the second time in 2017. But due to economic uncertainty, home and abroad, long term rates stayed flat on the announcement. The Fed meets again at the end of July to discuss additional hikes.

WHY MORTGAGE APPLICATES GET REJECTED

Number one reason: debt. Prospective homebuyers have just too much debt. One in eight applicants are declined due to debt to income ratios. Solution, lower guideline requirements. Fannie Mae announced that they will increase the allowable debt to income to 50% from 45%. Have too much debt? Don’t worry. The federal government just allowed you to borrow even more; further leveraging the US housing market.

Studies by the Federal Reserve and FICO, the credit-scoring company, have documented that high DTIs doom more mortgage applications — and are viewed more critically by lenders — than any other factor. And for good reason: If you are loaded down with monthly debts, you’re at a higher statistical risk of falling behind on your mortgage payments.

“We feel very comfortable” with the increased DTI ceiling, Steve Holden, Fannie’s vice president of single family analytics, told me in an interview. “What we’re seeing is that a lot of borrowers have other factors” in their credit profiles that reduce the risks associated with slightly higher DTIs. They make significant down payments, for example, or they’ve got reserves of 12 months or more set aside to handle a financial emergency without missing a mortgage payment. As a result, analysts concluded that there’s some room to treat these applicants differently than before

But is that statement even true. Fannie Mae only requires a 3% down payment and credit scores as low as 620. The automated underwriting engine (DU) does not require 12 months reserves, and rarely do you have borrowers with even 2 months reserves.

Well, it has been nearly ten years since the mortgage meltdown that brought down the world’s economies. Our memories can only retain so much.

FAIR AND EQUAL HOUSING FOR THE TIMES

The Fair Housing Act was created to protect people of housing discrimination based on race, color, religion, national origin, sex, familial status, or disability. A new bill, Fair and Equal Housing Act of 2017, backed by Senate Democrats aims to add gender identity and sexual orientation as protected classes.

Currently, only 20 states have laws which protect individuals from housing discrimination based on sexual orientation and gender identity. Two states ban discrimination based on sexual orientation.

It is 2017 and the US is still debating principles and policies of the dark ages. Discrimination and hate has no place in housing, let alone the United States.

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