Stocks started off October in positive territory following good news on the economy after the markets had their best September in 71 years. The fact that unemployment fell in nearly two thirds of the nation’s 372 largest metro areas (the broadest improvement since May) helped keep economic news on a modest incline. Divisions within the Federal Reserve over how to pump-up the economy to a faster pace and to lower unemployment came in sharper views last Wednesday. To buy more government debt known as quantitive-easing or Q.E. was the banter point. The goal is to force down rates on consumer and business loans even more in order to get American consumers to start spending more. Both ‘consumer spending’ and ‘personal income’ reports were higher than expected for August. Plus, auto sales were up an impressive 22% for August as well. When consumers spend money, our economy will start to turn in more positive numbers. It has been reported that hiring for the Holiday season should be on the upswing this month-helping unemployment numbers. Fed chairman-Ben Bernanke was mostly positive at the last meeting of the Fed. His expectations for the rest of the year are for the economy to continue on the positive side, though at a modest pace, while economic growth could pick up next year. I personally see that the economic numbers are getting better-slower than I would prefer but, they are getting better.
Mortgage rates remained in record low territory this week according to Bankrate.coms weekly article. The 30 year fixed rate index was unchanged at 4.5% compared to 5.25% the same period last year. The Mortgage Bankers Association said that 4 out of 5 mortgage applications are from homeowners wanting to refinance, the rest came from home purchases. In the same article, Dick Lepre, a mortgage banker in San Francisco, says an impediment to his job is “giving me arguments about whether or not something is important-you know, ‘I don’t think I should have to send you all the pages of my tax returns.’ People have to remember that their opinion doesn’t mean squat.” Just a reminder here-Today’s onerous paperwork requirements come from Fannie Mae, Freddie Mac, and HUD. They scrutinize virtually every mortgage they purchase. From appraisal to final underwriting requirements, Underwriters are only doing what they are required to do and that is make the loan ‘buyable’ in the secondary market. Lenders want to loan money, no matter what’s being said by the naysayers. But, they have to abide by underwriting guidelines established by Fannie, Freddie, and HUD. All that being said, here’s a new guideline: FHA FICO (credit) score requirements are being increased today-Monday. It used to be that FHA borrowers could get a loan with a 580-620 FICO score. Now the bar has been raised to 640-660 by most lenders. This is not in any way a catastrophe for the Mortgage lending arena. Folks will just have to make sure their affairs are in order before they can buy a home. One of those items will be to check their credit and find out what their current FICO scores are. If they are lower than needed to qualify for a mortgage, then people should ask a local Mortgage Loan Officer what it would take to get approved. The Loan Officer should be able to help council folks in order to get approved for a mortgage and help put them on a “mortgage plan”. If not, borrowers should find a Loan Officer that is willing to help them in the home financing process. It may take a little time, but borrowers will be able to qualify for a mortgage and still be able afford the American Dream of homeownership.
FYI…..If you are a member of the Gillespie County Board of realtors, don’t forget about the Chili Cook-off this Thursday at Luckenbach. Yours truly will be a judge. I hope to see you there!
Economic Data due this week: Monday= Pending Home Sales. Tuesday=ISM Non-Manufacturing Index Wednesday= ADP Employment claims. Thursday=Weekly Jobless claims. Friday= Unemployment rate.