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Five Housing and Mortgage Trends for the Rest of 2019

Mortgage rates fell in the first half of 2019, the opposite of what the experts had predicted at the beginning of the year. It is welcome news for home buyers, sellers and homeowners. NerdWallet has identified housing and mortgage trends to watch in the second half of 2019. Here are five of them:

Wanted: More homes for sale

More would-be buyers exist than homes for sale, giving sellers a stronger negotiating position. But, the balance of power is moving in the buyer’s direction. More homes are available for sale now, so buyers have greater choice. That said, Freddie Mac estimates that in 2017, 370,000 fewer homes were built than needed to satisfy demand resulting from population growth.

Home prices will keep going up

In the first four months of 2019, the year-over-year price increases for resold homes were less than 4%. A year ago, prices were more than 4.5% higher. “Home price appreciation will slow down — the days of easy price gains are coming to an end — but prices will continue to rise,” says Lawrence Yun, chief economist for the National Association of Realtors. Mortgage rates will remain low

Big lenders and the National Association of Realtors all predicted that mortgage rates would rise through 2019. Instead, mortgage rates have tumbled. The average APR for a 30-year fixed-rate mortgage fell to 4.09% by June 2019, according to NerdWallet.

The forecasters now predict that the 30-year fixed will remain steady through year’s end, not changing by more than a couple of tenths of a percentage point. Affordability continues to be a concern

Mark Boud, chief economist for Metrostudy, calls the national housing market “top-heavy.” Plenty of homes nationally are available for buyers who can afford to pay $800,000 or more. But buyers outnumber sellers of homes priced $400,000 or less. “We’re still very short of supply in this lower price range,” he says. More people could save by refinancing

Every time rates fall, there’s an increase in the number of homeowners who could save money by refinancing.

Black Knight, a technology provider for the mortgage industry, estimates that 5.9 million homeowners could cut 0.75% or more from their mortgage interest rate by refinancing. Even if you bought your home recently, it’s worth checking whether you should refinance.

Source: startribune

Lenders Continue To Reduce The Risks In Their Mortgage Books

The latest data from the Australian Prudential Regulation Authority (APRA) on property exposures data from authorised deposit-taking institutions (ADIs) shows that the tougher lending policies of recent years continue to reduce mortgage risks.

Over the March 2019 quarter, APRA reports that there was $72.395 billion in residential mortgages to households, which was -17.9% lower than the previous quarter and down -16.5% on the March 2018 quarter. As the chart shows the value of lending to investors and owner-occupiers is falling. Over the quarter the value of lending to owner-occupiers was -17.6% lower and it was down -15.2% year-on-year. Lending to investors was -18.7% lower over the quarter and -19.6% lower year-on-year.

The heightened level of interest-only lending has been seen as a key risk in the market and new interestonly lending has fallen over the quarter both on a value and share of total basis. Over the quarter there was $10.785 billion in interest-only lending which was the lowest on record. As a share of total lending, interest-only was also at a record low of 14.9% which is a far cry from its peak at 45.6% in June 2015. As a proportion of the total portfolio of outstanding loans, interest-only now accounts for a record low 23.3% which is down from a peak of 39.5% in June and September 2015.

Interest-only lending isn’t the only area in which there has been a reduction riskier lending. The value of low documentation loans, other non-standard loans and loans approved outside of serviceability all fell over the quarter in terms of both value and their share of total lending. In fact at 0.1% of total lending over the quarter, both other non-standard loans and low documentation loans were at an historic low share of mortgages while the 4.3% of loans that were approved outside of serviceability was the lowest share since December 2017.

While most areas of riskier lending recorded a reduction over the quarter, there was a slight increase in the share of new mortgages written with a loan to value ratio (LVR) of more than 80%. Over the quarter there was $15.772 billion worth of new mortgages with an LVR of more than 80%. Although that was the lowest value on record, that is more a function of reduced overall demand for mortgages. The share of mortgages with an LVR in excess of 80% was recorded at 21.8% over the quarter which was its highest share since March 2017. The share of higher LVR loans is still well below its peak of 37.6% in March 2009 and most new borrowers have more than 20% equity in the property they are purchasing. Nevertheless, it is a little surprising that given the current tight credit conditions and falling dwelling values that there is an increased willingness to lend to borrowers with less than a 20% deposit.

Overall, the data reflects the ongoing improvements in mortgage quality and the shift towards reducing the build-up of risk in the mortgage market. We would expect the current conditions to continue over the next quarter. Thereafter it will be interesting to see what happens given that there has been an interest rate cut and it looks as if APRA will be relaxing some of the serviceability limits in place on mortgages. On the other side of things, comprehensive credit reporting is being implemented which is likely to mean even more scrutiny on borrowers debts and subsequently increased pressure on lenders to write high quality mortgages.

Source: Corelogic

Mortgage rates are moving sideways. Will they fall from here?

Rates for home loans were mixed, but stayed near recent lows, even as bond market moves suggest another big step down lies ahead.

The 30-year fixed-rate mortgage averaged 3.84% in the June 20 week, up two basis points, Freddie Mac said Thursday. Halfway through 2019, this is only the seventh week in which the popular product has increased.

The 15-year fixed-rate mortgage averaged 3.25%, down from 3.26%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.48%, down three basis points. In the most recent week, according to data from the Mortgage Bankers Association, ARMs made up only 6.1% of all mortgage applications.

The steady swoon in mortgage rates is tracking a similar phenomenon in the 10-year U.S. Treasury note TMUBMUSD10Y, -1.32%  , which also touched a 2-year low in the past week. Mortgage rate moves often lag the broader bond market, so another step down for home loan rates may lie ahead.

Meanwhile, the housing market can’t seem to get out of its own way. In the nine years since sales bottomed and began to recover, one thing after another has derailed the market from consistent, strong growth.

In 2013, the then-chair of the Federal Reserve, Ben Bernanke, reminded Congress that at some point the central bank would have to start tightening post-crisis policy. That spooked investors, who started selling bonds, sending yields higher.

Two years later, a new mortgage lending regulation went into effect, crippling closings for a month.

And by early 2017, with the economy on more solid footing, bond yields started ticking up again in anticipation of budget-busting tax reform, just as prices for scarce housing started to put homeownership out of reach for many Americans.

It’s still unclear exactly what caused the housing market to seize up last year. Rates jumped, but lots of anecdotal evidence from real-estate agents and home builders also suggests that many wanna-be buyers simply decided to wait until conditions became more favorable. The 2017 tax cuts also took a bite out of buyers’ budgets in high-cost areas like California and New York, and high-property-tax areas like Illinois.

Sales haven’t recovered since then, though there’s scope for some rebound, with jobs still plentiful and interest rates even lower. But housing inventory is still scarce and scars from the last downturn are still with us.

Source: Marketwatch

Long Term Funding for Housing and Role of Data Dominates FSS2020 Forum

The Financial System Strategy FSS2020 Secretariat has convened the Quarter 2 2019 Mortgage Market Forum with the theme, “Integrating the Housing Ecosystem Using the Housing Market System (HMS).”

The Forum which is an assembly of Mortgage and Housing experts under the Chairpersonship of Director OFISD CBN, Mrs Tokunbo Martins, held on Wednesday at FSS2020 Secretariat, CBN Annex, NIRSAL Building, Abuja.

While speaking to Housing News, Adedeji Jones Adeshemoye, Group Head and CBN Deputy Director, Analytics, Projects and Special Examination, who is also Head of Nigeria Housing Finance Program said that the forum was essentially for stakeholders to update themselves on the FSS2020 strategy for mortgage sector and housing finance sector in Nigeria, particularly as 2020 draws near.

‘’We looked at the three thematic templates that we are working on to see where we are, and to score ourselves, and to also brief other members of the forum about where we are with issues like financial liquidity, long term funding for affordable homes in Nigeria, and other institutional arrangements that will move us closer to our targets under the financial system strategy.

‘’We meet every quarter as stakeholders to look at the task that we have been given – tasks that individual stakeholders are carrying out in the strategy implementation. We have responsibilities for different stakeholders. We come here to appraise what we have done, and then refocus on our objectives.

‘’Our goal is that by December 2020 when the FSS2020 will terminate, Nigeria mortgage ratio to GDP measures up to 20%. But we are still very far from that, and today is to rededicate ourselves to this duty.

‘’One of our key themes is to solve the problem of not having enough liquidity in the system to finance home ownership. The savings we have are short term, while housing is a long term project. So through the refinancing that we have created NMRC for, we have a market based institution that is connected to the capital market where the long term funding is, and that has been delivered,’’ he said.

However, there are a number of things according to him that will make it work better, and chief among them is access to land which is largely under the control of the government.

To address this, the Forum have developed the ‘Modern Mortgage Foreclosure Bill’ to be passed in all states of the federation. According to him, Lagos and Kaduna have passed theirs while different states are at different levels.

‘’So this forum gives us the opportunity to device how to collaborate with the Governors’ Forum so that they can help speed up the process of passing this bill into law and solve the problem of land titling in Nigeria, so that we have uniformity across the country.

‘’Today, we have also developed 4 different market based underwriting standards that will enable Nigerians at home and abroad, and those that have been disenfranchised in one way or the other to have access to mortgages.

‘’We are also coordination with those in the supply side of housing – the real estate developers – who will now be doing demand based supply as against what used to be the case,’’ he said.

Another achievement of the Forum according to him is the current development of an ‘Electronic Assets Registry System’ that will help everyone in information gathering.

Also speaking with Housing News, the president of Mortgage Banking Association of Nigeria (MBAN), Niyi Akinlusi stated that the mortgage market system forum is where major stakeholders meet and see how they can drive housing ownership including mortgage and the contribution of housing and mortgage GDP to the country’s economy.

‘’We are using housing to drive jobs, and reduce housing deficit, and ensure that the housing sector mortgage market takes its rightful position in relation to Nigeria’s GDP,’’ he said.

On the impact of Housing Market System (HMS) to housing, Akinlusi said that the data system provides one stop dashboard that brings all the stakeholders right from land titling to property construction to mortgage financing and refinancing together, so that the country can have a data driven economy, and so that everyone can see in a snapshot what is happening in the housing market and how it is contributing to the economy.

‘’We can use it as a tool to drive the housing and mortgage market,’’ he said.

The Financial System Strategy 2020 is the blueprint for engineering Nigeria’s evolution into an international financial centre and for developing the financial sector into a growth catalyst that will enable Nigeria’s transformation into one of the 20 largest economies in the world by 2020.

Objectives of FSS2020 includes developing a shared vision and an integrated strategy for the nation’s financial system; developing market and infrastructure strategies that will align fully with the strategic intent of the overall system; creating a performance management framework and building a partnership of all key stakeholders to implement the strategy; and establishing a harmonious and collaborative environment for the development and delivery of the strategy.

By Ojonugwa Felix Ugboja

Here’s the Salary you’ll need if you want to Afford a Mortgage in 17 major US Cities

  • Monthly mortgage payments in the US increased twice as much as incomes did from 2017 to 2019, according to the home-ownership-investment company Unison’s 2019 Home Affordability Report.
  • The report takes a look at how much homeowners need to make each year in order to afford the median monthly mortgage payments in major US cities.
  • The report’s findings are based on homebuyers who spend 30% or less of their gross income on monthly payments.
  • Of the 35 cities the report ranked, we looked at the 17 cities where homeowners need to make the highest income to afford their mortgages.

Saving up for a down payment is only part of the hurdle between homeownership and potential homeowners.

Unison’s 2019 Home Affordability Report found that since mortgage interest rates rose from 3.99 to 4.54%, monthly mortgage payments across major US cities have increased twice as much as incomes.

The report broke down how much homeowners need to make in 35 US cities in order to afford the city’s median monthly mortgage payments. From that list, we looked at the 17 US cities where homeowners have to make the highest income to afford mortgages.

The report’s findings are based on homebuyers who spend 30% or less of their gross income on monthly payments. The report assumes a 20% down payment, as well as a 4.54% mortgage interest rate on 2018 data and a 3.99% mortgage interest rate on 2017 data, the average annual Freddie Mac 30-year fixed rates. Data on median household incomes and median value of owner-occupied housing units were provided to Unisonby S&P Global.

Keep reading to see the 17 US cities where homeowners need the highest income to afford the median mortgage.

17. Las Vegas

In Las Vegas, in order to afford the city’s median monthly mortgage payment of $1,150, homeowners must earn a minimum annual income of $45,998.

The average price of a home in Las Vegas is $234,832.

16. Minneapolis

In Minneapolis, in order to afford the city’s median monthly mortgage payment of $1,228, homeowners must earn a minimum annual income of $49,122.

The average price of a home in Minneapolis is $250,779.

15. Chicago

In Chicago, in order to afford the city’s median monthly mortgage payment of $1,276, homeowners must earn a minimum annual income of $51,031.

The average price of a home in Chicago is $260,526.

14. Atlanta

In Atlanta, in order to afford the city’s median monthly mortgage payment of $1,357, homeowners must earn a minimum annual income of $54,266.

The average price of a home in Atlanta is $277,041.

13. Salt Lake City

In Salt Lake City, in order to afford the city’s median monthly mortgage payment of $1,431, homeowners must earn a minimum annual income of $57,248.

The average price of a home in Salt Lake City is $292,263.

12. Miami

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In Miami, in order to afford the city’s median monthly mortgage payment of $1,541, homeowners must earn a minimum annual income of $61,634.

The average price of a home in Miami is $314,657.

11. Denver

In Denver, in order to afford the city’s median monthly mortgage payment of $1,725, homeowners must earn a minimum annual income of $68,983.

The average price of a home in Denver is $352,172.

10. Portland, Oregon

Nadia Yong/Shutterstock

In Portland, in order to afford the city’s median monthly mortgage payment of $1,853, homeowners must earn a minimum annual income of $74,137.

The average price of a home in Portland is $378,483.

9. Boston

Sean Pavone/Shutterstock

In Boston, in order to afford the city’s median monthly mortgage payment of $2,384, homeowners must earn a minimum annual income of $95,344.

The average price of a home in Boston is $486,752.

8. New York City

Turtix/Shutterstock

In New York City, in order to afford the city’s median monthly mortgage payment of $2,733, homeowners must earn a minimum annual income of $109,313.

The average price of a home in New York City is $558,065.

7. Washington, D.C.

Orhan Cam/Shutterstock

In Washington, D.C., in order to afford the city’s median monthly mortgage payment of $2,803, homeowners must earn a minimum annual income of $112,106.

The average price of a home in Washington, D.C., is $572,324.

6. Seattle

Shutterstock

In Seattle, in order to afford the city’s median monthly mortgage payment of $2,855, homeowners must earn a minimum annual income of $114,217.

The average price of a home in Seattle is $583,100.

5. San Diego

Steve Heap/Shutterstock

In San Diego, in order to afford the city’s median monthly mortgage payment of $2,916, homeowners must earn a minimum annual income of $116,652.

The average price of a home in San Diego is $595,533.

4. Los Angeles

Let Go Media/Shutterstock

In Los Angeles, in order to afford the city’s median monthly mortgage payment of $3,048, homeowners must earn a minimum annual income of $121,939.

The average price of a home in Los Angeles is $622,523.

3. Urban Honolulu, Hawaii

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In Urban Honolulu, in order to afford the city’s median monthly mortgage payment of $3,514, homeowners must earn a minimum annual income of $140,555.

The average price of a home in Urban Honolulu is $717,564.

2. San Jose, California

Getty Images

In San Jose, in order to afford the city’s median monthly mortgage payment of $3,817, homeowners must earn a minimum annual income of $152,697.

The average price of a home in San Jose is $779,549.

1. San Francisco

Bill45/Shutterstock

In San Francisco, in order to afford the city’s median monthly mortgage payment of $5,052, homeowners must earn a minimum annual income of $202,094.

The average price of a home in San Francisco is $1,032,732.

Source: businessinsider

Revisiting FMBN’s informal sector and co-operative housing scheme

As access to mortgage continues to be an exclusive preserve of the privileged few in Nigeria, good initiatives that could ease access to the facility by low income earners and those in the informal sector of the economy should be encouraged by the government and its agencies.

This is why there is need for the Federal Mortgage Bank of Nigeria (FMBN) to go back to its very inspiring and commendable ‘Informal Sector Co-operative Housing Scheme’ which was launched in Lagos a few years ago with the primary aim of bringing more people into the mortgage net.

The scheme, also tagged ‘Affordable Home Ownership Through Co-operative Financing’, was launched as part of  the apex mortgage bank’s efforts at bridging the housing demand-supply gap  and giving the vast majority of  this economically-disadvantaged Nigerians, who constitute this sector, the opportunity to have decent and affordable housing.

The informal sector in Nigeria comprises low income earners struggling to earn their daily living such as artisans, the road-side mechanics, the market traders, farmers and so on. Basically, these are individuals who do not wear suits, ties or polished shoes to work in air-conditioned offices, yet they contribute immensely to the national economy.

 The National Housing Fund (NHF) scheme, whose operations are supervised by the FMBN, is accessible only to those in the formal sector, but by the launching of this new scheme, FMBN assured that Nigerians in the informal sector would be registered as bona fide contributors to NHF and become eligible for affordable loan to build, purchase or renovate residential accommodation.

The bank explained  that the loan facility under the scheme could be accessed in one of two ways, namely Cooperative Housing Development Loan (CHDL) and the Cooperative Housing Funds Loans (CNL).

The CHDL enables a cooperative society that has acquired a plot of land to develop houses for allocation to its members. The parcel of land should have title in the name of the society which would act as the facilitator on behalf of its members and in the loan transaction and would also facilitate construction of the housing units.

To qualify for this loan, the cooperative society must have been in existence for a minimum 12 months; the proposed estate must have good title that can be sub-leased to individual allottees/ purchasers of the housing units therein, and  the tenor for the loan shall be 24 months with a moratorium period of 12 months at an interest rate of 10 percent.

CNL, on the other hand, offers individual cooperative members a mortgage loan to buy a house developed through the cooperative housing development loan or to renovate an existing one. Individual cooperator shall enjoy the housing loan at 6 percent interest rate repayable over a maximum period of 25years. Cooperators shall make a down payment of 15 percent of the approved selling price/value or improvement as their personal stake in the loan.”

But like many things Nigerian, nothing is being said about the scheme at the moment after all the funfare at its launching. The federal government, at various times, has adopted strategic policies aimed at integrating the informal sector into mainstream national economy.

Such policies include the promotion of small and medium scale enterprises (SMEs), directive to commercial banks to engage in rural banking , encouragement of micro- finance banking  among others. These policies are usually aimed at enhancing the contribution of the informal sector to the growth of Nigeria economy.

Unconfirmed report indicates that the informal sector in Nigeria constitutes about  85 percent of the country’s total workforce. In terms of economic output and employment, the informal sector accounts for as high as 60 percent of  gross domestic product and about 70 percent  of total employment across all economic sectors.

In other jurisdictions, the informal sector generates about 6.2 percent of aggregate employment in the United States, 22.3 percent in China, about 50 percent in Israel and 80 percent in India which means that given the needed support and regulatory frame work, the informal sector should be a major facilitator in fighting unemployment and poverty in Nigeria.

But all these do not make any meaning to the government and that is why it is every man, mind your business. No structured policy that is targeted at growing this important component of the economy.

Amal Pepple,  the minister of housing at the time of the launch of the scheme described it as a significant step towards improving access to affordable housing to a good number of people who may not have the opportunity of owning a home, in their life time, unless they are assisted to do so.

“It is important to resolve the housing challenges of this important segment of the population  who constitute about 60 percent of the productive labour force in urban areas; housing finance in Nigeria is encumbered; there is scarcity of long term funds for housing/mortgage finance; there is also unsatisfactory state of housing delivery which is accentuated by other factors such as high cost of land acquisition, difficulty  in obtaining land title, high cost of perfecting  legal processes and of building materials”, she noted.

The minister noted further that the new product was remarkably different from the existing NHF; Estate Development Loans (EDL) for estate developers and the Cooperative Housing Development Loan (CHDL) which were for formal and private sector operators, adding that the new product had been designed  specifically with the informal sector operators in  mind to enable them to have access to cheap, reliable and affordable funds, with more relaxed condition for  access.

As Nigeria settles in with the President Muhammadu Buhari administration and its next level agenda coupled with the good strides which FMBN is making in recent times, consideration should be given to moving the country’s mortgage system to a new level by improving both access and affordability.

From all indications, this good scheme may have ended its journey at the launch, but Nigerians are still hoping that,in the spirit of economic diversification, the mortgage industry will be given attention.

By Chuka Uroko

25 per cent pension funds for mortgage

Central Bank of Nigeria (CBN) and the National Pension Commission (PenCom) are working out modalities for workers under the contributory pensions’ scheme to access 25 per cent of their contributions for personal home investments.

Mrs. Ambah Hamda of City Bank yesterday broke the news in Abuja.

She said: “The 25 per cent of Retirement Savings Account (RSA) being made available to the holders as equity contribution for mortgages is a work in progress. The CBN and Bankers’ Committee will work with PenCom to make this a reality.

“Once it becomes a reality, an RSA holder will then be in a position to walk up to his pension fund administrator and ask to access 25 per cent saved up in his name and would like to borrow money to build a house.

“With such approval, you will then approach your banker. It would make the bank very willing because you will then be coming with a sizeable sum of money where you would also contribute to the project.”

Mrs. Hamda said that the committee has also resolved that banks should support the pension industry to release up to 25 per cent of the N9 trillion Pensions’ Fund Assets (PSA) for the contributors of the fund to use as equity injection towards owing houses.

She went on: “Twenty-five per cent of N9 trillion is worth over N2 trillion and if this fund can be used to stimulate demand for mortgage loans in our economy. It was agreed that the Central Bank would talk to fellow regulators and also work with government of various states to make the while process of land transfer and titling a lot easier so that many more people across the nation can access mortgage financing, thereby stimulating demand in our economy.”

CBN Director, Corporate Communications, Mr. Isaac Okorafor, disclosed that when finalised, the 25 per cent pension contribution will form the contribution of workers to building their houses to which they can then obtain the remaining 75 per cent as loans from banks.

The Bankers’ Committee also announced that both the Creative Industry Initiative and Export Initiative have entered implementation stages and that operators in the sectors should begin to submit their proposals for funding to their various banks.

Mr. Patrick Akinruntan of FSDH Merchant Bank said the Creative Industry Fund was at the execution stage with all banks participating in the creative initiative.

He said: “Every person or business that is into any of the coverage areas is encouraged to put together their proposal, demonstrate the viability and approach their bank. The Central Bank will have a central collation point where all the requests that come through any bank are forwarded so that we have a way of knowing the impact we have made in creating employment and stimulating the economy.

“The same applies to the export support fund, be it in cashew nut, be it in sesame seeds and all the various rich exports that we are able to mobilise because of the impact for employment ability in the economy. There is learning for both customers and banks, but it is an area where we have absolute commitment.”

He noted that the interest rate for these initiatives is nine percent, including all charges.

Speaking on consumer financing, CBN’s Director of Banking Supervision, Mr. Ahmed Abdullahi, described consumer financing as an important asset class.

Abdullahi said: “Banks are looking for more innovative ways to create credit. At the moment, it is much structured around salaried staff but we need to look for ways of extending it to others, like using the collateral registry. Assets are more easily used as collaterals.

“The whole intention is to ultimately drive much more financing, which will have impact on other sectors of the economy along the value chain because the manufacturer is able to sell more products.”

Source: Nationonline

MBA Launches New Affordable Housing Initiative

The Mortgage Bankers Association (MBA) announced today the launch of a new strategic initiative to help develop stronger and more effective affordable housing partnerships in both the policy and business arenas. The objective of these partnerships will be to promote more sustainable, affordable homes for purchase and rental for underserved people and communities, especially minorities and low-to-moderate-income Americans.

“The lack of affordable housing is presenting significant challenges to families across the country. We need to explore how the lending community can better partner with public, private, and non-profit stakeholders to ensure more Americans have access to homes they can afford,” said MBA President and CEO Robert D. Broeksmit, CMB. “As the trade association representing the full breadth and depth of the mortgage lending community, MBA should, and will, be a leader in finding innovative solutions.”

Steve O’Connor, a 23-year veteran of MBA and currently its Senior Vice President for Public Policy and Industry Relations, will assume the new role as Senior Vice President for Affordable Housing Initiatives.

“Steve is uniquely qualified to lead this new initiative,” added Broeksmit. “He knows our members, he knows the issues, and he has strong relationships with a broad group of stakeholders, including affordable housing groups, consumer advocates, and civil rights organizations. Steve has a real passion and drive when it comes to addressing the needs of underserved markets.”

O’Connor currently leads MBA’s Consumer Affairs Advisory Council and serves on a number of industry boards, including the National Housing Conference, the National Association of Hispanic Real Estate Professionals, the Homeownership Council of America, Quicken Loans’ Consumer Advisory Council, Freddie Mac’s Affordable Housing Advisory Council, and the National Urban League’s Business Solutions Council.

“Housing affordability is an issue facing millions of Americans, both those who rent and those who want to buy a home,” said O’Connor. “There is no easy solution. The only way we are going to solve this is by getting lenders together with policymakers, consumer advocates, community leaders, and other stakeholders, and using our collective knowledge and experience to find the answers.”

Under O’Connor’s leadership, MBA is developing a work plan set around a series of objectives designed to better understand the nature of the problem and why previous efforts have failed, and to build and nurture partnerships in support of affordable housing policy and business practices.

Source: Mba

Buy To Let Mortgages

As far as investments go, property is one of the safer bets. Buying a house to let out can be a safe and profitable way to put spare cash to use, and a good way of expanding your assets.

While some approach letting as a purely commercial exercise, parents may also buy a place for their children, which they then charge them rent for. This can be seen as investment in both your and your family’s future.

Mortgages available for letting property used to be subject to higher rates of interest than standard residential mortgages, but in recent years this has changed.

In an active attempt to encourage growth in the private rental sector of the market, interest rates have been lowered and criteria made more flexible. This led to a boost in the amount of properties being bought as income-producing investments.

The rent you charge, as a rule of thumb, should be around 150% of your monthly mortgage repayments. This should cover all the associated expenses – while letting can prove profitable you should take into account the time and cost involved.

Not only will you need to find and purchase suitable property, but you will have to manage it well, whether this means maintenance, furnishing or advertising. An agent can take care of some of these tasks, but bear in mind you will have to pay their fees. Generally, you should think of buying to let as a medium or long term investment.

You should always make sure that a professional agent or solicitor draws up leases and agreements. While you can buy ‘readymade’ leases, these are not comprehensive enough to rely on. Remember too to include an inventory of all furnishings and fittings in the property.

Other costs to consider are: Insurance – both buildings and contents, plus you may want to take out rental protection in case a tenant fails to pay. Service charges and maintenance costs – try to ensure the property will require the minimum of upkeep and repairs.

Source: Booctrust Team

As Mortgage Rates Continue to Fall, will Housing Sales Increase?

The housing market has made big strides forward over the past decade since the financial crisis, recovering from its historic declines in the mid-2000s and seeing big gains in average home prices in many popular markets across the nation.

Yet the rise in prices combined with rapidly increasing mortgage rates over the past couple of years made housing far less affordable, especially in pricier areas of the country.

However, all that might be changing. Interest rates on 30-year mortgages fell to 3.82% on June 7, continuing a trend that has seen rates plunge by more than a full percentage point since last November.

The current figure is the lowest level for the 30-year mortgage since September 2017, and the weekly move was a sharp drop from 3.99% the week before.

The movements in interest rates reflected the big changes in market sentiment with respect to the expected future course of monetary policy from the Federal Reserve.

Line graph of 30-year mortgage rates for one year.
Line graph of 30-year mortgage rates for one year.

The Fed doesn’t directly control mortgage rates for the most part, as its most important lever for influencing the bond market is through its control of short-term interest rates. Yet the bond market pays close attention to the central bank’s decisions, and with an abrupt shift in strategy that’s appeared in the past several months, bond investors have had to adjust accordingly.

In particular, whereas most bond investors previously expected the rate increases that the Fed has implemented over the past two years to continue throughout 2019, they now see a greater likelihood of interest rate cuts in the near future in response to weakening economic activity.

Falling mortgage rates make it cheaper for would-be homebuyers to finance their purchases. For instance, a $300,000 30-year mortgage at the current rate of 3.82% would have a monthly payment of around $1,400, compared to the $1,600 monthly payment for a similar mortgage at the 4.94% rate that was available in November.

Put another way, someone who can afford a $1,600 monthly payment could borrow about $42,000 more now than they could seven months ago. That could spur more home purchases and help give the economy an extra boost heading into the key summer season.

The SPDR S&P Homebuilders ETF (XHB) was unchanged in after-hours trading Monday. Year-to-date, XHB has declined -7.50%, versus a 8.72% rise in the benchmark S&P 500 index during the same period.

Source: etfdailynews

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