August 2023 - Hanover Mortgages

Apache is functioning normally

August 1, 2023 by Brett Tams

I’ve got a bone to pick…it seems you aren’t bothering to shop around for your mortgage?

Instead, you’re just going with the first lender you come across, for better or worse. This is according to a new survey from the Consumer Finance Protection Bureau (CFPB).

The agency claims in their National Survey of Mortgage Borrowers that nearly half of those who take out a mortgage to purchase a home only “seriously consider” a single lender or mortgage broker before applying.

Equally troubling is that the mortgage borrowers simply rely on information from a lender/broker, followed by their real estate agent, as opposed to outside sources, such as websites, housing counselors, family/friends and so on.

It makes me wonder why I bothered creating this site. If you’re not going to take the time to learn about mortgages or shop around for the largest purchase in your life, I’m concerned.

But do take the time to comparison shop for your toaster. That’s important.

No Time to Shop

As you can see from the graphs, an overwhelming number of consumers only considered one candidate. And an even higher number (~77%) applied with just one lender.

Interestingly, first-time home buyers were a bit more shop-happy, though not by much.

The good news is that most consumers (51%) indicated that they’re “very familiar” with the loan options available in the marketplace.

For those who said they weren’t, they’re more likely to rely on the real estate agent or a personal acquaintance for direction. See my piece on using the real estate agent’s lender for more on that.

Those who did shop around indicated that they did so mostly to find better loan terms, such as a lower interest rate and/or reduced fees.

Others did so over qualifying concerns, some because of information learned from their GFEs, and of course more still because they were denied a mortgage from a prior lender.

What Are Consumers Looking for in a Lender?

This might explain the lack of shopping around. The report revealed that “having an established banking relationship” was the number one reason why a consumer chose a certain lender/broker.

While this makes sense, there are a lot of great banks out there that do a poor job originating mortgages. Sure, it’s convenient to use a one-stop shop, but it might not make sense for your pocketbook.

And if you use an inept bank or broker, you could miss out on a chance to buy your dream home. So it’s not always the best strategy.

Fortunately, reputation of the lender/broker came in a close second, and that’s certainly important if you want to receive a loan approval and a good rate.

The takeaway from the report is that a lot of homeowners don’t shop around for mortgages, and the CFPB wants to change that.

Check Out the Rate Checker

Today, the CFPB also released a new tool known as the “Rate Checker,” which uses real lender data from Informa Research Services.

It’s updated daily to give mortgage shoppers a good idea as to where interest rates should be for a given loan scenario.

The CFPB notes that the tool is unbiased, meaning you don’t actually get paired up with any particular lenders. Instead, you get to see the rates lenders are offering most frequently to borrowers based on certain criteria.

For example, if you tell the tool you’ve got an excellent credit score and a 20% down payment, it’ll tell you what lenders are typically offering for such a loan.

So if a lender tells you they can offer a rate of 4.5% for a 30-year fixed mortgage, but the tool tells you that most lenders are offering 3.625%, you might want to ask some questions.

Sure, there are situations where rates could fluctuate based on pricing adjustments. But if the rate you’re offered is way off from the tool’s data, there should be a pretty clear explanation.

On a $200,000 loan, a difference in rate of 50 basis points (4% instead of 4.5%) results in nearly $60 in monthly savings.

Over the first five years, that’s about $3,500, along with an additional $1,400 in principal paid down. So it can make a pretty big difference. But continue not to shop for your mortgage.

Source: thetruthaboutmortgage.com

Apache is functioning normally

August 1, 2023 by Brett Tams

Living in Colorado is paradise for anyone who loves the outdoors. From the majestic Rocky Mountains to Mesa Verde, hiking, skiing, and mountain biking, there’s plenty to keep you occupied. If Colorado sounds like the state for you, then you may also be curious about what cities fit into your budget. For example, the median home sale price in Colorado is $580,900 as of July.

If that number is out of your budget, don’t worry. We’ve got options to help you find a home. Redfin has collected 10 of the most affordable places to live in Colorado. And the best part is that they all have a median home sale price under the state’s average. From Colorado Springs to Aurora, read on to see what cities you may want to consider moving to this year.

#1: Pueblo

Median home price: $262,950
Average sale price per square foot: $163
Average rent for a 1-bedroom apartment: $1,512
Median household income: $42,902
Nearest major metro: Colorado Springs (45 miles)
Pueblo, CO homes for sale
Pueblo, CO apartments for rent

With a median home sale price of $262,950, Pueblo claims the first spot on our list of affordable places to live in Colorado. Pueblo is home to roughly 111,900 residents and is about 45 miles away from Colorado Springs, the nearest major metro. Living in Pueblo, you can visit the Historic Arkansas Riverwalk of Pueblo, explore the Pueblo Weisbrod Aircraft Museum and the Sangre de Cristo Arts Center, or check out the Nature & Wildlife Discovery Center.

#2: Greeley

Median home price: $405,000
Average sale price per square foot: $185
Average rent for a 1-bedroom apartment: $1,200
Median household income: $57,537
Nearest major metro: Fort Collins (35 miles)
Greeley, CO homes for sale
Greeley, CO apartments for rent

The second most affordable city to live in Colorado is Greeley. The nearest metropolitan area is Fort Collins, which is approximately 35 miles northwest of Greeley. When living in this city of 108,800 people, you can spend the day outside at Island Grove Regional Park, check out Gateway Lakes Natural Area, or visit the Colorado Model Railroad Museum.

#3: Grand Junction

Median home price: $434,000
Average sale price per square foot: $262
Average rent for a 1-bedroom apartment: $775
Median household income: $54,570
Grand Junction, CO homes for sale
Grand Junction, CO apartments for rent

Third is Grand Junction where about 65,600 residents currently live. The median home sale price is $434,000 which is about $145K less than the median home sale price in Colorado. If you find yourself moving to the third most affordable place in Colorado, explore the Western Colorado Botanical Gardens, and visit one of the many museums like Museum of the West or Eureka! McConnell Science Museum. You can also hike one of the trails and stop by Colorado National Monument.

#4: Colorado Springs

Median home price: $460,000
Average sale price per square foot: $218
Average rent for a 1-bedroom apartment: $1,227
Median household income: $57,537
Nearest major metro: Denver (70 miles)
Colorado Springs, CO homes for sale
Colorado Springs, CO apartments for rent

Only slightly more expensive than Grand Junction is none other than Colorado Springs. The second most populous city in Colorado, you can reach the nearest metro, Denver, in about 70 miles. With roughly 478,900 residents in Colorado Springs, make sure to visit the Garden of the Gods, tour the United States Air Force Academy, ride the Pikes Peak Cog Railway, and explore the Cheyenne Mountain Zoo.

#5: Aurora

Median home price: $480,000
Average sale price per square foot: $241
Average rent for a 1-bedroom apartment: $1,678
Median household income: $57,537
Nearest major metro: Denver (10 miles)
Aurora, CO homes for sale
Aurora, CO apartments for rent

Another great affordable city to consider moving to is Aurora, just outside of Denver. Home to 386,300 residents, this affordable town can be a great option to add to your list. Living in Aurora, you can check out the Plains Conservation Center, explore the city center, and fish or swim at Aurora Reservoir.

#6: Loveland

Median home price: $508,000
Average sale price per square foot: $221
Median household income: $72,515
Nearest major metro: Fort Collins (15 miles)
Loveland, CO homes for sale
Loveland, CO apartments for rent

Sixth on the list is another well-known city, Loveland, where you’ll find the home prices are about $80K less than the state’s average. With just about 76,400 people living in Loveland, it’s a great place to consider buying a house in. Make sure to enjoy a day by the lake at Lake Loveland or Boyd Lake State Park, explore Devil’s Backbone Open Space, or check out the sculptures at Benson Sculpture Garden.

#7: Westminster

Median home price: $550,000
Average sale price per square foot: $264
Average rent for a 1-bedroom apartment: $1,928
Median household income: $76,378
Nearest major metro: Denver (10 miles)
Westminster, CO homes for sale
Westminster, CO apartments for rent

Seventh on our list of affordable places to live in Colorado is Westminster. With a population of close to 116,300, living in Westminster is a great option for those looking for a mid-sized city. If you find yourself moving to this area make sure to spend the day at Standley Lake Regional Park & Wildlife Refuge where you can fish, boat, and camp, visit the Butterfly Pavilion home to over 1,500 butterflies, or explore the many local shops and restaurants.

#8: Thornton

Median home price: $562,500
Average sale price per square foot: $221
Average rent for a 1-bedroom apartment: $1,599
Median household income: $80,732
Nearest major metro: Denver (10 miles)
Thornton, CO homes for sale
Thornton, CO apartments for rent

Living in Colorado, it’s likely that you know of Thornton, the eighth city on our list. Nearly 141,800 residents call this affordable city home. Be sure to explore the 200-acre Pelican Ponds Open Space, check out the Trail Winds Recreation Center, and golf at one of the courses throughout the city once living in Thornton.

#9: Lakewood

Median home price: $569,000
Average sale price per square foot: $285
Average rent for a 1-bedroom apartment: $1,675
Median household income: $71,233
Nearest major metro: Denver (8 miles)
Lakewood, CO homes for sale
Lakewood, CO apartments for rent

Lakewood is a great place to consider moving to in Colorado. This Denver suburb is home to about 155,900 residents. Fun activities to do in Lakewood include camping, hiking, horseback riding, or swimming at Bear Creek Lake Park, heading to the famous Red Rocks Park and Amphitheatre for a concert, and hiking up Green Mountain.

#10: Fort Collins

Median home price: $570,000
Average sale price per square foot: $277
Average rent for a 1-bedroom apartment: $1,644
Median household income: $70,528
Nearest major metro: Denver (65 miles)
Fort Collins, CO homes for sale
Fort Collins, CO apartments for rent

Finishing off our list is Fort Collins, where the median home sale price is $570,000. This city has a population of 169,800, there is plenty to do in your free time living in Fort Collins. You can explore the Old Town Historic District where you’ll find homes dating back to the 1800s, trolleys, and charming shops, check out the Fort Collins Museum of Discovery, and visit Riverbend Ponds Natural Area.

Methodology: All cities must have over 50,000 residents per the US Census and have a median home sale price under the average median home sale price in Colorado. Median home sale price and median sale price per square foot from the Redfin Data Center during July 2023. Average rental data from Rent.com July 2023. Population and median household income data sourced from the United States Census Bureau.

Source: redfin.com

Apache is functioning normally

August 1, 2023 by Brett Tams

Last year I asked, “How much do you spend on food?” Answers varied widely. Some commenters couldn’t comprehend that others could spend so much — or so little. I’ve always believed that buying produce at the farmers market is a good way to cut food costs. But is it really? This weekend I decided to find out.

Over the past two days, I’ve surveyed produce prices at five different locations: the farmers market, a produce stand, and three different grocery stores. I did my best to compare apples to apples (so to speak), but I cannot guarantee that my methodology was flawless. Still, this survey was accurate enough for me to draw general conclusions about my personal shopping. Here are the places I scouted:

The nearby farmers market is a great source for produce, but it’s not exactly convenient. It’s open every Sunday from 9:30am to 2:00pm between May and October. The market is a crowded, bustling place with dozens of local growers offering their wares. Quality is good, and most items are raised organically. The market also features cheese-makers, bakers, and the all-important knife man. (We take our blades to be sharpened at the end of every summer.)

You won’t find out-of-season or out-of-region produce at the farmers market. Ginger and bananas and asparagus are nowhere to be seen. You can, however, find a dozen different types of tomatoes, or sample the fall raspberries before you buy. Prices are good on some things, poor on others. For us, it’s worth paying a little extra to support local farmers and businesses with our food dollars.

This high-end grocery store is tucked at the edge of a wealthy neighborhood. We shop it a couple times a year, generally before dinner parties. It stocks a variety of interesting items, and has the highest-quality meats of any nearby source. New Seasons sells a lot of organic and “health” foods, but is less concerned with local items.

The produce here is high quality, but it’s expensive. I have friends that refuse to shop for groceries anywhere else because they support the ideals New Seasons represents. This hinders their ability to economize, but it’s a price they’re willing to pay. I find it difficult to justify the forty minute round trip and the higher costs.

Safeway (Oak Grove store)

Safeway is the closest source of food for us. It’s a mile from our house, and I often walk to the store if our grocery list is light. The prices are decent, especially on sale items. Kris usually plans her weekly shopping list around the Safeway sale inserts.

While the store stocks some organic items, these are costly. The concept of local produce — or local anything — doesn’t enter into the picture with Safeway; we’re treated to woody California strawberries even during the peak of Oregon’s berry season. Produce quality here is good but not great. Safeway’s real competitive advantage is that it sells just about anything we cold possibly need for our home.

Grocery Outlet (Oak Grove store)

Just beyond walking distance is a discount grocery store that features nick-and-dent items, as well as products approaching their expiration dates. We don’t shop here much because Grocery Outlet mostly sells processed food. They do have a small produce section in the back of the store, and their prices are excellent. I can’t vouch for quality, however, as I’ve never purchased any fruits or vegetables from them. On the downside, you must purchase produce in bulk. They don’t sell Costco-sized packages, but still — does anyone really need three pounds of plums?

The Willamette Valley is an agricultural region, and there are produce stands all over, even in the middle of the city. I pass three on my daily commute. Produce stands offer local high-quality organic fruits and vegetables. Selection is mostly seasonal, though; you’re usually limited to whatever is ripe. For this survey, I chose the closest produce stand, which is located across the road from a fish market.

At each location, I jotted prices and observations. After compiling the data, I created a spreadsheet. I had hypothesized that the farmers market would have the lowest prices, but I was wrong. Click below to open the results of the survey in a new window:

Based on my past experience with each produce purveyor, and based on this new research, I charted the pros and cons of each supplier:

My arbitrary system for evaluating my options.

The choice seems clear. During the peak of the harvest, at least, the produce stand offers the best balance of quality and cost, with the best price on 33 out of 63 items. But will it still be a smart place to shop in February? Instead of berries and tomatoes, perhaps the stand will stock yams and winter squashes, cabbages and turnips. Some produce stands shut down completely in the off-season.

Another advantage of shopping exclusively at a produce stand or farmers market is that there are fewer temptations that fall outside the realm of healthy eating. One vendor at the farmers market sells fresh bakery cookies, but that’s as bad as it gets. The produce stand carries bottled soda (including my beloved Mexican Coke), honey stix, wax-paper-wrapped cubes of caramel, and carob balls, but there are few other distractions. Grocery stores — even high-end natural food stores — are warrens of processed food.

What’s the cheapest source of produce in your town? Who has the best quality? Are you willing to pay more to support causes that are important to you? Do you always buy from the same source? Or do you shop around based on price and convenience?

Source: getrichslowly.org

Apache is functioning normally

August 1, 2023 by Brett Tams

Current mortgage rates are moving a little higher this morning after some better than expected economic data.

We could see mortgage rates continue to adjust tomorrow morning when we get the monthly jobs report for December.

Anyone looking to buy or refinance should pay attention to what happens after that release. Read on for more details.

[embedded content]

Market Outlook 1.2.18 from Total Mortgage on Vimeo.

Where are mortgage rates going?

Rates up a little today

It’s a snowy day for most of the East Coast, but that’s not stopping financial markets from getting on with the day’s events.

Click here to get today’s latest mortgage rates (Aug. 1, 2023).

If we take a look at the yield on the 10-year Treasury note (which is the best market indicator of where mortgage rates are going), we can see that it’s up about three basis points from where it started the day.

That rise seems mostly due to a stronger than expected headline reading in the ADP employment report this morning. That report showed that 250,000 jobs were added in December, compared to the 180,000 that analysts had expected.

The ADP report is always the precursor the the main event, the Employment Situation report, which gets released the following day. The two reports don’t always align, but that doesn’t stop investor optimism after a strong ADP report.

If we do get a strong monthly jobs report tomorrow morning that would certainly put further upward pressure on Treasury yields and mortgage rates as market participants move out of bonds and into riskier assets such as stocks.

Rate/Float Recommendation

Lock now while rates are low

Mortgage rates are gradually moving higher, which is something we’ve been expecting, and believe will continue to to happen over the coming weeks and months.

Given this expectation, we believe that it makes the most sense for anyone trying to buy a home or refinance their current mortgage to lock in a rate sooner rather than later.

Click here to head to our Mortgage Builder and figure out how much you could save.

Today’s economic data:

ADP Employment Report

The ADP employment report showed that 250,000 jobs were added in December.

Jobless Claims

Applications for U.S. unemployment benefits came in at 250,000 for the week of 12/30. The four-week moving average is now at 241,750.

PMI Services Index

The PMI services index hit a 53.7 for December.

EIA Petroleum Status Report

For the week of 12/29:

Crude oil: -4.6 M barrels
Gasoline: 0.6 M barrels
Distillates: 1.1 M barrels

Fedspeak

St. Louis Fed President James Bullard will speak at 1:30pm.

Get the GreenLight and close in 21 days*

Notable events this week:

Monday:

Markets Closed: New Year’s Day

Tuesday:

PMI Manufacturing Index

Wednesday:

ISM Mfg Index
Construction Spending
FOMC Minutes

Thursday:

ADP Employment Report
Jobless Claims
PMI Services Index
EIA Petroleum Status Report
Fedspeak

Friday:

Employment Situation
International Trade
Factory Orders
ISM Non-Mfg Index
Fedspeak

*Terms and conditions apply.

Carter Wessman

Carter Wessman is originally from the charming town of Norfolk, Massachusetts. When he isn’t busy writing about mortgage related topics, you can find him playing table tennis, or jamming on his bass guitar.

Source: totalmortgage.com

Apache is functioning normally

August 1, 2023 by Brett Tams

Gateway First Bank was previously an independent mortgage company. Its dominance in the mortgage space helped it become American Banker’s 2022 top-performing bank based on data after the pandemic-era mortgage boom.

Gateway First Bank

A top bank isn’t always the highest flier, but one that can survive the tough periods in a more turbulent economy.

That’s the story of Gateway First in Jenks, Oklahoma, the No. 1 bank on the 2022 list of top-performing banks with $2 billion to $10 billion of assets compiled by the consulting firm Capital Performance Group. The list ranks the banks by their three-year average return on average equity. The $2.1 billion-asset Gateway’s three-year average ROAE of 25.36% put it at the top of the list.

But compared to its top-performing peers that hovered in the 20% to 30% range in the last three years, Gateway First had a very different journey. Its ROAE was slashed in half from 2020 to 2021, going from 45.66% to 26.58%. This then plummeted down to 3.84% in 2022.

“I don’t think there’s any company I’ve seen that has been through more change in the last five years than we have,” said Scott Gesell, CEO of Gateway First Bank. This included changes brought on by an acquisition and a change in strategy.

“But we’ve weathered the storm,” Gesell added. “And it’s because we got great people.”

The bank, originally an independent mortgage company called Gateway Mortgage Group, acquired Farmers Exchange Bank and became Gateway First Bank in 2019. Gateway First’s dominance in the mortgage market proved to be a boon during the pandemic when rates were cut in an attempt to spur economic activity. In 2020, the 30-year fixed-rate mortgage fell below 3% for the first time, and then hit an all-time low of 2.65% in January 2021.

Gesell noted that those were some of the “best years in the history of mortgage lending.” The bank’s mortgage loans peaked at $11.8 billion dollars in the middle of 2020, he added.

Then came the end of 2021, when the bank’s mortgage loans fell to only $4 billion. “It was a transition year away from that and into kind of the worst year in mortgage banking, probably since 2008,” he said.

Interest rates have spiked to more than 7% this year. Ninety-nine percent of borrowers had a mortgage rate lower than 6% or the current market rate, according to Goldman Sachs earlier this year. This has deterred refinancing, with the number of these loans dropping from 1.8 million in the first quarter of 2021 to just 9,700 in the fourth quarter of 2022. Gesell called it a “perfect storm in the mortgage industry today.”

Scott Gesell, CEO of Gateway First Bank.

Gateway First Bank

Gateway has made efforts to diversify its balance sheet by racking up more commercial loans while maintaining and monitoring its current mortgage portfolio. Gesell highlighted that mortgage banking is a more “fickle and volatile business” than other lines of business.

Steven Reider, president of the consulting firm Bancography, said that facing a dearth of refinancing and mortgage activity, it’s good for a bank to look for other revenue streams.

“There’s a benefit from diversification because all of our business lines and all our economic sectors don’t tend to move in lockstep,” he added. “But it takes time to build the product. It takes time to build the personnel.”

The industries of Gateway’s commercial loans are diverse, according to Gesell, ranging from hospitality to energy lending. Meanwhile, the bank has steered clear from lending on commercial office real estate given the uncertainty of that business right now. Remote work has persisted since the pandemic, and office vacancies have reached an all-time high at 16.1% in the first quarter.

Besides diversifying its loan portfolio, the company also cut operations and staffing since the mortgage boom ended. The company cut its number of mortgage centers from 170 to 125 and trimmed its headcount from 1,800 employees who work on mortgage originations to 1,100.

“It’s a tough deal but people know that we aren’t doing it lightly,” added Gesell. “The nice thing is we had a couple good years that allowed us to buffer and soft-land the process of downsizing.”

Gateway’s near-future growth strategy will continue to focus on commercial lending, while fortifying its deposit base — the bank currently has one of the highest loan-to-deposit ratios in the top-performing banks ranking at around 140%. Gesell said that they will be able to do this through organic customer growth and acquisitions of banks heavier on deposits than loans. He is aiming to decrease Gateway’s loan-to-deposit ratio to 90% by the end of 2024.

“That’s sort of been the history of the organization. There has been a commitment to reinvesting in the organization on an ongoing basis because you want to maintain yourself in a position to continue to grow,” said Gesell.

Source: nationalmortgagenews.com

Apache is functioning normally

August 1, 2023 by Brett Tams

Undertakings for Collective Investment in Transferable Securities (UCITS) are a category of investment funds designed to both streamline and safeguard investment transactions. UCITS are usually structured like traditional mutual funds, exchange traded funds, or a money market fund.

The European Union (EU) regulates UCITs, but they are widely available to non-EU investors. U.S. investors, for example, can buy shares of UCITS through U.S.-based fund managers, although local, EU-based money managers run the funds. Because they undergo a high level of regulatory scrutiny, many view UCITS as a relatively safe investment.

What Is a UCITS Fund?

UCITS funds are a type of mutual fund that complies with European Union regulations and holds securities from throughout the region. They emerged as part of an effort by the European Union to consolidate disparate European financial investments into one central sector, governed by the EU, with a “marketing passport,” that enables financial services firms across the EU to invest in multiple countries under a common set of rules and regulations.

The EU launched UCITS for two primary reasons:

1. To structure a single financial services entity under the EU umbrella that allowed for the cross-sale of mutual funds across the EU, and across the globe.

2. To better regulate investment asset transactions among all 28 EU member countries, giving investors inside and outside of the EU access to more tightly regulated investment funds.

Fundamentally, UCITS funds rules give EU regulators a powerful tool to centralize key financial services issues like types of investments allowed, asset liquidity, investment disclosures, and investor safeguards. By rolling the new rules and regulations into UCITS, EU regulators sought to make efficient and secure investment funds available to a broad swath of investors, primarily at the retail and institutional levels.

For investors, UCITS funds offer more flexibility and security. Not only are the funds widely viewed as safe and secure, but UCITS funds offer a diversified fund option to investors who might otherwise have to depend on single public companies for the bulk of their investment portfolios.
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A Brief History of UCITS

The genesis of UCITS funds dates back to the mid-1980’s, with the rollout of the European Directive legislation, which set a new blueprint for financial markets across the continent. The new law introduced UCITS funds on an incremental basis and has been used as a way to regulate financial markets with regular updates and revisions over the past three decades.

In 2002, the EU issued a pair of new directives related to mutual fund sales — Directives 2001/107/EC and 2001/108/EC, which expanded the market for UCITS across the EU and loosened regulations on the sale of index funds in the region.

The fund initiative accelerated in 2009 and 2010, when the Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 clarified the use of UCITS in European investment markets, especially in coordination of all laws, regulations, and administrative oversight. The next year, the European Union reclassified UCITS w as investment funds regulated under Part 1 of the Law of 17 December 2010.

In recent years, “Alt UCITS” or alternative UCITS funds have grown in popularity, along with other types of alternative investments.

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How Does a UCIT Fund Work?

Structurally, UCITS are built like mutual funds, with many of the same features, regulatory requirements, and marketing models.

Individual and institutional investors, who form a collective group of unit holders, put their money into a UCIT, which, in turn, owns investment securities (mostly stocks and bonds) and cash. For investors, the primary goal is to invest their money into the fund to capitalize on specific market conditions that favor the stocks or bonds that form the UCITS. UCTIS funds may provide one way for American investors to get more international diversification within their portfolios.

A professional money manager, or group of managers, run the fund, and they are singularly responsible for choosing the securities that make up the fund. The UCITS investor understands this agreement before investing in the fund, thus allowing the fund managers to choose investments on their behalf.

An investor may leave the fund at any point in time, and do so by liquidating their shares of the fund on the open market. American investors should know that the Internal Revenue Service may classify UCITS as passive foreign investment companies, which could trigger more onerous tax treatments, especially when compared to domestic mutual funds.
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UCITS Rules and Regulations

UCITS do have some firm regulatory and operational requirements to abide by in the European Union, as follows:

• The fund and its management team are usually based on a tax-neutral EU country (Ireland would be a good example.)

• A UCITS operates under the laws mandated by the member state of its headquarters. After the fund is licensed in the EU state of origin, it can then be marketed to other EU states, and to investors around the world. The fund must provide proper legal notification to the state or nation where it wants to do business before being allowed to market the fund to investors.

• A UCITS must provide proper notice to investors in the form of a Key Investor Information Document, usually located on the fund’s website. The fund must also be approved.

• A UCITS must also provide a fund prospectus to investors (also normally found on the fund’s web site) and must file both annual and semiannual reports.

• Any time a UCITS issues, sells, or redeems fund shares, it must make pricing notification available to investors.

The Takeaway

As discussed, Undertakings for Collective Investment in Transferable Securities (UCITS) are a category of investment funds designed to both streamline and safeguard investment transactions. Note that while UCITS are usually structured like traditional mutual funds, exchange traded funds, or a money market fund.

UCITS may be an interesting type of investment for U.S. investors looking to diversify their portfolios. As with any investment, investors must conduct thorough due diligence on the UCITS, which should include a review of fund holdings, past performance, management stability, fees, and tax consequences.

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Apache is functioning normally

August 1, 2023 by Brett Tams

The 8:20am CME Open is such a relevant event for the bond market sometimes that it has its own entry in our knowledge base. On any given morning, it’s possible to see traders lined up (figuratively) to buy or sell as soon as 8:20am hits.

This is all the more likely on the first and final days of any given week or month. Here on August 1st, a small but noticeable majority of traders were lined up to sell. The spike in volume and selling pressure at 8:20am were obvious and they added to what had been modest weakness overnight.

The rest of the session is likely to take its cues from the 10am econ data.

Source: mortgagenewsdaily.com

Apache is functioning normally

August 1, 2023 by Brett Tams

The broader economy showed signs of recovery last week, pushing the average mortgage rate for a 30-year fixed loan up eight basis points to 3.17%, according to Freddie Mac’s Primary Mortgage Market Survey

Since January, mortgage rates have increased roughly 50 basis points from historic lows and home prices have risen, leaving would-be homebuyers with less purchasing power. Unfortunately, this disproportionately affected the low end of the market, where supply is the slimmest, said Sam Khater, Freddie Mac’s chief economist.

“During the course of the pandemic, ‘home’ had become more important than ever, and as a result, strong purchase demand continues—but buyers also outnumber the sellers,” Khater said.

Mortgage applications decreased for the third straight week on Wednesday, according to the Mortgage Bankers Association, as rising mortgage rates pushed refinance activity down to its slowest pace since September 2020. That’s a full 5% drop.

Many economists speculate rising rates will be the key to quelling construction woes, even if it does eventually take a slight toll on demand. Even a slight quarter turn in rates will cause many borrowers to wait out the market. As they do, home builders can seize the opportunity to catch up. With greater supply comes lower home prices, and with them, a stabilization of building costs.

The uptick in rates, coupled with limited supply and rising home prices, did in fact deter some homebuyers last month. Sales of existing homes fell 6.6% in February to a seasonally adjusted annual rate of 6.22 million, according to the National Association of Realtors. At the current rate, unsold inventory sits at a mere 2 month supply, and it’s even lower than that in some of the country’s hottest housing market.

New home sales, which are more likely to be affected by rising rates, plummeted 18.2% month-over-month.

“New home sales from 2018 showed us that mortgage rates of 4.75% to 5% create a supply shock and caused builders to back off construction,” said Logan Mohtashami, HousingWire’s lead analyst. “We are far away from those mortgage rate levels right now, but you have to know your limits with new home sales.”

One potential bright spot is that many Americans have been saving money over the past year. There’s a strong possibility that once the country fully reopens, those reserves will strongly bolster the economy. Demand has yet to be contained as the market is still outperforming pre-pandemic levels with sales 9.1% higher existing home sales than a year ago.

Source: housingwire.com

Apache is functioning normally

August 1, 2023 by Brett Tams

(Bloomberg) — US homeowners are nearly twice as willing to sell if their mortgage rate is 5% or higher, but just one in five mortgaged homes meet that criteria.

Apache is functioning normally

August 1, 2023 by Brett Tams

More news on the mortgage rate lock-in effect, this time from Zestimate creator Zillow.

The company conducted a survey and found that homeowners with a mortgage rate above 5% are nearly twice as likely to sell.

This appears to be the “rate-lock tipping point,” where it essentially no longer matters to give up your mortgage rate.

On the other side of the coin, you have the homeowners with sub-5% rates that are essentially locked-in to their properties for fear of losing their low payments.

The latter group explains why housing inventory continues to be at historically low levels, arguably keeping home prices elevated despite affordability issues.

Low Locked-In Mortgage Rates Affect Housing Supply

By analyzing data from the ZG Population Science Quarterly Survey of Homeowner Intentions and Preferences, Zillow discovered that low locked-in mortgage rates affect housing supply.

A homeowner’s reluctance to sell “results in a shortage of housing options, resale supply, homeowner mobility, and places upward pressure on housing prices.”

Specifically, they learned that mortgage holders with interest rates above 5% are about twice as likely to have plans to sell their home over the next three years versus those with lower rates.

As you can see from the graphic above, this ratio is 38% vs. 21%, illustrating just how important a low rate mortgage is to existing homeowners.

And of the homeowners who reported plans to sell, 47% of homeowners with a mortgage rate above 5% have already listed their property for sale.

Meanwhile, just 20% of those planning to sell with a rate below 5% have yet to take their home to market.

As to why, it’s due to the huge jump in mortgage rates over such a short period of time. After all, you could land a sub-3% as recently as 2022.

Today, the going rate on a 30-year fixed is closer to 7%, which aside from being an unattractive payment increase, may also be unaffordable for many.

This means a homeowner with a low rate must carefully decide if selling and buying another property makes sense financially.

It’s yet another factor to consider when moving, and partially explains why there’s so little resale inventory at the moment.

Intent to Sell Driven by a Homeowner’s Mortgage Rate

Zillow Home Loans senior economist Orphe Divounguy said the company expects mortgage rates to ease slightly as inflation cools.

But doesn’t see a return to 5% for the 30-year fixed “in the near future.” This means someone selling and buying today must settle for a market rate closer to 6/7%.

And this may be driving intent to sell, with 41% of homeowners with rates between 5.00-5.99% considering selling, while just 26% with rates between 4.00-4.99% expressing the same.

But the company also found that this sentiment seems to change as the direction of mortgage rates shifts.

For example, the interest rate at which homeowners are less likely to move climbs higher when mortgage rates are trending up.

But when rates seem to have plateaued and/or are showing signs of improvement, homeowners may be more willing to move, even if they have a lower rate.

The idea likely being that their low rate matters less if mortgage rates are expected to improve.

Conversely, if the outlook for mortgage rates is negative, the existing homeowner may be more reluctant to sell and obtain a new purchase mortgage.

This also applies to the housing market climate overall. If mortgage rates are trending lower, there may be more buyers and higher asking prices.

But if mortgage rates are trending up, buyers could be few and far between. And it makes a new home loan less attractive to the seller as well.

Either way, this inflection point seems to have hovered between 4-5% over the past year, which seems to somewhat track the movement of the 30-year fixed mortgage during that time.

Zillow cited another study, which found that for every 1% increase in the difference between a homeowner’s mortgage rate and current market rates, moving rates fall by 9%.

So if we want the existing supply of homes to move again, mortgage rates need to come down.

Per Zillow’s survey, roughly 90% of existing mortgage holders have a mortgage rate below 6.00%, around 80% have a rate below 5.00%, and nearly a third a rate below 3.00%.

Read more: The National Average Mortgage Rate Lock-In Effect Is Worth $55,000

Source: thetruthaboutmortgage.com