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Did you know that a low credit score can do you more than just make it difficult to get a loan or a credit card? If you didn’t realize your score could keep you from renting an apartment or getting a mobile phone, you’re not alone.

A new national survey sponsored by the Consumer Federation of America found that consumers greatly underestimate the cost of low credit scores, and a significant minority don’t know that non-creditors use credit scores.

The Stats

Only about half of the participants in the survey (53%) know that electric utilities may use credit scores to determine the required initial deposit. Only about two-thirds know that they may be used by home insurers (66%), cell phone companies (68%), and landlords (70%).

Only about half of consumers (51%) know when lenders are required to inform borrowers of their use of credit scores—after a mortgage application when a consumer does not receive the best terms on a consumer loan, and whenever a consumer is turned down for a loan.

“The good news is that consumers understand the basics of credit scores, such as the importance of making loan payments on time,” noted Stephen Brobeck, CFA’s Executive Director. “The bad news is that this knowledge is limited and, each year, can cost them hundreds of dollars in fees on services and additional interest on consumer loans,” he added.

Millennials Know Less Than Gen-Exers

The national survey also revealed that millennials (18-34 years of age) know less about credit scores than do gen-exers (35-51 years of age). On eight of nine key knowledge questions, gen-exers scored more highly than millennials. For example, 89 percent of gen-exers, but only 73 percent of millennials, know that 700 is usually a good credit score.

In part, these differences probably reflect simple experience. On nine key knowledge questions, the differences between those who had looked up their credit score within the past year, compared to those who had not, ranged from 10 to 20 percent points. On the same knowledge questions, the differences between those who had ever obtained a free copy of their credit report, and those who had not, ranged from 11 to 26 percentage points.

Millennials are less likely than older Americans to have obtained either their credit scores or credit reports. Nearly two-thirds (65%) of gen-exers, but only about half (51%) of Millennials, said they had ever received a free credit score. Moreover, nearly four-fifths (79%) of gen-exers, but less than three-fifths (57%) of Millennials, said they had ever obtained a free copy of their credit report.

What This Means For You

Ultimately, this points to an unfortunate gap in the knowledge of a generation that’s quickly aging into the marketplace. However the situation is not as dire as it seems. Millennials are very aware of their knowledge limitations about credit scores. Only 42 percent of Millennials, compared to 57 percent of gen-exers, said their knowledge of credit scores was good or excellent.

Source: totalmortgage.com

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In the space of just 2-3 short days, mortgage rates have moved from multi-decade highs to the lowest levels in 3 weeks.  The catch is that the last 3 weeks have also seen some of the highest rates in decades, but hey! Long journeys begin with single steps, right?

As to the pace and duration at which this journey will continue, that’s entirely up to economic data–the periodic reports released by the government and 3rd party firms measuring things like jobs, inflation, and economic output. 

Today’s initial boost came from a small downward adjustment in GDP for the 2nd quarter.  Yes, the 2nd quarter ended 2 months ago, but the market will take any clarity it can get when it comes to how the economy is responding to the Fed’s restrictive rate policies.  After all, as soon as the Fed observes enough of an impact, it will begin to reconsider those policies.

In other words, weaker economic data leads to lower rates, all other things being equal.  Some reports are more important than others and we’ll be waiting until Friday to get this week’s headliner: the big jobs report.  Between now and then, tomorrow’s data can still move the needle a bit, for better or worse.

Source: mortgagenewsdaily.com

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Most people refinance for one of three reasons:

  1. Reduce their interest rate
  2. Reduce their monthly payment
  3. Convert some of their equity into cash

Recently, however, equity has built up in millions of homeowners’ properties thanks to three years of rising home values. This has lead to an incread many owners are also using equity to pay off their mortgages early.

An analysis by Black Knight Financial Services[1] found that chronically low interest rates motivate millions of homeowners to take advantage of rate declines by refinancing again soon after their last refinances.

Falling rates create “serial refinancers”

The number of owners who refinanced again after refinancing under two years ago jumped by 800 percent from Q1 2014 to Q1 2015. These “serial refinancings” dropped by nearly 65 percent when rates rose toward the end of last year, yet they still accounted for two-thirds of rate/term refinances in Q4 2015.

Although interest rates have been on a roller coaster over the last year,  rate and term refinances from borrowers who’ve held their mortgage for less than six years have remained steady. Term reductions remain popular among borrowers taking advantage of low rates. Not surprisingly, they are more popular among aged loans, as borrowers do not want to restart the clock on their mortgage, the report said. Black Knight found that some 37 percent of rate/term refinances in Q4 2015 included a term reduction.

“These two trends are linked, as term reductions are more popular among loans of a greater age, as those borrowers are understandably more hesitant to restart the clock on their mortgages,” the study found.

The data showed that serial refinance extracted $68 billion in equity via cash-out refinance transactions in 2015—the most since 2009 and a 53 percent increase over 2014. Cash-out refinance borrowers continue to represent a relatively low risk profile for lenders; the average post-cash-out LTV is 67 percent, with an average credit score of just under 750.

What this means for you—shorter terms may not pay for refinancing

However, serial refinancers may end up losers in the long run. If they reduce the term of their loan too much, they may end up end up not saving enough on lower interest rates over the course of the loan to pay for the cost of refinacing.

Greg McBride, senior financial analyst for Bankrate.com, says a general rule of thumb is that it is worth it to refinance if the homeowner can make back their investment within three years or less. “If your time horizon is not long enough, you are not going to be able to recoup the cost of refinancing,” he says.

As term reduction refinances grow in popularity, the active mortgage sector shifts as well. Five percent of all active mortgages had 20-year original terms (highest share in over ten years); 16 percent are 15-year original term; and 2.5 percent are 10- year original term (down slightly from last year), according to Black Knight.

[1] http://www.bkfs.com/CorporateInformation/NewsRoom/Pages/20160404.aspx

Source: totalmortgage.com

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While bonds may have started the day drifting into slightly weaker territory, losses have quickly shifted to gains in the wake of this morning’s big ticket data.  JOLTS (the Job Openings and Labor Turnover Survey) has been an increasingly important report.  It will be one of the data points considered by the Fed in determining whether the labor market has softened enough to begin removing some of the “restriction” from the current monetary policy stance.  In other words, if job openings drop enough (and if other data sings a similar tune), the Fed will be wondering more about the timing of the first rate cut than the potential for another rate hike.  Today’s number marked a sharp decline from last month and brings job openings to the lowest level since early 2021.

The bond market response was clear:

For what it’s worth, the chart of 2yr Treasury yields wouldn’t look much different apart from the values on the y-axis, but 2s have fallen more than twice as fast as 10s–an indication of the bond market reassessing the Fed’s rate outlook in the coming year.

Source: mortgagenewsdaily.com

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TOLEDO, Ohio (WTVG) – Mortgage rates across the country are going up and consumers appear to be more anxious about the economy.

You can watch the full big story above.

See a spelling or grammar error in our story? Please include the title when you click here to report it.

Copyright 2023 WTVG. All rights reserved.

Source: 13abc.com

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Texas continues to outpace other states in attracting new residents, according to migration data from John Burns, with Houston, San Antonio and Fort Worth showing strong housing demand. The other top cities for in-migration include Jacksonville, Florida, Charlotte, North Carolina, and Nashville, Tennessee.

However, the Austin housing market, which boomed during the pandemic, is now seeing barely positive migration numbers, along with Phoenix, Arizona, and Las Vegas, Nevada.

According to Altos Research, the Austin metro housing market shows signs of a substantial normalization in home prices compared with the overall trends of the pandemic years and pre-pandemic years. The median sale price for a home in the Austin metro area reached a peak of $675,000 in April 2022. By April 2023, that figure had dropped by 14.07% to a median sale price of $580,000. As of August 2023, the median sale price in the Austin metro area had moderated further to $569,900.

The John Burns report shows housing demand is weak in Sacramento and Riverside-San Bernardino, California.

Meanwhile, in metros such as Denver, Seattle and Philadelphia, the concern doesn’t revolve so much about the people coming in but too many going out, as out-migration is becoming a real issue.

At the very bottom of the list, the East Bay area, Orange County, San Diego, San Jose, Miami, Washington, D.C., Boston, Chicago and San Francisco show very negative domestic out-migration. However, this exodus might be offset by international migration.

To conduct this study, John Burns monitored domestic migration trends in near real time, using postal address change forms that are current within a few months. This data excludes international migration.

Source: housingwire.com

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The Los Angeles City Council passed a $150-million spending plan for funds raised by Measure ULA on Tuesday, marking the first time funds will be specifically allocated since Angelenos passed the tax in November.

The expenditure plan will be directed to six programs: short-term emergency rental assistance, eviction defense, tenant outreach and education, direct cash assistance for low-income seniors and people with disabilities, tenant protections, and affordable housing production.

“This is the largest source of revenue, that’s going to be consistent, that this city has access to for these uses ever,” said Councilmember Nithya Raman. “It’s really transformative for Los Angeles.”

Of the $150 million, $23 million will go toward eviction defense, $23 million will go toward income support for rent-burden seniors, and $18.4 million will go toward rent debt assistance.

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The first program to be implemented will be an emergency rental assistance program, which will open Sept. 19.

Dubbed a ‘mansion tax,’ Measure ULA took effect April 1, bringing a 4% charge on all residential and commercial real estate sales in the city above $5 million and a 5.5% charge on sales above $10 million.

Since April, the tax has raised roughly $55 million. City officials said ULA money can be spent only as it comes in, so the city won’t be able to use the full $150 million until the tax generates $150 million.

Before the vote at Tuesday’s meeting, about a dozen tenants and community activists expressed support for the funding, saying it is desperately needed, especially in the tenant-outreach and eviction-defense programs.

“I am … excited that tenants will also have an opportunity to be legally represented in court and that landlords will not be the only ones with an attorney during an eviction,” said Karely De La Cruz, a civic engagement organizer with TRUST South L.A. “Because housing is a human right.”

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“We really need you all to pass the ULA plan today. That money belongs to the community,” said Chad Williams, an L.A. organizer for the Alliance of Californians for Community Empowerment.

Joe Donlin, director of United to House LA, the coalition that brought Measure ULA onto the ballot, vowed that the coalition will stand together during the implementation process to make sure every dollar is spent effectively.

While $55 million is a significant amount of funding toward L.A.’s housing crisis, it’s still a far cry from original projections of how much the tax would raise.

Early proponents of Measure ULA estimated the tax would raise roughly $900 million per year. In March, a report from the City Administrative Office lowered that number to $672 million.

But once the tax took effect, L.A.’s luxury market froze. Only two homes sold for more than $5 million in the month of April, and the market hasn’t quite recovered since.

Part of the blame can be placed on the overall state of the real estate market that’s still hungover from historic pandemic sales and rising mortgage rates. But many luxury homeowners have simply decided to avoid the tax, either by refusing to sell their homes or hiring accountants and tax specialists to find loopholes.

As a result, Mayor Karen Bass’s first budget proposal, a $13.1-billion plan, projected only $150 million in revenue from Measure ULA.

The $150-million mark is both a product of a slowing real estate market and an emergency backup plan in case the measure gets overturned. If it does, the city has to pay back all the funds raised by the tax.

At the moment, the measure must overcome two major hurdles: an ongoing court case arguing that the tax is unconstitutional and a state ballot measure that Californians will vote on next year.

Barely begun, the court case has already seen its fair share of drama. Superior Court Judge Barbara Scheper recently became the third judge presiding over the case. The previous judge, Joseph Lipner, recused himself after one of the plaintiff’s attorneys complained that he had a conflict of interest because he had previously worked at a law firm that represents the Southern California Assn. of Nonprofit Housing, the Real Deal reported.

Meanwhile, the 2024 ballot measure, called the Taxpayer Protection and Government Accountability Act, would require two-thirds voter approval for new local special tax hikes dating back to January 2022, therefore dismantling Measure ULA, which received 57% approval.

Even if the measure is eventually overturned, the full $150 million will be spent, according to Councilmember Bob Blumenfield.

Source: latimes.com

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Rates for a 30-year and 15-year fixed mortgage fell to all-time lows this week as a resurgence in the pandemic caused investors to buy more bonds, including mortgage-backed securities.

The average rate for a 30-year fixed mortgage was 3.03%, down from 3.07% last week. That marks the lowest in a data series that goes back to 1971, Freddie Mac said in a statement Thursday. The average 15-year rate fell to 2.51%, the lowest in almost 30 years of data, according to the mortgage financier.

Mortgage rates fell as investors reacted to news of a record-setting COVID-19 resurgence in some of the nation’s biggest states. The surges erased optimism from last month’s economic reports showing the jobs market recovering quickly from the virus-induced recession.

The low mortgage rates will boost demand for housing, but it’s a delicate balance, said Sam Khater, chief economist of Freddie Mac. Bad economic news pushes mortgage rates down. However, if states are forced to close businesses again and job losses mount, it will eat into the reservoir of people eligible to purchase properties.

“The summer is heating up as record low mortgage rates continue to spur homebuyer demand,” Khater said. “However, it remains to be seen whether the demand will continue if COVID cases rise to the point that it hinders economic growth.”

The resurgence in the pandemic has “already been much worse than we anticipated, and further restrictions will likely be required in some states to bring the virus under control,” the economists led by Goldman Sachs Chief Economist Jan Hatzius said in a report issued on Saturday.

Mortgage rates have fallen as bond investors’ concerns about a surge in forbearances in April and May has subsided. If layoffs spike, those numbers will mount again, said Joel Naroff, president of Naroff Economics.

The beefed-up unemployment provision in the CARES Act, which adds $600 a week to state payouts in an effort to fully replace salaries, is set to expire on July 31.

“If you’re a middle-income household with a job loss, that $600 a week could mean the ability to pay your mortgage and if it goes away it could put pressure on the housing market in terms of either mortgages or rents,” Naroff said.

The Federal Reserve, which rescued the bond markets in March and April by restarting a fixed-asset-buying program used during the 2008 financial crisis, is still purchasing about $4.5 billion of mortgage-backed securities a day, said Walt Schmidt, FTN Financial’s head of mortgage strategy.

“If it weren’t for the Fed, mortgage rates would be a lot higher,” Schmidt said. “The Fed buying MBS is keeping rates low. The Fed can’t control Fannie Mae and Freddie Mac, but it’s controlling what it can.”

Source: housingwire.com

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Mat Ishbia, chairman and chief executive officer at United Wholesale Mortgage (UWM), provided more than half of the mortgage company’s outstanding shares as a guarantee to secure loans ahead of the acquisition of the Phoenix Suns, according to a Bloomberg report.

According to the report, Ishbia pledged stock he controls to back two loans that were finalized days before his purchase of the Suns was approved. The deal, which values the Suns at $4 billion, first became public in December. The executive received the NBA blessing in February.

In total, 805 million shares, currently worth $4.6 billion, secured two loans with JP Morgan Chase & Co. Ishbia holds his UWM stake via SFS Holding Corp., which owns 94% of UWM’s outstanding stock and pledged the shares, per the firm’s 2023 proxy statements.

“The number of shares of Class A common stock beneficially owned by SFS Corp. also includes a total 805,281,450 shares of Class A common stock which are pledged as security for two separate loan facilities,” the proxy statement states.

The risk of tying up the shares to the loans is that if the value of the stock falls, the bank can usually request additional collateral or for the loan to be repaid. And if the borrower fails to comply, the bank can seize and sell the shares.

The Bloomberg Billionaires Index shows Ishbia’s fortune dropped by $3.4 billion after the pledged shares were removed from his net worth calculation. 

UWM and JP Morgan Chase declined to comment on the topic.  

The seller of the Suns Legacy Holdings, which owns the Phoenix Suns and Mercury, was Robert Sarver. The executive acquired both teams in 2004. Earlier in 2022, Sarver was fined $10 million and suspended for one year following an NBA investigation regarding workplace conduct.

Ishbia and his brother Justin bought 50% ownership of the franchises, including Sarver’s interest. They also acquired a portion of the interest of minority partners, who were granted additional sale rights. Mat serves as governor and Justin as alternate governor.

Source: housingwire.com