Home Value Annual Increase 4.5% - 5% Based On Variety Of Reports


Happy Monday! Once again bonds had an early morning move and then trended flat for the day. The 10-year Treasury yield closed on Friday at 2.664% versus a Thursday close around 2.65%. The Dow closed positive by 444 points. MBS improved by 3 bps over Thursday and mortgage rates were basically flat versus one week ago and continue to track near monthly lows.

The 10-year yield has been consolidating into a tighter trend over 2019 and is maintaining below the 2.70% pivot within a lower tranche supported by a yield floor around 2.62% to 2.60%. Investors appear to be waiting for more reliable economic reporting in March to give a picture of post-government shutdown and current conditions.

The markets are closed today in recognition of Presidents Day. One bit of news of Friday was the release of the University of Michigan consumer sentiment index showing an increase from 91.2 in January to 95.5 this month. The index reading exceeded forecast of 93.0 and could be indicative of U.S. spending confidence climbing after the government shutdown. Consumer Spending accounts for almost 70% of the U.S. economy.

The Modern Mortgage Loan Originator uses Mortgage Coach. Additional information and TCAs available within Mortgage Coach and RateWatch.

Cost of Waiting Analysis

-- Home Value annual increase 4.5% - 5% based on variety of reports including NAR, Case Shiller and MBA.

-- Mortgage rate environment flat for the next 1-3 months; worsening in points within 4-6 months; .25 bps worse in rate within 6-8 months; additional .25 bps worse in rate by end of 12 months.

Borrower discount points and Seller Concession in lieu of Price Reduction

-- Over 1/3 of homes on the market have had a price decrease with average decrease of 5% based on various reports.

-- 30-year FRM relative price versus 10/1, 7/1 and 5/1 ARMs through 1 point in discount stack.

-- ARMs currently escalate more deeply at 2% discount by .125% to .25% in rate versus 30-year FRM

Seller Concession TCA with concession used within discount points to lower the interest rate: click here

Seller Concession TCA including ARMs with concession utilized by borrower at 2% discount: click here

Cost of Waiting TCA with 30-year FRM at three, six- and twelve-month future periods: click here

Borrower paid discount TCA 30-year FRM at PAR, 1% and 2% discount; and 10/1 ARM at 2% discount: click here

Rent versus own TCA including worsening rates and increasing rent: click here

Have a great day!