Welcome to my July newsletter featuring personal insights, advice on mortgage rates, and economic news affecting our local housing market.
Interest Rates
The Fed is signaling another interest rate increase in July of 50 to 75 basis points, but I believe the mortgage market should not see negative implications since the increase has probably been priced into today’s rates. Additionally, I think the mid-June highs that sent some loan products over 6% represent the peak for 2022, and barring any major events, we won’t see a significant change in mortgage rates for the remainder of the year.
Speaking of rates, Cohen Financial Group is proud to be one of just a few lenders to offer an exciting loan product with some of the best jumbo rates (priced well under 5%) and loan-to-value (LTV) in the U.S., plus no mortgage insurance!
90% financing to $2M
85% financing to $3M
80% financing to $5M
Local Trends
Here are the latest trends in our loan activity.
· Client concerns with the economy, local real estate values, and the rise in interest rates are creating a more conservative approach to the market. For example, earlier in the pandemic, sellers were willing to throw caution to the wind by purchasing a new home before selling their existing property – now they are waiting.
· Most of our application activity is purchase loans, and fewer clients face multiple offers.
· We have some homeowners apply for home equity lines (HELOC) and cash-out loans to finance an ADU on their property since recent changes to California laws have made the process easier.
Recent Transactions
We are proud to offer some of the best financing in the city and can close quickly. Here are some examples:
New Home Purchase | Hollywood Hills | $5.8M
Bank Statement Loan
10/1 Interest-Only ARM
70% Financing
7 /1 YR Interest-Only ARM
Closed in 28 Days
New Home Purchase | West Hollywood | $3.9M
Bank Statement Loan
80% Financing
10/1 Interest-Only ARM
Closed in 30 Days
Cash-Out Refinance | South Bay
70% financing
$1M cash-out
10/1 Interest-Only ARM
4.5% Interest rate | 4.64% Apr
No Banking Relationship Required
Economic Reports Impacting Our Housing Market
Jobs Report
Yesterday, The U.S. Bureau of Labor Statistics Employment Summary reported an addition of 372,000 jobs in June, maintaining the national unemployment rate at 3.6% for the fourth month in a row. The backlog of jobs stands at 11.3 million, which remains close to a record high and means almost two positions are available for every person looking for work.
While the data is positive for the economy because it helps quell recession fears, it’s a double-edged sword. Low employment means employers are paying more for workers, which increases the cost of goods and services, which continues to fuel inflation.
California has regained over 90% of jobs lost during the pandemic, and the unemployment rate stands at 4.3%.
Inflation
Inflation remains challenging, but we are starting to see commodity prices recede. Gasoline prices have come down 25 days in a row in many areas, plus the cost of crude oil fell below $100 per barrel this week for the first time since May 11.
The June Core Consumer Price Index (CPI) report, the most-watched measure of consumer price inflation, will be released on Wednesday.
Key Economic Reports to watch for this month:
July 13 – Core Consumer Price Index (CPI)
July 19 – Building Permits, Housing Starts
July 20 – Existing Home Sales
July 21 – Philadelphia Fed Manufacturing Index
July 26 – New Home Sales, Consumer Confidence
July 27 – Pending Home Sales, Fed Interest Rate Decision
July 28 – GDP Price Index (Q2)
If you or a client is in the market to buy, stay positive and remember – I have some of the best lending resources available for borrowers. Plus, my deep experience in the industry and origination volume allows me to negotiate the best deals. Don’t hesitate to contact me to discuss options or get a second opinion on a loan – I will always provide my best, unbiased advice.