State of the Stock Market

U.S. stocks edged lower as major indexes pared recent gains that have come amid milder expectations for Federal Reserve interest-rate increases.
The S&P 500 opened higher, then turned lower, trading down about 0.2% Monday. The Dow Jones Industrial Average faded 0.1%. The technology-focused Nasdaq Composite Index dropped 0.4%. Markets are trying to hold the gains from a rally that drove the S&P 500 to its largest one-day percentage gain in two years on Friday. Weaker-than-expected U.S. economic data have caused investors to reassess their expectations for a blistering pace of monetary-policy tightening from the Federal Reserve.
The Fed’s plans to raise rates and tame inflation have sparked volatility in global markets this year and earlier this month sent the S&P 500 into a bear market, or a 20% drop from a recent peak.
But recent reports have indicated that the U.S. economy—and potentially inflation—is beginning to cool off. The latest evidence came Friday as the University of Michigan revised lower its June reading of inflation expectations over the next five to 10 years—to 3.1% from 3.3%.
U.S. stock futures had registered larger gains earlier in their session, but the rises softened after data showed that durable-goods orders for May had risen more than expected.
“Every good macroeconomic news is interpreted as bad market news,” said Florian Ielpo, head of macro at Lombard Odier Investment Managers in Geneva. “If we keep seeing strong growth, strong inflation, then the Fed and the ECB will hike rates and we will enter a recession.”
In the near-term, he said stocks are likely to get additional support this week as investors rebalance portfolios ahead of Thursday, which marks the end of the second quarter.

If you're a potential home buyer it's easy to get discouraged, but we still have the best rates available right now. Let's see how we can help you get the loan you need for the home of your dreams. Call Scott Rojo to get started, 916-548-3942.

Good News for Homebuyers

The inventory shortage, high prices and rising interest rates have finally bitten.

Single-family home sales fell sharply by 16.6% in April to a seasonally adjusted annualized rate of 591,000, according to the latest Census Bureau data.

That was the slowest rate of sales since April 2020 during the earliest days of the COVID-19 pandemic, offering respite for buyers that the market is cooling.

What’s more, new home sales in March were revised downward significantly from 763,000 to 709,000, the Census Bureau said.

“The new home sales report released today by the Census Bureau clearly points to a housing market that has turned,” said Doug Duncan, chief economist at Fannie Mae.

Mortgage rates have risen 200 basis points since the end of 2021, putting pressure on existing home sales, mortgage applications, and homebuilder confidence, he said.

‘A sharper downturn in residential investment is now underway, and we will likely be revising downward our near-term home sales forecast.

Doug Duncan, chief economist at Fannie “However, today’s new home sales report is the sharpest indicator yet, with sales coming in well below both our own and consensus expectations,” Duncan said.

”The sales pace in April was similar in level to the slowdown that occurred the last time the Federal Reserve engaged in a tightening regimen in 2018,” he added.

”A sharper downturn in residential investment is now underway,” the Fannie Mae FNMA economist said, adding that he’ll revise downward his own sales projections.

A separate report released last Tuesday by Realtor.com suggested that people are prepared to buy and sell homes at ”more approachable price points.” 

George Ratiu, senior economist and manager of economic research at Realtor.com, said the report “offers hope” for seller-buyers.

The Dow Jones Industrial Index DJIA, S&P 500 SPX and Nasdaq Composite COMP all closed higher on Friday, ending eight straight weeks of declines.

If you’ve been waiting for the prices to take a downturn, now is your time! With our lock and shop program you can lock in your interest rate while shopping for your home! Call me, I’d love to help you get your loan process started! Scott Rojo, United Wholesale Lending, 916-548-3942.

Big Reforms from Fannie Mae and Freddie Mac

Fannie Mae and Freddie Mac are implementing big reforms aimed at helping disadvantaged communities become homeowners and making sure homebuyers of color stay owners.

The initiative from the two federally backed home mortgage companies announced last Wednesday is the most sweeping overhaul since the housing crash in 2008. Some of the big-ticket items exclusively reviewed by USA TODAY include assistance with down payments, reserve funding for homeowners' emergencies and Fannie Mae and Freddie Mac are also rolling out a new credit reporting system that factors rent payments into creditworthiness scores, one of the biggest systemic barriers experts say keep renters of color from being able to purchase a The three-year strategy also laid out plans to increase fairness in the underwriting process, address appraisal disparities in multifamily housing, and finance permanent supportive housing programs primarily geared at providing housing for people experiencing homelessness.

Help is on the way

As part of the effort, Freddie Mac is expected to issue $3 billion in affordable housing bonds this year. 

By 2024, Freddie Mac wants to fund the construction of 30,000 new multifamily units that allow credit-building for renters, accept housing choice vouchers and are designed inclusively for people with disabilities. They want to make the credit-building program available to 300,000 units.

The lender also wants to finance loan offerings in underinvested communities and neighborhoods at risk of losing affordability.

The announcement from Fannie Mae and Freddie Mac comes as median home prices and rents across the country skyrocket.

In the first quarter of this year, the median price of a home reached a record $428,000, according to the Federal Reserve Economic Data database, known as FRED.

Rent year-over-year increases have soared 90% across the nation, the most recent analysis by Rent.com found. In some markets, such as Austin and Oklahoma City, rents have shot up more than 112%, two years after a pandemic recession put nearly 40 million people at risk for eviction.

A majority of Americans also believe it's a bad time to buy a house for the first time since 1978.

According to a new poll by Gallup, only 30% of U.S. adults said it was a good time to purchase a home, driven by an annual inflation rate that accelerated to 8.5% in March and interest rates for 30-year fixed mortgages that climbed above 5%, up from 3% in 2020.

Taken together, everyday Americans are looking for relief in a priced-out housing market that has exacerbated inequities.

 If you’re interested in more information, I’m here to help. Call Scott Rojo at 916-548-3942.

Get the Best Rate— Mortgage Rate Factors That You Control as a Buyer

Lenders adjust mortgage rates depending on how risky they judge the loan to be. A riskier loan has a higher interest rate. Did you know that you have control over some of these mortgage rate factors?

When judging risk, the lender considers how likely you are to fall behind on payments (or stop making payments altogether), and how much money the lender could lose if the loan goes bad. The major factors are credit score and loan-to-value ratio.

Credit score

The lowest mortgage rates go to borrowers with credit scores of 740 or higher. These borrowers have the broadest choice of loan products.

Interest rates tend to be a little higher for borrowers with credit scores of 700 to 739. For borrowers with credit scores from 620 to 699, mortgage rates are even higher. These borrowers might find it difficult or impossible to get high-amount jumbo loans.

 With a credit score below 620, the interest rates are even higher and options are fewer. Most of the loans available at this level are insured or guaranteed by the government.

 A couple of ways to improve your credit score are to pay your bills on time and keep your credit-to-debt ratio low. Monitor your credit regularly to catch any discrepancies.

 Loan-to-value ratio

The loan-to-value ratio measures the mortgage amount compared with the home's price or value. Let's say you make a $20,000 down payment on a $100,000 house. The mortgage will be $80,000. You're borrowing 80% of the home's value, so your loan-to-value ratio is 80%.

 A bigger down payment gives you a smaller loan-to-value ratio, and a smaller down payment gives you a bigger loan-to-value ratio.

 If your loan-to-value ratio is greater than 80%, it's considered high, and it puts the lender at greater risk. This may result in a higher mortgage rate, especially when combined with a lower credit score. The loan will usually require mortgage insurance, too.

 Your loan to value ratio can be improved by saving more for a down payment or choosing a less expensive home.

 Other factors

Lenders may charge more for cash-out refinances, adjustable-rate mortgages and loans on manufactured homes, condominiums, second homes and investment properties because those loans are deemed riskier.

 If you’re just ready to begin the loan process or just have questions, I’m here to help. Call Scott Rojo at 916-548-3942.

No-Cost Appraisals Available Now

We’re Offering Up to $750 Towards Your Appraisal

Looking to purchase a new home this Summer? Now you can take one expense off your list: The Appraisal. Plus, you’ll enjoy our:

• Low rates

• Fast closings, usually within 20 days or less

• Transparent process

Our appraisal credit is available on conventional, government and jumbo purchase loans for primary homes through April 30th.

Need to Buy a Home but don't have the Money to Fix it Up?

GET YOUR MONEY BACK OUT OF THE HOME TO REMODEL

Refinance immediately after purchase. Close your loan in 20 days or less. Free up your cash to remodel.