2016 Year-End Report for Mortgage Rates

Happy Holidays, Just wanted to provide you with a brief year-end report to help prepare you for a fabulous new year!!! Well, 2016 has been a fairly good year for most in the trade. Purchase demand remained high amid inventory constrains. House prices in the 2nd half of the year seemed to have leveled off in urban areas, while an uptick in price reductions is beginning to be seen. This seems to coincide with a spike in the number of mortgage applicants seeking down payment assistance programs. Hence, we may have reached a pause in appreciation, especially since mortgage rates have shot up rapidly since Trump’s election win last month. Rates on a 30yr fixed rate mortgage were around 3.5% for the longest time but now are over 4% in less than a month! That’s quite a shock and may spook potential buyers while getting others off the fence to buy. Guess it all depends on how one perceives it; however, the Mortgage Bankers Association (our equivalent to the NAR) expects rates could go up to 4.5% before pausing. Sadly, this erodes buying power and may actually begin to push home prices lower to compensate…on the bright side, Trump’s rhetoric to bring more JOBS back to the United States should boost much-needed income levels (after inflation, most of the U.S. population haven’t had a raise since 1987)…only time will tell.

Current Mortgage Rates

30 Year Fixed

4.125% (4.209 APR)

15 Year Fixed

3.375% (3.526 APR)

A few positive notes are that mortgage loan limits in the Central Valley are increasing (see chart below), underwriting standards continue to loosen albeit ever-so-slowly, and more liberal programs are beginning to appear back in the marketplace (i.e. bank statement income verification loans, construction, energy loans, ITIN loans, etc.).

2017 Mortgage Loan Limits (Fresno, Madera, Tulare and Kings Counties)

 

Single-Family

Duplex

Triplex

4-Plex

FHA

$275,665

$352,950

$426,625

$530,150

Conventional

$424,100

$543,000

$656,350

$815,650

Keep in mind these important minimum credit score requirements for our traditional programs (we also offer Non-QM loans):

Program

Min Credit Score

Min Down Payment

FHA

500

10%

FHA

580

3.5%

FHA 203K

640

3.5%

Platinum/Sapphire DPA (partial assistance)

640

3%

Platinum/Sapphire DPA (full assistance)

660

3%

Jumbo

740

5%

Jumbo

680

10%

Foreign National

NA

50%

Conventional

620

3%

VA

600

0%

USDA Rural

620

0%

Expat/ITIN

NA

20%

We are optimistic for next year and hope you are too!  We continue to provide excellence in all areas and look forward to either continuing to work with you or begin working with you in 2017 and beyond.  Our rates/fees are in-line with everyone else, our turn times are on-time, and best of all, our staff is local (loan officers, processors, underwriters, and closers) so your customer’s files stay here and help our local economy by keeping jobs and money in the Central Valley.  We have very few credit overlays so we can approve more buyers and since our underwriters and appraisers are all local, they understand our area and the nuances that go with it.

Credit:  Luke Slivkof Primary Residential Mortgage, Inc.

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