First and foremost, a happy and healthy new year to everyone!! Already seems like this is old news!! Speaking of news, today’s labor report was right down the middle of the road…not too hot, not too cold. Since the election of Donald Trump, there has been a divergence between the stock and bond markets. Equity prices have zoomed upward with the 20,000 Dow Jones Industrial Average in its sights, while the bond market has seen rates increase by over 60 basis points. The equity markets have priced in to the equation a rosier economic picture with the combination of lower taxes and less regulation which will lead to better corporate earnings and the subsequent higher stock market. The flip side has seen interest rates spike to levels not seen in the past few years because of the perceived notion that economic policy is changing from a monetary perspective to a fiscal one. This in turn will create a landscape where the Federal Reserve will have less ability to shape policy and have to react more to the policies implemented by the new Trump administration. What all of this means, remains to be seen…..
In regard to the mortgage arena, rates have risen dramatically over the past two months. 30 year fixed rate loans that were in the low to mid 3% range, have now risen to the low 4% area. While trying to keep this in a 20-30 year perspective, rates are still historically low, but we all get spoiled and want the rates to stay well below any historic average. The real estate market has stayed extremely buoyant and prices remain at elevated levels at all price points. This can be said for the rental market as well. Low inventory and the relative low mortgage rates are still the driving factor for this demand. In addition, foreign investment remains strong. On the commercial front, activity remains robust with many clients seeking to purchase properties for their own use versus paying rent to a landlord.
The mortgage market still has rigid underwriting guidelines, but we have a number of non-traditional loan options offered by a number of institutions that mirror prime/traditional pricing. Some of the highlights are using only 1 year of tax returns versus the traditional 2 years, 12 month’s bank statements in lieu of tax returns & the use of liquid assets as a source of income. All of these can make or break being able to obtain financing. In addition, a number of our sources allow for recent short sales or foreclosures. No need to wait four to seven years to purchase a new home. Needless to say, we of course have a complete menu of traditional mortgage options, including interest only loans & a wide variety of investment property loan options.
We all look forward to a healthy & prosperous 2017 for each and every one of us!! Please feel free to reach out to us to discuss any real estate situation. We welcome your contact.
Gloria Shulman and Curtis Cohen