How Rising #Mortgage Rates May Not Matter for #Housing

Posted on in Economy, FHA, Government, GSE, Housing, Industry, Mortgages, TV Appearances


Everything YOU need to know to stay ahead of your competitors
December 13, 2016

How Rising Mortgage Rates May Not Matter for Housing

With the Fed announcement this afternoon of a quarter point rise in rates, mortgages which are now sitting solidly at the highest level in two years, could move even higher in the coming weeks.

Granted, December is not exactly the hottest season for the housing market — homes don’t top the holiday gift list — but in January, all eyes move to the all-important spring season. This, coming after the Federal Reserve’s expected rate increase on Wednesday.

Even before a Fed move, the average rate on the popular 30-year fixed mortgage shot up from record lows immediately after the presidential election, as investors piled into the stock market and sold out of the bond market [mortgage rates loosely follow the yield of the U.S. 10-year Treasury].

They then continued to move slowly higher, with the resulting move going from about 3.5 percent to now 4.25 percent. The last time rates moved by that much, in June 2013, home sales suffered and house price gains dropped by half.

This time around, however, there is great debate over whether rising rates really matter to housing. After all, increasing rates are indicative of a stronger economy, and a stronger economy favors housing.

“If interest rates are rising because the economy is growing more rapidly, then, typically, incomes also rise, and the rise in incomes offset the increase in the size of the mortgage payment, and housing goes just fine,” said Doug Duncan, chief economist at Fannie Mae, in a recent interview with National Mortgage News.

The greatest barrier to a robust spring housing market next year is not, however, higher mortgage rates — it is lack of supply.

Listings dropped throughout 2016 compared with 2015 and show no signs of improving. While there are some signs of home price gains easing, especially in California, one of the nation’s largest and priciest housing markets, sales cannot increase if there aren’t more homes to buy. Homebuilders are still operating at well below historical norms, and while they increase production little by little, it is not nearly enough. Sellers are also staying put.

read more:

Inside Word From @realDonaldTrump Economic Team Meeting

rood cnbc december-697494-edited.jpg

Collingwood Group Chairman Tim Rood met in New York last week with President Trump and his economic team including Treausry Secretary-designate Steven Mnuchin and Chief of Staff Reince Preibus.  Rood came away from the meeting impressed that the team wants to cut through red-tape and regulation to help fix housing and mortgage industry problems.  There was also talk of the future for Fannie Mae and Freddie Mac, public housing and more.

 >CLICK HERE:   Collingwood’s Rood explained in an appearance on CNBC Power Lunch 

Trump Cabinet Pick Wilbur Ross Can’t Sell NYC Duplex

Donald Trump fans may be clamoring to buy residences at Trump Tower — which brokers recently boasted as having the hottest amenity in town. (Yup, the Secret Service.)

But a few streets away, billionaire Wilbur Ross, whom the president-elect has tapped for commerce secretary, and his socialite wife, Hilary Geary Ross, are still trying to sell their palatial pad.

The posh penthouse duplex is at The Briarcliff on Billionaire’s Row, at 171 W. 57th St.

It’s currently on the market for $18.5 million — down from the $21 million it was asking last year — and has been on the market for 414 days, according to StreetEasy.

The four-bedroom, five-bathroom prewar unit is picture-perfect, decorated by Mario Buatta, and features a living room with two wood-burning fireplaces and soaring barrel-vaulted ceilings.

The penthouse is set up for entertaining. It opens to a windowed entry vestibule and a large gallery — perfect to display an art collection — followed by a library with another wood-burning fireplace and a dining room, with yet another fireplace, that can seat 30 guests.

The penthouse features hand-carved wood moldings and French doors that open to an irrigated and planted terrace with an outdoor fireplace, decorative stonework and a trellised gazebo, according to the listing.

There’s also a terraced corner master bedroom suite with — you guessed it — its own wood-burning fireplace, a marble bathroom and a dressing room with lots of closet space for ball gowns. The home also comes with an upstairs office that has corner exposures and terraces.

Ross bought the home from billionaire real estate mogul Andrew Farkas in 2007 for $18 million.

read more:

‘Duty to Serve’ Rule Approved

The Federal Housing Finance Agency finalized a rule Tuesday that will create a “duty to serve” for Fannie Mae and Freddie Mac to help low- and moderate- income consumers, including encouraging a secondary market for manufactured housing loans.

The final rule appears largely similar to a proposal unveiled a year ago, but manufactured housing advocates have been watching to see whether the FHFA kept a pilot program that gives credit to Fannie and Freddie for supporting so-called “chattel loans,” which are manufactured homes titled as real property. The FHFA said it will issue a proposal next year asking for comment on how to create the pilot program.

Manufactured housing advocates were hopeful the agency would approve the pilot program, noting that 70% of all manufactured homes are financed with chattel loans.

The final rule also give the GSEs credit for supporting the preservation of affordable rental housing and affordable homeownership opportunities, such as shared equity homeownership programs. Additionally, Fannie and Freddie will receive credit for supporting housing in high-needs rural regions.

30,000 Foreclosures in October

CoreLogic’s October 2016 National Foreclosure Report shows the foreclosure inventory declined by 31.5 percent and completed foreclosures declined by 24.9 percent compared with October 2015. The number of completed foreclosures nationwide decreased year over year from 40,000 in October 2015 to 30,000 in October 2016, representing a decrease of 74.7 percent from the peak of 118,287 in September 2010.

The foreclosure inventory represents the number of homes at some stage of the foreclosure process and completed foreclosures reflect the total number of homes lost to foreclosure. Since the financial crisis began in September 2008, there have been approximately 6.5 million completed foreclosures nationally, and since homeownership rates peaked in the second quarter of 2004, there have been approximately 8.5 million homes lost to foreclosure.

As of October 2016, the national foreclosure inventory included approximately 328,000, or 0.8 percent, of all homes with a mortgage, compared with 479,000 homes, or 1.2 percent, in October 2015.

Seven Real Estate Predictions for 2017

In the new year, home price growth will hold steady and homes will sell even faster than they have this year, making 2017 the fastest real estate market on record, according to Redfin.

“Next year, the new administration will lead a shifting U.S. economy,” said Redfin chief economist Nela Richardson. “Baby boomers will become less economically relevant as millennials continue to come of home-buying age. Superstar cities will create much of the job growth, pushing wages in those cities up. Yet the percentage of homes in America’s largest cities that are affordable on the median income has declined the past two years and will continue to fall in 2017. Sales would be even stronger if there were more starter homes on the market to meet demand from millennial homebuyers. We expect to see more homes built in second-tier cities and more millennial homebuyers moving from the coasts to smaller and inland markets where they can find affordable starter homes.”

>Redfin’s Seven Housing Predictions for 2017:

1. The housing market will continue to grow, but at a slower pace due to affordability pressures. The percentage of homes in America’s largest cities that are affordable on a median income has declined the past four years and will continue to fall in 2017. Even with rising affordability pressures, Redfin predicts:

  • Median home sale prices will increase 5.3 percent year over year, similar to the estimated 5.5 percent this year.
  • Existing homes sales are forecasted to increase 2.8 percent in 2017, compared to the estimated 3.4 percent increase in 2016.
  • Inventory will recover slightly, up 1.7 percent year over year, after falling an estimated 3.4 percent in 2016.

2. 2017 will be the fastest real estate market on record. In 2016, the typical home stayed on the market just 52 days, the shortest time recorded since 2009. Redfin anticipates 2017 will be even faster because of increasing demand for short-notice home tours and the development of new technologies to make the entire real estate transaction more efficient.
3. New construction growth will slow. Given that nearly one in four construction workers is foreign-born, stricter immigration policies are likely to make the labor-shortage problem even worse, slowing new-construction growth to 6 percent in 2017 if these policy changes go into effect next year. This will most affect the availability of affordable starter homes, which means higher prices for first-time buyers.

4. Mortgage rates will increase, but not by much. Redfin expects the 30-year fixed mortgage rate to climb, but no higher than 4.3 percent in 2017. Wall Street’s optimism for economic growth and inflation in 2017 is expected to keep mortgage rates low.

5. More people will have access to home loans. Fannie and Freddie are increasing the size of loans they’ll back, while large financial institutions have introduced mortgages requiring as little as 1 percent to 3 percent down. The Trump Administration’s plans to privatize Fannie and Freddie likely won’t take effect until at least 2018.

6. Millennials will move to second-tier cities. Markets able to offer buyers new construction at affordable prices will take center stage in 2017, since many first-time homebuyers have been priced out of the starter-home market in more expensive metropolises. Redfin analysts expect cities like Raleigh, North Carolina, Austin, Texas, and North Port, Florida, which lead the country in the number of new residential building permits per 1,000 people, to lead this trend.

7. Real estate commissions will continue to fall. A 2016 Redfin study found that most people who had sold a home in the past year got a discount on the commission they paid to their broker, and so did almost half of buyers. Redfin projects that as a growing number of disruptive companies offer new, money-saving ways to buy and sell homes, even more consumers will save on real estate fees in 2017.

>>Still Ahead


  • Fed (Rate Hike) announcement, 2 p.m. ET


  • NAHB Housing Market Index for December, 10 a.m ET


  • HUD/Census Bureau New Residential Construction Report for November, 8:30 a.m. ET
The Trump Transition

Carson Conundrum

Reaction flooding in to President Elect Donald Trump’s choice, tapping Ben Carson as his nominee for Housing Secretary.

Collingwood Group Chairman Tim Rood on Fox Business’s Cavuto said, “Dr Carson is an intelligent, impassioned, and empathetic individual.”

tim carson.jpg

As for his lack of experience in the housing arena that may be a positive, Collingwood’s Rood says, “Sometimes the very best policy makers are those who listen; and sometimes, good leaders who are not steeped in the subject matter are better listeners than those who believe they have all the answers.”

>Click Here for Collingwood Chairman Tim Rood’s full interview on FBN’s Cavuto

B.Montgomery_-_Head_Shot.jpgCollingwood Group Deputy Chairman Brian Montgomery tells Westwood One’s First Light radio show, “There is little doubt President-elect Trump greatly admires and respects Dr. Ben Carson and felt strongly about him joining his Cabinet.

Having spent almost eight years in the Executive Office of the President, I speak from experience in saying a Cabinet Secretary who has the ear of the President is a positive for that agency and individual.  In this instance, I think Dr. Carson will be able to “elevate” the issue of Housing within the Trump Administration.  The fact Dr. Carson is a household name I believe will provide him a larger platform to articulate his vision for how best to help tackle any number of issues within the housing arena: shortage of affordable rental housing, the impact of new regulations which have constricted the mortgage market, and the growing senior population and how best to address their housing need.,” 

sharga tv.jpg“Dr. Carson’s nomination is an indication of the tremendous respect that President-Elect Trump has developed for his former rival,” says Ten-X EVP Rick Sharga.Sharga adds “Dr. Carson has spoken out in the past about the need to revitalize many of the country’s urban areas, so it wouldn’t be a surprise if he focuses on doing that, and trying to find solutions to the growing problem of affordable housing. Since Dr. Carson has also discussed the unintended consequences of over-reaching government regulations, it’s possible we may also see some streamlining, or regulatory relief as well.”

By the way, Fannies’ stock price ended the day down 5 percent, Freddie’s is down 6 percent, and both were going even lower in after-hours trading

-“The Trump Effect” on Housing, The Collingwood Group Chairman Tim Rood on Fox Business’s Cavuto: chicago.jpg?v=TqPcoYyJuo

-Rood on the National Business Report  >CLICK HERE TO WATCH: Group’ Chairm

-Collingwood’s Rood on Business First AM >CLICK HERE TO WATCH:

-Rood with the trifecta, a third television interview from the Chicago Board of Trade >CLICK HERE:

Industry Insight: The Opportunity for Change in Housing Policy

DS News covered what the future of loss mitigation will look like after the expiration of HAMP on December 31, 2016. To explore the topic further, DS News sat down with Meg Burns, Managing Director of The Collingwood Group, to discuss the opportunities that come from pairing a new administration with housing policies such as loss mitigation, regulatory compliance, and more.


Burns joined The Collingwood Group in 2014, and as Managing Director, supports the firm’s Business Advisory and Business Development practices. Prior to Collingwood, Burns served as the Senior Associate Director of the Office of Housing and Regulatory Policy at the Federal Housing Finance Agency (FHFA). There, she managed various policy and regulatory initiatives involving single-family and multifamily finance and loss mitigation strategies, as well as insurance-related activities of the government-sponsored enterprises. As such, she was actively involved in industry-wide discussions regarding the role of the federal government in addressing the mortgage crisis.

With the end of HAMP drawing close, what is to come for loss mitigation?

The fact that the sunset of HAMP coincides with the arrival of a new leadership team in Washington is a great opportunity because there is a chance for a really fresh policy dialogue. The good news is that the industry has a lot of work that has been underway for quite sometime now to put forward a good plan for a new set of loss mitigation strategies including a particular set of modifications. It is a very cool time for HAMP to be expiring in some respects and I think that what we will see are some programs that really do reflect the lessons that have been learned. I also think that the reason a new leadership team in Washington is so helpful is because we can have really honest discussions and assessment of what those lessons learned are. It is often a lot easier for a new group of policy leaders to embrace the policy achievement of the team before them but also to acknowledge program flaws without feeling defensive or like they were integrally associated with them. At its core, what was reaffirmed through the HAMP experience was something that most good policymakers know very well which is that complicated program rules generally translate into fewer program beneficiaries. In the HAMP space there was an extended period where they were really striving for perfection and precision both in the data collection aspect and some of the calculations to determine who was eligible. One of the lessons learned in HAMP is that striving for that perfection and precision really rendered  fewer distressed borrowers eligible. I think that what we will see are the modifications that replace HAMP will be modifications that follow some basic rules rather than complex calculations.

Aside from HAMP, what other policy changes might be impacted by the entrance of a new administration?

I think there is tremendous opportunity across the board and I think that the new leadership team has certainly publicly acknowledged a concern with the heavy-handed nature of the regulatory framework in Washington D.C. today. If the new team begins their policy discussion from that perspective, there is a chance that we will see some of the very aggressive enforcement activity move into a space where those who are responsible for monitoring the leading communities activities will start to identify problems and issues but more for the purpose of addressing them and resolving them as opposed to taking very stringent enforcement actions. That type of enforcement outcome clearly has resulting in less lending activity and stifled access to credit. There is a huge opportunity for the Trump Administration to revisit the way rules have been enforced and to take a more relaxed approach not to identifying problems, but to how those problems get resolved. That should make a big difference for lending activity in the country and help more consumers.

Do you think that taking a relaxed approach will possibly improve homeownership?

I do. I think that the nature of the regulatory expansion over the past eight years has affected home sales. The cost in certain parts of this country to build homes has increased so substantially that it’s almost impossible in certain communities to construct starter and affordable homes. I think there is certainly a good opportunity for this new administration to take a look at ways to reduce some of that regulatory activity to the extent that the federal government has a role. This will also impact the lending space where there have been a lot of new regulations put in place as a result of Dodd-Frank in part. They have had a suffocating effect on the ability of lenders to reach the population of borrowers who are most in need of affordable financing options.

read more:


 Have a productive day!

Add Your Voice