Mortgage Rates1 – We had a bit of rate relief this week and our benchmark rate dropped back into the sixes and is now at 6.999% (APR 7.082%). The primary market mover was last week’s BLS jobs report which came in weaker than estimates, signaling a bit of a softening in the labor market. Earlier this week we also received July’s Consumer Price Index (CPI) report, which showed that overall inflation increased by only 0.2% – better than the consensus estimates of 0.3% (which was well received). The Core rate, which strips out food and energy prices, year over year decreased from 4.8% to 4.7%, just a hair worse than expectations. Overall, the mixed report had a slight dampening effect, limiting our ability to realize any significant rate improvements, but also not causing any major alarms in the markets.
· Weekly Market Data2 – It was another solid week of inventory growth as 1,154 new listings hit the market; but with only 719 closed, the number of active listings pressed up to 6,405. That is the lowest number of closings we’ve seen since March, as buyers seem to have turned to other summertime activities. Of the active listings, 44% have been listed in the last 30 days and the remaining 56% have been on the market over 30 days. Median Days-On-Market held at 11 days. (Source: REColorado, all DMAR counties, this past week -Thursday to Wednesday).
· Columbine Team Insight – We had 80% of offers accepted this past week, all of which were either at list price or over, and none had seller concessions. The most competitive price point was between $750k – $850k where buyers had to offer 3% to 5% over to win against competing bids.
· Market Trends – While our benchmark rate has been hovering around 7% this summer, did you know that buyers who qualify for either Fannie Mae’s HomeReady or Freddie Mac’s Home Possible loan programs can take advantage of substantially lower interest rates and mortgage insurance? Both of these programs are “income qualified”, which means that if the borrower(s) income being used to qualify for the loan is at or below 80% of the county Area Median Income, we can utilize these programs to obtain preferential pricing – for both the interest rate and mortgage insurance. To put it in perspective, in Denver and the surrounding metro-area counties, buyers with income of $100,400 or less can qualify for this program! Beyond just knowing the income limit, a key concept to understand is the difference between “qualifying income” and “household income”. Since HomeReady and Home Possible use “qualifying income”, a savvy lender (who might that be?) will look for ways to qualify borrowers while also staying within those income limits. For instance, if there are two borrowers on the loan, and we only need one income to qualify, we can simply exclude the other borrower’s income to meet program limits. Another example would be to exclude any bonus, overtime, or commission income. A program that requires using “household income” will include all income earned for those living in the household – many down payment assistance programs use this metric for qualification.
NOTES:
(1) The mortgage loan scenario presented assumes the purchase of a primary residence, excellent credit, an 80% loan-to-value (LTV), a loan amount of $480,000, a 30-year fixed interest rate of 6.999%, and a P&I payment of $3,193. The Annual Percentage Rate (APR) is 7.082% with a 0.039% discount fee ($187). Monthly principal and interest payments, which will continue for the stated term until paid in full, do not include mortgage insurance, property taxes or homeowners’ insurance premiums and actual monthly payments may be higher. Interest rates are current as of 08/10/2023 and are subject to change at any time without notice. All loans are subject to credit approval. Other terms and conditions may apply. Not all loans or products are available in all states. Regulated by the Colorado Department of Regulatory Agencies, Division of Real Estate.
(2) Source: REColorado®, Inc for the period 08/03/2023 to 08/09/2023. Data for Adams, Arapahoe, Boulder, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park counties. This representation is based in whole or in part on content supplied by REColorado®, Inc. and REColorado®, Inc. does not guarantee nor is it in any way responsible for its accuracy. Content maintained by REColorado®, Inc. may not reflect all real estate activity in the market.
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