NEW YORK (Reuters) – JPMorgan Chase & Co <JPM.N>, the country’s largest lender by assets, is raising borrowing standards this week for most new home loans as the bank moves to mitigate lending risk stemming from the novel coronavirus disruption.

From Tuesday, customers applying for a new mortgage will need a credit score of at least 700, and will be required to make a down payment equal to 20% of the home’s value.

The change highlights how banks are quickly shifting gears to respond to the darkening U.S. economic outlook and stress in the housing market, after measures to contain the virus put 16 million people out of work and plunged the country into recession.

“Due to the economic uncertainty, we are making temporary changes that will allow us to more closely focus on serving our existing customers,” Amy Bonitatibus, chief marketing officer for JPMorgan Chase’s home lending business, told Reuters.

The bank was the fourth largest U.S. mortgage lender in 2019, according to industry publication Inside Mortgage Finance.

The changes should help JPMorgan reduce its exposure to borrowers who unexpectedly lose their job, suffer a decline in wages, or whose homes lose value. The bank said the change will also free up staff to handle a surge in mortgage refinance requests, which are taking longer to process due to staff working from home and non-essential businesses being closed.

Refinancing requests jumped to their highest level in more than a decade last month as average rates on 30-year fixed-rate mortgages, the most popular home loan, fell to near record lows, according to data from the Mortgage Bankers Association (MBA).

JPMorgan would not disclose the current minimum requirements for its various mortgage products, but the average down payment across the housing market is around 10%, according to the MBA.

The new credit standards do not apply to JPMorgan’s roughly four million existing mortgage customers, or to low and moderate income borrowers who qualify for its “DreaMaker” product, which requires a minimum 3% down payment and 620 credit score.

The U.S. housing market had been on a steady footing earlier this year, but with a deepening recession and would-be home buyers unable to view properties or close purchases due to social distancing measures, the health crisis now threatens to derail the sector.

The residential mortgage market is already under strain after borrower requests to delay mortgage payments rose 1,900% in the second half of March, Reuters reported.

The National Association of Realtors last month said home sales could fall by around 10% in the short-term, compared to historical sales for this time of year. A Federal Reserve March consumer survey said home prices were expected grow 1.32% over the year, the lowest reading since the survey began in 2013.

https://www.yahoo.com/finance/news/exclusive-jpmorgan-chase-raise-mortgage-221128934.html

March 2020 Hottest Housing Markets

APRIL 9, 2020

Colorado Springs maintains hottest housing market status as national market shifts in response to COVID-19 pressure.

• Colorado Springs reclaims the number 1 rank of hottest housing market for the second consecutive month.
• California metros continue to dominate with ten markets appearing in the top 20 this month.
• The Columbus, OH metro area has seen the largest increase in its hotness ranking among larger metros over the past year.

With the spring home buying season ready to jump into full swing, the entire housing market seemed to pivot in response to COVID-19 in March. While in-person behaviors may have affected buyers’ willingness to visit homes in person, the hottest housing markets were still garnering listing views and closing sales throughout March. Going forward, however, it’s worthwhile to keep an eye on which markets are retaining the attention of homeowner hopefuls as the uncertainty subsidies and the housing market regains its pace.

In March, Colorado Springs, CO retained the title of hottest housing market in the country for the second consecutive month. Originally garnering attention as a spillover market from Denver, this metro has frequently appeared on our list of hottest housing markets, and this represents the third time on record that it has reached number one. Half of all homes in Colorado Springs were selling in under 28 days — nine days faster than last year, and 32 days faster than the rest of the country. Properties in the metro garnered 2.4 times as many views than the average property around the United States. Colorado Springs was the only metro from Colorado on the list of hottest markets.

As a group, Realtor.com’s 20 Hottest Housing Markets received 1.8 to 3.0 times the number of views per home for sale compared to the national rate. These markets are seeing homes for sale move 28 to 47 days more quickly than the typical property in the United States overall. 

Ten states were represented in the top 20 list, including California, Colorado, Connecticut, Indiana, Kansas, Massachusetts, New Hampshire, New York, Ohio, Washington, and Wisconsin. California dominated the hotness list, with seven markets represented, followed by New Hampshire, with three markets represented.

March’s Top 20 Hottest Housing Markets

Metro	Rank (March 2020)	Rank (March 2019)	Views Per Property YoY	Days on Market	Days on Market YoY	Median Listing Price	Median Listing Price YoY
Colorado Springs, CO	1	3	18%	28	-13	465,273	13%
Modesto, CA	2	8	26%	33	-9	392,450	10%
Manchester-Nashua, NH	3	7	0%	38	-13	387,450	6%
Rochester, NY	4	6	3%	37	-10	235,645	9%
Lafayette-West Lafayette, IN	5	11	1%	37	-14	286,450	27%
Fort Wayne, IN	6	38	-13%	39	-25	246,500	14%
Columbus, OH	7	61	-3%	40	-28	307,244	9%
Topeka, KS	8	40	29%	38	-19	152,450	15%
Vallejo-Fairfield, CA	9	10	16%	33	-3	480,050	2%
Sacramento–Roseville–Arden-Arcade, CA	10	5	-2%	35	-9	507,159	7%
Boston-Cambridge-Newton, MA-NH	11	4	-11%	32	-11	630,050	10%
Fresno, CA	12	20	25%	40	-4	334,025	9%
Yuba City, CA	13	18	-12%	42	-14	369,950	13%
Spokane-Spokane Valley, WA	14	21	-3%	40	-16	377,050	10%
Stockton-Lodi, CA	15	9	10%	38	-3	437,800	8%
Dayton, OH	16	22	14%	43	-10	184,995	23%
Milwaukee-Waukesha-West Allis, WI	17	25	15%	44	-9	327,500	2%
Concord, NH	18	75	22%	47	-22	330,000	2%
Bakersfield, CA	19	27	15%	42	-6	275,000	9%
Worcester, MA-CT	20	55	-3%	42	-22	358,550	8%

Columbus leads most improved large markets

Larger urban markets continue to cool down in the rankings, with the largest 40 markets across the country dropping by 9 spots, on average, since last year. Western markets collectively improved 3 spots on average over the past year, compared to a decline of 8 spots for midwestern markets, a decline of 23 spots for southern markets, and a decline of 5 spots for northeastern markets Western markets collectively improved 3 spots on average over the past year, an improvement compared to last month’s drop of 1 spot on average. Midwestern markets saw an average decline of 8 spots, although an improvement compared to the drop of 12 spots last month.

March 2020 Hottest Housing Markets

The housing market is in uncharted waters as COVID-19 continues to upset every aspect of the industry, from see-sawing mortgage rates to canceled open houses due to social distancing rules.

With the chaos and confusion comes a certain amount of unpredictability, a recurring theme among the experts asked to forecast trends for the second quarter of 2020.

The possibilities of what might happen with the housing market, as well as the economy, run the gamut. The answers will be dictated by the virus itself.

— Greg McBrideCFA, Bankrate chief financial analyst

What is certain is that the spring homebuying season will look different than the business-as-normal situation that everyone anticipated at the beginning of the year. Here experts break down five trends consumers should keep an eye on going into the second quarter of this pandemic-plagued year.

• Trend 1: Homebuying will dip for spring
• Trend 2: Homes values will hold steady if COVID-19 is short-lived
• Trend 3: Mortgage rates will likely drop even more
• Trend 4: Refinances will continue to increase
• Trend 5: Digital technology will become even more relevant

Trend 1: Homebuying will dip for spring

The spring homebuying season is headed for a slowdown that will last, at minimum, until summer, experts predict. As the housing gears grind to a halt, fewer people are applying for home loans, a trend that will deepen as Americans stay home by the tens of millions.

Purchase loans fell 10 percent from last week and 24 percent from this time last year in the week ending March 27, according to data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey. This drop in purchase loans comes as no surprise as people are asked to shelter in place making it difficult to complete the homebuying process.

Meanwhile, the refinance share of mortgage applications shot up by 26 percent, reflecting the eagerness of homeowners to lock in low rates amid a volatile mortgage environment. In some of the COVID-19 hotspots, mortgage applications were up, but most were likely refinances given the drop in purchases, according to a spokesperson for MBA. New York saw a 16 percent increase and California was up by 18 percent.

The reasons for an anticipated Q2 slowdown are both logistical and economical.

Currently, 75 percent of the country, or 250 million Americans, have been asked to shelter in place. This makes the homebuying and selling process difficult, if not impossible.

Mortgage originations depend on multiple parties, including government entities (which are involved in everything from recording deeds to title searches); so, closed government offices can mean stalled sales.

“If the title companies are unable to record the mortgages and complete their required work due to county and state office closures, loans may be unable to close,” says Heidi Lombardi, licensed mortgage loan originator for American Mortgage in Tampa, Florida.

Likewise, as COVID-19 continues to spread, more appraisers and inspectors will be forced to stop visiting sites, which means lenders won’t be able to fund mortgages.

In strong markets, like Manhattan, which has been one of the hardest-hit areas, listings were down 85 percent at the end of March compared with the same time last year, according to data from UrbanDigs.

“I expect to see a significant decrease in the second-quarter numbers, as will the majority of other businesses, too,” says Rich Schulhoff, CEO of Brooklyn MLS. “Open houses are not allowed and showings have gone virtual. Appraisals are proceeding with limitations. Some appraisers, if allowed by the homeowners, are going into homes while maintaining their distance.”

But the damage may be short-lived

The economic impact will also play a major role in a weak spring homebuying season. A record 3.33 million Americans had filed for unemployment benefits by March 21, and the numbers keep rising. Mass layoffs have created uncertainty, which will trigger lender pullback as well as force some potential homebuyers out of the market, at least for the time being.

The pandemic has penetrated almost every industry, throttling major companies, which has impacted workers all over the country. Marriott, one of the largest hotel chains in the world, is furloughing tens of thousands of workers, and airlines are issuing temporary layoffs of up to 90 percent of their staff.

“While the majority of workers who are being hit hard by the abrupt shutdown of economic activities are generally hourly workers who would not necessarily be in the market to buy a home, the impact has been spreading to salaried workers as well,” says Selma Hepp, deputy chief economist at CoreLogic. “It seems that potential homebuyers who were working in the industries that were most affected will most likely put off the homebuying decision. Also, the volatility in the financial markets will have a negative wealth effect on the higher-earning population.”

The market was strong prior to the pandemic, which could mean that the usually hot spring homebuying season isn’t canceled, but pushed back to autumn, says Lawrence Yun, chief economist at the National Association of Realtors.

“Worth noting that, unlike 2008, there is no subprime lending and overproduction by home builders. Sales will tumble for a few months but prices will hold on. With the stimulus package, any lost sales are likely to show up as a delayed transaction in the second half of the year,” Yun says.

Trend 2: Homes values will hold steady if COVID-19 is short-lived

Homeowners have seen their property value steadily rise, amassing record levels of home equity. In 2019, homeowners with mortgages (approximately 63 percent of all properties) got a notable 5.4 percent year-over-year bump in their home equity, totaling about $489 billion since the fourth quarter of 2018. An average family, with a mortgage, had a total of $177,000 in home equity at the end of 2019, according to data analysis by CoreLogic.

One question for homeowners is what will happen to their property values during this crisis. The answer is uniform across the board: It depends on how long the pandemic lasts. In the short-term, experts agree that prices will flatten, but the long-term effects depend on how deep the shutdown from the virus cleaves into our economy, which could mean the difference between a recession and a depression.

If the impact is limited, with the level of infections dropping dramatically within the next four to six weeks, the recession should be six to nine months in length and the impact on home price depreciation limited,” says Pat Stone, executive chairman and founder of Williston Financial Group in Portland, Oregon. “Should the pandemic extend and homebuying remain depressed, we will see noticeable declines in home prices. In either scenario, once we regain upward economic momentum, home price appreciation will regain pace.”

Another possibility is that only the most afflicted areas will experience a hit to home prices, especially if that area’s economic drivers (hospitality, for instance) are distressed.

Signs are good, however, for a full rebound, Hepp says, citing pent-up demand and very limited for-sale inventory across the country as two indicators that the market is poised for a strong recovery.

Low mortgage rates will also help bolster home sales as activity resumes, which will help keep home prices up. Also, if sellers can wait to sell, then they might maximize their profit if the economy gets back on track by fall.

“For Q2, I expect much lower volume of course, but not an immediate dramatic impact to pricing,” says Todd Teta, chief product officer at ATTOM Data Solutions. “Some sellers will panic and take lower prices; some will take dramatic discounts; most sellers will wait it out.”

Trend 3: Mortgage rates will likely drop even more

Mortgage rates have been on a roller coaster, whipsawing experts and consumers alike. Untethered by normal market levers, such as following the plummeting yields of the 10-year Treasury note, rates have risen and fallen seemingly unpredictably. In retrospect, the reasons are more apparent.

With rates touching new lows, the lender pipelines became clogged, and lenders had to raise rates to stave off more business from people who wanted to refinance or lock in a purchase loan. The erratic rate movement in March occurred as lenders were shying away from mortgage-backed securities, or MBS. Lenders typically trade these securities to hedge their risk of rates changing between the time a borrower makes an application and the closing. The MBS market froze up as the financial markets cratered and buyers became scarce.

In response, the Federal Reserve has employed quantitative easing, or QE, by injecting billions into the MBS market, to ensure that mortgage rates stay low. The Fed has written a blank check, promising to buy billions in agency MBS, which come from Ginnie Mae, Fannie Mae and Freddie Mac.

Experts say this move will help put mortgage rates back into balance, helping to push them into the low 3 percent range during Q2.

“With many policies the Federal Open Market Committee (FOMC) has put in place to ensure the continuation of economic activity and market liquidity, mortgage rates are likely to reach new lows in the coming weeks and months,” Hepp says. “The recent stress put on the financial system led to a bump in rates in recent weeks, but the rates should drift down again. Heightened uncertainty is causing a large variance in mortgage rates forecast through 2021, though many expect the rates on 30-year fixed-rate mortgage to hover around 3 percent or fall lower.”

Trend 4: Refinances will continue to increase

As mortgage rates fall, the number of homeowners who can save money by refinancing expands.  If, for example, rates fall to 3 percent, some 19.4 million homeowners will be refi eligible, according to mortgage data analysis by Black Knight.

Moreover, the incentive to refinance climbs with the amount of money borrowers can save. Currently, 50 percent of outstanding mortgage debt has an interest rate of more than 4 percent, while 24 percent of borrowers have interest rates north of 4.5 percent, according to CoreLogic.

Prepayments rose by 8 percent in January as refinance activity picked up speed, according to Black Knight, and this momentum isn’t expected to slow.

“I’d summarize that the second quarter is going to continue to see a wave of refinancing applications,” McBride says.

Equity-rich homeowners might consider cash-out refinancing as an option if their income was impacted by the coronavirus, McBride adds, especially for those who are long on equity but short on savings.

However, lenders will still run credit and employment checks, so borrowers who are out of work probably won’t qualify for cash-out refinancing.

“COVID-19 could affect cash-out and home equity lending later in the year if housing prices decline because borrowers will have less available equity,” says Jerry Schiano, founder and CEO of Spring EQ in Philadelphia. “That said, program guides have been cut and if people have a cash need for future home improvements or major expenses like weddings or tuition, and they are still employed, I would suggest borrowing now. If they are unemployed the loans won’t close.”

Trend 5: Digital technology will become even more relevant

In a contactless society, contactless technology is king. Lenders and borrowers, forced to keep their distance due to COVID-19, are now relying on a host of remote technology options to conduct business.

It’s now more important than ever for both private companies and government agencies to begin adopting widely accessible online tools like e-signatures, mobile image capture, digital documentation, automated valuation models, remote online notarization and e-closings. Those who don’t will get left behind, experts warn.

“Given the surge in refi demand appraisers are high in demand. Inspections require creativity, like pictures along with a discount mitigation,” says Jarred Kessler, CEO at EasyKnock, a proptech company that offers sale-leaseback of homes. “The bigger, and more frustrating issue, is many counties have not adapted to e-signatures and there is no better time than now to approve it while some court systems are shut down.”

Buyers and sellers are also using video technology to show houses, which can be especially helpful for buyers who have to move due to job relocations, for example.

“Right now, no one wants people in their homes, so interest in video tours has shot up while open houses have been canceled,” says Ilyce Glink, the author of “100 Questions Every First-Time Home Buyer Should Ask.” “Closings are now happening virtually or in drive-by mode, where buyers don’t even get out of their cars. I think you’ll see a lot more of that.”

https://www.bankrate.com/real-estate/housing-trends/?pid=email&utm_campaign=ed_ho_housingtrends&utm_medium=email&utm_source=email&utm_adgid=1121881

Economic Injury Disaster Loan (EIDL) Existing Program 

• Click Here To Apply
  Loan Amounts up to $2,000,000
• 3.75% Interest rate for For-Profit Businesses
• 2.75% Interest rate for Non-For-Profit Businesses
• Loan Terms will not exceed 30 Years 
• Collateral required is only when the loan is over $25,000
• Credit History: Must be acceptable to SBA and show the ability to repay.
• Only available in states with SBA approved declarations of disaster.  Check to see if your area is on the list, click here.
• If you receive the EIDL, you will not be eligible for the SBA 7(a) Relief Loan

*Our sources indicate that there are currently over 25,000 applications submitted so far, with at least 3-weeks  for approvals to be processed. It can be assumed that approval times will only increase as more applicants apply

Get a $10,000 Emergency Advance 

You can get up to a $10,000 grant from the SBA for your small business while you wait for your larger CARES Act Paycheck Protection Program (PPP) Loan or SBA Economic Injury Disaster Loan (EIDL) Follow the below steps:

• Go to https://covid19relief.sba.gov/#/
• Fill out the application
• On the page titled “Additional Information”, make sure to click on “I would like to be considered for an advance of up to $10,000”
• Complete application

*This grant provides an emergency advance of up to $10,000 to small businesses and private non-profits harmed by COVID-19 within three days of applying for an SBA Economic Injury Disaster Loan (EIDL).  

**If you’ve applied for CARES Act PPP financing with us, your place is safe in our queue. Although your application is on-hold pending SBA guidance, we are working diligently to complete your file for an assignment, underwriting, and funding as soon as possible.

SBA 7(a) Relief Loan (Paycheck Protection Program) New Program – CARES Act 

• Click Here To Apply
  Loan amounts up to $10,000,000**
• .5% Interest rate for For-Profit and Non-For-Profit businesses
• 2 year full payout loan, and payments may be deferred for 6 months
• Unsecured and no personal guarantee
• No minimum credit score requirements
• Eligible for loan forgiveness***
• Can only be used for payroll support including medical leave, costs related to health benefits, employee salaries, mortgage payments, rent, utilities, insurance, and any other debt payments incurred before 2/15/2020
• No prepayment penalties
• SBA guarantee fees and lender fees are waived

*A borrower with a current EIDL loan can only also receive the SBA 7(a) Relief loan if the EIDL loan is unrelated to COVID-19

**The maximum loan amount is the lesser of $10,000,000 or the product obtained by multiplying average total monthly payments for payroll costs during the 1-year period before the loan is made by 2.5. So if the loan was made on April 1, 2020, and average monthly payroll costs for the period April 1, 2019, to April 1, 2020, were $1,500,000, the maximum loan amount would be $3,750,000. Payroll amounts over $100,000 per person, will be excluded from the calculation

***Small businesses that take out these loans can get some or all of their loans forgiven. As long as employers continue paying employees at normal levels during the eight weeks following the origination of the loan, then the amount they spent on payroll costs (excluding costs for any compensation above $100,000 annually), mortgage interest, rent payments and utility payments can be combined and that portion of the loan will be forgiven. Any loan amounts not forgiven at the end of one year are carried forward as an ongoing loan with terms of a max of 10 years at 4% interest. The 100% loan guarantee remains intact.

Highlights from this housing report:

• Will the real estate market crash in 2020 due to a shaky economy?
• That’s one of the most common questions we received last week.
• At this point, it seems unlikely that the housing market will “crash.”
• But home prices might drop in some cities, especially the pricey ones.

---

From stock market investors to home buyers, it seems everyone has the jitters lately. And that’s understandable. Turn on the news, any news, and you would think the world was ending. (Spoiler alert: it’s not.)

The coronavirus has shaken the global economy, causing concerns among international corporations and small businesses alike. And those concerns are warranted. 

The biggest problem in the economy right now is restricted movement. Many countries have imposed travel restrictions and “lockdown” protocols to reduce the spread of the virus. That hurts all kinds of businesses, from restaurants to airlines to hotels — even your local coffee shop.

The bottom line is that we will get through this, as we have in the past. But there will certainly be a short-term impact on the world’s economies. How much of an impact is anyone’s guess. It’s just too soon to say.

But let’s turn our attention back to the housing market for a moment. Let’s tackle the big question…

Will the Real Estate Market Crash in 2020?

Will the U.S. real estate market crash in 2020, due to economic concerns spawned by the coronavirus?

That’s a hard question to answer at the moment, mainly because we don’t know how long the situation will drag on. That’s the key factor here — the duration of the crisis. But as of right now, it seems unlikely that we will see a nationwide housing crash on the scale of the one we saw in 2008.

What’s more likely is that the real estate market will slow down, as fewer and fewer home buyers venture out to buy houses. This in turn could lead to slower home-price growth going forward, or even a decline in some areas.

The housing markets most susceptible to falling home values are the ones with the highest prices relative to median income. Markets like those in the San Francisco Bay Area, where only a small percentage of local residents can afford to buy a house, are more likely to see a downturn compared to the more affordable markets with a higher percentage of capable buyers.

According to George Ratiu, a senior economist at Realtor.com, an economic slowdown could also result in fewer home sales nationwide and a buildup of inventory. In a recent Bloomberg article, Ratiu said:

“If there is a marked economic slowdown accompanied by job losses, that would put a lot of pressure on homeowners. We would see a change in the inventory situation. Instead of a severe shortage, you would start to see inventory ramp up as people get interested in offloading.”

But the fact is, we’re not there yet. All of these outlooks are speculative at this point. Possible, but speculative. We haven’t reached that turning point, at least not on a national scale. And we might not reach that point. A lot depends on how quickly health officials can get their arms around this virus.

House Values Continue to Climb in Most U.S. Cities

According to the latest data, home prices in most U.S. cities are still rising as we approach spring of 2020. And at least one forecast sees that trend continuing over the coming months.

As of March 16, the real estate information company Zillow had the following forecast posted on its website:

“The median home value in the United States is $245,193. United States home values have gone up 3.8% over the past year and Zillow predicts they will rise 4.1% within the next year.”

Of course, these predictions are based on current trends and conditions. And those conditions are changing as we speak. It’s certainly a fluid situation. But as of right now, the economists and analysts at Zillow clearly do not see a U.S. real estate market crash occurring in 2020.

Things Have Changed Since the Last Crash

The truth is it would take a lot more than a short-term economic slowdown to cause a nationwide real estate market crash in the U.S. It would take massive job losses and income reduction, on a national scale. And that’s just not happening right now.

The U.S. housing market is not nearly as “fragile” as it was during the last crash. In the early 2000s, reckless lending practices created a ticking time bomb of unaffordable mortgage loans. People who had no business taking on a mortgage loan were qualifying with ease, thanks in part to “creative financing” products like the payment-option ARM loan.

Say what you will about government regulation and oversight, but it has certainly created a more stable mortgage industry — and thus a sturdier housing market. Mortgage default and foreclosure rates today are significantly lower than they were ten or twelve years ago.

Mortgage borrowers today are also better qualified (on average) than they were during the last housing boom-and-bust cycle. There’s more income verification during the loan process today than in the past.

Containment and ‘Lockdown’ Measures Could Reduce Home Sales, Prices

As of right now, the U.S. has not implemented the kinds of strict containment measures we are seeing in some European and Asian countries. 

Many events have been cancelled, from Broadway shows to the Boston Marathon. Large gatherings are prohibited. And an international travel ban has been put into place. But so far, the free movement of individual citizens within the U.S. remains unaffected for the most part.

If that changes — if government officials implement a kind of lockdown to restrict movement — the housing market could take a bigger hit. People would be unable to go out and look at homes. Sales would decline. This reduction in demand would slow home prices and possibly reverse them, in some areas.

At present, this is a regional fight. Some parts of the U.S. have few or no documented cases of the coronavirus right now, while other states have many. And in those affected states, the highest concentration of cases are typically centered around major population centers (but not so much the outskirts).

So if we do see a kind of lockdown implemented in the U.S., it would likely apply to select areas such as New York City — not the country as a whole.

A broader lockdown scenario would certainly slow homes sales and probably chip away at house prices in some markets. But it probably wouldn’t cause a nationwide housing market crash in 2020, unless it dragged on for many months.

Here’s something worth remembering: A virus cannot cause home prices to drop, or cause the real estate market to crash. Not directly anyway. Those things occur due to changes in supply and demand, and consumer confidence. So a lot depends on how people react to the situation.

Disclaimer: This story contains forecasts provided from third parties not associated with the Home Buying Institute. They are the equivalent of an educated guess and should be treated as such. The publisher makes no claims or assertions about future economic conditions.

Will the U.S. Real Estate Market Crash in 2020, Due to Economic Uncertainty?

The Federal Reserve announced Tuesday that it will open a commercial paper funding facility to support the financing needs of companies facing stress amid the coronavirus outbreak.

The facility will support rollovers of commercial paper, a commonly used form of unsecured, short-term debt issued to raise funds. 

With businesses forced to close and with consumer activity capped by quarantines around the country, concern has built up over previous weeks that companies will not be able to find funding to survive the public health crisis.

The commercial paper funding facility will establish a special purpose vehicle (SPV) that will purchase unsecured and asset-backed commercial paper from eligible companies as long as the paper is rated A1/P1 as of March 17. The facility would be available to companies of various industries, not just banks.

“An improved commercial paper market will enhance the ability of businesses to maintain employment and investment as the nation deals with the coronavirus outbreak,” the Fed said in a statement.

The facility was opened in coordination with the U.S. Treasury, which will provide $10 billion of credit production via its Exchange Stabilization Fund.

https://finance.yahoo.com/news/fed-unleashes-commercial-paper-funding-to-support-nonbank-companies-144710054.html

The Federal Reserve made an emergency announcement Sunday afternoon by announcing that it would be cutting interest rates to zero for the first time since the financial crisis.

The central bank said it will use its “full range of tools” to battle the economic impacts of the novel coronavirus and announced quantitative easing in the form of at least $700 billion of asset purchases. It also encouraged banks to provide credit to the economy by eliminating reserve requirements and allowing the financial firms to tap into capital and liquidity buffers.

In a global effort, the Fed also announced standing U.S. dollar liquidity swap line arrangements in coordination with the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank. 

“The Federal Reserve is prepared to use its full range of tools to support the flow of credit to households and businesses and thereby promote its maximum employment and price stability goals,” the Fed said in a statement.

The Fed said the coronavirus outbreak “harmed communities and disrupted communities in many countries,” adding that the U.S. labor market still appeared “strong” as the U.S. economy rose at a “moderate rate.”

But the Fed on Sunday slashed rates by 100 basis points, less than two weeks after it had already made an impromptu 50 basis point cut. 

“The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.”

The Fed also resumed the crisis-era policy of large-scale asset purchases by committing to Treasury purchases of at least $500 billion and agency mortgage-backed securities of at least $20 billion “over coming months.”

The central bank was scheduled to hold a Federal Open Market Committee meeting on March 17-18 with a policy announcement on March 18. In the face of accelerating cases of the coronavirus around the world, the Fed pulled the decision forward.

Maintaining credit

The Fed said it is “carefully monitoring credit markets,” where market liquidity has been a concern as markets churned over the impact of the coronavirus.

The central bank announced a number of measures on Sunday to motivate banks to support businesses as quarantines around the country raise concerns that businesses will have to close their doors and possibly lay off workers.

As a key regulator of the banks, the Fed said the financial institutions should feel comfortable tapping into the discount window as a tool for addressing “potential funding pressures.” In the past, banks have been hesitant to tap into the direct lines of funding because of the stigma associated with relying on the Fed for emergency funds.

The Fed said banks were welcome to borrow from the discount window for periods as long as 90 days, “prepayable and renewable by the borrower on a daily basis.”

The Fed also said firms could use their capital and liquidity buffers to lend, and reduced reserve

requirement ratios to zero percent effective on March 26. 

“This action eliminates reserve requirements for thousands of depository institutions and will help to support lending to households and businesses.”

https://finance.yahoo.com/news/federal-reserve-cuts-rates-to-zero-restarts-quantitative-easing-qe-210001968.html

• The average rate on the 30-year fixed loosely tracks the yield on the 10-year U.S. Treasury bond, but it is no longer keeping up. The 10-year plummeted to yet another record low overnight, but mortgage rates, while also at a record low, are slower to fall.
•  One borrower who called Bank of America on Saturday was told there would be a two-hour wait to speak with a loan officer.  
• “It’s absolute pandemonium,” said Matt Weaver, vice-president of sales at Cross Country Mortgage. “The industry right now is certainly inundated with requests. Let’s put it this way, we are like Home Depot during a hurricane.”

A sharp drop in mortgage interest rates has sparked a sudden and unexpected refinance boom that has lenders large and small scrambling to handle the volume.

That stress on the lending market, as well as increased risk to mortgage investors from all those refinances, is actually keeping mortgage rates higher than they could be.

The average rate on the 30-year fixed loosely tracks the yield on the 10-year U.S. Treasury bond, but it is no longer keeping up. The 10-year plummeted to yet another record low overnight, but mortgage rates, while also at a record low, are slower to fall.

Mortgage rates hit 3.11% on Monday, according to Mortgage News Daily.

“Demand has ramped up in a way that many lenders have never experienced,” said Matthew Graham, chief operating officer at Mortgage News Daily, which tracks rates every morning. “Some of them have taken to raising rates in order to deter new business.  Others have completely stopped accepting new applications.”

One borrower who called Bank of America on Saturday was told there would be a two-hour wait to speak with a loan officer.  

At Cross Country Mortgage, a small lender in Boca Raton, Fla, phones were ringing before 8 am Monday. They have increased hours and are trying to find more staff to handle the volume, which is now triple the usual.

“It’s absolute pandemonium,” said Matt Weaver, vice-president of sales at Cross Country. “It is a supply and demand situation. The industry right now is certainly inundated with requests. Let’s put it this way, we are like Home Depot during a hurricane.”

Weaver says his firm is able to lower rates more than the bigger banks, because it has less volume, but there are also unusual profit and risk scenarios at play.

“It’s very complicated as to why mortgage rates aren’t a lot lower. One reason is lenders are dragging their feet, more for profit reasons than for concerns about handling the volume,” noted Guy Cecala, CEO of Inside Mortgage Finance. “If a lender’s costs of funds – either from MBS (mortgage backed securities) pricing or deposits – moves lower, but they keep mortgage rates higher than they normally would be, they profit off the larger than normal spread.” 

Weaver agrees that lenders have to watch their profit margins, along with the added volume.

“In these low times of course lenders have the juggling act of balancing margin vs. market demand, vs. the 10-year Treasury,” said Weaver, who added that his firm needs to handle pricing in a way that makes sure “profitability still remains there.”

At the big banks, rates are slightly higher than at smaller lenders. While no one we contacted would comment on why, they did speak to the enormous volume.

“We’ve paused email marketing campaigns on refinancing due to the thousands of customers who are already aware of the low rates and applying for them on Chase.com,” said Amy Bonitatibus, Chief Marketing Officer, Chase Home Lending. 

A Wells Fargo spokesperson said they are ramping up staff to deal with the onslaught.

“We continue to hire underwriters, processors and closers into our fulfillment group and we’re also executing on opportunities to shift team members from other non-fulfillment groups into our fulfillment operation,” said Tom Goyda, a spokesman for Wells Fargo.

And as for rates: “Lenders look at a lot of factors when setting mortgage rates and they are most directly tied to MBS yields, which have seen a widening spread relative to the 10-year Treasury yield,” added Goyda.

Investors in mortgage-backed bonds are at increasing risk because so many people are refinancing. When a loan is refinanced, it is paid off early, and the investor loses out on several more years of interest rate payment returns. As the risk rises, they will pay less for those bonds and therefore the yield on MBS rises – and mortgage rates rise.

“Investors are so spooked about what is going on that they don’t care about yield and are ignoring MBS and sticking with just Treasury bonds,” added Cecala.

It will take “time and market stability,” to get mortgage rates back to following the 10-year Treasury, said Graham. 

“If these Treasury yields become common, lenders can gradually lower mortgage rates without risking rampant refi activity,” he said.  “Eventually, mortgages would return to a normal distance from Treasuries.”  

https://www.cnbc.com/2020/03/09/mortgage-rates-could-be-lower-but-lenders-struggling-to-keep-up-with-demand.html

Benchmark mortgage rate slides with financial markets

The benchmark 30-year fixed-rate mortgage fell this week to 3.71 percent from 3.75 percent, according to Bankrate’s weekly survey of large lenders.

Mortgage rates have declined with the 10-year Treasury note, which closely tracks mortgage rates. Stocks and government bond yields are falling in the wake of worries about the worldwide coronavirus outbreak.

A year ago, the 30-year rate was 4.54 percent. Four weeks ago, the rate was 3.70 percent. The 30-year fixed-rate average for this week is 0.91 percentage points below the 52-week high of 4.62 percent, and is 0.01 percentage points greater than the 52-week low of 3.70 percent.

The 30-year fixed mortgages in this week’s survey had an average total of 0.30 discount and origination points.

Over the past 52 weeks, the 30-year fixed has averaged 3.99 percent. This week’s rate is 0.28 percentage points lower than the 52-week average.

The 15-year fixed-rate mortgage fell to 3.00 percent from 3.08 percent.
The 5/1 adjustable-rate mortgage fell to 3.30 percent from 3.42 percent.
The 30-year fixed-rate jumbo mortgage fell to 3.69 percent from 3.70 percent.
At the current 30-year fixed rate, you’ll pay $460.85 each month for every $100,000 you borrow, down from $463.12 last week.

At the current 15-year fixed rate, you’ll pay $690.58 each month for every $100,000 you borrow, down from $694.44 last week.

At the current 5/1 ARM rate, you’ll pay $437.96 each month for every $100,000 you borrow, down from $444.59 last week.

Where rates are headed

In the week ahead (Feb. 27-March 4)), 10 percent of the experts polled by Bankrate predict rates will rise, 60 percent say rates will fall, and 30 percent predict rates will remain relatively unchanged (plus or minus 2 basis points).

“The entire conversation is now about coronavirus and what the headlines are going to be. Right now we are basically at a triple cycle low in the 10-year yield which, on Tuesday, hit an all-time low intraday,” said Logan Mohtashami, senior loan officer, AMC Lending Group in Irvine, California. “None of the recent better economic data matters, it’s all about the coronavirus headlines as future data will come in soft for some sectors.”

There is fear in the market, says Mitch Ohlbaum, president, Macoy Capital Partners, Los Angeles. “The flood into treasuries is not anything new, it is the safest and most liquid asset in the world today and where everyone wants to park money in times of distress or the unknown. This is, of course, the simple law of supply and demand and drives rates down. The selloff in equity markets moves people to treasuries, the fear of global recession moves people to treasuries, the fear of COVID-19 moves people to Treasuries.”

For homebuyers and refinancers, decision time

Rate watchers want to know if this is the time to jump on low mortgage rates or if they should wait a little longer in hopes of getting even deeper discounts on loans.

Bankrate polls experts each week on the direction of mortgage rates.

For borrowers with adjustable-rate mortgages, there’s the question of how long to ride the wave of low rates and knowing when to lock.

There is the possibility that the spread between the Treasury yields and mortgage rates will tighten, which will help drive rates lower. However, there’s no guarantee that rates will drop, which could make waiting a risky bet.

https://www.bankrate.com/mortgages/analysis/?pid=email&utm_campaign=ed_bn_mortgage&utm_medium=email&utm_source=email