COVID-19 IMPACT ON THE MORTGAGE ECONOMY
Please see our notice on the COVID-19 epidemic and we hope that you are all safe and at least getting some quality time with family during this challenging time. The impact to the mortgage industry as a result of secondary market issues are significant, similar to that of the 2008 financial crisis. While similar, there are also some specific differences on the unknowns relating to forbearance (more below) and how long this continues. Daily changes continue to occur and will continue to occur on lender overlays, changes in process, rate locking, etc. It is a volatile time, but if you know of anyone presently in the loan process on buying or refinancing a home we are always available as a resource.
Today, more than ever, shows how vitally important it is to be an independent firm and not employed/captive to or by a single lender/creditor as the originating party. Competition and choice is critical with the changes that are happening.
Many lenders are impacted significantly and many others are in less-impactful ways, but all impacted. Being captive to one lender or rate sheet has significant consequences on the consumer so we’re continuing to analyze and navigate the best investors today as a true Independent Mortgage Firm (analyzing on average 30-40 wholesale lending partners). Please contact us if you or anyone you know has questions pertaining to these changes occurring in the mortgage and real estate industry.
VMG CORONAVIRUS COVID-19 NOTICE
To Vantage Clients, Business Partners, Friends, and Family,
We understand the challenges all have been faced with recently by the COVID-19 outbreak in the United States. We are taking measures suggested by the CDC to ensure our employees and partners remain healthy and protected during this challenging time for the Pacific Northwest. Both Oregon and Washington Governors have also urged and called all local citizens to remain home and work together to self-contain this out-break.
While we understand there are many economic factors impacting everyone today, please rest assure that the Vantage Mortgage Group staff is fully committed and available to all those in need. We have taken comprehensive steps to ensure the ongoing safety of our employees- especially those in essential roles for each transaction. Many of our clients are still actively looking to buy homes, invest in real estate, refinance, etc. and we’re working with other partners to limit exposure by remote signing, embracing our digital encrypted process remotely, and our staff remaining to be available as always during the hours needed.
For those actively in the loan process or home searching, please reach out to your team members or Mortgage Broker directly for any questions. Our digital process continues and will not be impacted by recent issues and we’re as committed as always to communication when questions arise. We will also provide resources and insight to past clients who may be economically concerned or impacted.
We know that this is just the beginning and plan to stay close to our communities, customers and their needs to do what we can to help all of us persevere. I encourage you to please keep in mind our friends and neighbors whose jobs may be impacted. In addition, please support our health care workers and those in critical roles and keep an eye on our neighbors who may need assistance including seniors and people with special needs. We are also working to support those challenged by this epidemic in our local communities and donating to any cause that can lift the burden people are faced with.
Thank you for your support in local small business and we support all of you during this time and may you and your loved ones stay healthy and happy.
COVID-19 AND MORTGAGE FORBEARANCE CONCERNS
There is a growing concern by mortgage lenders that consumers that are able to make their mortgage payment are inquiring to not do so due to media confusion. We understand many are faced with financial hardship and certainly support any option they have available to avoid default and avoid missing mortgage payments or potential foreclosure and hope this is short-lived with people getting back to work. For those that truly cannot make their payment the Consumer Financial Protection Bureau has released some helpful advice and resources HERE.
For those that can make their payment as normal if not impacted financially or have the reserves or emergency fund, PLEASE CONTINUE TO MAKE YOUR PAYMENTS. The result of forbearance when not necessary is not only causing lenders to maximize their warehouse lines and capacity which can restrict credit to additional consumers to buy and refinance their homes, but have overall economic recourse providing real estate is a huge part of our US economy. We are starting to see these issues already for the thousands that have contacted servicers about forbearance, but may not be impacted by those that truly need this assistance which is what it is meant for.
The attached image above also shows the impact one may have if they defer payments. How this could impact credit (which is not fully clear) depending on servicing reporting, as well as qualifying for a mortgage in the future, along with balloon payments. Something all need to be aware of as these are not just free skipped payments and come at a potential cost.
MORTGAGE RATES AND CURRENT MARKET
Several weeks ago mortgage rates (primarily 30 year fixed terms on conventional conforming and government) in a very short window hit the lowest levels in history (lower than 2016 and even 2012). This rapidly changed due to a significant volume of loan submissions and lenders Nationwide getting over-capacity. As a result, all lenders had to price worse than the market would reflect otherwise (such as bond market and 10 year treasury at one point dipping to an all time low under 0.5). We are starting to see this stabilize and are in a reactionary period due to demands and some lenders pricing much better than others. Each wholesale lender we are looking at are significantly different and it’s very volatile, but all these issues with COVID-19 hit at once so lenders impacted significantly.
For the remainder of 2020, interest rates should stay low historically and time will tell if they drop even lower or not with the timeline of this epidemic (as well as investor capacity and secondary market issues). Today will still spark opportunities for those in a position to buy a home, as well as those considering benefits of refinancing. As a reminder the Fed doesn’t directly control or change mortgage rates, but the Federal funds and prime rate. This media confusion also creates problems. The Fed is buying unlimited Mortgage-Backed Securities (MBS) and Treasuries to avoid a credit crunch we’ve seen before. This will help with liquidity and rates also and primarily with the uncertainly in the market rates should remain low.
We are monitoring closely and will try to notify everyone with opportunities, but please reach out to your VMG Mortgage Broker anytime for an update on rates.
We suggest the following consider a refinance presently or request a quote from their VMG Broker:
- If your note interest rate on your 30 year fixed conforming conventional loan is 4.25% or higher.
- If your note interest rate on your 30 year fixed government loan (VA or FHA) is 3.875% or higher.
- You would benefit by cash-out for debt consolidation or home improvements
We will update everyone as much as possible this year for rate opportunities, but please contact your VMG Mortgage Broker directly for questions as noted (as things are changing rapidly in this environment causing more reaction that proactive updates on demands).
OREGON REAL ESTATE UPDATE
The median home value in Oregon is $369,227. Oregon home values have gone up 3.0% over the past year and Zillow predicts they will rise 3.9% within the next year. The median list price per square foot in Oregon is $218. The median price of homes currently listed in Oregon is $378,900 while the median price of homes that sold is $359,600. The median rent price in Oregon is $1,850.
Foreclosures will be a factor impacting home values in the next several years. In Oregon 1.1 homes are foreclosed (per 10,000). This is lower than the national value of 1.2
Mortgage delinquency is the first step in the foreclosure process. This is when a homeowner fails to make a mortgage payment. The percent of delinquent mortgages in Oregon is 0.6%, which is lower than the national value of 1.1%. With U.S. home values having fallen by more than 20% nationally from their peak in 2007 until their trough in late 2011, many homeowners are now underwater on their mortgages, meaning they owe more than their home is worth. The percent of Oregon homeowners underwater on their mortgage is 4.1%.
WASHINGTON REAL ESTATE UPDATE
The median home value in Washington is $422,452. Washington home values have gone up 5.7% over the past year and Zillow predicts they will rise 4.9% within the next year. The median list price per square foot in Washington is $237. The median price of homes currently listed in Washington is $415,000 while the median price of homes that sold is $403,700. The median rent price in Washington is $1,995.
Foreclosures will be a factor impacting home values in the next several years. In Washington 0.8 homes are foreclosed (per 10,000). This is lower than the national value of 1.2
Mortgage delinquency is the first step in the foreclosure process. This is when a homeowner fails to make a mortgage payment. The percent of delinquent mortgages in Washington is 0.6%, which is lower than the national value of 1.1%. With U.S. home values having fallen by more than 20% nationally from their peak in 2007 until their trough in late 2011, many homeowners are now underwater on their mortgages, meaning they owe more than their home is worth. The percent of Washington homeowners underwater on their mortgage is 4.3%.
We are a local independent small business in the Pacific Northwest (Oregon), serving all those in Oregon and Washington State. As you may know, our business is based on referrals from people like you and those who hear about the quality and detail of our services.
Please pass on our information to anyone you know that could benefit from our services. We greatly appreciate your ongoing referrals and support!
Vantage Mortgage Group, Inc.
17040 Pilkington Rd, Lake Oswego, OR 97035
NMLS # 35986 Equal Housing Opportunity