Weekly News (February 09, 2022)

Interest Rate (6th Week)

(By Fairway Home Loan )

       Prime Rate: 3.0% / Ref IR: 0.00- 0.25% 

• 3% Down payment for 1st home buyer is available.
• 5% Down payment 2-4 units FHA program available
• 15% Down payment 2 families -conventional program available.
• Potential home buyer — Have a pre-approval first before the shop.  Now we have 48hour underwriting turn-around times for regular loans.
• Self employed borrower – Need to prepare 3 month business bank statements and the YTD Profit and Loss Statement. YTD income can’t decline more than 30% compared to last year.
• 2022 Conventional loan limit:

Conforming SFR: $647,200.00/ Conforming high balance: $970,800.00

Conforming 2 Family: $828,700/ Conforming High Balance: $1,243,050

NJ Home owner supporting fund $35,000 applying began

(Korea Times 2/9)

• The eligibility is 1) household income is below 150% of area AMI 2) hardship under the Covis-19 since Jan 2020 3) no mortgage payment delay or default before Jan 2020.
• The fund will be up to $35,000 for a qualified household and will be granted fund if they live for 3 years and if they move out before 3 year-term they will have to pay back.
• Contact: 855 647 7700 Email:HAFServicing@njhmfa.gov

NYC City Council pursues permanent outdoor restaurant

(Korea Times 2/9)

• The city council held the first hearing on 8th and discussed legalization of outdoor restaurant; the permission fee would be $1,050 and the renewal fee would $525 after the initial effective date.
• The mayor Eric Adams suggested this bill and it will have a smooth ride if the city council passed the bill.
• NYC allowed outdoor restaurant since June 2020 after Covid-19 outbreak and there are 12,000 outdoor restaurants currently. According to the NYC Hospitality Alliance’s survey, one out of ten restaurant owners are supporting this bill.
• Some residents are strongly opposing this bill and they will have organized rally to demonstrate.

U.S house price is forecasted to go down

(Korea Times 2/8)

• Fannie Mae reported on Monday, surveyed in Jan that 25% of poll said it is good time to buy a home and 69% of poll said it is a good time to sell, which is the highest since 2010 when this survey started.
• Fannie Mae HPSI (Home Purchase Sentiment Index) decreased 2.4 points to 71.8 in January, its lowest level since May 2020, as affordability constraints continue to weigh on the housing market.
• The reason of decreasing HPSI is 1) too high home price 2) mortgage rates are climbing up while the Fed is mentioning rates increase any time.

Pressured Renters Flock Into Tight Home Market

(WSJ 2/3)

• Rising rents are one of the main drivers in the recent bout of inflation. They are also spurring many renters to try to buy a home as quickly as possible.
• Average monthly rents listed in the U.S. jumped more than 14% year over year in December, climbing to $1,877, according to data from Redfin. In many major cities, including Austin, TX and Miami, FL, rents increased by more than 30%.
• Economists still recommend buying a home as a way to stave off inflation and build wealth, though it is hardly easy.
• Pressure on renters is coming from many directions. Higher rents are eating into buyers’ down-payment savings, while rising home prices mean they need to come up with a bigger down payment to compete with other buyers.

U.S. Consumers Begin to Pivot to Services

(WSJ 2/3)

• Americans responded to the pandemic with a dramatic shift in spending to goods from services. That now appears to be reversing and should gather steam as the Omicron wave of Covid-19 ebbs, economists say. Also they expect the shift to accelerate, reducing pressure on supply chain, inflation.
• Strong demand for goods coupled with disruptions to their supply have fueled inflation, sending it to a 39-year high of 7% in December. Prices for goods such as furniture and appliances rose 10.7% in December from a year earlier, while services inflation for costs such as rent and airline fares was up a more moderate 3.7%.
• If consumer spending rotates back to services from goods, some of that upward pressure on goods prices should dissipate.
• Real time data show that restaurant bookings and travel remained depressed in January, suggesting the shift toward services away from goods may have paused in January. But looking ahead, a strong labor market and rising wages mean many U.S. consumers are starting 2022 with robust income prospects that are likely to help fuel the services recovery this year.

Bond Yields Approach Milestone

(WSJ 2/8)

• Friday’s blockbuster jobs report has pushed the yield on the 10-year U.S. Treasury note within reach of 2%, making a major step in the financial market’s recovery from the pandemic.
• With the release of one report on Friday morning, the U.S. economy looked much stronger to investors than it did minutes earlier, not only increasing the chances that the Fed could raise interest rates rapidly this year but making it likelier that the economy could withstand such a move.
• Reflecting that conclusion, yields on both short-term and long-term Treasurys surged on Friday, with 10-year yield rising 0.105 % point to 1.930%, its highest close since December 2019.
• Some economists – such as Lawrence Summers, a former Treasury secretary and economic adviser to Democratic presidents, and William Dudley, former president of Fed of New York – have said that the Fed will likely have to raise rates higher than the bond market has suggested.
• Many investors share that view, noting that if consumer prices keep climbing rapidly, the Fed may have to raise rates more just to get to whatever level officials think is appropriate on an inflation-adjusted basis.

U.S. Household Debt Rose by $1 Trillion in 2021

(WSJ 2/9)

• Americans took on more new debt in 2021 than in any year before the 2008-2009 financial crises. Total household debt rose by $1.02T last year, boosted by higher balances on home and auto loans, the Fed of New York said Tuesday.
• It was the largest increase since a $1.06T jump in 2007. Total consumer debt now sits at around $15.58T, compared with $14.56T a year ago.
• The increase is largely a function of a sharp rise in prices for homes and cars.
• The rise in consumer borrowing isn’t cause for alarm, New York fed economists said. Wealth increased across all income levels during the pandemic, according to the Fed, though much of the gains accrued to the richest Americans.
• Delinquency levels on consumer loans are still around record lows. Also 87% of new debt is tied to homes that can appreciate over time.
• Today’s home buyers also are in better financial shape. Subprime borrowers accounted for just 2% of the mortgage debt originated in the fourth Qt of 2021, down from an average 12% in the years before the financial crises.

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