Weekly News (June 22, 2022)
Interest Rate (25th Week)
(By Fairway Home Loan )
| 30 yr fx
| 15 yr fx
|10 yr Tr Y
|5 Yr Arm
|7 Yr Arm
|A year ago||2.875||2.150||2.490||1.499|
|A month ago||5.250||4.499||4.750||2.930||4.625||5.000|
Prime Rate:3.75 – 4.00% / Fed Fund Rate: 0.75- 1.00% .
- 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
Cresskill schools may be ready to reopen in September
( The Record 6/17)
- The wind and rain from the storm hit New Jersey last August and wreaked havoc on the shared school building, which sits in a flood zone on Lincoln Drive, Cresskill. Several feet of water rose above the auditorium stage, destroying it and the gymnasium, the media center, desks and chairs.
- Since September, about 1,000 middle and high school students have been learning remotely the majority of the week.
- In December a group of parents, frustrated that their children would have to continue to learn remotely, took their fight to Trenton to try to get the governor’s office to speed up the return of the students. They wanted the governor to grant the district a waiver to quickly purchase supplies needed to repair the school, and circumvent the typically long process of going out to the lowest bidder.
- The district reported that all new lockers have been installed and about 80% of painting and piping work done in general. But electrical work is done about 30%-40%. All doors and furniture for the high school and middle school are expected to arrive and be installed by mid-July.
Rents Will Jumo at Least 3.25% for 2 Million New Yorkers
( New York Times 6/22 )
- The Rent Guide Board voted 5 to 4 to raise rents on one-year leases by 3.25% in rent-stabilized homes, and on two-year leases by 5% at a raucous meeting at Copper Union in Manhattan.
- Soaring inflation has hit tenants and property owners, and the effect on landlords’ ability to maintain buildings was one of the major factors that the board considered. But the vote also intensified concerns about the shortage of affordable housing and the sustainability of the city’s recovery.
- New York City’s rent-stabilization system, first put in place in 1960s, remain as a crucial source of affordable housing. The median income for people living in rent-stabilized homes is about $47,000, compared with $62,960 in unregulated homes, according to the recent survey.
- A separate analysis of property records released last week by the group JustFix.nyc, a technology company that tracks property ownership, suggested that more than 60% of rent-stabilized homes are owned by landlords with portfolio of more than 1,000 units overall. In contrast, about 1% of rent-stabilized units are owned by landlords that own fewer than 10 units.
Home Equity Hits Record $27.8 Trillion
( WSJ 6/16 )
- Americans have more equity in their homes than ever before. Total U.S. home equity increased almost 20% in the first Qt to $27.8T, a record high, according to the Fed.
- The increase is another consequence of a red-hot housing market. Double-digit price gains have driven some would-be homeowners out of market. At the same time, rising home values are boosting the finances of the Americans who already own them.
- About 60% of equity was withdrawn via cash-out refinances in 2021, according to Black Knight. Homeowners are likely to turn to home-equity lines of credit, said Andy Walden, vice president of enterprise research strategy at Black Knight. Borrowing costs on such products are more closely tied to the Fed’s benchmark rate, which has moved less than mortgage rates this year.
- The equity gains expected to spark a record amount of home-improvement spending this year, according to CoreLogic Inc.
U.S. Median price went over $400,000
( Korea Times 6/22 )
- According to NAR, the median price hit $407,600 in May, which is up 14.8% from a year ago. This price is the highest median price ever since 1999 when NAR has begun to collect the data.
- The sales of existing homes reached to 5.41M, down 3.4% from last month and down 8.6% from a year ago.
- Larence Yun, chief economist at NAR said the decline home sales will continue for a few more months.
Economists Say recession Is Likelier
( WSJ 6/21 )
- Economists surveyed by WSJ have raised the probability of recession, now putting it at 44% in the next 12 months, a level usually seen only on the brink or during actual recession. It was 28% in April and at 18% in January.
- Forecasters have raised recession probability due to a number of factors: higher borrowing costs, a blistering pace of inflation, supply-chain problems and commodity-price shocks stemming from the war in Ukraine.
- “We now believe the U.S. economy is headed for a mild recession in the coming months” said Greg Daco, chief economist for EY-Parthenon, a consulting firm. “While consumers will continue to spend freely on leisure, travel and hospitality over the summer, a persistently elevated inflation back-drop, surging interest rates and plunging stock prices will erode spending power, severely curtail housing activity and constrain business investment and hiring.
- One bright spot is that economists still expect the economy to grow this year, although they slashed their projection in half in the most recent survey. On average, they see inflation-adjusted gross domestic product rising 1.3% in the fourth quarter of 2022 from a year earlier, down from 2.6% in the April survey,
Wide range of financial effects from rate hikes
( The Record 6/17 )
- The Fed’s policy-making committee announced a 75 basis-point rate increase on Wed, the largest one-time increase since November 1994. The move will drive rates higher on everything from credit cards to mortgages.
- Anticipated rate hikes in 2022:
- JP Morgan chief U.S. economist Michael Feroli forecasts the Fed will continue to raise by 50 basis-point in July and September. Paul Ashworth, chief North America economist at Capital Economics, is more aggressive with two 75-basis point rate hikes in a row to take the fed funds rate range to 2.25% to 2.5% in July. That’s not all. The peak now likely to be nearer 4%. On the bright side, consumers, especially seniors and others on fixed incomes, will finally see bank deposit rates rise form paltry levels, especially for online savings accounts and CDs.
- Inflation rate in 2022:
- The Fed now finds itself in a delicate position: It must raise rates to cool spending and inflation without tipping the economy into recession. But economists increasingly believe recession will be unavoidable as inflation squeezes households and now, higher rates will too.
- Rising rates’ other effects:
- The Fed’s Wednesday rate increase will impact on credit cards, adjustable-rate mortgages and home equity lines of credit. All are directly affected by the Fed’s move. That’s because they’re tied to the prime rate, which in turn is linked to the Fed’s benchmark rate. Homebuying has become more difficult for many in the market. A silver lining is that it should cool demand for homes, slowing down torrid price growth and providing buyers more options and some relief from bidding wars.
- Fed’s affect on auto loan:
- The Fed’s increase rate should less painful on auto loans. Typically, the effect of a quarter point increase in rates on a $25,000 loan is just a few dollars extra per month.
- Fed’s effect on savings interest rates:
- As fed rates rise, banks will be able to charge a little more for loans, giving them more profit margin to pay a higher rate on customer deposits.
Others/Tech News: Korea launched a Satellite(NURI) successfully by own technology.(KSLV-II) on 21st.
- Korea becomes the seventh country launched own civilian Satellite in the world.