The Fed doesn’t want long-term mortgage interest rates to rise. At least, that’s the conclusion we draw from a blog post they released, Monday. The post goes to great lengths to draw the conclusion that their recent rate hike shouldn’t affect long-term mortgage rates. To be sure, it will affect short term, adjustable rate mortgages, but their argument is that long-term mortgage (30-year fixed) rates are more tied to long-term treasury rates, which in turn are tied more to Fed signalling than to actual rate hikes.

 

 

 

There are many reasons to think that the housing market is still in great shape; that it can easily withstand the next year’s worth of rate hikes. And the next few months are still likely a great time to buy, seasonally, even if the weather isn’t particularly wintery this year. But if you’re not in a position to be buying directly right now, you may still be able to reap some benefits through indirect investment. This interview on Portfolio Advisor discusses why rising interest rates may be good for investors.

 

There is a very long list of things that one must consider when buying or building a house. Now, there’s one more to add to the list: man-made hazard risk. This is only the second year it’s been conducted, but RealtyTrac just released  it’s annual Manmade Environmental Hazards Housing Risk Report — and a shocking 38% of U.S. homes are in zip codes that are listed as high risk or very-high risk. This is a new study, and with numbers that high, you may not want to give it too much weight, but it probably is something to start considering.

 

It seems that for the entire year, all the data on building permits have been good, but people have been slow to actually break ground. That’s perhaps changing, finally. A Reuters journalist reporting on the general economy agrees with everyone else that the overall economic position is good, even in the face of manufacturing weakness. A key piece of data in his article, at least from this blog’s perspective, is that actual housing starts finally rebounded in November, coming off a seven month low.

 

The Fed just announced the first increase in the “benchmark target rate” for the first time since 2006. The problem for most of us mortals is, not only do we not know what the Fed is, nor what the target rate is, but we really don’t know what this means or why it matters. Nevertheless, it’s literally all over the news, not just in the U.S., but around the world. Thankfully, Matt Phillips wrote a great article over on Quartz. In about 5 minutes of reading, you’ll understand at a basic level everything you need to know about the rate hike. Even better, it comes with a video in case you don’t want to read it.

 

Monday, USA Today carried an interesting piece, touching on the likely impacts of a Fed rate increase. The article focused on the auto and home industries in particular, and for their housing analysis, they came to the same conclusion that everyone else has for several months: a rate hike is unlikely to affect the market. But there was another interesting tidbit in there. They’re expecting home sales to increase by only 4% in 2016 (vs. 8% this year). The reason may surprise you — the limited supply of homes available may push prices up by as much as 5%!

 

We’ve written several times over the last few months about the housing market finally being, if not fully, than at least very nearly fully recovered. Of course, that’s good for the housing market. But Bloomberg wrote yesterday about The End of The Housing Hangover. The phrasing is both important and pretty good. Because in many ways, the effects of the extended recovery have served as a sort of hangover, enervating the economy as a whole. Maybe now, it can only finally start looking up.

 

In a fairly obscure piece of mortgage related news, the EU’s European Securities and Markets Authority (ESMA) has proposed relaxing their current two-day liquidation period, at least when dealing with U.S. mortgage-backed securities (the U.S. has a one-day period). The change of one day may seem particularly obtuse to those not immersed in banking lore, but it has a significant impact on capital requirements, which ultimately means better liquidity for deals on both sides of the pond, which should result in a continuation of relatively loose lending — a boon for both buyers and sellers.

 

There are a lot of regulations in the mortgage industry. Mostly, you don’t need to understand them — that’s why you have a loan officer and work with a professional institution. Nevertheless, you’ll get exposed to a bunch of acronyms, and it’s always frustrating when you don’t understand what people are talking about. Devon Thorsby, Real Estate reporter at U.S. News, put together this super clear, simple guide to some of the big ones: TILA, TRID, QM, RESPA, Dodd-Frank.

 

A couple of days ago, we shared the insights of one home buyer who extolled the virtues of shopping for a home in the depths of winter. But it isn’t all just about the buyer. U.S. News & World Report wrote about the advantages of selling in the winter from an investor’s perspective. Some of their reasoning is market specific (e.g., if you’re selling in Florida, winter is a great time to capture snowbirds), but they also make some generic points that hold no matter where you’re home is.