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Tag: mortgage

  • Feds order Bank of America to pay $12 million for reporting false mortgage data

    Feds order Bank of America to pay $12 million for reporting false mortgage data

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    The Consumer Financial Protection Bureau said Tuesday it ordered Charlotte-based Bank of America to pay a $12 million penalty for submitting false mortgage lending information to the federal government.

    The bank also was ordered to develop policies and procedures to ensure compliance with the Home Mortgage Disclosure Act. It requires mortgage lenders to report information to the CFPB and other federal regulators.

    Data collected under the act is used for the U.S. mortgage market and to see if financial institutions are serving the housing needs of communities and to find possible discriminatory lending practices.

    Hundreds of loan officers at Bank of America failed to ask applicants certain demographic questions required by federal law and then said the applicants declined to respond, according to the bureau’s Tuesday announcement. Those actions took place between 2016 and late 2020, the bureau stated. The applicants were not asked about race, ethnicity and gender, according to the the bureau’s order.

    In a consent order between the bureau and the bank, Bank of America “did not admit or deny any findings of fact or conclusion of law” in the case.

    Bank of America will have to pay millions to the bureau’s victim relief fund for filing false reports for at least four years.

    “Bank of America violated a federal law that thousands of mortgage lenders have routinely followed for decades,” Rohit Chopra, director of the Consumer Financial Protection Bureau, said in a statement. “It is illegal to report false information to federal regulators, and we will be taking additional steps to ensure that Bank of America stops breaking the law.”

    In a statement to The Charlotte Observer, Bank of America said demographic data was collected in more than 99% of applications in the years reviewed by the bureau, and consistently had lower percentages of applicants not disclosing their race compared to annual industry averages.

    “After receiving one complaint in 2020, we conducted a review and notified the government, which prompted this inquiry,” spokesman Bill Halldin told the Observer in a statement. “As the CFPB notes, we took additional steps in 2020 and 2021 to enhance our monitoring and training to ensure employees ask applicants for required racial, ethnic and gender information.”

    The data collection issue had no impact on applications, Halldin said.

    Bank of America took issue with how CFPB characterized the case in its news release. Halldin said there is nothing in the consent order that says hundreds of people failed to ask certain demographic questions for four years.

    He noted that in the consent order, the CFPB cited a three-month period in 2020 involving 113 loan officers, and a three-month period between 2016 and 2021 with 290 officers, who recorded that mortgage applicants chose not to report their race or ethnicity in every application they took during that time.

    “These and other loan officers were not asking applicants for their race, ethnicity, or sex. Instead, they were wrongly recording on applications that the applicants chose not to provide the information, which (Bank of America) then reported to the government each year,” the order stated.

    The Consumer Financial Protection Bureau ordered Bank of America to pay a $12 million penalty for submitting false mortgage lending information to ​the ​federal government.
    The Consumer Financial Protection Bureau ordered Bank of America to pay a $12 million penalty for submitting false mortgage lending information to ​the ​federal government. Christopher Dilts Bloomberg News

    Prior federal action against Bank of America

    In July, the CPFB and the Office of the Comptroller of the Currency imposed $250 million in fines and restitution on Bank of America for what the consumer bureau said were actions that hurt “hundreds of thousands of consumers” by illegally charging junk fees, withholding credit card rewards and opening fake accounts.

    Bank of America agreed to a consent order without admitting or denying any wrongdoing in that case.

    The CFPB and OCC took action against the bank twice last year. The first involved instance botched disbursement of state unemployment benefits. Bank of America was ordered to pay $225 million in fines and refunded hundreds of million of dollars to consumers.

    Later that year, Bank of America paid a $10 million penalty for unlawful garnishments of customer accounts.

    Bank of America has more than 19,000 employees in the Charlotte region, part of 213,000 workers companywide. As of June, it had $2.4 trillion in assets, and was the second-largest bank in the United States.

    This story was originally published November 28, 2023, 3:16 PM.

    Related stories from Charlotte Observer

    Chase Jordan is a business reporter for The Charlotte Observer, and has nearly a decade of experience covering news in North Carolina. Prior to joining the Observer, he was a growth and development reporter for the Wilmington StarNews. The Kansas City native is a graduate of Bethune-Cookman University.

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  • New-home sales drop in October to much lower level than expected

    New-home sales drop in October to much lower level than expected

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    The numbers: U.S. new-home sales fell 5.6% to a seasonally adjusted annual rate of 679,000 in October, from a revised 719,000 in September, the government reported Monday. 

    Analysts polled by the Wall Street Journal had forecast new-home sales to occur at a seasonally adjusted annual rate of 725,000 in October.

    The data are often revised sharply….

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  • The tax implications of buying a second home in Canada – MoneySense

    The tax implications of buying a second home in Canada – MoneySense

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    Primary residences vs. secondary properties

    The tax treatment of real estate in Canada depends on its use. The home you live in—your primary residence—is normally exempt from capital gains tax upon sale due to the primary residence exemption.

    This exemption can even be used on vacation properties, so long as it is “ordinarily inhabited.” While the definition of “ordinarily inhabited” is vague, it means at a minimum you spent time living there during a calendar year. And while there’s an exception for years in which you move and own two homes, you can otherwise only declare one property as your primary residence at any given time. Generally speaking, you’ll want to apply the exemption to the property that has increased in value the most.

    Rental properties don’t qualify for this exemption under most circumstances. When they’re sold, if they have increased in value, capital gains taxes will normally apply.

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    Capital gains tax on a second property in Canada

    When selling a property, if you can’t use the primary residence exemption, then capital gains taxes will be levied against the increase in value. But capital gains are relatively tax-efficient, since only half of the gain is taxable—the other half you can stick in your jeans.

    To calculate the capital gain, you need to first calculate the adjusted cost base, or ACB, against which the sale proceeds will be measured. The starting point is the purchase price, and from there certain additions and deductions can be applied. Common additions include expenses incurred to purchase the property, like commissions and legal fees. Capital expenses, like those used to improve or upgrade the property, can also be added.

    Here’s where it gets a little complicated. Because a building is depreciable property which may wear out over time, investors can deduct a percentage of the property’s cost each year—known as “capital cost allowance,” or CCA. It can only be used against the building itself, not the land portion of the property. When the property is eventually disposed of, the undepreciated capital cost, or UCC—that is, the original cost minus the amount of CCA claimed—is recaptured and taxed as income, with additional proceeds being taxed as a capital gain.

    As a simplified example, say you bought a rental property for $1,000,000. Over the years, you deducted $200,000 of CCA. You then sold the property for $1,300,000. Here’s how it would be taxed:

    • Original cost: $1,000,000
    • CCA claimed: $200,000
    • Undepreciated capital cost: $800,000

    When the rental property is sold, that $200,000 CCA is recaptured and taxed as income. And since you sold it for $1,300,000, you have a capital gain of $300,000. Half of this is taxable, so you add $150,000 to your income that year. Between the recapture and the taxable half of the capital gain, you have $350,000 of income to report on your tax return.

    Capital expenses vs. current expenses: What’s the difference?

    In the above example, the cost of improving the property is a capital cost. It extends the useful life of the property or increases its value. Capital expenses can increase the ACB of the property and can be deducted over time via the CCA. Examples include:

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    Mark McGrath, CFP, CIM, CLU

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  • Toronto housing bubble: Is it ready to pop? – MoneySense

    Toronto housing bubble: Is it ready to pop? – MoneySense

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    As an example, someone who considered themselves fortunate to secure a 5-year variable rate mortgage at 0.9% in early 2022 may have seen their interest rate soar to 5.4%, leading to a significantly higher required payment. For some, this situation is painful, and for others, it becomes unmanageable. In extreme cases, selling the home they purchased just a few years ago, because they can no longer afford it, may be their only recourse. 

    Source: Michael Pe, CFA

    Furthermore, demand from foreign buyers has also been curtailed by the Canadian government’s recent ban on non-Canadians purchasing property. Resident investors, who have significantly contributed to home price inflation, are also likely to be affected by higher interest rates and diminishing cash flow. 

    When will the Toronto real estate bubble burst? While pinpointing the exact timing of Toronto’s potential real estate correction remains challenging, signs of deflation may already be underway. The TRREB has its benchmark prices, designed to estimate the value of a typical home in the area without distortion from outliers. In October, the real estate board reported the benchmark at $1,103,600, indicating a 2.1% dip from September’s $1,127,000. 

    The prospect of a prolonged period of increased interest rates, driven by the Bank of Canada’s cautious stance amid inflation concerns, alongside reduced affordability, restrictions on foreign buyers, and decreased local investor activity due to higher interest rates, suggests the potential for further market deflation.

    When will housing prices hit bottom?

    Prices are dropping in Toronto, and in Canada as a whole. However, it’s uncertain whether prices will continue to decline or not. The Canada Mortgage and Housing Corporation (CMHC) forecasted home prices to increase in 2024. And according to recent stats from real estate firm Wahl’s 2023 GTA Housing Snapshot Report, underbidding has been rising over the past five months (81% in October). To me, the growth underbidding indicates there are less buyers and lower prices.

    Optimists may argue we’ve seen this environment before, with affordability as the ongoing issue. They may contend that the lack of housing supply and the resilience of the housing market will continue to drive up home values. However, certain conditions such as astronomical inflation and rapid interest rate increases have not been seen in decades. This present landscape contains a new set of headlines, setting the stage for potential falling home prices.

    While it’s impossible to definitively predict if and when the Toronto real estate market will experience a downturn, it’s evident that skyrocketing prices have created an affordability problem for many. 

    Simultaneously, though, it disproportionately benefited others, such as property investors. Despite current conditions suggesting diminishing housing demand, including that of investors, policy makers in Canada, including Toronto, must address and moderate this type of demand in the future. Even after interest rates come down. 

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    Michael Pe, CFA

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  • Down payment for a second home in Canada: How much do you need? – MoneySense

    Down payment for a second home in Canada: How much do you need? – MoneySense

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    So, how much of a down payment do you need for a second home? That depends on a few factors, including whether or not you intend to live at the property. 

    Down payment requirements in Canada

    Every Canadian home buyer is required to have a minimum down payment when purchasing property. A down payment is the money provided up front towards the purchase of the home, and it is directly tied to the value of the property. 

    When buying a home, the down payment rules in Canada are as follows:

    Purchase price Minimum down payment required
    $500,000 or less 5% of the purchase price
    $500,000 to $999,999 5% of the first $500,000 of the purchase price
    +
    10% of the portion of the purchase price above $500,000
    $1 million or more 20% of the purchase price

    If you’re buying a home priced under $1 million and your down payment is less than 20%, you’ll need to purchase mortgage default insurance, also known as mortgage loan insurance—which protects the lender if you can’t make your mortgage payments. Using a mortgage down payment calculator is the fastest and simplest way to figure out how much money you will need for your home down payment.

    Minimum down payment for a second home in Canada

    Contrary to popular belief, there’s no blanket 20% down payment requirement for second-home purchases in Canada. In fact, the down payment rules for a second home are similar to those listed above for single-property ownership, as long as the second home will be owner-occupied, meaning the owner will be living in it. 

    “You can purchase a second home with 5% down as long as the property is intended for family use throughout the year and the mortgage is under $500,000,” says Samantha Brookes, CEO of Toronto-based Mortgages of Canada. 

    The 5% down payment requirement applies to second homes with one or two units in them. For properties with three or four units, the minimum down payment jumps to 10%.

    Buildings with five or more units are considered commercial buildings, and they require a commercial mortgage. Depending on the property’s location and the buyer’s cash flow, lenders may require a buyer to have a down payment of 20% to 35% on commercial properties, according to Brookes. 

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    Sandra MacGregor

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  • Tools to calculate your mortgage payments and costs in Canada – MoneySense

    Tools to calculate your mortgage payments and costs in Canada – MoneySense

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    Mortgage payment calculator

    Understanding the long-term financial implications of a home mortgage, particularly the cumulative impact of interest, can be complicated. A mortgage payment calculator is an essential tool to help you make informed home buying decisions. It helps you estimate your regular mortgage payments based on the home’s purchase price, down payment size, loan interest rate and amortization.

    A reliable mortgage payment calculator provides a comprehensive overview of your expected payments, including the total interest you’ll pay over the mortgage term. Additionally, many other housing expenses, such as property taxes, land transfer taxes, and the need for mortgage default insurance, are directly linked to the size of your mortgage and the home’s value. 

    The mortgage payment calculator on MoneySense helps you understand your mortgage payments, including the required closing cash and monthly carrying expenses you will need to buy the home you want. 

    Mortgage insurance calculator

    If you buy a home with less than a 20% down payment in Canada, you must get mortgage default insurance (sometimes, referred to as mortgage insurance). Unlike home insurance, which covers property damage, mortgage default insurance protects the lender if something happens and you can no longer make your mortgage payments. In Canada, this type of insurance is provided by three institutions: CMHC, Sagen and Canada Guaranty.

    The mortgage insurance calculator on MoneySense calculates how much you will pay for mortgage default insurance. Your premium is based on the loan-to-value ratio (LTV) of your home.

    Based on this ratio, the insurance premium falls between 2.8% and 4% for down payments below 20%. While a down payment higher than this may exempt you from purchasing mortgage insurance, the lender might still require it in certain situations. To use the tool, enter the asking price and down payment amount, and it will provide an estimate of your mortgage insurance premium. 

    Land transfer tax calculator

    A one-time fee called a land transfer tax (or land transfer fee) must be paid whenever a property changes hands. The charge is levied by the provincial and territorial governments and/or local municipalities. 

    Land transfer tax—which must be paid in cash—is in effect across all regions except Alberta, Saskatchewan and the three territories. In these areas, a much smaller land transfer fee is imposed instead. If you’re purchasing in Toronto or Montreal, you’ll pay municipal land transfer tax in addition to provincial land transfer tax. 

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    Angela Serednicki

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  • U.S. pending home sales stay near record low despite modest pickup in September

    U.S. pending home sales stay near record low despite modest pickup in September

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    The numbers: U.S. pending home sales rebounded in September but remain near a record low as high mortgage rates and low inventory continue to hurt the real-estate sector.

    Pending home sales rose 1.1% in September from the previous month, according to the monthly index released Thursday by the National Association of Realtors.

    But pending home sales were still depressed on an annual basis due to the dearth of home listings. The September figure was the second-lowest reading since the NAR began tracking the data in 2001.

    Transactions were down 11% from last year.

    Nonetheless, the sales pace exceeded expectations on Wall Street. Economists were expecting pending home sales to fall 1.5% in September.

    Pending home sales reflect transactions where the contract has been signed for the sale of an existing home, but the sale has not yet closed. Economists view it as an indicator of the direction of existing-home sales in subsequent months.

    The NAR also released an updated forecast for existing-home sales on Thursday. The group expects sales to fall 17.5% in 2023 to a pace of 4.15 million, which will be the slowest pace since 2008. Yet due to low inventory, the median home price will increase by 0.1% in 2023, the NAR said, to $386,700.

    The group expects home sales to rebound in 2024, rising 13.5% to a rate of 4.71 million. Home prices are expected to rise 0.7% next year, to $389,500. 

    The NAR also expects the 30-year mortgage rate to fall to 6.9% in 2023 and 6.3% in 2024. The 30-year was averaging 7.98% as of Wednesday, according to Mortgage News Daily.

    Big picture: The U.S. housing market is dealing with problems on both the demand and supply sides, but the NAR seems confident that the sector will recover in the new year.

    At present, not only are rates high enough to discourage home buyers, the lack of inventory is also making homes more expensive, which further spooks buyers. The NAR expects the pace of existing-home sales to fall to the slowest in 15 years, when the U.S. was in the midst of a recession caused by the subprime-lending crisis.

    What the realtors said: “Because of home builders’ ability to create more inventory, new-home sales could be higher this year despite increasing mortgage rates,” NAR Chief Economist Lawrence Yun said. “This underscores the importance of increased inventory in helping to get the overall housing market moving.”

    Market reaction: Stocks
    DJIA

    SPX
    were mixed in early trading on Thursday. The yield on the 10-year Treasury note
    BX:TMUBMUSD10Y
    rose above 4.9%.

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  • Mortgage refinance calculator – MoneySense

    Mortgage refinance calculator – MoneySense

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    Depending on your circumstances, refinancing your mortgage can be a smart financial choice. However, while refinancing can lead to substantial savings, it can also come with steep costs. That’s when a mortgage refinance calculator can come in. It gives you a quick breakdown of the financial pros and cons of refinancing, which should make it easier for you to decided on the best course of action.

    What is a mortgage refinance?

    To refinance your mortgage means to break your current mortgage contract and negotiate a new one, either with the same lender or a new one. When you refinance your mortgage, you are taking out a new mortgage loan under different terms and paying off your existing one. Sometimes it makes financial sense to refinance a mortgage, but note that doing this before your mortgage is up for renewal can result in prepayment penalty fees. Whether or not to refinance a mortgage is a question many borrowers face at some point. A mortgage refinance calculator can help you decide. 

    How to use a mortgage refinance calculator

    A mortgage refinance can save you money, but it can also come at a significant cost. To help you weigh these pros and cons, the Ratehub mortgage refinance calculator above estimates the fees involved in breaking your mortgage agreement and calculates what your new mortgage payment would be under revised terms. (MoneySense.ca and Ratehub.ca are both owned by Ratehub Inc.)

    Based on the information you enter, it provides four pieces of information useful to home owners considering a refinance. For each scenario (sticking with your current contract and signing a new one), it shows you: the total mortgage amount, the amount of equity you can access, the penalty paid for breaking the mortgage, and the monthly mortgage payment (based on the interest rate you select).  

    Of course, every person’s situation is unique. Though a mortgage refinance calculator is a helpful tool, it’s always good to speak to an expert or mortgage broker, who can discuss all the specifics of your financial situation, before making a final decision. 

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    When should you refinance your mortgage? 

    There are few reasons you may want to break your current mortgage contract and refinance. 

    1. Taking advantage of lower interest rates. Negotiating a lower interest rate can reduce your regular mortgage payment, thus making your mortgage more affordable. It can also save you tens of thousands of dollars over the course of your mortgage. However, any savings that come from lower mortgage payments must be weighed against the cost of prepayment penalties, which can easily add up to thousands of dollars (more on that below). 
    2. Accessing the equity in your home. As you make payments on your mortgage, you steadily build up equity in your property. Your home equity is the difference between the current market value of your property and how much you still owe on your mortgage. Once you’ve built up sufficient equity, you may be able to borrow up to 80% of the appraised value of your home, minus the remaining balance on your mortgage. You can put this money towards home renovations, investment opportunities or even your children’s education. 

    You may also be able to get a home equity line of credit (HELOC), a secured form a credit. With a HELOC, you can access 65% to 80% of your home’s appraised value. Rather than having to break your mortgage and receiving the equity in a lump sum, you can use a HELOC to access the money as needed (the same way other lines of credit work). You only borrow and pay interest on the funds you need. 

    Finally, you may want to refinance your mortgage to consolidate debt. By taking out a mortgage that is bigger than your current one, you can put the extra cash towards paying off higher-interest debt, such as credit card debt, helping yourself save money in the long run. 

    Be aware of prepayment penalties

    Just as there are good reasons to refinance a mortgage, there may be reasons to stick with your current one. A common reason people decide not to refinance is the high cost of prepayment penalties, which lenders charge when you break a mortgage contract early. 

    Fixed-rate mortgage holders typically pay the higher of three months’ interest on their remaining mortgage balance or the interest rate differential (IRD), a penalty based on the difference between your current mortgage rate and the rate the lender would use if lending the funds today. Variable-rate mortgage holders are penalized three months’ interest. (Note: Penalties may vary based on the financial institution, original mortgage contract, term length and more.)

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    Sandra MacGregor

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  • U.S. home sales fell in September to the lowest level since the Great Recession

    U.S. home sales fell in September to the lowest level since the Great Recession

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    The numbers: Home sales in September fell to the lowest level since 2010, as high mortgage rates continue to hammer the housing market.

    Aside from low inventory, rising rates are eroding buyers’ purchasing power, and drying up demand. Sales of previously owned homes fell by 2% to an annual rate of 3.96 million in September, the National Association of Realtors said Thursday.

    That’s the number of homes that would be sold over an entire year if sales took place at the same rate every month as they did in September. The numbers are seasonally adjusted.

    The drop in sales was slightly better than what Wall Street was expecting. They forecasted existing-home sales to total 3.9 million in September.

    Compared to September 2022, home sales are down by 15.4%. 

    Key details: The median price for an existing home in September rose for the third month in a row to $394,300. Prices are up 2.8% from a year ago. That was the highest price for the month of September since NAR began tracking the data.

    Home prices peaked in June 2022, when the median price of a resale home hit $413,800.

    Around 26% of properties are being sold above list price, the NAR noted.

    The total number of homes for sale in September fell by 8.1% from last year, to 1.13 million units. Housing inventory for the month of September was the lowest since 1999, when the NAR began tracking the data.

    Homes listed for sale remained on the market for 21 days on average, up from the previous month. Last September, homes were only on the market for 19 days.

    Sales of existing homes rose only in the Northeast in September, as compared with the previous month, by 4.2%. The median price of a home in the region was $439,900. 

    All-cash buyers made up 29% of sales, highest since January 2023. The share of individual investors or second-home buyers was 18%. About 27% of homes were sold to first-time home buyers.

    Big picture: The U.S. housing market is in the midst of a serious slowdown that is primarily driven by high mortgage rates. High rates spook home buyers, drying up demand, and high rates also deter homeowners from selling since they may have to purchase another home. For a homeowner with a 3% mortgage rate for the next few decades, there’s little incentive to move.  

    And the residential sector is likely to see sales fall further in October’s data, as the 30-year mortgage inches even higher. Demand for mortgages has collapsed, and some outlets like Mortgage News Daily are quoting a rate of 8% for the 30-year.

    Existing-home sales in 2023 could fall to the slowest pace since the housing bubble burst in 2008, real-estate brokerage Redfin said on Thursday, at a 4.1 million pace. 

    What the realtors said: “Mortgage rates and limited inventory has been the story throughout this year — no different this month, other than the fact that interest rates are moving higher,” said Lawrence Yun, chief economist at the National Association of Realtors. 

    “The Federal Reserve simply cannot keep raising interest rates in light of softening inflation and weakening job gains,” he added. “We don’t want the Fed to overdo it and cause great harm to real estate.” 

    Yun also questioned whether there will be a “fundamental change” or a temporary one to the “American way of life” due to the slowdown in sales.

    Market reaction: Stocks were down in early trading on Thursday. The yield on the 10-year note
    BX:TMUBMUSD10Y
    rose above 4.9%.

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  • Mortgage bankers expect the 30-year rate to drop to 6.1% by the end of 2024

    Mortgage bankers expect the 30-year rate to drop to 6.1% by the end of 2024

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    PHILADELPHIA — High mortgage rates are hammering home buyers, but expect rates to fall over the next year, one industry group says.

    Mortgage rates are over 7.5% as of mid-October, but expect rates to fall to 6.1% by the end of 2024, according to a forecast by the Mortgage Bankers Association. The group also expects the 30-year mortgage rate to fall to 5.5% by the end of 2025.

    A big driver pushing down rates will be a slowing U.S. economy, Mike Fratantoni, chief economist and senior vice president at the MBA, said during the group’s annual convention in Philadelphia on Sunday.

    Not only is the group expecting a recession in the first half of 2024, but the MBA also forecasts unemployment to rise and inflation to slow, which are signs of a weakening U.S. economy. That will, in turn, push rates down, as the market will expect the Fed to back off on hiking interest rates, they said.

     “The Fed’s hiking cycle is likely nearing an end, but while Fed officials have indicated that additional rate hikes might not be needed, rate cuts may not come as soon or proceed as rapidly as previously expected,” Fratantoni said.

    Consequently, mortgage lenders could see origination volume to increase 19% in 2024, to $1.95 trillion from the $1.64 trillion expected this year. Purchase originations are expected to rise by 11%, the MBA said. 

    The pandemic years were boom times for the mortgage industry. 2021 was a record year, when $4.4 trillion in mortgages were originated.

    But after the Fed began hiking interest rates in the middle of 2022, surging rates have put a damper on home-buying activity. Homes are far more expensive to purchase due to high rates, with the median principal and interest payment rising to $2,170 in August, compared to $1,284 in August 2021, according to MBA data.

    Fratantoni on Sunday said that he believed the “Fed is done” with rate hikes. There are two Fed meetings left this year. The MBA said it does not expect the Fed to hike interest rates in November, and to potentially hold off in December, depending on the data.

    But for now, lenders should brace for “a little bit more pain” for the next few months, which is generally a slower season for home sales, until a turnaround at the end of spring in 2024, Marina Walsh, vice president of industry analysis at the MBA, said during a presentation.

    Home prices will still continue to rise over the next three years, the MBA added, due to the persistence of tight inventory.

    Millennials are entering their prime home-buying years, said Joel Kan, deputy chief economist at the MBA, which will keep prices from falling.

    “The forecast is for low single-digit growth over the next few years supported by [low] inventory,” he said. “We’re not expecting national declines yet.”

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  • Ameren Corporation (AEE) Stock Forecasts

    Ameren Corporation (AEE) Stock Forecasts

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    Market Update: AEE, CAH

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  • Nordstrom, Inc. (JWN) Stock Forecasts

    Nordstrom, Inc. (JWN) Stock Forecasts

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    Analyst Report: Nordstrom, Inc.

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  • U.S. household wealth rises to record $154.28 trillion in second quarter

    U.S. household wealth rises to record $154.28 trillion in second quarter

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    The numbers: Total U.S. household net worth rose $5.5 trillion to a record $154.28 trillion in the second quarter, the Federal Reserve said Friday. This is the third straight quarterly increase.

    Key details: The gain was boosted by a $2.6 trillion gain in stocks. The value of real estate holdings rose $2.5 trillion in the three months.

    Household debt rose at a 2.7% annual rate in the second quarter. Mortgage debt grew at a 2.8% annual rate.

    Big picture: The health of the consumer has been a big factor in the surprising strength of the U.S. economy this year. Talk of a recession has vanished and the economy seems to be strengthening as the year progresses.

    Market reaction: Stocks
    DJIA

    SPX
    were higher in Friday trading while the 10-year Treasury yield
    BX:TMUBMUSD10Y
    rose to 4.26%.

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  • Research Reports & Trade Ideas – Yahoo Finance

    Research Reports & Trade Ideas – Yahoo Finance

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    Monthly Sector Review

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  • Mortgage rates reach highest level since 2001 and are likely to go higher, Freddie Mac says

    Mortgage rates reach highest level since 2001 and are likely to go higher, Freddie Mac says

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    U.S. mortgage rates increased for the fifth week in a row, with the 30-year reaching the highest level since 2001. 

    The 30-year fixed-rate mortgage averaged 7.23% as of Aug 24, according to data released by Freddie Mac
    FMCC,
    +0.18%
    on Thursday. 

    It’s up 14 basis points from the previous week — one basis point is equal to one hundredth of a percentage point. 

    The last time rates were this high was in June 2001. 

    A year ago, the 30-year was averaging at 5.55%.

    The average rate on the 15-year mortgage rose to 6.55% from 6.46% last week. The 15-year was at 4.85% a year ago.

    Freddie Mac’s weekly report on mortgage rates is based on thousands of applications received from lenders across the country that are submitted to Freddie Mac when a borrower applies for a mortgage. 

    Separate data by Mortgage News Daily said that the 30-year fixed-rate mortgage was averaging at 7.36% as of Thursday afternoon.

    What Freddie Mac said: “Indications of ongoing economic strength will likely continue to keep upward pressure on rates in the short-term,” Sam Khater, chief economist at Freddie Mac, said in a statement. 

    “As rates remain high and supply of unsold homes woefully low, incoming data shows that existing homes sales continue to fall,” he added. “However, there are slightly more new homes available, and sales of these new homes continue to rise, helping provide modest relief to the unyielding housing inventory predicament.

    What are they saying? Other industry experts also believe rates could move higher.

    “Earlier this year, it looked as though inflation was being brought under control and the Fed may be almost ready to declare victory… now, however, as inflation has ticked up and bond yields are rising amidst economic uncertainty, it is a different situation,” Lisa Sturtevant, chief economist at Bright MLS, said in a statement. “Instead of talking about rates falling to 6% this year, the question is how much above 7% are we going to go?”

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  • Lowe’s Companies, Inc. (LOW) Stock Forecasts

    Lowe’s Companies, Inc. (LOW) Stock Forecasts

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    Summary

    Lowe’s is the world’s second-largest home improvement retailer, with sales of $97 billion in FY23. Based in Mooresville, North Carolina, the company operated over 1,700 home improvement and hardware stores in the U.S. at the end of FY23. Retail selling space was about 200 million square feet. Home Decor, which includes appliances and paint, was the biggest merchandise division at 35% of FY22 sales. Building Products, including lumber, was 32%; Hardlines, including tools, seasonal, and lawn & garden, was 30%; Other categories represented 3% of sales. About 75% of sales are to individuals and 25% are to maintenance, repair, operations and construction professionals. The states with more than 100 stores at the end of FY22 were Texas, Florida, North Carolina and California. Online sales were 5% of the company’s total in FY20 and rose to about 7% at the end of FY21 and 11% in 4Q23.

    The company’s fiscal year ends on the Friday closest to the end of January. Based on the fiscal calendar, FY17 had a 53rd week, which happens about every five years. The FY23 was also 53-week fiscal year. FY24 will end on February 2, 2024.

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  • Home buyers flee the housing market as mortgage rates surge to the highest level since 2000

    Home buyers flee the housing market as mortgage rates surge to the highest level since 2000

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    The numbers: Mortgage rates rose for the fourth week in a row to the highest level since 2000, as the economy continues to show strength.

    Rates surged as the U.S. economy continued to show signs of resilience,  which signal to the market that the U.S. Federal Reserve may not be done with rate increases.

    The 30-year was averaging at 7.31%, which in part dampened demand for home-purchase mortgages to the lowest level since April 1995. 

    Demand for both purchases and refinancing fell. That overall pushed down the market composite index, a measure of mortgage application volume, the Mortgage Bankers Association (M.B.A.) said on Wednesday. 

    The market index fell 4.2% to 184.8 for the week that ended Aug. 18, relative to a week earlier. A year ago, the index stood at 270.1.

    Key details: High mortgage rates are weighing on home buyers’ budgets due to an increase in borrowing costs. Many buyers fled the market as a result of rates rising over the last week. The purchase index, which measures mortgage applications for the purchase of a home, fell 5% from last week.

    Rates hold little allure for homeowners hoping to refinance. The refinance index fell 2.8%.

    Rates rose across the board.

    The average contract rate for the 30-year mortgage for homes sold for $726,200 or less was 7.31% for the week ending August 18. That’s up from 7.16% the week before, the M.B.A. said. The 30-year is at the highest level since December 2000.

    The rate for jumbo loans, or the 30-year mortgage for homes sold for over $726,200, was 7.27%, up from 7.11% the previous week.

    The average rate for a 30-year mortgage backed by the Federal Housing Administration rose to 7.09% from 6.93%.

    The 15-year rose to 6.72%, up from last week’s 6.57%. 

    The rate for adjustable-rate mortgages rose to 6.5% from last week’s 6.2%. The share of adjustable-rate mortgages rose to 7.6%, the highest level in five months.

    The big picture: The housing market continues to be hammered by good economic news, which is pushing rates up and depressing home sales. Higher rates also discourage homeowners from selling, as their purchasing power erodes when they look for homes to buy. 

    As a result, both home-buying demand and supply of home listings continues to fall, bringing the market to a standstill. Until the economy shows signs of slowing, it’s likely that the housing market will remain in the doldrums.

    What the M.B.A. said:  “Applications for home purchase mortgages dropped to their lowest level since April 1995, as home buyers withdrew from the market due to the elevated rate environment and the erosion of purchasing power,” Joel Kan, deputy chief economist and vice president at the M.B.A., said in a statement.

    Kan added that there was an uptick in people using adjustable-rate mortgages. “Some home buyers are looking to lower their monthly payments by accepting some interest rate risk after the initial fixed period,” he said.

    Market reaction: The yield on the 10-year Treasury note
    BX:TMUBMUSD10Y
    was above 4.3% in early morning trading Wednesday.

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