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Real Estate News

Posted in Economy Reports, Housing Market, Loan Products, and News


The residential market will begin to see more FHA loans as Millennials increasingly enter into homeownership, according to the latest Millennial Tracker Report from Ellie Mae. Millennials continue to utilize FHA loans, which represent 35% of all loans closed in January, up slightly from 34% in December. Comparatively, Ellie Mae’s January Origination Insight Report showed that FHA loans represented only 21% of closed loans for the month. And FICO scores continued to slip in January, perhaps showing a loosening of credit standards as the average FICO score for all loan types for Millennials fell to 724. This is down from the peak of 726 from August through October. For purchases, the average FICO score was 748 for a conventional loan, 690 for an FHA loan and 734 for a VA loan. “As the purchase market heats up, we will continue to watch the FHA purchase trend amongst Millennials,” said Joe Tyrrell, Ellie Mae executive vice president of corporate strategy. “It is not surprising to see millennial borrowers leverage FHA loans because they typically offer lower down payments and lower average FICO score requirements than conventional loans,” Tyrrell said. “As more millennials enter the market, we expect to see the popularity of FHA loans continue to increase.” Time to close ticked up one day across all loan types to 49 days in January, up from 48 days in November and December. While purchases took an average of 46 days, refinances moved slower at 58 days. Source: HousingWire

First American Financial Corp., Santa Ana, Calif., said home prices increased sharply in December, while consumer home-buying power fell. The company’s Real House Price Index, which measures price changes of single-family properties adjusted for the impact of income and interest rate changes on consumer house-buying power, said real house prices increased by 6.2 percent between November and December. From a year ago, real house prices increased by 8.0 percent. The report said real house prices are 33.1 percent below their housing-boom peak in July 2006 and 10.1 percent below the level of prices in January 2000. At the same time, the report said consumer house-buying power–how much one can buy based on changes in income and interest rates–declined by 5.1 percent and fell by 2.1 percent year-over-year. First American Chief Economist Mark Fleming noted December marked the first full month to see the impact of the surge in rates after the election and the most recent Federal Open Market Committee rate increase. “This interest rate surge lead to the first year-over-year decline in consumer house-buying power in two and a half years,” Fleming said. “Rising rates and nominal home price growth are outpacing the influence of strong income growth, leading to declining affordability for first-time home buyers. However, housing remains as affordable as it was in late 2009.” Source: Mortgage Bankers Association