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Home Mortgages: Rates Up, Requirements Easing

by simplifyingthemarket.com

The media has extensively covered the rise in mortgage interest rates since last fall (from 3.42% last September to the current 4.1% according to Freddie Mac). However, a less covered aspect of the mortgage market is that requirements to get a mortgage have eased while rates have risen.

The Mortgage Bankers Association (MBA) quantifies the availability of mortgage credit each month with their Mortgage Credit Availability Index (MCAI). According to the MBA, the MCAI is:

“A summary measure which indicates the availability of mortgage credit at a point in time.”

The higher the index, the easier it is to get a mortgage. Here is a chart showing the MCAI over the last several months as rates have increased.

Have requirements for attaining a mortgage actually eased?

Yes. Here are two examples:

  1. FICO® Score – the credit score which helps determine a buyer’s eligibility. The score required to attain a mortgage has been falling over the last five months:

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  1. Down Payment Requirement – the percentage of the purchase price necessary to place as a down payment on a home. To make this point, let’s look at the percentage of first-time buyers who have put less than 5% down over the last several years as compared to the 1st quarter of 2017:

Bottom Line

Whether you are a current homeowner looking to move to a home that will better serve your family’s current needs, or a first-time buyer looking for a starter home, it is easier to get a mortgage today than it has been at any other time in the last ten years.

 

1,500 Properties Later...

by Adam Watkins

       Although, I've been a part of The All-Star Team since late 1999 (almost 18 years), this past month marked a milestone in my real estate career as I completed my 15th year as a real estate licensee and REALTOR (I write it that way because those two are not one in the same)!  A lot has changed in our market, on our team, and in our lives during these years.  There's also a lot to be thankful for in those 15 years - most of all, those of you who took the chance on a young 22-year-old guy in those early days who had a big dream and a desire to be an ambassador for the community he loves.  Now, close to 1,500 properties later, I can say that I've not only gained experience, but most importantly friendships that continue to bless my career as well as my life.  I'm also grateful for those members of our team who've been a part of the journey - those who are currently serving along side of me, and those who've served alongside me on this journey.  Thank you to DeLois and our team of agents and staff - both past and present who have supported me along the way.  Thanks of course to my wife, Amelia, who has been able to work alongside me daily in this business for the last 10 years and who will celebrate 14 years of marriage with me in May.  Most importantly, thank you to God for blessing my life with the ministry of this career.

       I've always been a little bit of a statistics junkie.  When I first started in the business, I would truly get lost in them.  In fact, for years before I was licensed, I did the research for our team's monthly market updates (like the ones we provide with this newsletter each month).  Calculating the supply and demand for each price range was something I looked forward to doing.  One time I created a chart showing the change in supply and demand over a period of several years!  Add a couple of kiddos and managing a real estate team, and it gets a little more challenging to devote the time it takes for me to produce these things manually these days.  Plus, technology and our MLS systems are more robust to do these things automatically now, which helps.  It always intrigued me how quickly our market levels could change, though.  That's why when folks ask me how the market is, it's important to realize how complex markets are and how quickly they change in order to answer such a question.  For instance, a major disaster, sudden economic downturn, or other factors can quickly impact a market.  Many of you recall the days after Hurricane Katrina and how our market became under supplied for a period of time. Nearly 2 years later in August of 2007, the exact opposite was true as the supply of new construction homes that were listed in the MLS system increased by approximately 400% in only 30 days time (end of July to end of August 2007). Suffice it to say that real estate markets can be compared to the weather in Mississippi.  They can change quickly and vary from location to location!

       So what about now?  Well in general, and for many of our locations (Petal and Oak Grove in particular), we've been experiencing low supply levels in the price ranges between $100k and $200k in our market.  This is partially due to the reduction in inventory in these price ranges following the January 21st tornado.  Several homes that would have been in this price range were removed from the market, and the need to replace those homes increased.  As we migrate to the $200k to $250k ranges, the inventory is abundant in the City of Hattiesburg, but in the 4 to 5 month range in Oak Grove, Petal, and Sumrall, again underscoring the principle that markets are local in nature and driven by specific factors within each market.  Where there is agreement in our market is once you go over $300k, where our supply levels are quite high and our selections are abundant.  We began noting the oversupply in these price ranges particularly in the $300K to $500K range in the first and second quarters of 2016.  For a while we were trying to determine why this was. The fact is that purchases in this price range are driven by strong employment in job sectors where income levels are high relative to the median incomes in our market.  After reviewing previous years sales activity, we were able to pinpoint the oil and gas industry as one job sector that produces jobs meeting this criteria which has experienced difficulty over the last 18 to 24 months.  And, as a result, the number of buyers entering this price range has been reduced when compared to the years prior to 2015.  

       Perhaps some of your eyes are glazed over by the discussion of statistics, but I thank you for sticking with me (assuming you have).  For those who are curious, hopefully your understanding of our market at this moment has been increased.  Either way, I hope what you will see in our team a desire to understand and study our market in such a way that when you hire us, you're hiring a group who values understanding these factors and how they impact your property investments.  When you're recommending REALTORS to others, or choose to hire us to serve you, please know that we make it our business to understand our markets so that we can best counsel and advise.  Our mission is to serve you again...and again with the best service and knowledge in our marketplace.  Have questions about our market update?  Feel free to e-mail me at adam@allstarteam.com.  I'll be happy to discuss it with you. It's just one of the ways in which we strive to be your Greater Hattiesburg Market Experts.

 

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Contact Information

The All-Star Team, REALTORS®
Bringing you home...again and again!
4 Willow Bend, Suite 2A
Hattiesburg MS 39402
601.545.3900
800.335.6477

The All-Star Team, REALTORS brings you over 200 years of accumulated experience along with the most innovative marketing strategies in the real estate industry. We specialize in the real estate properties located in Hattiesburg, Oak Grove, Petal, Sumrall, Purvis, Columbia, and the entire Pine Belt region. Put The All-Star Team, REALTORS® to work for you as you consider your next home sale or purchase. Experience the team approach to real estate and make us your REALTOR® for life! See how The All-Star Team, REALTORS® really is bringing the Pine Belt home again and again.