A report from The Daily News in Washington. “What goes up, must come down — except for the housing market, experts say. Longtime loan officer and Longview native Jon Trussell oversaw the opening of a national mortgage lender branch in October, nearing the expected end of the low mortgage interest rates spurred by the pandemic. ‘Growth in the mortgage business has been pretty wild in the last three years,’ he said.”
“Trussell said the loan options are keeping up with rising prices. The United States Federal Housing Administration loan, which offers lower down payments and interest rates, raised its maximum handout up $64,000 to $420,680 for Cowlitz County homes in 2022. The large jump, Trussell said, is one he’s never seen and will help even the playing field for new homeowners. The office offers online applications and options that don’t require down payments like Veterans Affairs loans for service members and veterans, as well as United States Department of Agriculture loans for rural homes. ‘Lending is fun,’ he said. ‘It’s fun to help a first-time homeowner who’s nervous get their first keys.’”
From CBS 19 TV. “In East Texas, median home prices have skyrocketed over the last two years – up nearly 23 percent in Tyler and almost 29 percent in Longview. If you’re financing a new house, know that you have more options than the traditional 20 percent down, 30 year fixed mortgage. ‘There’s so many great programs that are out there [where] you don’t have to have 20% down,’ said Monica Rucker, loan specialist at Fairway Independent Mortgage Corporation. ‘We have a no down-payment program out here. It’s built for the rural areas. And so you can get in…with nothing, if you qualify.’”
From WBMA in Alabama. “Interest rates are low and the demand for housing is high. This is forcing some first-time homebuyers to go to extreme lengths to beat out the competition. ‘A buyer may offer list price and then – another buyer will come in and say, I need to get five thousand more than the list price,’ said Real Estate Appraiser Tom Horn. Horn said losing out on a home causes many people to bid higher the next time out of desperation. The real question is, are buyers setting themselves up for failure in the future.”
“‘In that situation, an appraisal is very important because the price that they’re willing to pay to get into a house, may not actually be what the home is worth,’ Horn said.”
“Homebuyers bidding higher in competitive market comes at a price, experts say. Down the line, market values might catch up with what the homeowner paid. If that doesn’t happen, new homeowners could find themselves in a bind. ‘The unpleasant scenario is that housing supply catches up and perhaps interests rise, such that mortgage rates increase, that demand begins to taper off and they’ll be stuck with a house that they overpaid for,’ said Samford University Economics Professor Jeremy Thornton.”
“Thornton believes the housing market is headed down that path. ‘I think every indication now, we’re likely to see, a year or two years from now, higher interest rates than what we do now,’ Thornton said. Thornton foresees today’s buyers making less when it comes time to sell. With less money in their pocket, and higher interest rates in the years ahead, they’ll have less buying power for their next home.”
The Globe and Mail. “After months of blistering inflation, economists and investors are betting the Bank of Canada will start raising interest rates on March 2, kicking off a brisk rate hike cycle that could see borrowing costs return to pre-COVID-19 levels or surpass them some time next year. ‘Can the housing market withstand a return to prepandemic mortgage rates even though house prices have risen by 40 per cent in the interim? I just don’t think it can,’ said Stephen Brown, senior Canada economist with Capital Economics, adding that he expects the bank’s policy rate to peak at around 1.5 per cent about a year from now.”
The Daily Mail. “Australian property prices could stall within a matter of weeks before plummeting following the biggest boom in 32 years. Economist Matthew Hassan noted the signs were already there, even if ‘the total stock on market remains at extremely low levels.’ ‘Auction markets softened a touch into year end and look to have begun 2022 with a similar tone,’ he said.”
“Westpac is expecting the Reserve Bank of Australia to raise the cash rate in August from a record-low of 0.1 per cent, marking the first rate rise since November 2010 after the Global Financial Crisis. ‘This earlier and slightly more aggressive tightening cycle has clear implications for the residential property,’ Westpac said. ‘Housing will be ‘collateral’ damage in the RBA’s efforts to keep inflation on target over the medium term.’”
“Australia’s median property price now stands at $718,146, CoreLogic data on houses and apartments for January 2022 showed. So even with a 20 per cent deposit factored in, someone earning an average, full-time salary of $90,329 would owe the bank $574,517 – giving them a debt-to-income ratio of 6.3. The Australian Prudential Regulation Authority considers a debt-to-income ratio of six, before tax, to be at a dangerous point where a borrower would struggle to meet monthly mortgage repayments.”
From Bloomberg. “New Zealand’s central bank is set to raise interest rates for a third straight meeting and may signal a quicker pace of tightening ahead as it seeks to rein in the fastest inflation in more than 30 years. The bank will probably publish an interest-rate track ‘that doesn’t look that different to market pricing,’ said Stephen Toplis, head of research at the Bank of New Zealand in Wellington. ‘The concern I’m starting to have is that because unemployment and inflation are so front of mind, for very good reason, people are starting to forget that rapid increases in interest rates should have an impact on the economy,’ Toplis said. ‘There’s a real chance here the wheels fall off the economy.’”
From Yicai Global. “Yango Group said it is in danger of defaulting on debt as the Chinese homebuilder has little in the way of cash on hand because of the impact of tighter regulation, financing difficulties, and the nation’s cooling real estate market. Yango has disposable funds of less than 1 percent of its book capital, the Fuzhou-based firm said on Feb. 18.”
“The developer has CNY61.4 billion (USD9.7 billion) of debt to repay over the next two years, it said, and is likely to come under pressure from creditors to repay loans in advance as the company’s credit rating crumbles. It has cut prices to speed up payment collection, it added. Amid a cooling market, Yango achieved less than 80 percent of its sales target last year and the firm is bracing for a 2021 loss of up to CNY5.8 billion (USD915.5 million).”
The Telegraph. “HSBC’s exposure to the Chinese property market has led to the banking giant taking a $500m (£368m) hit against the potential fallout from the crisis that has rocked the sector. The bank, which makes most of its money in Asia, said that the charge would cover an ‘increase in allowances to reflect recent developments in China’s commercial real estate sector.’”