A report from the Mortgage Research Center. “Critics of the ‘date the rate’ strategy are having their day in the sun. They were right in saying that the strategy could be harder to implement than it sounds. Realtor.com offered solid reminders: Rates may not go down. Rates might fall, but not enough to matter. You may not qualify for a refinance. Refinancing can require outrageous fees. But rubbing it in isn’t helpful for homeowners in a tight spot. Here are practical steps to consider if you’re stuck in a bad relationship with your mortgage rate. While financial gurus like Dave Ramsey tout the benefits of pizza delivery, you still have to commit to a schedule and report to a manager. Uber, Uber Eats, DoorDash, and other flexible side gigs help you work when you can while providing decent income. Your pride might take a hit, but there’s now good money in fast food, especially with establishments where tips are common.”
Yahoo Finance. “Many investors are betting further weakness lies ahead for bonds. ‘Inflation is not coming down like the Fed thought it was,’ said Arthur Laffer, president of Laffer Tengler Investments, who is bearish on longer-dated Treasuries and believes yields could rise as high as 6%. ‘You’re not getting paid to take risk in the bond market right now.’”
Associated Press. “Regulators have closed Republic First Bank, a regional lender operating in Pennsylvania, New Jersey and New York. The Federal Deposit Insurance Corp. said Friday it had seized the Philadelphia-based bank, which did business as Republic Bank and had roughly $6 billion in assets and $4 billion in deposits as of Jan. 31. Fulton Bank, which is based in Lancaster, Pennsylvania, agreed to assume substantially all of the failed bank’s deposits and buy essentially all of its assets, the agency said. Rising interest rates and falling commercial real estate values, especially for office buildings grappling with surging vacancy rates following the pandemic, have heightened the financial risks for many regional and community banks. Outstanding loans backed by properties that have lost value make them a challenge to refinance.”
From Reuters. “New York Community Bancorp will have to lure buyers for its commercial real estate (CRE) loans with steep discounts and diversify its revenue as it races to shore up its finances. ‘If you’re a hedge fund or an asset manager, you know NYCB has to sell. So, you’re going to factor that into your pricing,’ said Brian Graham, co-founder of financial services investment firm Klaros Group, adding it will be difficult for the bank to find loans it can sell at a premium.”
The Orange County Register. “Twenty U.S. cities with the highest home-price-to-income ratios are all in California. Ponder the statewide pain like this: A California home costs 8.4 times income ($765,197 vs. $91,551) compared with 4.7 times nationally – $347,716 price vs. 74,755 income. No. 1 Newport Beach: Cost ratio of 25.4 times – $3.2 million price vs. $127,353 income. No. 2 Palo Alto: 19 times – $3.4 million vs. $179,707. No. 3 Glendale: 15.2 times – $1.2 million vs. $77,483. No. 4 Los Angeles: 12.5 times – $953,501 vs. $76,135. No. 5 El Monte: 12.3 times – $733,107 vs. $59,368. No. 6 Costa Mesa: 12.2 times – $1.3 million vs. $103,891. A sobering tidbit, nationally speaking, from the report: ‘On an inflation-adjusted basis, household incomes increased by just 4.5% since 2000, while home prices increased by 59%.’”
The Mercury News. “Not surprisingly, California cities rank high in a new list of places where it is cheaper to rent vs. to own a starter home. San Jose-Sunnyvale-Santa Clara, Calif. ranked number six on the list behind San Francisco-Oakland-Berkeley, Calif. (4) and Los Angeles-Long Beach-Anaheim, Calif. (5), according to the Realtor.com study. Austin-Round Rock, TX took the top spot. In the South Bay, the median rent on a starter home was $3,206 in February 2024 compared to the median mortgage cost of $5,986, according to the study. Overall, the study found that it is more affordable to rent than to buy in all the top 50 U.S. metros compared to 45 last year.”
The News Press in Florida. “Across the Sunshine State, older adults are facing a tough decision: pay out five figures or more annually for the privilege of homeowner’s insurance, or go without. Jeff Petersen lives in Charlotte County, which was also pummeled by Ian as it passed by. Five years ago, his insurance ran $2,800 a year. This year, his insurance renewed at five figures, sans flood. Despite the fact that he’s paid off his home, he says his annual insurance bills mean he’s still struggling financially. He’s not sure he can hang on much longer. He’s not in a position to self-insure, but the rates just keep climbing. ‘I don’t have a mortgage and I own my own home but I don’t know if we’re going to be here next year,’ Petersen said. ‘Like a renter, I have no stability.’”
The Sun Sentinel. “While home prices continue to soar, the rental market may be cooling down in South Florida, providing renters much-needed relief. The Miami-metropolitan area, which includes Miami-Dade, Broward and Palm Beach counties, saw the most significant decrease in the median cost of rent from the first part of 2023 to the first part of 2024, according to a report by Forbes Advisor. The region saw a decrease of $400 in the median rental price for Quarter One, which is typically January, February and March, compared to the same time frame last year. The report also found the tri-county area to be among some of the least competitive rental markets in the nation of the 75 metros.”
“‘I’m just seeing that things have gotten back to what they were prior to this just exponential skyrocketing of growth and rental growth,’ said Todd Cohen, a principal with Lee & Associates South Florida, which handles real estate deals across the region. ‘Developers who didn’t have to give any concessions to lease up their properties are now giving maybe a month or two of free rent to get people in because people aren’t moving here every five seconds like they were.’”
The Stamford Advocate in Connecticut. “Several dozen people attended Wednesday’s meeting inside one of the 12 buildings that are part of River Bend Center, a roughly 36-acre property that has access to Hope Street via three different roads. Between Hope Street and the business park is the Springdale train station. The park’s owners have requested a ‘text change’ that would allow some of the buildings to be redeveloped for multifamily housing. But overall, the attendees were skeptical. Democratic city Rep. Christina Strain, whose district includes some of Glenbrook, asked: ‘Instead of building housing here, have you ever considered building something that people need, like another hospital’ or a public school? We don’t need more apartments, more housing,’ Strain said.”
Denver 7 in Colorado. “A former Larimer County real estate agent who stole more than $1 million from investors was sentenced Tuesday to 90 days in jail and 10 years of probation. He must also pay restitution to 14 victims. Bret Lamperes, 54, pleaded guilty in December 2023 to one count of securities fraud — fraud or deceit in connection to a 2021 real estate investment scam, according to the 19th Judicial District Attorney’s Office. In February 2015, Lamperes entered into a business called Investments of Windsor, LLC (IOW). He executed 29 sales contracts related to the IOW project in Windsor, but only eight of the 29 condos were built, according to the district attorney’s office.”
“The DA’s office said Lamperes stole $1,062,500 from people who invested in the project. He then used the money for luxury vacations, sporting events and other personal expenses, according to the district attorney’s office. ‘This man was living a lifestyle only some of us can dream about,’ Chief Deputy District Attorney Michael Pirraglia said in a statement. ‘It’s devastating to hear how this has had such a ripple effect on these victims and their families. Some of these victims, who were getting ready to retire, are now having to work several more years, and even having to work multiple jobs to make ends meet. All because of the greed and deceit at the hands of one man.’”
CTV News in Canada. “A years-long fraud investigation by the Ontario Provincial Police’s anti-rackets branch has resulted in fraud and other charges for the former head of BioNorth Technology Group, Frank Benincasa. North Bay OPP received several fraud complaints in July 2018 in relation to a $6 million syndicated mortgage investment into BioNorth Technology Real Estate, also operating as the BioNorth Tech Group. The investigation uncovered 60 alleged victims. Syndicated mortgage investments (SMIs) are a way for companies to raise development money. Several investors pool their money into a single mortgage, using the company’s land as collateral.”
“Benincasa, 59, is also charged with using forged documents to convince the investors to proceed with the SMI. In a related case, mutual fund dealer Leszek Dziadecki was found guilty in 2023 of misconduct for promoting the BioNorth SMIs to Polish investors. According to the Mutual Fund Dealers Association of Canada, Dziadecki ran ads in Poland promoting the BioNorth SMIs as ‘a good, safe investment … describing it as ‘next level Investment,’ a ‘gold egg,’ ‘almost guaranteed’ and having ‘no risk.’ This was confirmed in the affidavits and testimony of the investors. He managed to raise $1,045,900 from investors, even advising some to liquidate existing mutual funds to raise the cash. The investors lost all of their money.”
CP 24 in Canada. “New condo sales in the Toronto region dropped to the lowest quarterly total since the financial crisis in 2009 amid high interest rates and affordability issues, a new report has found. ‘We are showing a decrease in the average sold per square foot. It’s dropped since the beginning of the year by at lease six per cent, if not more,’ said Toronto real estate expert John Lusink, adding that one-bedroom condo listings on his sites, both for sale and rent, are waiting sometimes up to 32 days for potential renters and buyers.”
“The drop in sales is largely due to the high-interest rates making it difficult for people to make new purchases or even close previously-made purchases, Lusink said. ‘We continue to get notices from developers of buyers who are not able to close. These are transactions that some of our salespeople would have done two, three years ago and have now come up to close, but they don’t qualify anymore based on current rates,’ he said. ‘Banks are saying ‘sorry, you know, either put more money down or we won’t advance the loan.’ So those units are having to go back on the market.’”
“Many of the new condo builders are using ‘widespread’ incentives, including reduced or free parking, no development levies, reduced deposits, rental guarantees, and mortgage assistance programs, to encourage people to make condo purchases. Lusink said that a lot of the investor-owned new condos are being pushed into the rental market amid the slowdown. ‘The buildings were already well on their way and they are pushing into completion, and a good chunk are owned by investors and they are putting them up for rent,’ he said. ‘Then there’s a whole group of projects that are simply put on hold and they are going to wait it out.’”
The Globe and Mail. “In Canada’s mortgage market, sentiment can shift on a dime. That’s especially evident these days, as the Bank of Canada prepares to start cutting interest rates. But this shock still lies ahead, and while rate cuts may ease the blow, a higher rate reality awaits most of today’s current fixed-rate mortgage holders. The vast majority of existing mortgage borrowers – roughly 70 per cent – have fixed rates that remain at the record low prices available during the pandemic. (For example, the lowest discounted five-year fixed mortgage rate was 1.39 per cent, compared to 4.79 per cent today.)”
“Consider that there is approximately $2-trillion in outstanding mortgage debt. Only 5 per cent of that came up for renewal in 2023, according to Canada Mortgage and Housing Corp., with 13 per cent slated for this year. That spikes to 23 per cent in 2025, a whopping 31 per cent in 2026, and 21 per cent in 2027. The CMHC says that much of the rate pain will be concentrated this year and next, with 2.2 million mortgages – 45 per cent of all outstanding mortgages – poised for ‘interest rate shock.’”
“‘Most of these borrowers contracted their fixed-rate mortgages at record-low interest rates and, most likely, at or near the peak of housing prices around 2020-2021. This holds true for both households who took out a mortgage when buying their new home. It also applies to the numerous existing homeowners that used the increased equity on their property by refinancing and taking cash out for consumption,’ Tania Bourassa-Ochoa, CMHC’s senior specialist of housing research, said in note from November, 2023, adding that the total amount of renewing mortgage loans over this period represents $675-billion – or nearly 40 per cent of the Canadian economy. The bottom line is that even if the Bank of Canada cuts rates, the majority of Canadians will be paying a higher mortgage rate then they are today, when their mortgage renewal comes up over the next few years.”
Radio New Zealand. “The odds are still stacked against property investors, as market conditions continue to favour first-home buyers. Being able to tap into KiwiSaver funds, low deposit loans, and reduced competition from owner occupiers and investors was helping first-home buyers. These lending changes were a win for mum-and-dad borrowers, Auckland mortgage advisor Bruce Patten from Loan Market said. While still ‘tricky,’ the new legislation changes would also help first-home buyers, he said. Measures like loan-to-value and debt-to-income ratios would slow down interest rates from rising. ‘People were able to borrow way too much when rates were 2.5 percent.’”
The Times of India. “China’s economy is battling a barrage of challenges, including a deepening housing slump, fears of a deflationary spiral and high levels of youth unemployment. As China grapples with a myriad of economic challenges, the government is taking significant steps to tighten its belt, particularly among public officials. Amid concerns of an economic slowdown, soaring debt levels, and faltering consumer confidence, China is now enforcing a frugal lifestyle on its public servants in an effort to redirect resources toward more critical areas of need.”
“In response to economic distress, characterized by a $2 trillion loss in stock market value since 2022 and debt levels nearing three times the national economic output, Chinese authorities have initiated widespread budget cuts across provincial governments. For instance, the governor of Guizhou province has pledged to slash his administration’s operating expenses by 15%. Similarly, in Hunan, officials are urged to embody the spirit of ‘red housekeepers,’ a term coined to inspire cost-efficient governance that honors the Communist Party’s revolutionary roots, a Wall Street Journal report said.”
“The campaign for frugality has resulted in various stringent measures aimed at curbing unnecessary spending. In Yunnan, for instance, a directive has been issued to set air conditioning thermostats no lower than 26 degrees Celsius (79 degrees Fahrenheit) during summer to save on electricity costs. Meanwhile, in Inner Mongolia, authorities are promoting the repair and reuse of office equipment like desks and chairs instead of purchasing new ones.”
“As per the WSJ report, in recent weeks, numerous local governments have rolled out comprehensive guidelines on how to ‘get used to living frugally.’ These directives instruct staff to economize by utilizing public transport, opting for less expensive stationery, and printing documents in black-and-white and on both sides of the paper. Additional measures include directives for bureaucrats to consume all their food, reduce work-related travel, and extend the lifespan of resources by repairing and reusing everything from official vehicles to office furniture.”
“At a state-owned ironworks in Yunnan, party officials have called for a
30% reduction in annual drinking water expenses compared to last year’s
expenditure of 270,000 yuan. The plant’s party committee issued a
directive saying, ‘Strictly control the consumption of bottled water in
each work unit,’ and encouraged employees to use their own cups instead
of disposable ones to further cut costs, the WSJ report said. Critics
contend that while these frugal measures may yield some savings, they do
little to address the underlying structural issues that threaten
China’s long-term economic stability, the WSJ report said.”