Ability to Repay and Qualified Mortgages
You’ve probably noticed there’s been a lot of talk recently about the Ability to Repay (ATR) and Qualified Mortgages (QM) rules. If you’re a mortgage or real estate professional, you’re probably also wondering how these two issues will affect your business. To give you a brief introduction, check out the following video from the Consumer Financial Protection Bureau:
Remember to check back with us frequently, as we will be going into more detail on ATR and QM rules in upcoming posts. In the meantime, the Consumer Financial Protection Bureau has some great information and resources. Click here to see a list of mortgage regulations and resources for being in compliance.
Last week saw rates improve an average of .125% on Tuesday due to news that the Non-Farm Payroll report came in much lower than analysts originally expected. This pushed MBS (Mortgage Backed Securities) out of the previous trading range and pierced through the Resistance Level of 102.00 (which is now a new Support Level) and into a new trading channel. Through the rest of the week MBS remained flat, with almost no change to rates or rebate pricing. When MBS stay flat, interest rates tend to remain stable.
While stability may be the trend now, expect high levels of volatility in the near future. There will be a lot of economic data releases coming out this week, since many were postponed during the government shutdown. While we will likely end the week very close to where we started it in both MBS pricing and interest rates, expect volatility along the way. It should also be noted that the Fed can’t begin talks of tapering again until 2014, so rates are likely to stay neutral overall.
The Bottom Line
Rates are still relatively low, which makes it a good time to lock in. High levels of volatility further drive home the notion that waiting a week can definitely make a huge difference. If you or your borrowers are ready to commit to a mortgage, it makes sense to encourage them to lock in a low rate before they rise again.