home appreciation, pending home sales, mortgage application, credit card defaults, jobless claims

Good morning and happy Friday. Jordan Keck here, your lender buddy, with your weekly market update. Happy New Year. Kicking off January 3rd here, 2025, and I think it's just going to be an amazing year. So we've been through some rough times, not clear sailing yet, but those who have been able to stick it out, been able to grow during this time. I think incredible year ahead for opportunity, so I'm optimistic. Hopefully you are as well, and looking forward to just getting after things. As far as interest rates go, moving down just slightly week over week. Obviously not a whole lot of movement due to the holidays. Most traders are going to be gone, so moving from last week at 7.14% to 7.07% this week. As a reminder, that is a national average for lenders on conventional purchase transactions for top-tier client scenarios. So if you're buying it down, if you have a different type of loan, if you're refinancing, every situation is different. So this is an indication of where the market's moving, not a quote for individual clients. So just always want to make sure that that's clear. As far as your weekly mortgage tip here, I want to talk about financing for properties that are 5 units or more. Now, I had several clients in the past few weeks here as I'm doing commercial lending now, having some great success access opportunities there is the big divide between 4-unit and 5-unit financing. Up to 4 units, you can do VA, you can do FHA, you can do conventional loans on those, and those are what we know and love. 30-year fixed-rate loans, low rates, you name it. The moment you get into 5 units, you start splitting it up to where you have options of either doing what's called a non-QM loan, which can still often do a 30-year fix, but at a much higher rate, usually somewhere between the 8 to 12% range, or you go into full commercial loan standpoint. And that's typically going to be somewhere between about a 7 to 10-year term with a readjustment period for interest rate in the middle and amortized over usually a 25-year period. So you've got prepayment penalties, you have adjustable rates, and you have refinances you have to do during the of that loan. You're also looking at significantly higher down payment than you normally would, and it has to meet debt service coverage ratio guidelines. So when somebody's looking for property directly, you know, at the 5, 6, 7, even up to maybe 10-unit property, it really has to make much more financial sense. So if you've got somebody looking, I'm always happy to consult with them on those differences. But say that to say, there's a big gap between 4 units and 5 units in terms of financing. So if you're paying cash, it doesn't matter that much, but if you're financing it, just got to make sure the economics work out to be worth that jump into that range. You get a property that you're looking at 10 units and up, 15, 20, 25 units, at that point, no problem at all. The economics per door are usually going to be better at that point. So you're full-on commercial, and of course I can help with that, no problem. So if you're looking at multifamily, especially $1 million and above, can extremely competitive on those situations and get some flexibility for clients who are looking in that space. Next up for our news this week, Case-Shiller and FHFA came in with their home price appreciation for the month of October, since it's 2 months delayed, up both showing 0.3% and 0.4% price growth respectively. Case-Shiller showing homes up 3.6% year over year, which is down from 3.9% in September. So still growing, but just not as fast. And then FHFA up 4.5% year over year, unchanged from the September report. Remember that Case-Shiller takes into account all homes, where FHFA only takes into account homes that are financed with the loan limits of roughly $800,000 or below. So it doesn't take into account as many of those higher-end properties. Next up, pending home sales for the month of November up 2.2%. This is signed contracts in the month November. This is above estimates of only a 0.7% increase, so coming in over triple that number. This measures, again, signed contracts for the month. It's the highest since February of 2023, with sales up now 6.9% year over year, which is up from 5.4% we saw in the previous report. So getting a bit of a boost there, likely because those are signed contracts when rates were a little bit lower just prior. Next, mortgage purchase applications fell down 13% last week to be down 17% year over year, mostly due to the holidays. Not as many people are going to be shopping there. Refinances are in the same boat where they fell 36% for applications in that week. They're still up 10% year over year with rates almost the same, about a quarter percent higher than they were this time last year. Next up, US credit card debt defaults just hit their highest level since 2008 according to a report from Bank Bank data, credit card lenders wrote off a total of $46 billion with a B in seriously delinquent credit card debt for the first 9 months of 2024. So not even a full year. Now, that sounds like a lot, but total US credit card debt's over $1 trillion. So you look at this, maybe about 4.5% for a serious default rate puts it a little bit in perspective there, but still a huge amount. The biggest concern is this is 50% year over year for the exact same period. So as COVID money has started to dry up, people have been living on savings. That's gone away. And now cost of credit card debt, car loans, and short-term debts like that with funds rate moving higher, just showing it's harder and harder for people to stay ahead. Luckily, haven't seen that relate to mortgage delinquencies yet, but this might be a harbinger of things to come without any changes. So we'll keep a close eye on that. And lastly here, initial jobless claims. Again, holiday week, so take things with a grain of salt, but they dropped initial claims 9,000 for the week to 211, which is very, very low. And continuing claims fell 54,000 to a total of 1,844,000 for continuing claims. And those again are people who have filed for more than one week in a row but who haven't expired their benefits of 26 weeks yet. Big drop-off on the continuing claims number. How much of that is people people going back to work, expiring their benefits, or who just, um, you know, aren't filing for it anymore due to holidays. Who knows? But as always, hopefully this is helpful information for you. Let me know if there's anything you'd like to see me cover in the future, go into more depth. And the last piece of reminder that there is a holiday this month. It is Martin Luther King Jr. Day on the 20th, so make sure to take that into account for closing time frames, write a rescission period for Refinances, and we'll see you next week. Have a great one.