This week’s Q&A column is sponsored and written by Brian Bonnet, Senior Loan Officer (NMLS ID# 224811) of Atlantic Coast Mortgage, LLC (NMLS ID# 643114). To learn more about current mortgage rates and the home loan process, contact Brian at 703-766-6702 or email [email protected]. You may also submit your questions to McEnearney Associates via email for response in future columns.
Question: What’s the status of the mortgage industry this fall?
Answer: As we roll into fall 2021, the US mortgage industry will see some changes, some more attractive to consumers and some not as much.
Recent positive changes include a reduction in the spread between rates for owner occupied properties and those for second homes and investment properties. Several months ago, regulatory changes caused significant increases in the rates for non-owner occupied properties.
For a period, the rate spread between primary residence properties and non-owner occupied could be as high as 1.75% in rate. That spread is now back down to roughly .500% to .750% making investment purchases and second home purchases more tenable.
At the start of the pandemic, Fannie Mae, Freddie Mac and most of the secondary market imposed various additional restrictive underwriting guidelines. The purpose of the tighter underwriting guidelines was to protect lenders from potential increased risk associated with pandemic related economic downturns. At this point most of the more restrictive guidelines have been lifted and underwriting guidelines generally reflect pre-pandemic standards.
Mortgage program options have continued to rebound as well. Some programs were suspended early in the pandemic, again to allay risk. Many lenders suspended their non-conforming or jumbo programs. At Atlantic Coast Mortgage we suspended our construction loan and bridge loan programs at the beginning of the pandemic.
The good news is we have brought those two programs back. Additionally, we added programs such as special loans for doctors and lawyers. Most lenders in the secondary mortgage market have brought back their jumbo loan programs. The loan program offerings for consumers today generally mirror those offered prior to the pandemic.
The last bit of good news is conforming loan limits are going to increase significantly at the start of the new year. There are no official numbers currently, but we expect the standard conforming loan limit to increase from $548,250 to at least $625,000. At Atlantic Coast we have already begun making conforming loans up to that loan amount.
In the Washington Metro area, we enjoy the benefit of the 2nd tier conforming loan limit which is currently $822,375. That number will also likely increase to somewhere close to $900,000. Conforming loans have less restrictive underwriting standards including lower down payment requirements which make it easier to purchase property in the ever increasingly expensive Washington area.
Now for the less than pleasant news. Interest rates are increasing. We knew it would happen and it is generally a sign of an improving economy. Interest rates have been in the two percentiles for most of the past year. The Federal Reserve’s response to the pandemic economy were the reason for the historically low rates and now the Fed is faced with the need to address the reality of significant inflation. Generally, the Fed’s response to inflation is to increase the Fed funds rate which also has the impact of driving up all other interest rates as well.
Mortgage interest rates have inched into the low three percentiles for most transactions, and we expect they will continue to rise in the coming months. An increase in rates has an impact on a consumer’s ability to qualify for loans. At some point that will translate to pressure against the rising cost of housing. The lack of housing supply has been the primary driver of the cost and it will continue to be so, but a rise in rates will have some tempering affect.
If you would like more information to help plan your next move, please contact Brian Bonnet at [email protected] or call 703.766.6702.
If you would like a question answered in our weekly column or to set up an appointment with one of our Associates, please email: [email protected] or call 703.549.9292.
McEnearney Associates Realtors®, 109 S. Pitt Street, Alexandria, VA 22314. www.McEnearney.com Equal Housing Opportunity. #WeAreAlexandria
The redevelopment of the Montgomery Center has pushed some businesses out of Alexandria or out of business, but a clever re-use of an old funding authority may help The Art…
Hundreds solemnly gathered outside Police Headquarters this morning to dedicate the Alexandria Police Department Suicide Memorial. The names of officers Jason Kline, who died in 2004, and his best friend,…
Work is finally getting underway next week on a complete overhaul of the busy King/Callahan/Russell intersection. Work is expected to start the first week of October. Drivers going through the…
Step inside a cult-classic inspired world at DC Fray’s can’t-miss Halloween party packed with endless references to iconic films and music from the ‘80s and ‘90s. Vibe to retro sounds…
If you have been thinking about buying your first home or haven’t owned one in the last three years, THIS IS FOR YOU!
In the DMV area, it can be difficult to save the downpayment necessary for you to get into your own home. We have a solution. The Funder’s Summit!
We have assembled a summit with different municipalities to tell you how to access their funds for your home purchase.
Our local therapy practice is delighted to welcome Stacey Cali, Resident in Counseling, who has openings now for new clients. Stacey specializes in therapy for women, couples, teens and families. A graduate of George Mason University’s Clinical Mental Health Counseling Masters Program, Stacey is also passionate about working with people with addiction.
Stacey’s approach: “Therapy’s a powerful combination of reflection, support and action. You’ll find sessions are filled with empowerment, compassion, goal setting and a metaphorical shovel to dig deep to find the root of your difficulties and how to move past them.”
Adds Stacey, “As a therapist who works with women, teens, couples and families, I use a personalized style of counseling, tailored to you as an individual. You’re the expert in your life, I’m just here to guide you towards transformation and healing.”