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Market Analysis

(We attempt to update this consumer comment section regularlyshould news warrant. But, there are times when we are on vacation or there is other interference and an update is delayed. If you find that the comment is out dated, please check back. We will do our best to remain as current as possible in helping you determine the home loan market information. Thank you!)

January 17, 2019


The government shutdown is having some impact on our home loan atmosphere.

For the most part, conventional loans are proceeding unimpeded but with some potential slowing. For instance, loans require a response form the IRS regarding confirmation of a borrower’s tax returns. With the IRS short-handed, acquiring the transcripts has slowed the process.

FHA loans are available but, again, the agency is short-handed and the acquisition of case numbers and appraiser assignments have been affected.

VA continues to process loans and we have yet to feel any results from the shut-down.

USDA is closed. While we can accept loan applications and partially process them, we are unable to acquire necessary certificates allowing a loan to close escrow.

There are likely collateral aspects to the shut-down. Persons have reported that they are now using the savings that they were accumulating for down payment on a home purchase to maintain their household budget. Whether such folks will proceed with home buying plans after receiving back pay (if they receive such pay) is questionable.

Employees who are furloughed cannot document current income to complete loans in progress or to open new loan applications. Those working but remaining unpaid face a similar situation. These latter “working without pay” employees are, in some situations, being deemed unqualified for temporary unemployment by being told “they have job”. Furloughed individuals seem to be facing similar the same conundrum in some locations.

We are unable to assess the impact of this protracted shut-down on future real estate transactions – either the number of loans projected or the impact on individuals’ capacity to qualify. The most feared impact is the possible negative affect on credit scores for those both furloughed or working unpaid as they fall behind on credit obligations.  



Treasury Yields:         Keep your eye on the 10-year treasury note—expect home interest rates to follow the note’s trajectory, in spite of the slight roller-coaster ride (up and down). After rising to over 3% late last year, the note has become mostly stable again around 2.7% and long-term interest rates have done the same. Unpredictable economic policies including the threat of tariff wars, increased deficit spending and immigration rhetoric are but a few of the impacts that make predicting what might happen a “fool’s game”.

Interest Rates:                        Related to the above, the FED’s recent softening of their interpretation of the market as stable and inflation within desired parameters resulted in calming the market. Interest rates declined slightly with the announcement that the FED MAY NOT increase short term rates as frequently this year. Remember, the FED affects only short-term rates and not the long-term home loan rates.

Unusual Market:        Generally, when interest rates increase, home values moderate. We experienced a unique market wherein both rates and home values increased, mostly due to limited inventory. The slight rise in interest rates resulted in a pause among some potential home buyers. The recent increase in home inventory coupled with the interest rate reduction has stimulated he purchase market again.

Affordability:              Affordability has not yet become a major issue even though some would-b home buyers seem to have exited the market. If home prices rise substantially in the future accompanied by interest rate increases, affordability could become an issue.

Home Improvement:  If senior home owners stay in their homes, the anticipation is that home improvement projects will stimulate small construction investment. But there is a lack of construction workers to perform these sometimes smaller job tasks.

Bank Regulations:      With the rollback of the Consumer Finance Protection Bureau (CFPB)  some states have taken to passing local legislation, some of which mirror that of the CFPB. Lending institutions that function across state lines are fearful of the loss of national regulations that could be replaced by numerous sets of individual state rules. A potential nightmare for the big lending institutions. Maybe it won’t happen?

Growing Older:          By 2035 it is projected that there will be 78 million people 65 years and older compared to only 76.4 million under the age of 18 (according to the US Census Bureau). It will represent the first time in our history that older folks are projected to outnumber children. The Bureau projects that the transformative 2030s will see the population grow at a slower pace, age considerably and become more racially and ethnically diverse. Current immigration decisions could impact the latter prediction?

Housing Changes:      As we age and affordability concerns grow, homes that accommodate shared living space might become more popular? Might we see a growth in mother-in-law suites as a part of new home construction to accommodate grandparents or an in-home care-giver?

Fintech Encroachment:          The use of Financial Technologies is projected to expand as Millennials embrace home ownership. Reality is that documentation must still be collected, reviewed, underwritten and a loan funded. Technology is unlikely to help with fixing qualification defects (i.e; improving credit, accumulation of additional funds, etc). There may be some limit to how fast a loan can be acquired—and what is the rush in most instances? Curiously, would-be home buyers noted recently that they want some speed with their transactions but definitely want the personal touch in explaining the documentation and total loan process.

Housing Construction Slow Down:    Labor shortages and now possible higher prices in lumber and building supplies (if tariffs expand) continue to contribute to extended time frames for new home construction. This is especially problematic in disaster areas which are trying to rebuild lost homes. But it has an impact on new home construction also, especially when home sale inventory is low and we need new home construction.

Retirement Savings:   Recent polls suggest that one-third of the adult population has less than $5000 saved for retirement. The figures can be deceptive, but the overall prospect is scary. Many are resigned to working longer before retiring. Expectations are that seniors will rely more in the future upon the equity they might extract via the Reverse Mortgage option. Another reason to buy a home vs renting.   

Equity Line Loans:     As home values have increased homeowners are being encouraged to borrow the equity for a plethora of reasons – vacation, home improvements, college funds or investment reasons. Lenders are making equity loans increasingly easier to acquire which make such loans very tempting. Remember prior to the last recession, homeowners were accused of using their home equity as a form of “piggy bank” resulting in very negative consequences. This doesn’t mean that one should not use home equity for legitimate (determined by each homeowner) purposes but one should be cautious.


January 2, 2019

It seems foolish to try to predict the future of interest rate and the housing market but perhaps even more foolish if we don’t at least look at the “signals” in the economy that MIGHT provide some clues. The attempt here is to recognize that change is inevitable and determine what can be done to take advantage of the opportunities that always accompany what many perceive as negative impacts.


Interest rates: Home mortgage rates have remained stable over the past several months in spite of the FED’s gradual increases in the short-term rates. The reasons for the moderate changes in long term interest rates are numerous. Among the most obvious is that wages, while slowly increasing, are not rebounding as expected after the tax cut legislation. The business community is uneasy with tariff rhetoric and that is reflected in a stock market that roller coasters along and often continues a downward trajectory. While the FED reported that they still intend to stick to the plan of gradual increases in the short-term rates, pundits are less sure that this will occur. The next expected rate hike scheduled in April may give us a sense of the FED’s determination moving forward.

The FED:       The economy has reached the Federal Reserve’s target level of 2% or less inflation. But, the FED seems poised to continue to review its gradual short-term interest rate increases with maybe two additional quarter percent raises by the end of 2019.  But, there are some economic aspects that could change the plan (see below):

Oil:      After reaching a price above $70 a barrel prices have tumbled stimulating an increased interest in the purchase of SUVs. Focus on the development of electric vehicles suggests a long-term reduction in reliance on oil. We are no longer as dependent on OPEC production resulting in less of a roller-coaster affect on oil prices going forward.

GDP:  The Congressional Budget Office released its long-term budget outlook, focusing on the growing deficits that are expected to impact the nation’s total debt load over the next 30 years. With the implementation of the tax cuts, the debt payments are anticipated to exceed the cost of all entitlement spending within the next decade. With GDP negatively impacted, the idea that we will grow ourselves productivity wise out of the deficits is unlikely. The Consumer Confidence Index indicates that its Expectations Index suggests that “consumers don’t anticipate the economy gaining much momentum in the coming months”. This could be another reason for some hesitation in the FED’s rate increase plan?

Housing Inventory:   Generally, when interest rates are trending upward, home values stabilize and sometimes retreat. Not so now, we have the phenomena of both rates and values increasing. The lack of inventory has kept housing values artificially high as multiple offers and a bidding situation escalated home prices. Consensus indicates that we need more new home construction to ease the lack of available homes for sale. But, the recent tariffs imposed upon lumber from Canada has resulted in both a short supply and higher cost for construction. Builders are opting for units rather than single family homes in order to spread the higher cost.  The housing sector of the economy tends to lead us into prosperity. If the home purchasing public is deterred either by higher interest rates or short home supply (or both as is happening now), there could be pressure on lower interest rates rather than higher.

The good news is that there seems to be a bit more inventory available. If this rend continues, it could stabilize home values, at least in the near term. 



Fear is a disabling factor for all of us. And when fear is combined with lack of facts it can cripple a person’s ability to make decisions. Consumers could easily determine that this is not the time to pursue home ownership and/or to sell a home. Let us try to dispel such fears. Here are a few things to consider when considering purchasing a home or other real estate.

Fear of Interest rate increases:        While this has not curbed the appetite for home buyers yet, we don’t know at what level of rate consumers will begin to balk? We urge would-be home buyers to identify the actual monthly cost of a small interest rate increase. The amount is usually manageable and will unlikely impact their ability to qualify for home financing. In other words, put into perspective what a quarter percent rate increase means in monthly payment change. Don’t focus on rate but on the emotion of becoming a home-owner. The fact is that most persons who gamble on future lower interest rates and/or home values seldom win.

Rate shopping:          As rates increase, buyers can convince themselves that they should shop for the lowest rate or at least someone who will tell them they have the lowest rate. Facts are important – all lenders have the same rates as nearly 100% of the conventional and government home loans are sold to the secondary market. So, don’t shop rate, shop who one can trust to perform – educate and fully explain the loan process, solve borrower concerns, keep promises and close the loan on time. Fact – when only one source among many is offering a “killer” rate, it is generally too good to be true!

Fear of a housing bubble:    Younger home borrowers especially are indicating some reluctance to buy because they fear another housing bubble wherein home values are likely to decline. Absent the negatively amortized, rate accelerating loans responsible for the last recession, most persons who retained their homes have seen their value returned along with increased appreciation. The fact is that while there are no guarantees, long term home owners seldom lose on investing in a home.


December 27, 2018


            Our assessment of interest rates changes daily. The current unpredictability of the stock market confused & frightened many. The stock market, however, is not the best barometer of what may happen in the home interest rate arena but it does reflect corporations’ future expectations. What we are seeing is an economic cycle of events. It is too early to determine the outcome but we can see what is occurring presently.

            The Federal Reserve (THE FED) has kept interest rates arbitrarily historically low for several years as the real estate segment of the economy and the economy as a whole slowly but continually recovered.  New jobs were created and unemployment reached new lows but wages stubbornly remain static. The slight increase in wages currently accompanied by last year’s tax legislation has consumers feeling just a bit richer with anticipated increased paycheck dollars resulting in consumer confidence and spending. All of this is good news but while we don’t know if wages will actually increase the possibility can be viewed as inflationary.

            The FED feels compelled to increase short term interest rates as a way to combat this rising inflation, whether real or perceived. While short term rates do not automatically or immediately translate into an increase in the long-term mortgage rates there is an eventual affect. Rising interest rates mean higher borrowing costs for everyone, including businesses. Higher deficits translate into greater national debt payments, sustained low unemployment creates wage pressures and heightened consumer confidence and spending combine with the result that the FED raises rates to curb the anticipated inflation. A continuing cycle is initiated.

            Don’t panic! We don’t know for sure how many rate changes will actually occur and those that do are likely to be minimal. The FED’s recent announcement that there may be only two short term interest increases in 2019 calmed the market fears of rapid interest rate increases. While rates did increase over the past year, they remain historically low.

Should would-be home buyers put their purchases on hold? We generally believe that a home provides emotional comfort along with its appreciation and wealth building capacity and there is Never a Better Time to Buy Than Now If you are contemplating a home purchase or refinance and have questions give us a call.


Why You Should Buy Your Home Soon!

 At the risk of sounding like just so much real estate hype, there are some good reasons to consider purchasing a home soon. Home ownership still represents the typical path for middle class wealth building. While un-even across the state, 2018 did continue the signs of a continuation in real estate appreciation that many expect to continue into 2019 and beyond.

Home prices:  increased, albeit only slightly and not everywhere. Predictions are that home values will continue to grow slowly., thanks to a likely continued shortage in home for sale inventory.

Consumer Confidence Improving:  this drives the market and as people seem to be a bit more confident about the future it is expected that we could see inflation continue. Buying now allow new home owners to acquire the appreciation that we expect to accompany home ownership. occur.

Low Interest Rates:   home mortgage interest rates, while edging upward, remain at historic lows. Mortgage rates are going to increase but the FED seems focused on controlling inflation.

Unemployment Dropping:   skepticism over how the numbers are calculated and the types of jobs being created doesn’t detract from the fact that more people are working and feeling a bit more optimistic about the future. 



All real estate is local! That statement is true as every area is unique as to its home values, loan options available and its future growth. Regardless of the future changes in real estate financing ahead, the need for competent, knowledgeable loan originators will not change. Humboldt Home Loans’ emphasis remains on education and counseling – the two parts of the home buying process that most empowers consumers. Every potential buyer requires good information with which to make good decisions. Our promise remains the same – our focus is always based on what is best for our client. One may not always like what we say (sometimes having to tell one that they are not yet ready to buy) but we guarantee that the information will be accurate and in one’s best interest. And if you are not ready to buy now, we will provide a road map to home ownership in the future. 

Finally, low rates and moderate home price appreciation makes this still a good time to purchase a home. We urge that you become pre-approved for a loan before initiating your home buying search. There is a variety of loan options and you want to identify the one that is best for your circumstances. Call us today to schedule your FREE qualification meeting. 

For information regarding all of your real estate financing questions and concerns you are invited to call us at Humboldt Home Loans:

            John Fesler      707-269-2318                          Jody Harper      707-2692304


Visit the “tip sheet” section of this web site for answers to many of the most often asked questions – see below.

We follow the market every day, all day. We will attempt to keep you updated on what we think is happening and what you can expect regarding long term mortgage rates. We wish we could be clearer with our suggestions of what you should do in these market times. Remember, real estate is almost always a good long term investment. Discuss your situation with your Realtor and Mortgage Broker and then move ahead accordingly.



You may find several tip sheets (found in our "tip sheet" section of this web site) interesting as you determine if you should proceed with either a purchase or refinance transaction . . . check out "Never Been a Better Time to Buy", "Refinancing" and "Locking the Interest Rate"..

Here are a few additional tip sheets of particular interest. You may view our complete tip sheet table of contents by clicking below.

Acquiring a Loan via the Internet

Capital Gains Tax Clarified

TDS Required in All Sales

Preparing your home for sale

Sellers should be pre-approved

Real Estate Advertising

Credit Scoring . . . here to stay

Click Here for
Complete Tip Sheet
Table of Contents