Airbnb Income Counts Toward Refinancing
With the backing of Fannie Mae, home-sharing giant Airbnb has announced a new partnership with select lenders, including Quicken Loans, Citizens Bank, and Better Mortgage, that will allow homeowners to report rental earnings as part of their income when applying to refinance a mortgage. Owners who rent rooms on Airbnb had been facing delays, higher interest rates, and loan limitations when refinancing.
“This initiative was developed to identify new ways of recognizing home-sharing income, making it possible for homeowners to maximize their investment to better reach their financial goals,” Airbnb said in a statement. “The project is part of Fannie Mae’s work to find new, innovative ways to expand the availability of affordable mortgage credit.”
If the initial program goes well, Fannie Mae may consider extending it to all of its lenders, according to reports. Airbnb will provide hosts with a proof of income statement that they can use when refinancing an existing mortgage.
Housing studies show mixed results when it comes to the effect of Airbnb on local markets. Some show that a greater number of Airbnb listings in a given location can lead to a slight increase in rents and home prices. Others, however, suggest Airbnb restricts long-term rent growth. Some cities, such as Baltimore and Detroit, are considering new zoning requirements to limit Airbnb rentals in its communities.
Source: Airbnb and “Refinancing a Mortgage? You Can Now Count Airbnb Income,” Curbed.com (Feb. 9, 2018)
Daily Real Estate News | Monday, February 12, 2018
Utility Bills May Be Getting Cheaper
Utility companies will pay less tax from a recent tax overhaul, and many are planning to pass those savings on to customers. Rate changes may shave a few dollars off the average customer’s bill in the coming months, The Wall Street Journal reports.
The federal government slashed its corporate tax rate from 35 percent to 21 percent. Regulated gas and electric utilities will have to pay less tax, and some state authorities may give regulated utilities little choice but to return that tax savings to its customers, WSJ reports.
Some regulated utilities will be refunding some of the tax payments they collected from customers based on the 35 percent rate. Companies may choose to issue refunds over several years, so the savings may be minimal for customers.
For example, National Grid U.S., a utility holding company with subsidiaries in New York, Massachusetts, and Rhode Island, expects a non-cash tax credit of $2 billion in 2018 from the lower tax rate. “It’s going to be returned to customers over a period of 20 to 30 years,” Peggy Smyth, the company’s finance chief, told The Wall Street Journal.
Some companies are using the tax savings to defray higher costs and prevent having to hike bills. For example, Florida Power & Light said it plans to use its savings to pay for $1.3 billion in recovery costs from Hurricane Irma. Customers may not see any reduction in utility bills, but it will spare them from any increases, the company said.
Duke Energy Corp, with subsidiaries in North Carolina, is in the process of requesting permission from local authorities to cut retail rates or use its tax savings to defray the cost of storm-related recovery efforts, WSJ reports.
“Tax reform has presented us a unique opportunity to reduce customer bills in the near term, while also helping to offset future rate increases,” says Steven Young, Duke Energy’s finance chief.
Source: “As Utilities Move to Pass Tax Savings to Customers, Credit Concerns Arise,” The Wall Street Journal (Feb. 7, 2018)
Daily Real Estate News | Thursday, February 08, 2018
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Will Rising Mortgage Rates Hurt Spring Sales?
Mortgage rates are steadily rising, and some housing analysts are already forecasting an impact on the market from the higher borrowing costs.
Heading into the spring buying season, the supply of homes remains at record lows, which presses home prices higher throughout the country. But as buyers face higher mortgage rate costs, will that prompt them to pause?
Mortgage rates were near record lows for most of 2017, but they’ve been on the rise ever since the new year. The average rate on the popular 30-year fixed-rate mortgage is up a quarter of a percentage point since the first week of the year, and rates have increased for the past four consecutive weeks. Freddie Mac reported last week the average on a 30-year fixed-rate loan was 4.22 percent. (Read more: Fed Move Doesn’t Suppress Mortgage Rates)
As the Federal Reserve prepares to raise its benchmark rate in the coming months, mortgage rates are expected to move higher, too. Mortgage rates are loosely tied to the yield on the U.S. 10-year Treasury.
Some homeowners may be less inclined to sell because they don’t want to lose their current record low rates that they secured after the recession. Some buyers, however, may want to move faster before rates rise even more and they face higher prices.
Lawrence Yun, chief economist of the National Association of REALTORS®, predicts that mortgage rates will reach 4.5 percent by the second half of the year.
Some home shoppers may be in a rush to lock in rates before those edge up even more.
“The increases that we’ve seen so far have only gotten people off the couch and into the market,” Glenn Kelman, CEO of Redfin, told CNBC in late January. “People are worrying that they need to hurry and buy a house now before rates go up further.”
Source: “Rising Mortgage Rates Could Mean Even Fewer Homes for Sale This Spring,” CNBC (Jan. 19, 2018)
Daily Real Estate News | Tuesday, February 06, 2018
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Rising Rates Cause Loan Demand to Teeter
Mortgage rates were on the rise for the second consecutive week, causing some borrowers to show reluctance. Total mortgage application activity—which reflects both refinancing and home purchase demand—dropped 2.6 percent last week, the Mortgage Bankers Association reported Wednesday. Nevertheless, mortgage volume remains 6.6 percent higher than the same week a year ago.
“Rates moved higher last week driven by concerns over a weaker U.S. dollar, signs of more robust growth and rising rates abroad, and moderately strong fourth-quarter domestic growth,” says MBA economist Joel Kan.
Broken out, applications to refinance a home loan dropped 3 percent during the week, but are still 3 percent higher than a year ago. Refinancing applications tend to be more sensitive to rate changes than home buying applications. Applications to buy a home also dropped 3 percent last week, but remain 10 percent higher than a year ago.
The MBA reported that the average 30-year fixed-rate mortgage rate was 4.41 percent last week, the highest level since March. The 15-year fixed rate and the FHA rate were at their highest levels since 2011 and 2013, respectively.
Source: “Rising Interest Rates Cause a 2.6% Pullback in Weekly Mortgage Applications,” CNBC (Jan. 31, 2018)
Daily Real Estate News | Wednesday, January 31, 2018
Housing Market Starts 2018 on Positive Note
Contract signings on home sales rose slightly in December, reaching their highest level since last March, the National Association of REALTORS® reported Wednesday. NAR’s Pending Home Sales Index, a forward-looking indicator based on contract signings, moved 0.5 percent higher to a reading of 110.1 last month, 0.5 percent higher than a year ago.
“Another month of modest increases in contract activity is evidence that the housing market has a small trace of momentum at the start of 2018,” says Lawrence Yun, NAR’s chief economist. “Jobs are plentiful, wages are finally climbing, and the prospect of higher mortgage rates are perhaps encouraging more aspiring buyers to begin their search.”
But Yun cautions that these positive indicators won’t necessarily equate to a stronger sales pace in the long run: “Buyers throughout the country continue to be hamstrung by record-low supply levels that are pushing up prices—especially at the lower end of the market.”
The imbalance in supply and demand in housing throughout the country prompted home prices to appreciate 5.8 percent in 2017, which marks the sixth consecutive year of gains at or above 5 percent, NAR reports. Yun does expect price growth to subside in 2018, with some states possibly experiencing a decline due to the changes in the impact of the mortgage interest deduction and state and local deductions under the new tax law.
“In the short term, the larger paychecks most households will see from the tax cuts may give prospective buyers the ability to save for a larger down payment this year, and the healthy labor economy and job market will continue to boost demand,” Yun says. “However, there’s no doubt the nation’s most expensive markets with high property taxes are going to be adversely impacted by the tax law. Just how severe is still uncertain, but with homeownership now less incentivized in the tax code, sellers in the upper end of the market may have to adjust their price expectations if they want to trade down or move to less expensive areas. This could in turn lead to both a decrease in sales and home values.”
Source: National Association of REALTORS®
Daily Real Estate News | Wednesday, January 31, 2018