From HousingWire:
Goodbye refi: Rising interest rates all but erase refinance demand
While mortgage interest rates dipped ever so slightly in the last week, they’ve been trending up for the majority of this year. In fact, the interest rate on a 30-year, fixed-rate mortgage is now more than half a percentage point higher than it was back in January.
And it appears that the consistent rise in interest rates this year has all but dried up refinance demand.
Is it time to say goodbye to refis for a while? It certainly looks that way.
A new report from Ellie Mae shows that purchase loans are now approaching 75% of all mortgages, with refis hovering around historic lows.
Ellie Mae’s latest Origination Insight Report shows that the 71% of all loans closed in July were purchase loans, while only 29% of the closed loans were refinances.
That’s the second month in a row that refis have been that low (and purchases that high).
Those figures also represent the lowest percentage of refis (or highest percentage of purchases, depending on how you look at it) since Ellie Mae began tracking this data in 2011.
To put it another way, refis haven’t been this small of a percentage of overall originations in seven years.
And the trend doesn’t appear to be going away anytime soon.
…
There was a little bit of good news on the refi front in this week’s Mortgage Bankers Association’s Weekly Mortgage Applications Survey, which showed that the refinance share of mortgage application activity increased from last week’s 36.6% to 37.6%.But that may just be a blip on the radar as interest rates are expected to continue climbing this year.
And while today’s interest rates are still low by historic standards, they’re still higher than many younger homeowners have seen in their adult lives. Those borrowers aren’t going to refi their 3.95% mortgage into a 4.75% right now, and they certainly won’t do it if rates keep going up, no matter how much their home is worth now.
Welcome to the new normal.
It’s like a tithe to Our Lady of Perpetual Tax.
Thinking of Buying or Renting Near NYC? Consider the Tax Costs
Imagine setting aside 10 percent of your salary every year towards paying property taxes on your home. Well, that is a reality for some homeowners in the tri-state area.
Homeowners in New York City’s affluent Westchester suburb pay on average $15,000 in annual property taxes, which is comparable to about 10 percent of the average adjusted gross income of $148,775, according to Bloomberg’s analysis of 2015-2016 IRS filings, the most recent available.
Manhattan, or New York county, is a close second, where homeowners there pay about $14,400 in annual real estate taxes. Yet, filers in the city make on average $60,000 more per year than their suburban neighbors, meaning that a smaller share of their income goes towards paying property taxes. Half of the homes in Manhattan were valued more than $1.3 million at the end of 2015.
Two more counties in New York, five in New Jersey and one in Connecticut round out the top ten highest counties for taxes in the tri-state area.
In my opinion “effective tax rate” is a more informative than nominal tax bill or percent of income. $20,000 tax on a $2 Million home (1%) is much different than $10,000 on a $500k home (2%)…or my friends in Little Falls paying $23,000 on $900k house. (2.6%)
1987 condo,
In my opinion, what really matters is what services (and level of service) you get for your taxes. Just like condo fees, higher or lower doesn’t necessarily mean better… all comes down to what you actually get in return for your money.
BRT,
What should the kid have done? What would have been an appropriate response? I really don’t understand any criticism of the kid in this situation. What you call mouthing off, I call standing up for himself. The article states a witness saw the kids riding bikes, one falls down, and this witness the lady says to the kids you need to leave or I’m calling the cops. And she also finds her friend the retired cop to ‘help’ out. I also love how the actual uniformed cop on scene does literally nothing other than tell the kids to leave after watching the old guy approach in an aggressive manner… and he impersonated a police officer by flashing some sort of badge.
I do agree the ornery retired cop is going to cross the wrong person one day. He can only hope his retiree badge gets him off the hook.
Blue Ribbon Teacher says:
August 16, 2018 at 11:40 pm
Because it’s the truth. There is no good guy in that confrontation. Scrawny kid mouths off to irate adult. He’s going to cross the wrong person one day.
I read the article and noticed property taxes are lowest in West Virginia, Indiana, Alabama, and Louisiana. But nobody moves to these states. Low property taxes don’t attract people. Texas and Florida have medium to high property taxes, and people are moving to these states in droves.
I believe the main driver of the Trump income tax reform was to stick Hillary with a higher tax burden.
NJ needs to pass a property tax freeze bill ala Prop 13 in California.
This would do wonders for real estate values in NJ, as it would lock inventory for decades.
Christie’s cap, while leaky, helped caused the property tax growth rate to slow from 7% annually before the cap to 2% to 3% after the cap.
Decent chance Californians repeal Prop 13 next year.
Actually Prop 13 repeal vote would be in 2020.
I’ve had mortgage companies try to pitch me a refi into a higher rate because…reasons. I think they all got used to the that easy, refinance money and now that’s it’s dried up they don’t know what to do.
I wonder how the home equity loans and heloc market is doing with the tax changes?
Grim – Prop 13 works in California because the state funds about 60% of the education costs. Property and local taxes account for only 25% of the costs of K-12 education. California for it’s size is also consolidated they have 8000 public schools divided into 963 school districts.
This compared to New Jersey with 678 operating school districts, and 15 non operating districts and 2,516 public schools for a much smaller state.
Christie’s leaky 2 Percent Cap is now history, that part that really matters expired, that is the 2 percent cap on interest arbitration awards for local governments and unions.
We should see a surge in municipal tax increases as the labor contracts come up for negotiations/arbitration.
https://www.app.com/story/opinion/columnists/2018/05/01/nj-interest-arbitration-award-cap/569200002/
I think the 2% cap on the property tax rate remains, how the towns deal with higher costs without ability to raise the taxes will be the interesting part,
Condo not for the labor contracts. That is the meat and potatoes.
Again, I believe there are 2 different caps. The towns are still restricted to 2% max with pension and health care costs excluded. The 2% arbitration law is separate and did expire.
https://www.app.com/story/opinion/columnists/2018/01/05/interest-arbitration-cap-nj-renew-legislature/109192274/
When the 2 percent property tax levy cap was enacted, a separate 2 percent cap on interest arbitration awards followed, requiring arbitrators to take property taxes into account when issuing awards and providing local officials with a now proven and effective tool to contain property tax increases.
The arbitration cap expired on Dec. 31, but the property tax levy cap is permanent.
So what do you guys think about Trump’s idea to stop quarterly reporting? I know someone who agrees:
“Quarterly capitalism as developed over recent decades is neither legally required nor economically sound. It’s bad for our economy.”
– Hillary Clinton (3 years ago)
Andrew Cuomo is a chocker
re: “stop quarterly reporting?”
“I felt a great disturbance in the Force, as if millions of accountants suddenly cried out in terror and were suddenly silenced. I fear something terrible has happened.”
―Obi-Wan Kenobi, sensing the destruction of the Planet Financial…
What should the kid have done? What would have been an appropriate response? I really don’t understand any criticism of the kid in this situation
There was already a uniformed officer there. The kid and his buddies at that point should have just left. Then the video starts. And if a guy gets in your face, and you don’t back down, that’s fine. But as you walk away, you start talking about how he’s “red like a tomato”. At that point, the kid is trying to bait the guy into hitting him. Like I said, there is no good guy in this situation. As far as the “witness”, it sounds like there are some key details missing in the altercation.
The guy’s an idiot and a hot head. The kid’s a punk.
Juice, Condo’s correct about the leaky cap. The only exceptions (the leaks) are for rising pension and health care costs, debt payments, rising school enrollment and states of emergency.
With that said, I expect the cops and firemen to declare their not getting paid the 5% the arbitrators promised a state of emergency.
Seriously though, no one knows what’s going to happen when the arbitrator rules 5%. The money will have to come from either the school budget, or the municipal budget. Once again, break out the popcorn for the fireworks as different groups of public sector labor battle it out. Add Murphy’s promise to make the pension payment whole and NJ will win the race to state bankruptcy. This would actually be the best strategy. Perhaps drop trough Murphy is smarter than we think? Nah.
If the 2 percent cap on interest arbitration awards for police and fire is allowed to expire, and the overall 2 percent cap on municipal property taxes remains in force, won’t that likely threaten raises for other municipal workers or lead to a reduction in services? Or both?
Yes, likely both. Under these circumstances, in a zero sum budget environment, a local government will need to fund the percentage increases over 2 percent ordered by an arbitrator. To keep under the permanent levy cap, local elected officials will be forced to make cuts elsewhere. All line items will come under scrutiny and local elected officials will be forced to consider reduction of services, furloughs and even layoffs to fund one line item in the budget, mandated by the decision of an unelected arbitrator. At some point, local budget balancers could even need to lay off some police and fire personnel to pay the raises mandated by an unelected arbiter. As noted above, we are also likely to see an increase in 2018 and 2019 of ballot referendums in which voters will be asked to authorize exceeding the 2 percent levy cap.
9:03 LA USD – 500k students – typical class sizes over 30….$9k per pupil.
What that might not tell you is it’s also serving free lunch to over half the kids…
https://www.njslom.org/Archive.aspx?ADID=698
The battle has already begun.
You guys would laugh for what passes as schools in Cali. Many of them are a series of trailers all connected with roofed walkways open to the elements. Schools are much “nicer” here in New England. Though I’m not sure the quality of the building impacts the quality of the education.
Turd and Condo – The arbitrator will rule 6% increase (because they have “suffered” for so long under no and low pay increases), then the town will have to file for an exemption to the 2% cap and then lobby for changes. What do you think the legislature and governor are going to do? Do you really think we are going to see Sweeney’s proposed budget and spending reforms come to pass? The spending cap is history, anyone who thinks towns will cut spending is smoking something funny.
12:19 You would be surprised about a lot of things “out here” as you said earlier Stu, it’s ramshackle to say the least, they invest in performing arts programs for the kids. Visual Arts are an after thought and the overall vibe is very attuned to “social justice” which makes someone with the type A (or A minus) attitude of hard work and silent suffering to be just an antiquated notion in the era of “you owe me pal….” now pay up. A lot of idle non-performers mixed in with ordinary nice kids, with no plan for the future I think some of what passes for education is just warmed over 70’s feel good tripe. The most important factor in any bldg of learning is the Teacher. Everyone else needs to get out the way. Pay is abysmal in teaching so there is barely a financial incentive to do the job. Most people either can’t do anything else with their skills, or got sick of corporate life. But it is really just poverty pay.
I have a lot of friends in the PBA. They are foaming at the mouth over going to arbitration. Many lived over their heads and their wives actually had to work to pay the bills under the 2% cap. Meanwhile, NJ cops are 2nd highest paid and NJ Firemen are top compensated in the country already. The State Police gig is where the REAL money is at. Forced retirement at 55!
Teachers pay in Cali is terrible. Yet the students do OK. What really matters is the wealth of the parents.
Wow, even Trevor Noah calls out Peter Strzok on his gofundme scam.
The usual crop of headcases and middle aged moms inhabit the teaching ranks, the desert heat has already beaten most Californians into passivity whole the 1% continue their person pilgrimage to the brass ring hospitality, nursing jobs, and sad sales gigs complete the rather typical offerings in an economy devoid of a middle class. Get ready folks it’s all going to thrive under Trump though…
Keep dreaming that NYC area is not f-ed. This is going on en masse and picking up steam. Take all the back office, middle office, legal, compliance and all other support functions out of nyc and not much left for middle class. Allow Infosys, Wipro and Tata to take all the IT contracts and there is nothing for anyone except the very rich or very poor.
Goldman Sachs is about to move dozens of jobs out of pricey NYC to Utah as Wall Street turns to cheaper cities
Goldman Sachs is planning to move dozens of compliance jobs out of New York City as part of an ongoing plan to move back-office staff to lower cost locales.
The investment bank has been moving staff to Salt Lake City for years and the proposed plans are another stage in that effort, according to people with knowledge of the matter. Affected employees may be told of their fate as soon as September, the people said. As the roles are shifted to Salt Lake City, New York-based employees will be given a chance to move or apply for other jobs in New York, one of the people said.
A Goldman Sachs spokesman declined to comment.
Banks and asset management firms have been moving employees out of high-cost locations like New York and London for years to curb expenses and this shift has continued into 2018. Earlier this year, asset manager AllianceBernstein said it would send 1,000 jobs to Nashville. Deutsche Bank AG, which has had a hub in Jacksonville, Florida for years, is once again hiring for front-office staff in the southern city, Bloomberg reported this week.
“Near-shoring has been going on for years and it’s not going to slow down,” said Stuart Rosenthal, a recruiter who places compliance, operations and legal staff. “If you’re the CFO, you have to worry about the bottom line.”
Goldman’s global compliance department is run by Sarah Smith, who was named to the role in March of last year. A 20-year veteran of Goldman, Smith has a background in accounting and audit and earlier worked at KPMG.
The moves in her group are part of a long-running Goldman strategy. In 2012, then-Goldman president Gary Cohn highlighted the build out of offices in what the bank has dubbed “high value” locations. In a May presentation that year, Cohn said the strategy was so advanced that already 19% of the firm’s headcount was based in lower-cost cities such as Salt Lake City, Dallas and Bengaluru. The make up is now much higher, climbing to 30% last year, according to a November 2017 presentation.
The locations tend to cost 40-75% less than New York or other expensive cities like London, Tokyo or Hong Kong due to cost of living differences, Cohn said on those 2012 remarks.
Separately, the bank is building up its Richardson, Texas office, about 15 miles north of Dallas. Many of the control and compliance functions for its digital bank, Marcus by Goldman Sachs, and related activities will be based there, one of the people said.
In the past week, Goldman has been advertising for at least six such jobs in Texas, according to job postings compiled by Google.
In rural Florida my grades 3 through 6 were each run out of trailers parked in the school. They were actually nicer than the main building because they had AC. My fourth grade teacher was my favorite, every day she read bits of the Chronicles of Narnia to the class, which just inspired me to read more and someday accomplish great things. Though she seemed to inspire some of my classmates differently. One classmate was jailed for murder. Another is a drug dealer and pimp with a great work ethic and positive attitude. And one was inspired to become a fireman, was subsequently jailed for arson.
I’ve had mortgage companies try to pitch me a refi into a higher rate because…reasons. I think they all got used to the that easy, refinance money and now that’s it’s dried up they don’t know what to do.
Mortgage companies will shift to reduce lending standards now in an attempt to pivot resources back to new mortgage business.
Either that or lay off tons of people and tell the market they are doing shitty on the next earnings report.
If you were one of the executives over the mortgage business, what would you do? Push for lower standards and riskier mortgages, or fire yourself?
See how easy that is? Just like that. The Federal Reserve wrong reams of paper on lending standards, and completely missed the simplest, most basic driver behind all of this.
Heard from a friend that they have already begun. No details, but he said his broker pitched some pretty funky little money down stuff at him. His credit is good though.
“Mortgage companies will shift to reduce lending standards”
Save money for how long? So ignorant. Their shifting of jobs will now increase the price in Utah to the point where they will no longer be cheap, and now stuck overpaying for a second rate location. What f’ing idiots!
“Goldman Sachs is about to move dozens of jobs out of pricey NYC to Utah as Wall Street turns to cheaper cities”
Juice Box, no exemption to 2% cap except for pension and healthcare. They can re-write law of course, but as linked article says….current choices are:
“local elected officials will have no choice but to consider imposing employee furloughs; privatizing services; freezing salaries for non-affiliated employees; and, reducing or eliminating non-mandated services such as transportation for the aged and disabled, meals on wheels, mental health and addiction services, and more”
Rim job update—was going to cost $150+ to repair my 12 year old rim, so I ordered from “WheelerShip” on Amazon, got new rim, $122 including tax, free Fed Ex shipping, arrived next day (this am) went to Costco and they mounted for $30.
I e mailed company about a few items (TPMS sensor issues, etc)..responded in 10 minutes both times. It must be 1955 there.
My wife works at GS. It’s all about getting the people here to move out there because they will not get poached out there where as here GS ops people are actually underpaid compared to market. Some people jump at the opportunity to live out there and save money but your salary will never go up(golden handcuffs). My wife and her team have open reqs that they’d love to hire for in NY/NJ but the dictate is SLC/Banglore and the problem in both is hiring skilled people. Finance people in SLC are in short supply.
It always starts out great but what happens is once the local market runs out of talent, the cost goes up and the quality goes down. They’ll find they are saving 20k per employee but the savings doesn’t justify the headache. If you need experienced people with particular skills you need to be in the major population centers.
Exactly. There was already an actual cop there. If there was a legitimate problem (and not someone used to being in power having their feelings hurt), let the cop handle it. He probably was and doing so without getting in the face of a kid. You’d think a former cop, let alone an adult, would be mature and do that.
Yes, the guy is an idiot, a hot head, and borderline tried to impersonate an officer. The kid was a kid.
Blue Ribbon Teacher says:
August 17, 2018 at 11:48 am
There was already a uniformed officer there. The kid and his buddies at that point should have just left. Then the video starts. And if a guy gets in your face, and you don’t back down, that’s fine. But as you walk away, you start talking about how he’s “red like a tomato”. At that point, the kid is trying to bait the guy into hitting him. Like I said, there is no good guy in this situation. As far as the “witness”, it sounds like there are some key details missing in the altercation.
The guy’s an idiot and a hot head. The kid’s a punk.
Market rising on news-
https://www.wsj.com/articles/u-s-china-plot-road-map-to-resolve-trade-dispute-by-november-1534528756?mod=hp_lead_pos1
Chinese and U.S. negotiators are drawing up a road map for talks to end their trade impasse culminating with meetings between President Trump and Chinese leader Xi Jinping at multilateral summits in November, said officials in both nations.
The planning represents an effort on both sides to keep a spiraling trade dispute—which already has involved billions of dollars in tariffs and comes with the threat of hundreds of billions more—from torpedoing the U.S.-China relationship and shaking global markets.
To pave the way for the November meetings, both sides have scheduled midlevel talks in Washington next week. A nine-member delegation from Beijing, led by Vice Commerce Minister Wang Shouwen, will hold meetings with U.S. officials led by the Treasury undersecretary, David Malpass, on Aug. 22 and Aug. 23.
Bingo. They are going to outsource/privatize. Your tax bill will only go up ~2%, and then a separate bill for a service that used to be included in your taxes.
1987 Condo says:
August 17, 2018 at 2:12 pm
Juice Box, no exemption to 2% cap except for pension and healthcare. They can re-write law of course, but as linked article says….current choices are:
“local elected officials will have no choice but to consider imposing employee furloughs; privatizing services; freezing salaries for non-affiliated employees; and, reducing or eliminating non-mandated services such as transportation for the aged and disabled, meals on wheels, mental health and addiction services, and more”
I don’t think there’s all that much extra new business to be gotten, in the short term at least, even if you went back to 2005’s lending standards. Inventory in the choke point now. There aren’t any more houses to be sold.
Refinances don’t require anything except an existing mortgage and a pen. If you want to do more new business you need more houses and there aren’t any more to go around.
The Mortgage biz is like a lot of industries that had a large, but temporary, jump in revenue due to external factors but didn’t plan for the eventual lean years. There’s no way out and there’s going to be a lot of fire and blood before it’s over.
Interesting. This might explain why there are price increases and increased market activity when rates go up.
grim says:
August 17, 2018 at 1:22 pm
I’ve had mortgage companies try to pitch me a refi into a higher rate because…reasons. I think they all got used to the that easy, refinance money and now that’s it’s dried up they don’t know what to do.
Mortgage companies will shift to reduce lending standards now in an attempt to pivot resources back to new mortgage business.
Either that or lay off tons of people and tell the market they are doing shitty on the next earnings report.
If you were one of the executives over the mortgage business, what would you do? Push for lower standards and riskier mortgages, or fire yourself?
See how easy that is? Just like that. The Federal Reserve wrong reams of paper on lending standards, and completely missed the simplest, most basic driver behind all of this.
Chinese and U.S. negotiators are drawing up a road map for talks to end their trade impasse culminating with meetings between President Trump and Chinese leader Xi Jinping at multilateral summits in November, said officials in both nations.
The nation doesn’t care. They want Omarosa sightings.
Listen, would you be more happy if I found more bad stuff to say about the retired cop as well? The kid is not your run of the mill kid. I deal with kids everyday and most of them are great. Some I’ve taught are now in prison, despite living in a Blue Ribbon town. This kid, from the 1 minute I saw, is hardly an upstanding citizen in the making.
Amazing that in a short ten years we are back to the precipice for a housing disaster. Nowhere to turn except loosen standards or watch market and economy tank. Of course, passing the risk via securization won’t work so much this time. Companies are generally not offering wage increases so people can’t afford current prices. Rates will keep rising. My buddy bought in Ridgewood back in May 2009. He paid 690k for colonial but dropped 65k into place. He said realtors said maybe sell it for 750k today. Tax bill approaching 17k. How can he lose after nearly 10 years of ownership? He can’t get out. My brother taking a bath on 2010 purchase…but, but Trump’s economy is so strong??
“privatizing services”
Might happen in blue collar towns where people don’t pay attention (Bloomfield), but will never pass muster in Montclair where the word “privatize” has evil connotations. Though they did take the sewer out of the the tax collection 10 years ago so they wouldn’t have to lay off public workers during the Great Recession. Don’t remember anyone saving my coworkers jobs at the time. Used to have a staff of 22. Now down to six.
Everything you said below is accurate. My overriding point is that there should be no comparison between to the two individuals. Agree to disagree.
Maybe the kids should have reacted the way these did:
https://m.youtube.com/watch?v=RNNQEuSbnsQ
Blue Ribbon Teacher says:
August 17, 2018 at 5:15 pm
Listen, would you be more happy if I found more bad stuff to say about the retired cop as well? The kid is not your run of the mill kid. I deal with kids everyday and most of them are great. Some I’ve taught are now in prison, despite living in a Blue Ribbon town. This kid, from the 1 minute I saw, is hardly an upstanding citizen in the making.
Electric bill for the last month, $270. Histogram says that’s way higher than last year. Me? I say…worth it! Central Air rules!
Re: Property taxes – Bedroom communities will continue to take it up the butt hole. Ratables, baby! I was looking at our local Boston Tax map recently and commercial properties support the rest of us. $80,000 property tax on liquor store here, $55,000 tax on a Firestone Auto Service center there, etc. If your Rockwell suburb has no ratables, you are screwed.
Utah Property Tax is about .51% Tax tax rate , 50% of assessed value
https://smartasset.com/taxes/utah-property-tax-calculator
My Son just got a promotion with MS.He is with the Hedge Fund Division today. The kid can afford to buy a house in NJ but won’t.
Just like every other Millennials they do not know where their job will send them.
My Daughter with LVMH going to Los Angeles or Florida
My niece,Company is getting ready to send her somewhere too.
Why will they buy a house?
I get scared when Cuomo comes out on a TV Ad saying;If you want to go to College in NY we will pay for you.
NY will have a socialized Healthcare
Where is the money coming from? Companies are leaving