Issue 10.17
Hope everyone made it through the busy month of February. President’s day brought the busiest weekend of the year for St. George and Southern Utah. With over 30,000 visitors and much going on during the weekend, presidents day weekend is on record the busiest time of the year in St. George.
It also marks the kick off to officially the home buying season and spring in St. George. 2017 brings a lot of enthusiasm to Southern Utah as many of the builders are busy developing and expanding. It also marks a busy season for the real estate market both new and re-sale homes. Home purchase numbers are showing promise year over year and 2017 looks like another year of growth for development and home purchases.
The down side of this means also that costs are increasing, lot prices to remain on the climb and interest rates continue to rise since elections in November. We have seen one of the quickest interest rate increases in the last three months that we have seen in over the past two years and it happened extremely quickly. As, the stock markets soar, the monies come out of the bond market and feed the equities market and thus the stock market increases and the bond prices soar. This simply makes mortgage interest and other interest rates rise.
As, a mortgage banker we look at soaring stock markets with a double edge sword. Grateful that the markets are on the upswing, but it means that interest rates will rise in relation and thus mortgage rates have increased as dramatically as the stock markets since the elections.
Now, with our mortgages interest rates on the steep rise, it has a dramatic effect on some of our popular senior loan programs. Specifically, the Reverse mortgage. I have been lucky enough to service more seniors than any other single reverse lender in the country over the last five years. It is crazy that we have closed and funded more reverse loans than any other single lender orinator in the country and we live is a representative lower population area. But, we have a rich senior population and St. George, SunRiver and Southern Nevada are known for retirement areas and rank in the top 10 annually for places in the country to retire.
Please understand that the reverse loan will begin and has begun to have changes in percentages, fees and what is more important the amount of funds that HUD will lend on these loans.
The higher the interest rate the higher the fees on these loans and origination fees and more importantly the lower the loan amount that HUD will lend in a loan amount. This will dramatically affect the attractiveness of these programs. I would think with the rise in interest rates over the next year or two, these loans will look dramatically different in comparison to what advantages they have today and the advantages over conventional loans as well.
When looking at reverse mortgage options, please run these side by side with all of your lending and retirement options today and as most of our seniors are finding, they are choosing these options versus a conventional loan or paying cash for a home today when buying a home in your retirement. But, as the market changes and the loan options and advantages decrease, we will see less noise on these reverse loans in the future.
If you are interested in reverse loan options in staying in your home or buying a new home over the age of 62, please contact your local investment advisor or registered investment advisor representative and or certified Mortgage professional and learn more about the options today before they continue to decrease in opportunity. Until next time, Brandon.