Innovative Mortgage Solutions

FHFA House Price Index
The FHFA (Federal Housing Finance Agency) released their House Price Index, which measures home price appreciation on single-family homes with conforming loan amounts. Different than Case Shiller, it does not include cash buyers or jumbo loans. The FHFA reported that prices rose 0.2% in January! Year over year, home prices are up 5.3%. From the peak, home prices according to FHFA are down 0.63%...which is basically flat. Based on this, you can interpolate that the decline in Case Shiller is coming from higher priced homes where there is less demand. Additionally, there is likely cash discounts being offered, where buyers paying in cash are able to command a lower price, which is why Case Shiller is also lower.

NAHB Housing Market Index
The NAHB Housing Market Index, measuring builder confidence, rose 2 points in March after rising 7 points in February and 4 points in January. The index is now at a level of 44, which was 4 points above expectations and much higher than it was a few months ago when it was at 31, but still beneath the level of 50, which is the line in the sand between expansion and contraction. Looking at the internals: -Present conditions - increased 2 pts to 49 -Future outlook fell 1 pt to 47 -Prospective Buyers Traffic increased by 3 to 31 (third month in a row of increases) These figures are still in contraction territory being below 50, but are clearly rebounding and going in the right direction. It’s also important to note that the confidence is from builders, who are completing new homes. There is a difference between someone selling an existing home and a builder selling a new home. Existing home owners still receive a benefit as they are living there, even if they cant sell the home as fast as they want. Builders are much more sensitive, as they have carrying costs if they took out a loan and their capital is tied up from new projects. With Builders showing a big bump in confidence, it is positive sign to see.

Low DSCR Ratio Loans Explained-

A low ratio debt service coverage ratio (DSCR) loan is a loan that has a lower DSCR than the lender's standard minimum requirements.

DSCR is the ratio of the property's net operating income (NOI) to its debt service or mortgage payments. A low DSCR means that the property's income is not enough to cover its debt service, making it a riskier loan for the lender.

Lenders may still approve these loans, but they may require additional collateral or charge higher interest rates to offset the increased risk.