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Mortgage Insights - Ask Not What Lower Rates Can Do For You...

In the latest edition of The Mortgage Minute, we’re keeping a close eye on several economic reports, including housing starts, jobless claims, and existing home sales data. 

We’ve also got a Pipeline Save that proves sometimes, the best solutions are the ones hiding in plain sight. 

And in industry news, a new California law is about to give renters a leg up on credit scoring, and a veteran loan officer gives some evergreen best practices and advice to his son before his first year in the business.

It’s time to acknowledge that furniture you got an awesome deal on during the President’s Day Weekend Extravaganza isn’t going to fit. It’s never going to fit. Your time will be better spent reading this newsletter.

So, let’s dive in!

Market Sentiment & Economic Calendar

Last week’s economic news brought us a roller coaster of rate changes, but ultimately led us to right about where we started. For this week, economic projections indicate an expectation of little activity, but, as always, be ready for anything. Here’s what we’re watching this week:

What to Watch:

Tuesday, February 18:

• Empire State Manufacturing Survey (February): After a decline in January, economists anticipate a modest improvement in manufacturing activity, suggesting a steady economic environment. A positive reading could bolster market confidence, potentially leading to stable or slightly increased mortgage rates.

Wednesday, February 19:

• Housing Starts (January): Forecasts suggest a slight but stable decline in housing starts, indicating builders' response to sustained demand. An increase in new constructions can help alleviate inventory shortages, benefiting prospective homeowners.

Thursday, February 20:

• Initial Jobless Claims (February): The labor market continues to exhibit strength, with expectations of low initial jobless claims. A robust employment landscape supports consumer confidence, which is favorable for housing demand and mortgage stability.

Friday, February 21:

• Existing Home Sales: Analysts predict a stable but modest decline in existing home sales. We should see this number start to pop as we head into spring.

For now, the market is still in a wait-and-see mode. Rates are holding steady, but they’ll move if the data gives them a reason to. As always, be vigilant.

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Pipeline Save of the Week

In this week’s Pipeline Save, we’ve got one of those classic mortgage moments where a deal seems completely dead in the water… until the loan officer found the hidden escape hatch.

The borrower was house shopping, and, armed with a solid credit score of 742, had a lot of breathing room. But they took a good while to find that perfect home, and by the time that they did their original credit report had expired, which meant time for a fresh pull.

And that’s when the fun started.

The new report? It came back with a whopping 45-point drop, dragging them below 700. No missed payments, no huge debts – just a slight uptick in balances was enough to move the needle.

Problem was, that little dip in credit score was enough to throw the whole deal into chaos. With a debt-to-income ratio already at its limit, and no additional wiggle room in the budget, the only option left was to reduce the interest rate to the point that the loan officer’s compensation moved from a healthy $8,000 all the way to zero.

But all was not lost because a few water cooler chats led to an idea that would ultimately save this drowning deal: adding an authorized user to credit.

The borrower’s dad had an 800+ credit score and a credit card with years of spotless payment history. A quick call, a little paperwork, and suddenly, the borrower was an authorized user on that card. As if by magic, their score skyrocketed to 765 overnight. The deal was alive again, the loan officer kept their full compensation, and the borrower walked away with an even better rate than they would have otherwise.

It’s one of those solutions that feels almost too simple, but it works. The trick is making sure the card has a long, positive history with low utilization. If those pieces are in place, adding an authorized user can be an instant credit score booster.

Reminder to send in your Pipeline Saves of the Week to team@mortgageminutenews.com to be featured in future newsletters!