Mortgage Rates Skyrocket After Trump Victory (Highest jump since 2013)

Financial markets are still processing the effects that President-elect Donald Trump will have when he officially takes office in January. In the aftermath of Trump’s victory, the stock market rose sharply, reaching record highs the last 2 weeks.

But the stock market isn’t the only thing that’s on the rise since Trump won; mortgage interest rates are skyrocketing as well.

According to data provided by Zillow, the 30-year fixed mortgage interest rate spiked in the aftermath of Trump’s election, rising from 3.38% on Tuesday to 3.8% on Monday morning.

shutterstock_71006383Zillow takes the interest rate data from the interest rates borrowers are quoted on its mortgage marketplace [click here for an example].

Zillow said that Monday morning’s interest rates are the highest rates have been in 2016.

The jump from 3.38% on Tuesday to 3.8% on Monday represents the largest one-week jump in interest rates seen on Zillow Mortgages since July 2013, when mortgage rates jumped 68 basis points in the wake of the “Taper Tantrum.”

According to Zillow’s data, the average interest rate for the 15-year fixed-rate mortgage and the 5/1 adjustable-rate mortgage also rose sharply in the past week, with each trending towards 3% in recent days.

Erin Lantz, vice president of mortgages for Zillow Group, said the increase is driven by the amount of uncertainty that exists within the financial markets right now.

shutterstock_78123298“Mortgage rates have spiked 27 basis points since last Tuesday, rising to the highest levels we’ve seen this year as investors assess the degree of political and economic uncertainty that Trump’s presidential win introduced to the market,” Lantz said.

“As investors move away from U.S government assets, including U.S. mortgage-backed securities, in favor of relatively safer investments, we expect more volatility as markets try to put a price on the political developments,” Lantz continued.

“Consumers considering buying or refinancing now should stay patient, as we’ll likely see rates stabilize once markets find a new equilibrium,” Lantz added.

http://www.housingwire.com/articles/38520-zillow-mortgage-interest-rates-skyrocket-after-trumps-victory

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Flipping Properties in Michigan, Ohio, & Indiana (Matt Andrews in the field)

Join Matt Andrews on his recent trip up to the northern market of Grand Rapids, Michigan. Pick up some tips on how to evaluate and move into new real estate markets.  

 

Wach video below…

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Check Out Obama’s New $5M Mansion (The post-white house home)

Another milestone in Barack Obama’s presidency has been set with the election of his successor, Donald Trump. The election moved Obama closer to life after the presidency. And as Politico reported back in May, the Obamas have already settled on a post-Pennsylvania Avenue house to call home.

It’s not the White House, but it’ll do.

obama-houseThough smaller than the Obamas’ current, better-known abode, the house is still a lavish residence in a desirable neighborhood in the nation’s capital. It was built in 1928, with 8,200 square feet and nine bedrooms. It was listed for sale at $5.3 million before going off the market in May.

The Obamas will lease the home from Joe Lockhart, who served as press secretary in President Bill Clinton’s White House, until their younger daughter, Sasha, finishes high school.

See more pics here –> http://www.businessinsider.com/heres-where-the-obamas-are-moving-2016-11/#the-obamas-are-trading-white-for-brick-at-their-newly-leased-mansion-in-the-kalorama-section-of-dc-1

 

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Trump To Dismantle Dodd-Frank Act (Property Investors Jump For Joy)

Now that the dust is starting to settle from the election, a clearer picture is beginning to emerge of what types of actions President-elect Donald Trump will pursue once the “-elect” is removed from his title.

Chief among those planned actions appears to a plan to “dismantle” the Dodd-Frank Wall Street Reform Act. Trump’s plans for the first days of his term as president are being revealed on a website launched by his transition team.

Screen Shot 2016-06-04 at 7.17.21 PMUnder a section titled “Make America Great Again,” the website lists the three main tenets of Trump’s plan: Making America Secure Again; Getting America Back To Work Again; and Government for the People Again.

Each of those main sections has several subsections, and those in the financial services industry should pay close attention to the “Getting America Back To Work Again,” as it contains much of Trump’s plan for the economy.

“Financial markets are vital to the American economy. Capital markets bring investors together with creators to fund new ideas and fuel economic growth,” the website reads under a subsection entitled “Financial Services.”

“Banks and other lenders provide funding to small businesses and mortgage borrowers to help fund the American Dream,” the website continues. “Federal policy should focus on free enterprise, while protecting consumers by policing markets for force and fraud. Both Wall Street and Washington should be held accountable.”

The Trump website then goes on to discuss the impact of the Dodd-Frank Act, and how the Trump administration will work to replace it.

The website calls Dodd-Frank a “sprawling and complex piece of legislation that has unleashed hundreds of new rules and several new bureaucratic agencies,” including the Consumer Financial Protection Bureau.

“The proponents of Dodd-Frank promised that it would lift our economy. Yet now, six years later, the American people remain stuck in the slowest, weakest, most tepid recovery since the Great Depression,” the website states.

“Paychecks have been stagnant. Savings are being depleted, millions are unemployed or underemployed, and millions more have dropped out of the workforce altogether,” the website continues. “Economic growth remains below 2%, about half the historic average. The big banks got bigger while community financial institutions have disappeared at a rate of one per day, and taxpayers remain on the hook for bailing out financial firms deemed ‘too big to fail.’”

200In the words of the Trump transition team, Dodd-Frank and the economy it fostered “does not work” for America.

“Bureaucratic red tape and Washington mandates are not the answer,” the website states. “The Financial Services Policy Implementation team will be working to dismantle the Dodd-Frank Act and replace it with new policies to encourage economic growth and job creation.”

One of the main issues that many have with Dodd-Frank is the amount of regulations that the law place on the financial services industry.

Trump’s website doesn’t provide any additional details on how President Trump will go about dismantling Dodd-Frank, but the website does also contain a separate section entitled “Regulatory Reform,” which is called a “cornerstone” of the Trump Administration.

According to the website, Trump’s regulatory reform effort, which he spoke about often on the campaign trail, includes: “a temporary moratorium on all new regulation, canceling overarching executive orders and a thorough review to identify and eliminate unnecessary regulations that kill jobs and bloat government.”

The Trump Administration is “committed to regulatory reform that will produce sensible regulations that allow America to be great,” the website states.

shutterstock_124303804As HousingWire previously reported, there’s already a Republican-led effort underway in Congress to repeal and replace Dodd-Frank and many of its regulations.

Earlier this year, House Financial Services Committee Chairman Rep. Jeb Hensarling, R-Texas, introduced a bill in the House that would replace Dodd-Frank with a “pro-growth, pro-consumer” alternative that would bring significant reforms to the CFPB, and much more.

The bill, called the Financial CHOICE act, passed out of the House Financial Services Committee in September.

The bill would “end taxpayer-funded bailouts of large financial institutions; relieve banks that elect to be strongly capitalized from ‘growth-strangling regulation’ that slows the economy and harms consumers; and impose tougher penalties on those who commit fraud as well as greater accountability on Washington regulators.”

Again, it’s unknown how Trump will accomplish the dismantling of Dodd-Frank, but Christopher Whalen, the senior managing director of Kroll Bond Rating Agency, is already predicting that pursuing the Financial CHOICE Act, or some version of it could be one of Trump’s first moves as president.

“Changing the narrative regarding Dodd-Frank and related regulations is not a simple task,” Whalen wrote in a post-election note. “That said, addressing Dodd-Frank and related issues is a lot simpler than either tax reform or fixing the (Affordable Care Act.)”

Whalen says that KBRA’s “decidedly speculative bet” is that Trump will back a modified version of the Financial CHOICE Act that would be altered to make it more “palatable” to the Senate.

Despite Democratic opposition to any proposed changes to Dodd-Frank, Whalen writes that changes to Dodd-Frank could be much more easily accomplished that changes to the tax code, or repealing Obamacare.

http://www.housingwire.com/articles/38500-trump-unveils-plan-to-dismantle-dodd-frank-act

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How Trump’s Immigration Policy Affects Housing (It’s not what you think)

One of the central themes of President-elect Donald Trump’s campaign was the large-scale deportation of illegal immigrants. Since winning the election, Trump restated his plan during an interview with 60 Minutes to deport as many as 3 million illegal immigrants when he takes office.

But what does that mean for housing? This chart from an article by Max Ehrenfreund for The Washington Post uses data from the National Bureau of Economic Research to show the distribution of undocumented immigrants in the work force.

 

screen-shot-2016-11-15-at-105135-am(Source: NBER, Washington Post)

 

The construction sector shows the second-highest number of undocumented workers at 1.1 million.

From the article:

According to a recent estimate from the Pew Research Center, there are about 8 million unauthorized workers in the United States in total.

If all undocumented workers were immediately removed from the country, Edwards and Ortega forecast a decline of 9 percent in agricultural production and declines of 8 percent in construction and leisure and hospitality over the long term.

200Today’s market is already tight when it comes to construction jobs. Intense competition for construction workers in places like San Francisco, for instance, has driven up wagesand housing costs.

As far as the financial sector, there are fewer illegal immigrants in the industry, however their weekly earnings are about double that of undocumented workers in other industries.

From the article:

“When we think about unauthorized immigrants, we tend to think about poor Mexican workers with low education in agriculture,” Edwards said. In other sectors, he added, “they’re highly trained, highly paid professionals, so their removal has a pretty large effect.”

A recent report from Goldman Sachs shows that the U.S. may already be losing immigrants as more are leaving the country than are coming in.

http://www.housingwire.com/articles/38527-how-trumps-immigration-policy-will-affect-housing

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Blackstone Crushed the Third Quarter ($7.2 Billion in Property Sales)

Blackstone Group LP posted third-quarter profit that exceeded analysts’ expectations as its private equity portfolio appreciated, credit holdings gained and it sold a string of real estate assets. Economic net income, a measure of earnings that reflects both realized and unrealized investment gains, was $687 million, or 57 cents a share, New York-based Blackstone said in a statement Thursday. Analysts on average expected earnings of 47 cents, according to estimates compiled by Bloomberg.

shutterstock_156241742Blackstone, led by Chief Executive Officer Steve Schwarzman, continues to prove the strength of its real estate business, which is the largest among alternative asset managers. The firm has found several willing Chinese buyers for its property holdings this year, including Anbang Insurance Group Co., which bought Strategic Hotels & Resorts Inc. in the quarter. This week Blackstone also struck a deal to sell 25 percent of its biggest holding, hotel operator Hilton Worldwide Holdings Inc., to China’s HNA Group for $6.5 billion.

Blackstone’s real estate group, overseen by Jon Gray, sold $7.2 billion in holdings during the quarter, the second-highest level ever. That keeps them on track to seal $20 billion in real estate realizations for the third year in a row, Chief Financial Officer Michael Chae said during the call. Dispositions in the period ended Sept. 30 included Chicago-based Strategic Hotels and Blackstone’s remaining stake in Brixmor Property Group Inc.

“We are not planning on slowing down, with clear visibility on a number of large monetizations over the next 12 to 18 months,” Chae said of Blackstone’s real estate portfolio.

shutterstock_171648779The firm’s private equity unit shed $4.5 billion in assets during the quarter, including its remaining ownership in NXP Semiconductors NV and stakes of drug-products maker Catalent Inc. and Scout24 AG, a German digital-advertising company.

‘Healthy’ Pace

“Performance remained strong while fundraising, realization activity and investment activity all continued at a healthy pace,” Jefferies Group LLC analysts led by Dan Fannon wrote in a note to clients Thursday. Blackstone’s economic net income compared with a loss of $415.9 million a year earlier.

Shares of Blackstone gained 2.4 percent to $25.99 as of 2:50 p.m. in New York. The stock was down 9.1 percent, including reinvested dividends, this year through Wednesday.

Blackstone’s distributable earnings, which reflect cash profits on asset sales and fund management fees, were $593 million, compared with $691.5 million a year earlier. The firm said it will pay stockholders a dividend of 41 cents a share on Nov. 14.

Its private equity portfolio appreciated 3 percent in the quarter, compared with 5.8 percent for KKR & Co. and 3 percent for Carlyle Group LP, which both reported results earlier this week. The S&P 500 index of large U.S. companies was up 3.3 percent in the three months ended Sept. 30.

shutterstock_172281584Blackstone earlier this month took advantage of low global interest rates by issuing 1 percent senior notes, raising 600 million euros ($655 million). That adds to $2.8 billion in debt as of Sept. 30 on the company’s balance sheet, which had about $3.9 billion in cash and marketable securities.

With $361 billion in assets under management, Blackstone is viewed as a bellwether for the alternative asset sector given its size and reach across markets. Peter Grauer, chairman of Bloomberg LP, the parent of Bloomberg News, is a non-executive director at Blackstone.

http://www.bloomberg.com/news/articles/2016-10-27/blackstone-tops-third-quarter-estimates-on-real-estate-sales

 

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